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horizontal and collaborative ones.

"Globalization is the word we came up with to describe the changing relationships

between governments and big businesses," said David Rothkopf, a former senior

Department of Commerce official in the Clinton administration and now a private

strategic consultant. "But whatis going on today is a much broader, much more profound

phenomenon." It is not simply about how governments, business, and people communicate,

not just about how organizations interact, but is about the emergence of completely

new social, political, and business models. "It is about things that impact some of

the deepest, most ingrained aspects of society right down to the nature of the social

contract," added Rothkopf. "What happens if the political entity in which you are

located no longer corresponds to a job that takes place in cyberspace, or no longer

really encompasses workers collaborating with other workers in different corners of

the globe, or no longer really captures products produced in multiple places

simultaneously? Who regulates the work? Who taxes it? Who should benefit from those

taxes?"

If I am right about the flattening of the world, it will be remembered as one of those

fundamental changes-like the rise of the nation-state or the Industrial

Revolution-each of which, in its day, noted Rothkopf,

produced changes in the role of individuals, the role and form of governments, the

way we innovated, the way we conducted business, the role of women, the way we fought

wars, the way we educated ourselves, the way religion responded, the way art was

expressed, the way science and research were conducted, not to mention the political

labels we assigned to ourselves and to our opponents. "There are certain pivot points

or watersheds in history that are greater than others because the changes they

produced were so sweeping, multifaceted, and hard to predict at the time," Rothkopf

said.

If the prospect of this flattening-and all of the pressures, dislocations, and

opportunities accompanying it-causes you unease about the future, you are neither

alone nor wrong. Whenever civilization has gone through one of these disruptive,

dislocating technological revolutions- like Gutenberg's introduction of the printing

press-the whole world has changed in profound ways. But there is something about the

flattening of the world that is going to be qualitatively different from other such

profound changes: the speed and breadth with which it is taking hold. The introduction

of printing happened over a period of decades and for a long time affected only a

relatively small part of the planet. Same with the Industrial Revolution. This

flattening process is happening at warp speed and directly or indirectly touching

a lot more people on the planet at once. The faster and broader this transition to

a new era, the more likely is the potential for disruption, as opposed to an orderly

transfer of power from the old winners to the new winners.

To put it another way, the experiences of the high-tech companies in the last few

decades who failed to navigate the rapid changes brought about in their marketplace

by these types of forces may be a warning to all the businesses, institutions, and

nation-states that are now facing these inevitable, even predictable, changes but

lack the leadership, flexibility, and imagination to adapt-not because they are not

smart or aware, but because the speed of change is simply overwhelming them.

And that is why the great challenge for our time will be to absorb these changes in

ways that do not overwhelm people but also do not leave them behind. None of this

will be easy. But this is our task. It

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is inevitable and unavoidable. It is the ambition of this book to offer a framework

for how to think about it and manage it to our maximum benefit.

I have shared with you in this chapter how I personally discovered that the world

is flat. The next chapter details how it got that way.

::::: TWO

The Ten Forces That Flattened the World

The Bible tells us that God created the world in six days and on the seventh day he

rested. Flattening the world took a little longer. The world has been flattened by

the convergence often major political events, innovations, and companies. None of

us has rested since, or maybe ever will again. This chapter is about the forces that

flattened the world and the multiple new forms and tools for collaboration that this

flattening has created.

Flattener #1

11/9/89 When the Walls Came Down and the Windows Went Up

The first time I saw the Berlin Wall, it already had a hole in it. It was December

1990, and I was traveling to Berlin with the reporters covering Secretary of State

James A. Baker III. The Berlin Wall had been breached a year earlier, on November

9, 1989. Yes, in a wonderful kabbalistic accident of dates, the Berlin Wall fell on

11/9. The wall, even in its punctured and broken state, was still an ugly scar across

Berlin. Secretary Baker was making his first visit to see this crumbled monument to

Soviet communism. I was standing next to him with a small group of reporters. "It

was a foggy, overcast day," Baker recalled in

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his memoir, The Politics of Diplomacy, "and in my raincoat, I felt like a character

in a John leCarre novel. But as I peered through a crack in the Wall [near the Reichstag]

and saw the high-resolution drabness that characterizes East Berlin, I realized that

the ordinary men and women of East Germany, peacefully and persistently, had taken

matters into their own hands. This was their revolution." After Baker finished looking

through the wall and moved along, we reporters took turns peering through the same

jagged concrete hole. I brought a couple of chunks of the wall home for my daughters.

I remember thinking how unnatural it looked-indeed, what a bizarre thing it was, this

cement wall snaking across a modern city for the sole purpose of preventing the people

on the other side from enjoying, even glimpsing, freedom.

The fall of the Berlin Wall on 11/9/89 unleashed forces that ultimately liberated

all the captive peoples of the Soviet Empire. But it actually did so much more. It

tipped the balance of power across the world toward those advocating democratic,

consensual, free-market-oriented governance, and away from those advocating

authoritarian rule with centrally planned economies. The Cold War had been a struggle

between two economic systems-capitalism and communism-and with the fall of the wall,

there was only one system left and everyone had to orient himself or herself to it

one way or another. Henceforth, more and more economies would be governed from the

ground up, by the interests, demands, and aspirations of the people, rather than from

the top down, by the interests of some narrow ruling clique. Within two years, there

was no Soviet Empire to hide behind anymore or to prop up autocratic regimes in Asia,

the Middle East, Africa, or Latin America. If you were not a democracy or a

democratizing society, if you continued to hold fast to highly regulated or centrally

planned economics, you were seen as being on the wrong side of history.

For some, particularly among the older generations, this was an unwelcome

transformation. Communism was a great system for making people equally poor. In fact,

there was no better system in the world for that than communism. Capitalism madepeople

unequally rich, and for some who were used to the plodding, limited, but secure

Socialist

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lifestyle-where a job, a house, an education, and a pension were all guaranteed, even

if they were meager-the fall of the Berlin Wall was deeply unsettling. But for many

others, it was a get-out-of-jail-free card. That is why the fall of the Berlin Wall

was felt in so many more places than just Berlin, and why its fall was such a

world-flattening event.

Indeed, to appreciate the far-reaching flattening effects of the fall of the Berlin

Wall, it's always best to talk to non-Germans or non-Russians. Tarun Das was heading

the Confederation of Indian Industry when the wall fell in Berlin, and he saw its

ripple effect felt all the way to India. "We had this huge mass of regulation and

controls and bureaucracy," he recalled. "Nehru had come to power [after the end of

British colonial rule] and had a huge country to manage, and no experience of running

a country. The U.S. was busy with Europe and Japan and the Marshall Plan. So Nehru

looked north, across the Himalayas, and sent his team of economists to Moscow. They

came back and said that this country [the Soviet Union] was amazing. They allocate

resources, they give licenses, there is a planning commission that decides everything,

and the country moves. So we took that model and forgot that we had a private sector . . .

That private sector got put under this wall of regulation. By 1991, the private sector

was there, but under wraps, and there was mistrust about business. They made profits!

The entire infrastructure from 1947 to 1991 was government-owned . . . [The burden

of state ownership] almost bankrupted the country. We were not able to pay our debts.

As a people, we did not have self-confidence. Sure, we might have won a couple of

wars with Pakistan, but that did not give the nation confidence."

In 1991, with India running out of hard currency, Manmohan Singh, the finance minister

at that time (and now the prime minister), decided that India had to open its economy.

"Our Berlin Wall fell," said Das, "and it was like unleashing a caged tiger. Trade

controls were abolished. We were always at 3 percent growth, the so-called Hindu rate

of growth-slow, cautious, and conservative. To make [better returns], you had to go

to America. Well, three years later [after the 1991 reforms] we were at 7 percent

rate of growth. To hell with poverty! Now to make it you could stay in India and become

one of Forbes's richest people in the world ... All the years of socialism and controls

had taken us downhill to

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the point where we had only $ 1 billion in foreign currency. Today we have $ 118

billion . . . We went from quiet self-confidence to outrageous ambition in a decade."

The fall of the Berlin Wall didn't just help flatten the alternatives to free-market

capitalism and unlock enormous pent-up energies for hundreds of millions of people

in places like India, Brazil, China, and the former Soviet Empire. It also allowed

us to think about the world differently-to see it as more of a seamless whole. Because

the Berlin Wall was not only blocking our way; it was blocking our sight-our ability

to think about the world as a single market, a single ecosystem, and a single community.

Before 1989, you could have an Eastern policy or a Western policy, but it was hard

to think about having a "global" policy. Amartya Sen, the Nobel Prize-winning Indian

economist now teaching at Harvard, once remarked to me that "the Berlin Wall was not

only a symbol of keeping people inside East Germany-it was a way of preventing a kind

of global view of our future. We could not think globally about the world when the

Berlin Wall was there. We could not think about the world as a whole." There is a

lovely story in Sanskrit, Sen added, about a frog that is born in a well and stays

in the well and lives its entire life in the well. "It has a worldview that consists

of the well," he said. "That was what the world was like for many people on the planet

before the fall of the wall. When it fell, it was like the frog in the well was suddenly

able to communicate with frogs in all the other wells... If I celebrate the fall of

the wall, it is because I am convinced of how much we can learn from each other. Most

knowledge is learning from the other across the border."

Yes, the world became a better place to live in after 11/9, because each outbreak

of freedom stimulated another outbreak, and that process in and of itself had a

flattening effect across societies, strengthening those below and weakening those

above. "Women's freedom," noted Sen, citing just one example, "which promotes women's

literacy, tends to reduce fertility and child mortality and increase the employment

opportunities for women, which then affects the political dialogue and gives women

the opportunity for a greater role in local self-government."

Finally, the fall of the wall did not just open the way for more people

to tap into one another's knowledge pools. It also paved the way for the adoption

of common standards-standards onhow economies should be run, onhow accounting should

be done, on how banking should be conducted, on how PCs should be made, and on how

economics papers should be written. I discuss this more later, but suffice it to say

here that common standards create a flatter, more level playing field. To put it

another way, the fall of the wall enhanced the free movement of best practices. When

an economic or technological standard emerged and proved itself on the world stage,

it was much more quickly adopted after the wall was out of the way. In Europe alone,

the fall of the wall opened the way for the formation of the European Union and its

expansion from fifteen to twenty-five countries. That, in combination with the advent

of the euro as a common currency, has created a single economic zone out of a region

once divided by an Iron Curtain.

While the positive effects of the wall coming down were immediately apparent, the

cause of the wall's fall was not so clear. There was no single cause. To some degree

the termites just ate away at the foundations of the Soviet Union, which were already

weakened by the system's own internal contradictions and inefficiencies; to some

degree the Reagan administration's military buildup in Europe forced the Kremlin to

bankrupt itself paying for warheads; and to some degree Mikhail Gorbachev's hapless

efforts to reform something that was unreformable brought communism to an end. But