Thomas Friedman Missed the Point about the World Being Flat

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Thomas Friedman Missed the Point about the World Being Flat

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I recently read Thomas Friedman's "The World Is Flat," one of those books I bought a long time ago, but never had time to read. I am an admirer of Friedman who is a writer at the “NY Times”; frequent guest speaker on shows I like, such as "Meet The Press"; and book author. It impresses me that he is considered an expert on both the Middle East political situation and on the competitive advantage of nations.

Many of you are probably familiar with the premise of the book where he argues that recent advances in technology (primarily networks, but also software) have allowed developing nations (eg: India) to gain competitive advantage on a myriad of newly commoditized business processes, such as software testing and tax preparation. He is basically telling the comparative advantage story as is taught in most macro-economics classes and is sometimes heard on the campaign trails of politicians, but is talking about it in the context of how the very recent technology shift has facilitated a rapid comparative advantage shift.

The book puts fear, uncertainty, and doubt in the hearts and minds of the American or European reader who naturally thinks about his profession and how it could be broken down into a commodizable business process and outsourced to technically astute low-cost laborers in another country.

The point I think Friedman missed in his book was how the pervasiveness of high speed networks and the improved search engines have opened up a massive opportunity for niche providers of innovative goods, services, and information in developed economies who can now be "found" by people shopping for those products across the internet. Yesterday’s Boston Globe had an article entitled "The Meganiche" which talks about how even razor thin slices of markets on the internet can represent over a million users, which is one tenth of one percent of all internet users.

The meganiche phenomenon is particularly interesting in my mind for small business owners. Most small businesses we talk with sell niche products, information, or services to people through word of mouth (rolodexes and one degree of separation removed from those rolodexes). The great thing about owning a small business today versus ten years ago is that you can leverage the power of the internet to enable shoppers in your meganiche to "find" you by doing smart things around content creation, custom landing pages, and search engine optimization.

Posted by Brian Halligan on Tue, Nov 14, 2006 @ 11:24 AM

COMMENTS

I haven't read the book, but I do read his columns, and I've read some of his other books. I am sure Friedman would take some umbrage at the fear uncertain and doubt comment. Yes, he does like to sound the alarm, but he definitely sees himself as a problem solver, not just a problem spotter.

Isn't there a chapter somewhere -- or sprinkled throughout -- in which he points to some of the intrinsic characteristics of American culture and business and economy? For example, the U.S. has an unparalleled venture capital engine. It also has a strong 'cult of the individual,' in which self-made men (and women) setting up business and hanging out a shingle is a time-honored vocation and avocation. Small businesses are often granted some sort of most-favored-nation status when it comes to regulatory and tax treatment (though I am sure almost all your small business readers will howl in disagreement). Fairly liberal bankruptcy laws take a lot of the risk out of setting up shop -- you won't necessarily lose the house and your life savings if the business goes south.

I think somewhere Friedman also points out that at the primary and secondary school level, the U.S. always seems to fall behind global competitors; but that at the graduate level, the U.S. is still the envy of much of the world. This is attributed to the value placed on creativity and ingenuity -- facilities less useful when studying for standardized tests, but irreplaceable when it comes to innovation.

I think Friedman would agree that creative and energetic entrepreneurs will continue to fare well in a flat world economy. In fact, I think his point is that the non-entrepreneurial class (and those not highly educated or with specialty skills) will find it increasingly difficult to find rewarding -- or any -- employment. At least, employment here in the U.S.

If I have helped you avoid an otherwise awkward encounter with Friedman in the future, you are welcome.
Andrew

posted on Tuesday, November 14, 2006 at 1:56 PM by Andrew Mahon

Thanks Andrew.

Yes, I think Friedman makes many of the classic arguements on behalf of why our economy will continue to evolve/innovate/thrive.

I had lunch with a friend of mine on thursday who is an EIR at MIT's Entreprenuership Center. He is doing some consulting in Middle Eastern countries on entrepreneurship. I commented how I thought that must be a tough sell becuase the "incentives" in most countries do not encourage people to start businesses. In the US, we have an aggressive/profitable vc industry, we have aggressive bankrupcy laws that protect a founder if his company goes bankrupt, we have universities that churn our cutting edge research, we have government institutions (i.e. Darpa, small business loans) that encourage innovation, etc.

I don't think Friedman is putting "FUD" (fear, uncertainty, & doubt) into the US economic system; rather, he is putting FUD into the minds of the individual white collar workers minds about his occupation.

Brian.