The World Is Flat Notes

The following is a brief summary for the first part of The World is Flat by John Friedman. I strongly recommend that people purchase either the traditional or audio version of the book.

For Jesse and I the book is almost personal because it touches everything that we breath every day.  Essentially there are many drivers pushing the flattening of the world. One of those things is the decomposing of the corporate value chain down into more and more chunks that can be connected and out sourced. That’s what we do for a living we take traditional business models in music and video and decompose and digitize them to form a new type of business model.

Here are some fascinating notes:

• Goods are traded but services are consumed in the same place. But some pieces are being done by call centers far away. e.g. getting a second opinion on catscans half a world away.
• We should move work to where it can be done best efficiently and effectively. Need retraining and a social safety-net.
• India business schools are churning out 85,000 MBA’s per year.
• Tokyo is outsourcing low-end jobs to China, there are a large number of Japanese speaking people in north-eastern China. While China may not forgive Japan for what it did in the last century they are so focused on leading the world in the next century that they are willing to learn Japanese to outsource Japanese jobs.
• Key is the abundance of broadband. Can get call center operators in China for $90 per month. A software developer in Japan can get 3 developers in China.
• McDonalds is outsourcing order taking in the drive through.
• Who regulates, who taxes, who benefits from the taxes. Changes the role’s of people. The way religion responds, the art is formed. Sweeping multifaceted changes.
• The speed and breadth of change from industrial revolution is happening incredibly fast. The great challenge of our time is absorbing change.

The 10 forces that flattened the world that we deal with

Flatner 1 -- 11/9/89 – When the walls came down and the windows went up

While we may not travel to Eastern Europe our CDN has its development team in the Ukrain.

Flatner 2 -- 8/9/95 – When Netscape went public

The next phase is described as the results of the over investment in Fiber. Our business of delivering movies to the homes sits on that very fiber he talks about.

Digitize Everything!

In my previous job helping to build the digital supply chain for audio and now in our job of building the supply chain for video – I would argue we are amongst a small few that have done more to digitize content (audio and video) than any other group of people in the world. At our peak in audio we digitizing 16,000 music tracks per hr. In video, well that’s a classified number but we are definitely the best.

Flatner 3 -- Workflow Software:

Our job is to build the digital supply chain. We connect everything together, studio’s, record labels, billing systems, rights management systems, we extend XML and SOAP to the extreme limits of what it is capable of.

“This is the genesis moment of the flattening of the world – people and applications communicating.”  ß that is us.

Flatner  4 -- Open sourcing. Self organization collaborative communities

One of the points of open sourcing and collaborative communities is how to deal with intellectual property. Its interesting in my recent trip to Japan the big topic that kept coming up was how the Japanese broadcasters were going to deal with the self publishing of their Video on YouTube..

Flatner number 5: outsourcing y2k

We are currently evaluating how we can outsource certain aspects of content QA, data QA, second level customer service and other aspects of our operations to continually drive towards cost cutting and excellence.

Flatner Number 6: offshoring Running with gazzels eating with lions

“To get rich is glorious. In a similar fashion to outsourcing of technology China with its entrance into the WTO in 2001 has meant that manufacturing has been moved offshore to China.”

It is interesting that all our key partners from CE devices to set-top-box manufacturers are all making their boxes in China now. Essentially most of the worlds audio playback devices come from a few key factories in China.

Flatner Number7: Supply Chain – eating sushi in Arkansas

Thomas makes the comment that “I had never seen a supply chain in action until I went to Wal Mart.”

Right from the beginning I have always made the comment that phase of our building a Digital Supply Chain was “getting the right product to the right place at the right time” in our case getting a digital file with all its associated meta data, and images packaged and ready to sell on street date. The recent release of EST on our site has been a key driver behind this.

However the next phase of the Digital Supply Chain is matching this against the right marketing message. We don’t have the same issues of needing a knew widget manufactured each time one sells that is the wonder of a digital file but all the initial load and all the issues around matching against inventory yield management (digital shelf space and merchandizing / category management) still apply. The problem we have in our digital supply chain is our relationship (for better and worse) extends well beyond the sale and into the actual content management and consumption of that product by the consumer.

We have similar issues around the need for the supply chain to collaborate horizontally. I could argue that while Wal Mart may be the single biggest contributor towards the flattening of the traditional supply chain globalization, audience fragmentation and the resulting Digital Supply Chain will do more to flatten the distribution of information, entertainment and digital intellectual property than Wal Mart will ever achieve.

If Walmarts basic plan was:

1. Working with manufactures to cut costs
2. Working on supply chain from manufactuers to walmart
3. Improve information system to know what people where buying to manufctuers

And

“Shevles stocked with the right items at the right time.”

Ours will be:

1. Working with content companies to cut costs
2. Working on the supply chain from content creators all the way to consumers
3. Improve information systems to let content creators know not only what people are buying but exactly what they are consuming and what they did and didn’t like about that

We are only in the infancy of this business, but what we are doing to help educate the industry on Digital UPC’s and the management of Intellectual property world-wide is something we believe will be our part in building the Digital Supply Chain and ultimately will be our part in helping to flatten the world.