The Flat World

November 23, 2005
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HOLLAND — Buzz Miller, president, COO and grandson of his company's namesake, Howard Miller, knows all about globalization.

"Whether you like it or not — and personally, for what it's worth, I don't — globalization is the new, undeniable reality, and it's not going away," he said.

Miller demonstrated his opinion with a copy of the 2005 watershed book on the subject, "The World Is Flat: A Brief History of the Twenty-First Century," by Thomas Friedman.

"According to our friend Thomas Friedman, the world is flat," Miller began, "and when he wrote the book, it probably was flat. But now I contend that the world is continuing to tilt on its axis, and it's beginning to look like this …"

He turned the book at a 45-degree angle.

"Now, see, what's happening is that you and I are up here," he said as he pointed to the top of the slope, "and this is Asia down here," he added, as he pointed to the bottom.

"And this is your money," he mimics a slide down the slope. "Your technology, maybe your neighbor's job, maybe even the future opportunity of your children."

Miller was a guest speaker at the Holland Chamber of Commerce's recent MidDay Forum discussion of the best-selling book, moderated by Mark de Roo of Keystone Coaching & Consulting.

De Roo began his introduction to the flat world in the same manner as Friedman.

"No one ever gave me directions like this on a golf course before," he said, golf club in hand. "Aim at either Microsoft or IBM."

It was on the first tee at the KGA Golf Club in Bangalore, India, that the celebrated New York Times columnist realized he was surrounded by U.S. businesses in a foreign land. The two technology giants, along with Goldman Sachs, HP and Texas Instruments, all had offices in Bangalore. Beyond the golf course, there were ads for Pizza Hut.

A little over 500 years ago, Christopher Columbus discovered what he thought was India but was actually America. Now, Friedman thought, he was in India but it looked and felt like America. Some Indian employees had gone so far as to take American names and copy American accents.

Later, on a tour of Indian outsourcing giant Infosys, CEO Nandan Nilekani told him that after a decade of social and technological advances, the global playing field — on which the United States had long held the high ground — was now "flat."

"The World Is Flat" documents the 10 forces that helped to create this level playing field, along with the effect this new world has already had — and Friedman predicts will have — on the global and domestic landscape.

Steve Spoelhof, a salesman at Johnson Controls Inc. in Holland, explained how the "flat world" has changed his employer. He's currently working on a program with a European holding company of a Detroit automaker. All the engineering for the vehicle will be done in Europe, and the same vehicle will be delivered simultaneously in the United States and China.

"They expect to pay one engineering bill — design it once to meet all the standards of the world; they expect one tooling source with three sets of tools, and one-stop shopping, so you better have capabilities in all three regions," Spoelhof explained. "They expect it to be manufactured consistently around the world. … And they want a low price, the China price. They expect much of the content to be made in an LCC (low-cost country)."

In a nutshell, that is the meaning of a "flat" world. With barriers removed, work will flow to where it can be done best — whether that be cheapest, closest, fastest or most innovative. In West Michigan, there is no manufacturer that has not been touched in some way by this trend, and a surprising number of other industries have already dipped into the global labor pool.

A great number of tax returns are done overseas. The region's largest title insurance companies, LandAmerica and First American, have a joint venture in the Philippines.

Also present at the forum was Progressive AE CEO Brad Thomas, who explained that the engineering firm recently had its own Indian experiment. A slew of work forced the company to seek some temporary help, and, as an educational experience as much as anything else, it turned to an Indian firm.

"We talked Tuesday afternoon, and Wednesday morning it was done," he said.

At a quarter of the cost, the project needed only an hour of polishing to meet company standards, a surprising success on a first run.

"It's not necessarily a direction for us," Thomas said. "I think it's something no one likes, but it's something you have to understand."

For all Buzz Miller's disdain of the global marketplace, Howard Miller now employs nearly 3,000 workers between two Chinese facilities. When the clock and furniture maker opened its first Chinese facility in Shanghai in 1997, there were dozens of workers lined up outside the gates each day with hopes of employment. Though the facility grew by 40 percent each year, there are no more lines.

"The people in Shanghai don't want to work in factories anymore," Miller said. "They want to work in the commercial sector; they want to work in an office."

When Howard Miller needed 100 employees earlier this year, they were brought in on a three-hour flight from a remote village in central China. At roughly the same time, the company opened its first Chinese retail store.

"Globalization has many roads," Miller said. "And to know what lies on the road ahead, you should ask the ones coming back. Right now, the road is facing China, and what's coming back is tens of thousands of containers filled with goods that you and I used to make."

Keystone Coaching & Consulting's de Roo said Friedman hits on realities that address all aspects of our society, and "certain segments of our society — the have-nots — even more so."

In West Michigan, de Roo said, this is seen in Electrolux, Lear and Delphi. As Friedman calls it, the United States has descended into an "American Idol" environment. Those that don't have skills — no matter how positive or hardworking they might be — can expect some harsh treatment.

"People need to invest further in education or in jobs that have an opportunity to create value for the organization," de Roo said. "Not doing so will jeopardize their jobs and all of us."

In his global project, Spoelhof discovered he missed an opportunity himself. In college, he took German, but not to the conversational level. Now, he is working with German nationals.

"I've learned that you can't over-communicate. You can't assume they understand you; these language barriers are unique," he said. "As a parent, I know my kids need to be bilingual. They're going to be living in a world where they'll be at a competitive disadvantage if they don't know two or three languages." 

The Evolution Of Globalization

Globalization 1.0 (1492-1800): Christopher Columbus proves the world round by discovering the New World. As bands of explorers crisscross the globe, the world goes from a size large to a size medium.

Globalization 2.0 (1800-2000): The rise of multinational companies, from the East India Trading Co. to McDonald's, Shell and Disney, make it "a small world after all."

Globalization 3.0 (2000-present): Through a convergence of social, political and technological advances, the world is now unfathomably small, and, once again, "flat." In the words of Microsoft founder Bill Gates, before this era, it was better to be born an average guy in Poughkeepsie, N.Y., than a genius in Shanghai, China. Now, not so much.

The Ten Forces That Flattened The World

Author Thomas Friedman believes that the current pace of globalization was created through a convergence of 10 distinct events and trends.

1. 11/9/89 — The fall of the Berlin Wall marked the end of the Cold War and simultaneous adoption of the free market throughout Asia, the Middle East, Africa, Latin America and Eastern Europe.

2. 8/9/95 — Netscape's IPO was the beginning of the dot-com boom and, with the shipping of Windows 95 a week later, the birth of the mainstream Internet.

3. Work Flow Software — Inspired by the ease of use found on the Internet at home, corporate software adopted standardized protocols and the ability to communicate with the outside world.

4. Open-Sourcing — The rise of self-organizing collaborative communities challenged traditional business models, put free tools from software to encyclopedias in the hands of millions of users, and set the stage for the horizontal business model.

5. Outsourcing and Y2K — The Y2K bug was the first large-scale outsourcing of information technology work to India. The ill-advised fiber build-out of the dot-com boom proceeded to make offshore telecommuting virtually free, and the rest is history.

6. Offshoring — On Dec. 11, 2001, China formally joined the World Trade Organization. An African proverb, in Mandarin, paraphrased, on the board of a Chinese manufacturer: "Every morning in Africa, a gazelle wakes up. It knows it must run faster than the fastest lion or it will be killed. Every morning a lion wakes up knowing it must outrun the slowest gazelle or starve. Whether you are a lion or a gazelle, when the sun comes up, you better start running."

7. Supply-Chaining — From 1988 to 2000, Wal-Mart created the modern supply chain, using volume, innovation and ruthless efficiency to cut cost out of its sourcing and distribution network.

8. Insourcing — Through the services of UPS and FedEx, every company has access to global service and fulfillment. More than just parcel delivery, firms can contract for full distribution and logistics support, as well as localized service and repairs.

9. In-forming — Between Google, Yahoo! and MSN Search, more information is now available to more people than ever before.

10. The Steroids — On top of everything else, the world is now digital, mobile, personal and virtual, bringing with it the theoretical ability to work and collaborate at any time from anywhere.

Source: "The World Is Flat"     

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