How do we keep

In Lexus and the Olive Tree Thomas Friedman argued that economic interdependence equals prosperity and peace. In his new book he says the argument's over; globalization is here and it's good. But succeeding takes work, forethought, and resistance to "idio


So what really needs to change?

Oh, a lot of things need to change. First of all, we need leaders who will dare to describe the world to us as it really is and make us smart, not make us stupid. Leaders who don't make us believe that any CIO or CEO who does this is a Benedict Arnold. Jobs are produced by thriving companies that are growing, and they may be produced all over the world, that's a good thing, but plenty will be produced here.

And look at companies that outsource and thrive. Let's look at their makeup. Who's here, which jobs stay here? The CEO, the CIO, the CTO, all the top sales people, usually all the top technology people, and all the people who've got to deal with the product in the market, because the first adopters are here. So the best jobs in the company are the ones that stay here, and the other jobs get sourced out around the world.

That means two things. One is that where the innovation happens matters. It matters that Google is in Mountain View, Calif. Look at all the jobs they've spun off, and then all the jobs for jobs, like the shopping centers and the gas stations and the restaurants and the housing market. So thank God Google's in Mountain View and not in Mumbai.

Won't other countries move up the food chain? Don't they want to be where the U.S. is today?

That's right. They want to race us to the top, not the bottom.

So will the U.S. continue to have an advantage?

Potentially, yes. I still believe that we are so far ahead in so many areas. Let's just take capital markets. If we go through our Social Security reform, as the President has proposed, and you can invest your Social Security, how many people would like to be invested in the Shanghai stock market? I sure wouldn't want my mother to be investing her savings in the Shanghai stock market.

People will say, "Oh, come on, Friedman, I mean, we have Enron." But our capital markets are what they are not because we don't have Enrons and others do. What distinguishes our capital markets is that we have Elliot Spitzer and others don't. It's not that we don't have cowboy capitalists here who are criminals. But what distinguishes our markets is not Enron, it's Sarbanes-Oxley. It's that we actually address these kinds of problems. That's still a big deal for a lot of the rest of the world.

Some people view Spitzer and Sarbanes-Oxley as hindrances to America's global competitiveness.

I think that's about as dumb as the day is long. Anyone who believes that is an idiot. The rule of law is one of our competitive advantages, and that's not to say that at times regulation can't go too far. But I'd rather err that way, and reel it back, than not have it at all.

Ask people in Indonesia what they'd give for one day of Elliot Spitzer. Ask people in the Russian stock market what they'd give for one day of Janet Reno or the Securities and Exchange Commission.

What is guiding globalization? Is it the corporations?

The dynamic element of globalization is neither countries nor companies, but the individual. The unique thing about this era is going to be the ability of the individual to globalize.

Now, I believe corporations have a huge responsibility. For example, when Hewlett-Packard is in negotiations with the government of Canton, China, about opening a factory, its leverage is enormous because the stakes are so high for the local government. So H-P could come in and say, "You know what, we'll open this factory here, but you know those laws you have about dumping water in the river, we can't live up to those. So you're going to have to turn a blind eye to that. And we believe people should work 12 hours a day, not eight hours a day."

So the fact that companies resist doing that for the most part is hugely important, because they can have just the opposite effect. They can be the ones who tell the government of Canton, "You know, knowledge workers like to live in places where the air is clean and where there are parks, and we're a knowledge company. So we'd love to come to Canton, but we're going to need a park here, and to attract Chinese knowledge workers, you have to clean up your water and clean up your air."

Companies should think about using supply chains to transmit values, not just value. A lot of people just want to pass a rule. "What we need is global government. If only there were a global government that would tell these companies you ought to do this." Well, guess what? If you don't have people at the local level to implement that global rule, it's not going to get implemented, and you can pass whatever rule you want.

I don't want to rely on any company to implement these values, but they can be enormously supportive in reinforcing a rule that's been made. And that's why I think they have to understand that, and I would argue the best companies do understand it. H-P's got a senior vice president for global governance now.

What role should government play in globalization?

Oh, yeah, a huge role for government. And I think the most important role for government is to strengthen its people to be untouchables. Untouchables are people whose jobs cannot be outsourced. So government needs to build the infrastructure, both human and physical, for people to take advantage of the flat world, and that means everything from the IT infrastructure to college education, which I think should be compulsory in the sense that government will make it possible for every American to have college education. Our motto should not be a man on the moon, but a man and woman on every college campus.

Are you optimistic that this can happen?

Or am I just naïve? It's my nature. Yeah, well, let's take corporate values, for example. You're going to get everything and its opposite. You're going to see companies doing outsourcing so the CEO can triple his wages and make off like a bandit. But I think that companies that want to survive are companies that will want to do well for their employees and their customers.

Look at Wal-Mart. One of the biggest companies in the world, grew by leaps and bounds, and just last night I saw this Wal-Mart ad about a guy going to the emergency ward, and only because of his Wal-Mart health plan could he do this. Forget the ad. Wal-Mart got the message that they were perceived by their customers as not being the best global citizen they could be, and in a flat world that really matters. They've been in denial for a long time. Then they admit the problem. The good news is [Wal-Mart CEO] H. Lee Scott, in an interview for this book says, "You know, I've got to come clean on this, we have a problem. We were not as good as we should have been." He didn't come out and say, "You don't understand, Tom, locking people in Wal-Mart overnight is a good thing."

What about the small company in the U.S. that is used to a different way of doing business. Do they have to think about being a global company now?

Yeah, otherwise they're going to get hungry. And what's interesting about this era is that we're seeing the birth of what I call the micro multinational. In the old days, somebody starting a company would say, "We dream one day it'll be a multinational." Now, they're a multinational from day one.

And that means a lot of things for CIOs, because now one of the skills of their job is managing a global knowledge supply chain across 24 time zones and different nationalities. Suddenly there's a whole new job in companies—manager of the China supply chain. This is going to be a business school course: managing global supply chains. Another new business school course is going to be how to use Google, how to get the most out of search. And there's going to be a CIO Insight honorary professor of Googling at the Wharton School, and you may hold the first chair.

How does a CIO manage through a time of change like this?

The smartest thing that I've seen companies do is trying to make their employees "versatilists," which is another word for untouchable. Versatilists are people who don't just know XML, they also know how to do distributed computing.

You take every employee, and you make this bargain with them: We cannot guarantee you a lifetime job, nobody can. But we can guarantee you that while you're here, we'll give you every opportunity to really become a versatilist. So if you stay here, you're more valuable to us because we can move you from here to here to here to here. And if, God forbid, we have to lay you off because we've found other ways to do this job cheaper or more efficiently, then you'll be that much more marketable somewhere else.

And the thing about learning today—about making people versatilists—is that with online systems it's so cheap and so easy for people to really upgrade their skills. But you have to have your thinking cap on as a CIO and be constantly incentivizing people to take courses online, so you're producing a smarter and smarter workforce all the time that will be more versatile, more adaptable.

That sounds great, but it also sounds expensive. Is it realistic to think that many companies will invest the time and money in their employees?

What's expensive is not doing it, and having one employee that can only do this and another that only does that. I'd much rather be educating a versatilist. I don't think expense is the problem. I think imagination is the problem. But I think that's the bargain that's going to replace lifetime employment.

So what do you tell a career-minded ten-year-old today?

What I tell my own girls. When I was growing up, my parents used to say to me, "Tom, finish your dinner. People in China and India are starving." Today I tell my girls, "Finish your homework. People in China and India are starving for your jobs."

And that's the only thing to tell people. That's the fact. I always say, "When the world goes flat, reach for a shovel, not a wall." Dig inside yourself. Dig inside your company. Find the secret of the sauce inside. If you're reaching for a wall, it's a losing strategy because the technology is going to blow that wall down.

For the entire interview, click here.

This article was originally published on 03-25-2005
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