Coefficient of Flatness
Thomas Friedman's latest book on globalization, "The World Is Flat" explains ten forces that have "flattened" the world (created a more- equal playing field for the entire world.) Buy the book.
Force #7 is "Supply-chaining," creating value by shortening the time from manufacturing to delivery to customer. The epitome of value creation through supply-chaining is Wal-Mart, a company which is easy to love and equally easy to find fault with. For me, the interesting part of this story isn't the actual supply-chaining but rather, what Friedman calls the "coefficient of flatness," defined by him as "The fewer natural resources your country or company has, the more you will dig inside yourself for innovations in order to survive."
Think about it, a small company opens low-price department stores in rural Arkansas, trying to dodge the mega-giants such as Sears and JCPenney. Its headquarters are in Bentonville, Arkansas, and its options are limited. As Jay Allen, Wal-Mart's senior vice president of corporate affairs states, "The reason we built all our own logistics and systems is because we are in the middle of nowhere." They turned their limitations into their strength.
MORAL: Resource-rich organizations (and people) have the wherewithal to do things the old way; resource-poor organizations (and people) have to find new ways to compete. In that digging deeper often lies the gem that will turn into true innovation.
Ten Forces below
Ten Forces that have flattened the world (summarized by Dan Pink for Wired magazine):
1. Fall of the Berlin Wall
The events of November 9, 1989, tilted the worldwide balance of power toward democracies and free markets.
2. Netscape IPO
The August 9, 1995, offering sparked massive investment in fiber-optic cables.
3. Work flow software
The rise of apps from PayPal to VPNs enabled faster, closer coordination among far-flung employees.
4. Open-sourcing
Self-organizing communities, à la Linux, launched a collaborative revolution.
5. Outsourcing
Migrating business functions to India saved money and a third world economy.
6. Offshoring
Contract manufacturing elevated China to economic prominence.
7. Supply-chaining
Robust networks of suppliers, retailers, and customers increased business efficiency. See Wal-Mart.
8. Insourcing
Logistics giants took control of customer supply chains, helping mom-and-pop shops go global. See UPS and FedEx.
9. In-forming
Power searching allowed everyone to use the Internet as a "personal supply chain of knowledge." See Google.
10. Wireless
Like "steroids," wireless technologies pumped up collaboration, making it mobile and personal.
More about "The World Is Flat":
http://www.thomaslfriedman.com/worldisflat.htm
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