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electric motors powering machines of all sizes. Only when there was a critical mass

of experienced factory architects and electrical engineers and managers, who

understood the complementarities among the electric motor, the redesign of the

factory, and the redesign of the production line, did electrification really deliver

the productivity breakthrough in manufacturing, David wrote.

The same thing is happening today with the flattening of the world. Many of the ten

flatteners have been around for years. But for the full flattening effects to be felt,

we needed not only the ten flatteners to converge but also something else. We needed

the emergence of a large cadre of managers, innovators, business consultants,

business schools, designers, IT specialists, CEOs, and workers to get comfortable

with, and develop, the sorts of horizontal collaboration and value-creation processes

and habits that could take advantage of this new, flatter playing field. In short,

the convergence of the ten flatteners begat the convergence of a set of business

practices and skills that would get the most out of the flat world. And then the two

began to mutually reinforce each other.

"When people asked, 'Why didn't the IT revolution lead to more productivity right

away?' it was because you needed more than just new computers," saidRomer. "You needed

new business processes and new types of skills to go with them. The new way of doing

things makes the information technologies more valuable, and the new and better

information technologies make the new ways of doing things more possible."

Globalization 2.0 was really the era of mainframe computing, which was very

vertical-command-and-control oriented, with companies and their individual

departments tending to be organized in vertical silos. Globalization 3.0, which is

built around the convergence of the ten flat179

teners, and particularly the combination of the PC, the microprocessor, the Internet,

and fiber optics, flipped the playing field from largely top-down to more side to

side. And this naturally fostered and demanded new business practices, which were

less about command and control and more about connecting and collaborating

horizontally.

"We have gone from a vertical chain of command for value creation to a much more

horizontal chain ofcommand for value creation," explained Carly Fiorina. Innovations

in companies like HP, she said, now come more and more often from horizontal

collaboration among different departments and teams spread all across the globe. For

instance, HP, Cisco, and Nokia recently collaborated on the development of a camera/

cell phone that beams its digitized pictures to an HP printer, which quickly prints

them out. Each company had developed a very sophisticated technological specialty,

but it could add value only when its specialty was horizontally combined with the

specialties of the other two companies.

"How you collaborate horizontally and manage horizontally requires a totally

different set of skills" from traditional top-down approaches, Fiorina added.

Let me offer just a few examples. In the past five years, HP has gone from a company

that had eighty-seven different supply chains-each managed vertically and

independently, with its own hierarchy of managers and back-office support-to a

company with just five supply chains that manage $50 billion in business, and where

functions like accounting, billing, and human resources are handled through a

companywide system.

Southwest Airlines took advantage of the convergence of the ten flat-teners to create

a system where its customers can download their boarding passes at home. But until

I personally altered my ticket-buying habits and reengineered myself to collaborate

horizontally with Southwest, this technological breakthrough didn't produce a

productivity breakthrough for me or Southwest. What the bizhub commercial is about

is the difference between the employee who understands the convergent technologies

in the new bizhub machine (and how to get the most out of them) and the employee in

the very same office who does not. Not until the latter

changes his work habits will productivity in that fictional office go up, even though

the office has this amazing new machine.

Finally, consider the example of WPP-the second-largest

advertising-marketing-communications consortium in the world. WPP, which is based

in England, did not exist as we now know it twenty years ago. It is a product of the

consolidation of some of the biggest names in the business-from Young & Rubicam to

Ogilvy & Mather to Hill & Knowlton. The alliance was put together to capture more

and more of big clients' marketing needs, such as advertising, direct mail, media

buying, and branding.

"For years the big challenge for WPP was how to get its own companies to collaborate,"

said Allen Adamson, managing director of WPP's branding firm, Landor Associates. "Now,

though, it is often no longer enough just to get the companies in WPP to work together

per se. Increasingly, we find ourselves pulling together individuals from within each

of these companies to form a customized collaborative team just for one client. The

solution that will create value for that client did not exist in any one company or

even in the traditional integration of the companies. It had to be much more

specifically tailored. So we had to go down inside the whole group and pluck the

individual who is the right ad person, to work with the right branding person, to

work with the right media person for this particular client."

When GE decided in 2003 to spin off its insurance businesses into a separate company,

WPP assembled a customized team to handle everything from the naming of the new

company-Genworth-all the way down to its first advertising campaign and

direct-marketing program. "As a leader withinthis organization," said Adamson, "what

you have to do is figure out the value proposition that is needed for each client

and then identify and assemble the individual talents within WPP's workforce that

will in effect form a virtual company just for that client. In the case of GE, we

even gave a name to the virtual collaborative team we formed: Klamath Communications."

When the world went flat, WPP adapted itself to get the most out of itself. It changed

its office architecture and practices, just like those companies that adjusted their

steam-run factories to the electric motor. But

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WPP not only got rid of all its walls, it got rid of all its floors. It looked at

all its employees from all its companies as a vast pool of individual specialists

who could be assembled horizontally into collaborative teams, depending on the unique

demands of any given project. And that team would then become a de facto new company

with its own name.

It will take time for this new playing field and the new business practices to be

fully aligned. It's a work in progress. But here's a little warning. It is happening

much faster than you think, and it is happening globally.

Remember, this was a triple convergence!

Convergence III

How so? Just as we finished creating this new, more horizontal playing field, and

companies and individuals primarily in the West started quickly adapting to it, 3

billion people who had been frozen out of the field suddenly found themselves

liberated to plug and play with everybody else.

Save for a tiny minority, these 3 billion people had never been allowed to compete

and collaborate before, because they lived in largely closed economies with very

vertical, hierarchical political and economic structures. I am talking about the

people ofChina, India,Russia, Eastern Europe,Latin America, and Central Asia. Their

economies and political systems all opened up during the course of the 1990s, so that

their people were increasingly free to join the free-market game. And when did these

3 billion people converge with the new playing field and the new processes? Right

when the field was being flattened, right when millions of them could compete and

collaborate more equally, more horizontally, and with cheaper and more readily

available tools than ever before. Indeed, thanks to the flattening of the world, many

of these new entrants didn't even have to leave home to participate. Thanks to the

ten flatten-ers, the playing field came to them!

It is this triple convergence-of new players, on a new playing field, developing new

processes and habits for horizontal collaboration - that I be182

lieve is the most important force shaping global economics and politics in the early

twenty-first century. Giving so many people access to all these tools of collaboration,

along with the ability through search engines and the Web to access billions of pages

of raw information, ensures that the next generation of innovations will come from

all over Planet Flat. The scale of the global community that is soon going to be able

to participate in all sorts of discovery and innovation is something the world has

simply never seen before.

Throughout the Cold War there were just three major trading blocs-North America,

Western Europe, and Japan plus East Asia-and the competition among the three was

relatively controlled, since they were all Cold War allies on the same side of the

great global divide. There were also still a lot of walls around for labor and

industries to hide behind. The wage rates in these three trading blocs were roughly

the same, the workforces roughly the same size, and the education levels roughly

equivalent. "You had a gentlemanly competition," noted Intel's Chairman Craig

Barrett.

Then along came the triple convergence. The Berlin Wall came down, the Berlin mall

opened up, and suddenly some 3 billion people who had been behind walls walked onto

the flattened global piazza.

Here's what happened in round numbers: According to a November 2004 study by Harvard

University economist Richard B. Freeman, in 1985 "the global economic world"

comprised North America, Western Europe, Japan, as well as chunks of Latin America,

Africa, and the countries of East Asia. The total population of this global economic

world, taking part in international trade and commerce, said Freeman, was about 2.5

billion people.

By 2000, as a result of the collapse of communism in the Soviet Empire, India's turn

from autarky, China's shift to market capitalism, and population growth all over,

the global economic world expanded to encompass 6 billion people.

As a result of this widening, another roughly 1.5 billion new workers entered the

global economic labor force, Freeman said, which is almost exactly double the number

we would have had in 2000 had China, India, and the Soviet Empire not joined.

True, maybe only 10 percent of this new 1.5 billion-strong workforce entering the

global economy have the education and connectivity to collaborate and compete at a

meaningful level. But that is still 150 million people, roughly the size of the entire

U.S. workforce. Said Barrett, "You don't bring three billion people into the world

economy overnight without huge consequences, especially from three societies [like

India, China, and Russia] with rich educational heritages."

That is exactly right. And a lot of those new workers are not just walking onto the

playing field. No, this is no slow-motion triple convergence. They are jogging and

even sprinting there. Because once the world has been flattened and the new forms

of collaboration made available to more and more people, the winners will be those

who learn the habits, processes, and skills most quickly-and there is simply nothing

that guarantees it will be Americans or Western Europeans permanently leading the

way. And be advised, these new players are stepping onto the playing field legacy

free, meaning that many of them were so far behind they can leap right into the new

technologies without having to worry about all the sunken costs of old systems. It

means that they can move very fast to adopt new, state-of-the-art technologies, which

is why there are already more cell phones in use in China today than there are people

in the United States. Many Chinese just skipped over the landline phase. South Koreans

put Americans to shame in terms of Internet usage and broadband penetration.

We tend to think of global trade and economics as something driven by the IMF, the

G-8, the World Bank, the WTO, and the trade treaties forged by trade ministers. I

don't want to suggest that these governmental agencies are irrelevant. They are not.

But they are going to become less important. In the future globalization is going

to be increasingly driven by the individuals who understand the flat world, adapt

themselves quickly to its processes and technologies, and start to march

forward-without any treaties or advice from the IMF. They will be every color of the

rainbow and from every corner of the world.

The global economy from here forward will be shaped less by the ponderous

deliberations of finance ministers and more by the spontaneous explosion of energy

from the zippies. Yes, Americans grew up with

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the hippes in the 1960s. Thanks to the high-tech revolution, many of us became yuppies

in the 1980s. Well, now let me introduce the zippies.

"The Zippies Are Here," declared the Indian weekly magazine Outlook. Zippies are the

huge cohort of Indian youth who are the first to come of age since India shifted away

from socialism and dived headfirst into global trade and the information revolution

by turning itself into the world's service center. Outlook called India's zippies

"Liberalization's Children" and defined a zippie as a "young city or suburban resident,

between 15 and 25 years of age, with a zip in the stride. Belongs to Generation Z.

Can be male or female, studying or working. Oozes attitude, ambition and aspiration.