The Hindu Business Line : The world gets flatter as the playing field is levelled

THERE's no Bodhi tree on the KGA golf course in Bangalore, I guess, but that's where `a brief history of the globalised world in the twenty-first century begins'. There, Thomas L. Friedman, `three times winner of the Pulitzer Prize', would see Epson's tee markers, and a 3M cap on a caddy's head. But more importantly, he'd glimpse the `shiny glass-and-steel buildings' of HP and Texas Instruments just outside, along the tenth hole.

Like Columbus, Friedman had set out for India; but unlike the 15th century explorer who was searching for hardware — "precious metals, silk, and spices", Friedman was searching for "software, brainpower, complex algorithms, knowledge workers, call centres, transmission protocols, breakthroughs in optical engineering".

Columbus returned to tell King Ferdinand and Queen Isabella that the world was indeed round. But Friedman's message is different, and is the title of his new book, The World is Flat, from Penguin (www.penguin.com).

For, a line that Nandan Nilekani told him at the Infosys campus, was to ring in his ears for long: "Tom, the playing field is being levelled."

"Columbus accidentally ran into America and thought he had discovered part of India; I actually found India and thought many of the people I met there were Americans," writes Friedman.

Globalisation 1.0 was from 1492, the year when Columbus set sail, to 1800, opines Friedman. In that period, what mattered was how much muscle and horsepower "your country had and how creatively you could deploy it". The next edition, 2.0, was on for two hundred years, till 2000; the dynamic force driving global integration then was the MNC or multinational company. What's now running is Globalisation 3.0, "shrinking the world from a size small to a size tiny and flattening the playing field at the same time." What's the current dynamic force? In Friedman's view, Globalisation 3.0 enables "so many more people to plug and play" and the dynamic force is "the newfound power for individuals to collaborate and compete globally".

True, you cannot export a haircut, Jaithirth `Jerry' Rao of MphasiS explains to the author at the Leela Palace hotel. "But we are coming close to exporting a haircut, the appointment part. What kind of haircut do you want? Which barber do you want? All those things can and will be done by a call centre far away."

And there's Tom Glocer, the CEO of Reuters, telling Friedman how earnings flashes that are out within seconds of company releases are a basic commodity that actually can be made anywhere in the flat world. Don't miss the discussion on `personal remote executive assistant' that Brickwork of Vivek Kulkarni's B2K offers, and also on the Bangalore of China, Dalian, "about an hour's flight northeast of Beijing", which Kenichi Ohmae suggests as an outsourcing destination for Japanese companies!

"The world has been flattened by the convergence of ten major political events, innovations and companies," writes Friedman, listing the flatteners. The first is 11/9/89, November 9, 1989, "a wonderful kabbalistic accident of dates" when the Berlin Wall came down. It flattened `the alternatives to free-market capitalism' and also unlocked the potential for countries such as India, Brazil, China, and the former Soviet Empire, reasons the author.

"The Berlin Wall was not only a symbol of keeping people inside East Germany — it was a way of preventing a kind of global view of our future. We could not think globally about the world when the Berlin Wall was there," is a quote from Amartya Sen in the book. To Sen, the fall of the wall enabled the frog in the well to communicate with frogs in all the other wells!

Six months later, Windows went up, narrates Friedman, referring to version 3.0 of the software, "the real breakthrough version that made PCs truly user-friendly". Flattener number two happened about ten years ago, on August 9, 1995, when Netscape went public; its IPO was "a clarion call to the world to wake up to the Internet".

Netscape's browser was the killer application for the millions of PCs, to make the computer and its connectivity inherently more useful, explains Friedman. The IPO in turn set off an explosion in demand for all things digital, and also led to the dot-com bubble. It caused "a massive over-investment in the fibre-optic cable", to wire the world together, "and without anyone really planning it, made Bangalore a suburb of Boston". The third flattener was the `work flow software'. This was needed because "we had to go from an Internet that just connected people to people, and people to their own applications, to an Internet that could connect any of my software programs to any of your software programs". XML, the extensible mark-up language, and the related transport protocol SOAP made the digital plumbing possible, so anybody could connect his or her hose to any hydrant! Open-sourcing, and self-organising collaborative communities are the next flattener that Friedman discusses, focussing on "the intellectual commons movement and the free software movement". He talks about Wiki, Apache and Linux, as also Microsoft's view on free software. "This movement is not going away," declares the author. "Indeed, it may just be getting started — with a huge, growing appetite that could apply to many industries."

The fifth flattener is outsourcing. A strange comment reads, "India is a country with virtually no natural resources that got very good at doing one thing — mining the brains of its own people by educating a relatively large slice of its elites in the sciences, engineering, and medicine." But since our political system was `dysfunctional', the US became `the second buyer of India's brainpower'.

The Indian IT industry got its footprint across the globe because of Y2K, is a comment of Jerry Rao that Friedman cites. The wheel seemed to turn, and so, when the bubble burst, India became the "second buyers of the fibre-optics companies". Ironically, India didn't benefit only from the dot-com boom; it benefited even more from the bust, opines the author.

Offshoring is the sixth flattener, and a win-win too. Do you know, for instance, that 90 per cent of the output from US-owned offshore factories is sold to foreign consumers? A challenge for China is to get over a `huge speed bump called political reform'. A quote of a diplomat may sum up that country's experiment: "China right now is doing titillation, not privatisation. Reform here is translucent — and sometimes it is quite titillating, because you can see the shapes moving behind the screen — but it is not transparent." Flattener number seven is `supply-chaining'. A must-read is about how Wal-Mart's headquarters handles arriving shipments in its 1.2 million square foot distribution centre. Another informative example is the Dell story tracing the global supply chain of author's laptop. The three other flatteners are insourcing, in-forming and the steroids.

A book that's worth more than a fleeting glance.

Economics@TheHindu.co.in

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The world gets flatter as the playing field is levelled