The World is Flat Chapter 11 How Companies Cope Jenna Hicks, Jackie Hilgendorf , Laurel Miller, Dakin Munson, & Ka

1. The World is Flat Chapter 11 How Companies Cope Jenna Hicks, Jackie Hilgendorf, Laurel Miller, Dakin Munson, & Kaytee Norris

2. Introduction • “Everyone wants economic growth, but nobody wants change” – Paul Romer (pg. 441) • “…companies that have managed to survive and grow today are those that are most prepared to change.” – Friedman (pg. 442) • 9 rules companies live by in a flat world

3. Rule #1: When the world is flat, whatever can be done will be done. The only question is whether it will be done by you or to you.

4. Rule #1 • “Today, with the right imagination, Internet bandwidth, and a modest amount of capital, anyone can assemble a global company by matching workers and customers from anywhere to do anything for anyone.” (pg. 444) • “…we are seeing the emergence of collaborative, build-your-own business models that are unprecedented in history – and that whatever can be done is being done.” (pg. 447)

5. Rule #2: Because we are in a world where whatever can be done will be done, the most important competition of today is between you and your imagination.

6. Rule #2 • What is unique about the flat world is the degree to which individuals, or small groups, can now act and compete globally • Must have radical free-trade because the society that is most open to the competition, while also being most inviting of its own people and immigrants to imagine and do whatever can be done, is the society that will thrive the most • “Britain dominated the 19th century, America dominated the 20th century, and China will dominate the twenty-first century” • America will have to work harder and smarter to dominate • China censors Google, and that is a proxy for impeding and restring imagination and what can be done

7. Rule #3: And the small shall act big… one way small companies flourish in the flat world is by learning to act really big. Imagination is necessary, but not sufficient. You have to be able to implement what you imagine. And the key to being small and acting big is being quick to take advantage of all the new tools for collaboration to reach farther, faster, wider, and deeper.

8. Rule #3 • Aramex – first home-grown package delivery service in the Arab world and the first and only Arab company to be listed on the Nasdaq • Triple Convergence • Software and Industrial Engineers in Jordan, Ability to use the latest technologies, Internet platform • Insourcing • Delivery of credit cards, collecting bills • “We are a very flat organization,” Ghandour explained. “This is not traditional because Arab institutions in the private sector tend to look like the governments – very hierarchical and patriarchal. That is not how Aramex works. There are no more than two or three layers between me and anyone in the company. Every single knowledge worker in this organization has a computer with e-mail and Internet access. Right here from your computer I can access my intranet and see exactly what is happening in the organization without my senior people having to report to me. (pg. 454) • Collaboration • Supply chaining, outsourcing, insourcing, and all the steroids

9. Rule #4: And the big shall act small… One way that big companies learn to flourish in the flat world is by learning how to act really small by enabling their customers to act really big.

10. Rule #4 • Starbucks and E*Trade: “The smartest big companies clearly understand that the triple convergence allows them to collaborate with their customers in a totally new fashion – and by doing so, to act really small” (pg 455). • Internet and Flat World lead to the birth of the “self-directed consumer.” • Companies can now act like they are catering to customers individual needs without the expense of actually dealing with each customer individually. • They make changes according to customer requests and suggestions, without having to employ someone to research it – FREE research, and often making money from the customer using the services!

11. Rule #5: The best companies are the collaborators. In the flat world, more and more business will be done through collaborations within and between companies, for a very simple reason: The next layers of value creation–whether in technology, marketing, biomedicine, or manufacturing–are becoming so complex hat no single firm or department is going to be able to master them alone.

12. Rule #5 • Companies need to specialize and find niches to stay competitive in the flattening world. • “The cutting edge of technical innovation in every field is increasingly specialization” – Joel Cawley, IBM strategic planning unit head (pg 457). • Rolls-Royce no longer manufactures automobiles (sold in 1972). • R-R became a technology company specializing in power systems. • They expanded from the U.K. to a global market -- now employing 35,000 people and services 120 countries. • They outsource 75% of engine components – and remaining 25% is the “differential elements” – “the hot end of the engine: the turbines, the compressors and fans, and the alloys and aerodynamics” (pg 459).

13. Rule #6: In a flat world, the best companies stay healthy by getting regular chest X-rays and then selling the results to their clients.

14. Rule #6 • A niche can become vanilla quickly • Constantly identify “Hot Spots” (IBM) • Core competencies • Skills with potential • Functions to outsource (to free up funds) • HP Bags $150 Million India Bank Contract • Implement and manage a core banking system • HP’s innovations to its own info systems • Commercialize it to clients

15. Rule #7: The best companies outsource to win, not to shrink. They outsource to innovate faster and more cheaply in order to grow larger, gain market share, and hire more and different specialists – not to save money by firing more people.

16. Rule #7 • LRN outsourcing to MindTree • Offers ethics education and managing corporate governance responsibilities of global companies • Demand increased after Enron • Double Challenge • Grow market share • Design a new integrated platform • Not cutting costs, but adding people and creating new processes

17. Rule #8: HOW you do things as a company matters more today than ever.

18. Rule #8 • This concept is taken from Dov Seidman • You need to differentiate yourself from how you do business • Wal-Mart, Target, and Kmart • “ If your interactions with others deliver a more meaningful customer experience, if you deal more consistently, openly, and honestly with your suppliers and investors, and more decently with your employees, you engender loyalty that brings them all back and trust that enables greater collaboration” (pg. 468) • Companies used to be one-way communicators and no you can interact through things like pod casting and blogging to establish a companies overall reputation and credibility

19. Rule #9: When the world goes flat–and you are feeling flattened–reach for a shovel and dig inside yourself. Don’t try to build walls.

20. Rule #9 • It’s all about the idea of commoditization and triple convergence; sticking to your core competencies. • Greer and Associates vs. “Freelancers” • The analog process in photography went digital, virtual, mobile, and personal • Advanced technology has increased the competition like the Canon DI • Control of the supply chain (photographer, processor, color separator) • “All functions used to be farmed out to a separate company now everything controlled on a single computer in a single task”