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But this isn't the half of it. In the old days, explained Pickering, Boeing would

say to its Japanese subcontractors, "We will send you the plans for the wings of the

777. We will let you make some of them and then we will count on you buying the whole

airplanes from us. It's a win-win."

Today Boeing says to the giant Japanese industrial company Mitsubishi, "Here are the

general parameters for the wings of the new 7E7. You design the finished product and

build it." But Japanese engineers are very expensive. So what happens? Mitsubishi

outsources elements of the outsourced 7E7 wing to the same Russian engineers Boeing

is using for other parts of the plane. Meanwhile, some of these Russian engineers

and scientists are leaving the big Russian airplane companies, setting up their own

firms, and Boeing is considering buying shares in some of these start-ups to have

reserve engineering capacity.

All of this global sourcing is for the purpose of designing and building planes faster

and cheaper, so that Boeing can use its cash to keep innovating for the next generation

and survive the withering competition from Airbus. Thanks to the triple convergence,

it now takes Boeing eleven days to build a 737, down from twenty-eight days just a

few years ago. Boeing will build its next generation of planes in three days, because

all the parts are being computer-designed for assembly, and Boeing's global supply

chain will enable it to move parts from one facility to another just in time.

To make sure that it is getting the best deals on its parts and other supplies, Boeing

now runs regular "reverse auctions," in which companies bid down against each other

rather than bid up against each other. Theybid for contracts on everything from toilet

paper for the Boeing factories to nuts and bolts-the off-the-shelf commodity

parts-for Boeing's supply chain. Boeing will announce an auction for a stated time

on a specially designed Internet site. It will begin the auction for each supply

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item at what it considers a fair price. Then it will just sit back and watch how far

each supplier wants to undercut the others to win Boeing's business. Bidders are

prequalified by Boeing, and everyone can see everyone else's bids as they are

submitted.

"You can really see the pressures ofthe marketplace and how they work," said Pickering.

"It's like watching a horse race."

The Other Triple Convergence

I once heard Bill Bradley tell a story about a high-society woman from Boston who

goes to San Francisco for the first time. When she comes home and is asked by a friend

how she liked it, she says, "Not very much-it's too far from the ocean."

The perspective and predispositions that you carry around in your head are very

important in shaping what you see and what you don't see. That helps to explain why

a lot of people missed the triple convergence. Their heads were completely somewhere

else-even though it was happening right before their eyes. Three other things-another

convergence- came together to create this smoke screen.

The first was the dot-com bust, which began in March 2001. As I said earlier, many

people wrongly equated the dot-com boom with globalization. So when the dot-com boom

went bust, and so many dot-coms (and the firms that supported them) imploded, these

same people assumed that globalization was imploding as well. The sudden flameout

of dogfood.com and ten other Web sites offering to deliver ten pounds of puppy chow

to your door in thirty minutes was supposed to be proof that globalization and the

IT revolution were all sizzle and no beef.

This was pure foolishness. Those who thought that globalization was the same thing

as the dot-com boom and that the dot-com bust marked the end of globalization could

not have been more wrong. To say it again, the dot-com bust actually drove

globalization into hypermode by forcing companies to outsource and offshore more and

more functions in order to save on scarce capital. This was a key factor in laying

the groundwork for

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Globalization 3.0. Between the dot-com bust and today, Google went from processing

roughly 150 million searches per day to roughly one billion searches per day, with

only a third coming from inside the United States. As its auction model caught on

worldwide, eBay went from twelve hundred employees in early 2000 to sixty-three

hundred by 2004, all in the period when globalization was supposed to be "over."

Between 2000 and 2004, total global Internet usage grew 125 percent, including 186

percent in Africa, 209 percent in Latin America, 124 percent in Europe, and 105 percent

in North America, according to Nielsen/ NetRatings. Yes, globalization sure ended,

all right.

It was not just the dot-com bust and all the hot air surrounding it that obscured

all this from view. There were two other big clouds that moved in. The biggest, of

course, was 9/11, which was a profound shock to the American body politic. Given 9/11,

and the Afghanistan and Iraq invasions that followed, it's not surprising that the

triple convergence was lost in the fog of war and the chatter of cable television.

Finally, there was the Enron corporate governance scandal, quickly followed by

blowups at Tyco and WorldCom-which all sent CEOs and the Bush administration running

for cover. CEOs, with some justification, became guilty until proven innocent of

boardroom shenanigans, and even the slavishly probusiness, pro-CEO Bush

administration was wary of appearing-in public-to be overly solicitous of the

concerns of big business. In the spring of 2004,1 met with the head of one of America's

biggest technology companies, who had come to Washington to lobby for more federal

funding for the National Science Foundation to help nurture a stronger industrial

base for American industry. I asked him why the administration wasn't convening a

summit of CEOs to highlight this issue, and he just shook his head and said one word:

"Enron."

The result: At the precise moment when the world was being flattened, and the triple

convergence was reshaping the whole global business environment-requiring some very

important adjustments in our own society and that of many other Western developed

nations-American politicians not only were not educating the American public, they

were actively working to make it stupid. During the 2004 election campaign

we saw the Democrats debating whether NAFTA was a good idea and the Bush White House

putting duct tape over the mouth of N. Gregory Mankiw, the chairman of the White House

Council of Economic Advisers, and stashing him away in Dick Cheney's basement, because

Mankiw, author of a popular college economics textbook, had dared to speak approvingly

of oursourcing as just the "latest manifestation of the gains from trade that

economists have talked about at least since Adam Smith."

Mankiw's statement triggered a competition for who could say the most ridiculous thing

in response. The winner was Speaker of theHouse Dennis Hastert, who said that Mankiw's

"theory fails a basic test of real economics." And what test was that, Dennis? Poor

Mankiw was barely heard from again.

For all these reasons, most people missed the triple convergence. Something really

big was happening, and it was simply not part of public discourse in America or Europe.

Until I visited India in early 2004,1 too was largely ignorant of it, although I was

picking up a few hints that something was brewing. One of the most thoughtful business

leaders I have come to know over the years is Nobuyuki Idei, the chairman of Sony.

Whenever he speaks, I pay close attention. We saw each other twice during 2004, and

both times he said something through his heavy Japanese accent that stuck in my ear.

Idei said that a change was under way in the business-technology world that would

be remembered, in time, like "the meteor that hit the earth and killed all the

dinosaurs." Fortunately, the cutting-edge global companies knew what was going on

out there, and the best companies were quietly adapting to it so that they would not

be one of those dinosaurs.

As I started researching this book, I felt at times like I was in a Twilight Zone

segment. I would interview CEOs and technologists from major companies, both

American-based and foreign, and they would describe in their own ways what I came

to call the triple convergence. But, for all the reasons I explained above, most of

them weren't telling the public or the politicians. They were either too distracted,

too focused on their own businesses, or too afraid. It was like they were all "pod

people," living in

a parallel universe, who were in on a big secret. Yes, they all knew the secret-but

nobody wanted to tell the kids.

Well, here's the truth that no one wanted to tell you: The world has been flattened.

As a result of the triple convergence, global collaboration and competition-between

individuals and individuals, companies and individuals, companies and companies, and

companies and customers-have been made cheaper, easier, more friction-free, and more

productive for more people from more corners of the earth than at any time in the

history of the world.

You know "the IT revolution" that the business press has been touting for the last

twenty years? Sorry, but that was only the prologue. The last twenty years were just

about forging, sharpening, and distributing all the new tools with which to

collaborate and connect. Now the real IT revolution is about to begin, as all the

complementarities between these tools start to really work together to level the

playing field. One of those who pulled back the curtain and called this moment by

its real name was HP's Carly Fiorina, who in 2004 began to declare in her public

speeches that the dot-com boom and bust were just "the end of the beginning." The

last twenty-five years in technology, said Fiorina, then the CEO of HP, have been

just "the warm-up act." Now we are going into the main event, she said, "and by the

main event, I mean an era in which technology will literally transform every aspect

of business, every aspect of life and every aspect of society."

::::: FOUR

The Great Sorting Out

The triple convergence is not only going to affect how individuals prepare themselves

for work, how companies compete, and how countries organize their economies and

geopolitics. Over time, it is going to reshape political identities, recast political

parties, and redefine who is a political actor. In short, in the wake of this triple

convergence that we have just gone through, we are going to witness what I call "the

great sorting out." Because when the world starts to move from a primarily vertical

(command and control) value-creation model to an increasingly horizontal (connect

and collaborate) creation model, it doesn't affect just how business gets done. It

affects everything-how communities and companies define themselves, where companies

and communities stop and start, how individuals balance their different identities

as consumers, employees, shareholders, and citizens, and what role government has

to play. All of this is going to have to be sorted out anew. The most common disease

of the flat world is going to be multiple identity disorder, which is why, if nothing

else, political scientists are going to have a field day with the flat world. Political

science may turn out to be the biggest growth industry of all in this new era. Because

as we go through this great sorting out over the next decade, we are going to see

some very strange bedfellows making some very new politics.

I first began thinking about the great sorting out after a conversation with Harvard

University's noted political theorist Michael J. Sandel. Sandel startled me slightly

by remarking that the sort of flattening process that I was describing was actually

first identified by Karl Marx

and Friedrich Engels in the Communist Manifesto, published in 1848. While the

shrinking and flattening of the world that we are seeing today constitute a difference

of degree from what Marx saw happening in his day, said Sandel, it is nevertheless

part of the same historical trend Marx highlighted in his writings on capitalism-the

inexorable march of technology and capital to remove all barriers, boundaries,

frictions, and restraints to global commerce.

"Marx was one of the first to glimpse the possibility of the world as a global market,

uncomplicated by national boundaries," Sandel explained. "Marx was capitalism's

fiercest critic, and yet he stood in awe of its power to break down barriers and create

a worldwide system of production and consumption. In the Communist Manifesto, he

described capitalism as a force that would dissolve all feudal, national, and

religious identities, giving rise to a universal civilization governed by market

imperatives. Marx considered it inevitable that capital would have its way-inevitable

and also desirable. Because once capitalism destroyed all national and religious

allegiances, Marx thought, it would lay bare the stark struggle between capital and

labor. Forced to compete in a global race to the bottom, the workers of the world

would unite in a global revolution to end oppression. Deprived of consoling

distractions such as patriotism and religion, they would see their exploitation

clearly and rise up to end it."

Indeed, reading the Communist Manifesto today, I am in awe at how incisively Marx

detailed the forces that were flattening the world during the rise of the Industrial

Revolution, and how much he foreshadowed the way these same forces would keep

flattening the world right up to the present. In what is probably the key paragraph

of the Communist Manifesto, Marx and Engels wrote:

All fixed, fast, frozen relations, with their train of ancient and venerable

prejudices and opinions, are swept away, all new-formed ones become antiquated before