That Used to Be Us: How America Fell Behind in the World It Invented and How We Can

by Thomas L. Friedman

  Put these three innovations all together and the result was that in the span of a decade, people in Boston, Bangkok, and Bangalore, Mumbai, Manhattan, and Moscow, all became virtual next-door neighbors. Probably two billion new people suddenly found themselves with new powers to communicate, compete, and collaborate globally—as individuals. Whereas previously it was largely only countries and companies who could act globally in this way, when the world got flat, individuals could act globally—as individuals—and more and more of them every day.

  Flat World 2.0

  According to the International Telecommunications Union (ITU), an agency of the United Nations, as of 2010 there were about 4.6 billion cell phones in use worldwide. There are 6.8 billion people on the planet, so the number of cell phones in circulation now equals roughly two-thirds of the world’s total population. Since there were only about one billion cell-phone subscribers worldwide in 2002, it is clear that the rate of growth is staggering—with most of it now coming from the developing world: India, for example, is adding 15 to 18 million cell-phone users a month. According to the ITU, about 23 percent of the global population uses the Internet today, up from 12 percent in 2002. Every day now there are millions of free or dirt-cheap interactions and collaborations happening in places and among people who were not connected just five years ago. We know where this eventually goes—to universal connectivity to the Internet via cell phone, smartphone, or traditional computer, probably within a decade.

  “I call my mother in Karachi every day. I use Skype and she uses her regular phone. It costs so little, it’s almost free,” Raziuddin Syed, a senior IT engineer based in Tampa, Florida, told the Pakistani newspaper Dawn (February 20, 2011). Syed “works for an international accounting firm, thanks to internet-connected laptop computer and the Voice over Internet Protocol technology. ‘Five years ago the cost of phone calls, especially those using VOIP, was much higher than it is today. Calls between members of services like Skype are always free but calls to other phones, landlines or mobiles, carry a very small per minute charge,’ Syed says.”

  In other words, since The World Is Flat was published in 2005, the world has only gotten, well, flatter. How far and how fast have we come? When Tom wrote The World Is Flat, Facebook wasn’t even in it. It had just started up and was still a minor phenomenon. Indeed, in 2005 Facebook didn’t exist for most people, “Twitter” was still a sound, the “cloud” was something in the sky, “3G” was a parking space, “applications” were what you sent to colleges, and “Skype” was a typo.

  That is how much has changed in just the last six years. In fact, so many new technologies and services have been introduced that we would argue that sometime around the year 2010 we entered Flat World 2.0—a difference of degree that deserves its own designation. That is because Flat World 2.0 is everything Flat World 1.0 was, but with so many more people able to connect to the Flat World platform, so many more people able to communicate with others who are also connected, and so many more people now empowered to find other people of like mind to collaborate with—whether to support a politician, follow a rock group, invent a product, or launch a revolution—based on shared values, interests, and ideals.

  We look at it this way: Flat World 1.0 was built around the PC-server relationship. In order to participate, most everyone had to use a laptop or a desktop computer—usually connected by landline or fiber-optic cable to an Internet Web server somewhere. It was not very mobile, and the cost of participating still excluded some people. You had to have enough money to buy a desktop or a laptop, rent one at an Internet café, or use one at the office where you worked. The penetration was global, and in that sense it really did flatten the world, thanks to the rapid diffusion of landlines and fiber cable on land and undersea, but it tended to connect people living in cities and towns—less so villages and countryside—who were of a certain minimum income level.

  Flat World 1.0 was particularly strong not only at enabling individuals to take part in a global conversation via e-mail, but also at enabling people to work together to make stuff, sell stuff, and buy stuff—from more places than ever before. It was great at enabling Boeing to make part of its 777 jetliner with a team that included designers in Moscow, wing manufacturers in China, and control electronics producers in Wichita. It was great at enabling the outsourcing of everything from the reading of X-rays to the tracing of lost luggage on Delta flights. It was great for empowering powerful breakthroughs in online education, entertainment, publishing, and commerce, and actually enhancing the cultural diversity of the world, not squashing it. And it was great for promoting global collaboration among individuals, so that “the crowd” could write and then upload everything from an encyclopedia (Wikipedia) to a new operating system for PCs (Linux).

  Flat World 2.0 is doing all that still—and more—because it is being driven by the diffusion of more PCs (more than 350 million were sold in 2010), as well as by smartphones enabled with text messaging, Web browsers, and cameras, as well as by wireless connectivity in place of landlines to reach more remote communities, as well as by new social networks that enable collaboration on more and more things. And all of these activities are now increasingly being supported by a vast new array of software applications stored on huge interlinked server farms known collectively as “the cloud.”

  The cloud really is a “new, new thing.” It holds every imaginable software program and every imaginable application—from bird-watching guides for southern Africa to investing guides for Wall Street—and it is being updated seamlessly every moment. The beauty of the cloud, and the reason that it is driving the flattening further and faster, is that it can turn any desktop, laptop, or simple handheld device with a browser into an information-creation or -consumption powerhouse by serving as a central location for those myriad applications, which run on individual user’s devices.

  Amazon.com, for example, is now selling not only books and chain saws but business facilities in the cloud. Andy Jassy is Amazon’s senior vice president in charge of Amazon Web Services, Bloomberg BusinessWeek explained (March 3, 2011), which means that his job is to rent space to individual innovators, or companies, on Amazon’s rent-a-cloud.

  Although all shoppers are welcome, this Amazon, [Jassy] explains, is for business customers and isn’t well marked on the home page. It’s called Amazon Web Services, or AWS … , which rents out computing power for pennies an hour. “This completely levels the playing field,” Jassy boasts. AWS makes it possible for anyone with an Internet connection and a credit card to access the same kind of world-class computing systems that Amazon uses to run its $34 billion-a-year retail operation … AWS is growing like crazy. Although he won’t cite exact numbers, Jassy claims “hundreds of thousands of customers” already use the service, and analysts at UBS estimate Amazon will do about $750 million of business on AWS this year. In fact, a whole generation of Internet companies couldn’t exist without it. Netflix’s movie-streaming empire runs on it; Zynga, the social gaming company, uses it to handle sudden spikes in usage. AWS has become such a fact of life for Silicon Valley startups that venture capitalists actually hand out Amazon gift cards to entrepreneurs. Keeping up with the demand requires frantic expansion: Each day, Jassy’s operation adds enough computing muscle to power one whole Amazon.com circa 2000, when it was a $2.8 billion business. The physical expansion of all that data takes place in Amazon’s huge, specially designed buildings—the biggest can reach 700,000 square feet, or the equivalent of roughly 16 football fields. These interconnected facilities, scattered all over the world, are where AWS conducts its business: cloud computing. The “cloud” refers to the amorphous, out-of-sight, out-of-mind mess of computer tasks that happen on someone else’s equipment.

  Though the cloud is still in its infancy, in 2009 alone global data flows grew by 50 percent thanks in part to its emergence, along with wireless connectivity. “The more people are connected, the more people connect,” said Hewlett-Packard’s CEO, Léo Apotheker, “so you
get these network effects, and that is just flattening the world even more every day.”

  Indeed, every day more and more of the features that defined the personal computer are finding their way into the phone and the tablet. True, the majority of the world’s people still don’t have smartphones. But you can see the future, and it will be smart; there will be Web- and video-enabled phones everywhere for everyone—and sooner than you think. As a result, another two billion people are joining the daily global conversation, with more and cheaper tools they can use to connect, compete, and collaborate on the global playing field. Many of them can just dive right in and start texting on their phones, without having to buy or rent a PC or learn any software-writing program.

  To summarize: Flat World 1.0, from roughly 1995 to 2005, made Boston and Bangalore next-door neighbors. Flat World 2.0, from 2005 to the present, is making Boston, Bangalore, and Sirsi next-door neighbors. Where is Sirsi? Sirsi is an agricultural trading center of 90,000 people some 275 miles from Bangalore in the Indian countryside. And this is happening everywhere in every country.

  In Flat World 1.0, said Alan Cohen, Vice President of Mobility Solutions at Cisco Systems, “everyone was a consumer of goods and information in what has become the ultimate consumer marketplace. You could buy anything from anyone anywhere.” Some people also became producers of goods and information (people who had never dreamed of being able to do so in the past), starting their own websites or uploading and sharing their opinions, music, pictures, software programs, or encyclopedia entries. This new Flat World 2.0 platform for connectivity, being so cheap and mobile, continues and broadens that phenomenon into the most remote areas, bringing a whole new swath of humanity into the game. It can only lead to more innovation of all sorts much faster.“Imagine what they are going to produce,” said Cohen. “The cloud is like this huge shared factory, where anyone who wants to produce something can come and rent the tools for almost nothing.”

  If Flat World 1.0 was about producing goods and services on this new global platform, Flat World 2.0 is about all that—but also about generating and sharing ideas on this platform. As Craig Mundie, Chief Strategy and Research Officer for Microsoft, put it to us, what the PC plus the Internet plus the search engine did for Web pages “was enable anyone with connectivity to find anything that interests them,” and what the PC and smartphone plus the Internet plus Facebook is doing “is enabling anyone to find anyone” who interests them—or at least any of the 500 million people already using social networks. They can find anyone who shares their special interest in knitting, Ethiopian cooking, the New York Yankees, kids with Down syndrome, cancer research, launching a jihad against America, or toppling the government in Egypt, Tunisia, or Syria.

  When so many people can find anything and anyone and more easily than ever, and can stay in touch more easily than ever to collaborate to make products, encyclopedias, or revolutions, you are into Flat World 2.0—a hyper-connected world. And that has profound implications.

  “The people now have not only their own information access system to understand what is going on better inside their own countries or abroad, not only to discuss that with one another, but also the command-and-control mechanism to organize themselves to do something about it,” adds Mundie. “In the past, only governments and armies had these kinds of high-scale command-and-control systems. Now the people do. And the more these tools penetrate at great volumes, the more the price of making and using them goes down, then the more they penetrate and diffuse farther. And the more they diffuse the more impossible it becomes to control anything from the center.” The more impossible it also becomes to keep anything “local” anymore. Everything now flows instantly from the most remote corners of any country onto this global platform where it gets shared.

  One big indication of this move from Flat World 1.0 to 2.0 can be found in the uprisings across the Arab world in 2011. Flat World 1.0 connected Detroit and Damascus. Flat World 2.0, though, connected Detroit, Damascus, and Dara’a. Where is Dara’a? It is a small, dusty town on the Syrian border with Jordan where the revolution in Syria began and from which a stream of pictures, video, and words about what was happening inside Syria have been pumped out to the world. The people of Dara’a had so many cell phones and wireless connections that the Syrian regime could not suppress information about its own brutality. Think about it: the Syrian regime refused to permit any foreign TV networks into the country—no CNN, no BBC—so it thought that no one outside Syria would know of its brutal crackdown. Out of nowhere, someone inside or outside Syria created a website called “Sham News Network” or SNN, where Syrians in Dara’a and then elsewhere began posting their cell-phone videos of the regime killing its own people. They did the same on YouTube. Suddenly, big global networks like al-Jazeera and CNN were running video and crediting SNN—a site that probably cost only a few hundred dollars to create and operate and that no one knows who runs. The people were telling their own story. In the old days, the Syrian government would have just shut down a TV or radio station broadcasting opinions it did not like. But today the Syrian regime can no more afford to shut down its cell-phone network than it can afford to shut down its electricity grid.

  It is for all of these reasons that we would argue that Flat Worlds 1.0 and 2.0 together constitute the most profound inflection point for communication, innovation, and commerce since the Gutenberg printing press. In a relatively short time, virtually everyone will have both the tools and the networks to participate in this hyper-connected world. The effects of the printing press, though, took hundreds of years to percolate through society. This is happening in a few decades, which is much more challenging in terms of adaptation.

  This change will affect America and Americans in many ways—from politics to commerce to the workplace to education. What interests us most in this chapter is how these forces are helping to reshape the workplace and the skills that the individual will need in order to get and hold a job. We can already see that this hyper-connecting of the world is altering everyone’s business and forcing everyone who is in business to learn how to take advantage of these new tools to become more productive, no matter how big or small their company is. We can see that when so many people have so many tools to compete, connect, and both pull and push new innovations and information, the speed with which companies need to update their own products or invent new ones before competitors overtake them just gets faster. We can also see that this hyper-connected world is empowering more individuals and small groups to start up their own companies and create new jobs with greater ease and for less money than ever before. And, finally, we can see that it is challenging every worker who wants to hold a job for any length of time at any company—large or small, new or old—to develop the skills needed to keep up.

  Let’s look at all of these changes.

  Everyone Is Feeling the Pressure

  Michael Barber, the chief education officer for the Pearson publishing group and formerly the top education adviser to British prime minister Tony Blair, told us that whenever he lectures on globalization today he begins by telling this story: “I was at friend’s fiftieth birthday party in Wales. The morning after the party another guest and I agreed to take a walk up a nearby hill. We had not met before. To make conversation as we set out, I asked him, ‘What do you do?’ He said, ‘I am a monumental stonemason,’ which in British English means he carves gravestones. I immediately said to him, ‘It must be great to be in a line of work not affected by globalization.’ And he looks at me with this question mark in his eyes, and says, ‘What do you mean? If I didn’t buy my stone over the Internet from India, I’d be out of business.’ Everything had changed for him in the previous two or three years. If a stonemason [in Wales] has to get his best stone from India to stay competitive, there is no job left not affected by globalization.”

  Barber’s story is not unusual these days. Whether you are talking to stonemasons or global corporate titans, all of them will tell you this: Changes in t
echnology that affect their core enterprise are coming faster than they ever imagined, challenges are coming from places they never imagined, and opportunities are being opened in places they never imagined. Therefore every business executive large and small has to scour the world every day and take advantage of every way to access talent, develop new markets, and lower production costs—because if they don’t do it, it will be done to them.

  Tom has interviewed Victor Fung, the group chairman of Li & Fung, one of Hong Kong’s oldest and most respected textile manufacturers, several times over the last decade. Fung grew up in the industry and for many years it operated on the same basic rules. As he explained: “You sourced in Asia, and you sold in America and Europe.” When Tom spoke with him in early 2011, Fung had a different message. In today’s hyper-connected world, he said, his whole business model has been flattened. Asia is becoming a huge market on its own, as are other areas of the developing world, and new manufacturing and design possibilities are opening up in places where they were never imaginable before. Said Fung, “Now our motto is ‘Source everywhere, manufacture everywhere, sell everywhere.’ The whole notion of an ‘export’ is really disappearing.”