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Global service delivery: history and context

Global service delivery: history and context. The Information and Service Economy October 17 2007 Bob Glushko and Anno Saxenian. Outline. It’s a Flat World, After All Global economic integration Is the world flat? The new Argonauts. This is globalization 3.0.

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Global service delivery: history and context

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  1. Global service delivery: history and context The Information and Service Economy October 17 2007 Bob Glushko and Anno Saxenian

  2. Outline • It’s a Flat World, After All • Global economic integration • Is the world flat? • The new Argonauts

  3. This is globalization 3.0 Globalization 1.0 1492-1800 Nations globalize for resources & imperial conquest Globalization 2.0 1800-2000 Companies globalize for markets & labor Globalization 3.0 2000-?? Individuals & small groups globalize: connecting the world’s knowledge pools together Thomas Friedman The World is Flat: A Brief History of the Twenty-First Century, 2005

  4. Ten forces that flattened the world • 11/9/89- Berlin wall • 8/9/95- Yahoo! • Work flow software • Open-sourcing • Outsourcing • Offshoring • Supply-chaining • Insourcing • In-forming • The steroids

  5. The triple convergence “Creation of a global, web-enabled playing field that allows for multiple forms of collaboration—the sharing of knowledge and work—in real time, without regard for geography, distance, or, in the near future, even language. . . . new players, a new global playing field, and new processes and habits for horizontal collaboration.” Thomas Friedman, The World is Flat

  6. The view from the Fed History of global economic integration • Roman empire: common language, legal system, currency • 15th-16th c: mercantilist European empires • 1815-1914: increasing global trade, cross-border flows of financial capital and labor • Post-WWII: global re-integration, intra-industry manufacturing trade (v. comparative advantage) Ben Bernanke, Chair of Federal Reserve Bank, 2006

  7. What’s New, What’s Not? Historical commonalities: • New transportation & communication technologies a major factor in global economic integration • National policy choices play a critical role in the extent of integration • Social dislocation and resistance may result with greater openness

  8. What is really new today? • Scale and pace of global integration is unprecedented • Core-periphery distinction less relevant as interdependencies grow • Geographic fragmentation of prodn, development of global supply chains • International capital markets more mature, capital flows greater

  9. Is the world really flat? • The 10 percent presumption • Most economic activity is still conducted domestically • Most activities, like FDI in world capital formation, only 10 percent • Only trade accounts for over 20 percent • Tyranny of times zones, languages, proximity to client: “home bias” • Tension: national sovereignty and global economic integration

  10. The world is spiky: population

  11. The spikes http://creativeclass.com/rfcgdb/articles/other-2005-The%20World%20is%20Spiky.pdf

  12. The world is spiky: innovation

  13. More perspectives • Edward Leamer “A Flat World, A Level Playing Field, a Small World After All, or None of the Above? A Review of Thomas L. Friedman, The World is Flat” Journal of Economic Literature, Vol. XLV (March 2007), pp. 83-126 • William Nordhaus’ spinning globe, origins of GDP http://www.econ.yale.edu/~nordhaus/homepage/homepage.htm

  14. The global labor pool: 1980

  15. Global labor pools: 1980 & 2000

  16. The power of “gravity”

  17. The power of gravity: 1960

  18. The power of gravity: 1990

  19. Is the Internet flat? hosts

  20. Is the Internet flat? users

  21. Why are there firms? • Coase’s theory: no longer relevant • Firms exist to accelerate talent development (Hagel and Brown) • Talent is a flow, not a stock: people seek firms and locations that provide challnges, help them refresh their talent • Geographic clustering and virtuous cycle: enhances opportunity to develop talent • Large firms face vicious cycle: scale limits potential for talent development

  22. Talent development in firms • Implications for managers • Need to develop talent, not just “attract and retain” • Learning, not training, is the goal • Need to access and motivate external as well as internal talent • Use IT to amplify, not automate, talent • Growth is key to developing talent because it creates new challenges

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