The World is Flat’ – Implications for Government”
Originally published Sept/Oct 2005
In the last column, we discussed examples from Tom Friedman’s extraordinary new book, The World is Flat. Friedman argues that, since the fall of the Berlin Wall in 1989, a series of political, economic, technological and organizational barriers have fallen around the world. Today, companies (like McDonald’s) that have been at odds with environmental nonprofits for decades work together to reduce the impact of their operations on the environment. Advanced technology and extraordinary levels of trust allow Wal–Mart to share unprecedented corporate information with its suppliers, allowing those suppliers to replenish their products in Wal–Mart stores without Wal–Mart managers even placing an order. United Parcel Service (UPS) has such close relationships with Toshiba that it not only ships Toshiba laptops to purchasers, it also repairs those laptops when they’re broken, reducing the amount of time customers go without their computers, and allowing Toshiba to focus on its core competencies. These and other changes are transforming the way our economy is working. Are these changes good for everyone? No, it turns out there are winners and losers. Wal–Mart’s customers are delighted at the low prices, but the communities and states in which Wal–Mart operates end up paying millions of dollars in taxes for the opportunity to shop at Wal–Mart. Why? Because Wal–Mart pays relatively low wages and few benefits; some of its full time employees live in public housing, rely on food stamps, and use the emergency room for health care, the most expensive kind of medical treatment. One study by Georgia officials showed that the state pays almost $10 million on health care for children of Wal–Mart employees.
Given that these enormous changes are mixed blessings, what challenges do they pose, and how can the US thrive in this environment? The hurdles include the following.
AND WHAT SHOULD GOVERNMENT DO?
Friedman argues that we must all learn to truly “think globally and act locally.” He writes that government at all levels must be actively involved in dealing with our flatter world. For instance, our public leaders should do the following.
The corporate and nonprofit sectors should also play an important role in dealing with our increasingly “flat world,” Friedman argues. He cites the trend toward a new collaborative social activism, uniting companies and watchdog nonprofits in a search for environmentally friendly production methods. An intriguing example is the partnership between McDonald’s and Conservation International, a huge environmental organization. Their partnership began in 2002. Leaders of both organizations looked at the activities of the contractors involved in supplying McDonald’s with the burgers, fries and other foods it uses, and came up with changes in how they grow potatoes, harvest fish, etc., that would reduce the environmental impact of their work with little or no impact on cost.
Conservation International has noted increased conservation of water and energy since these changes went into effect. That’s not surprising; when a huge multinational like McDonald’s agrees to require its suppliers to make certain changes, the ripples are seen in hundreds of companies around the world. A similar concept being tried in the high tech arena, where Dell, HP and IBM formed an alliance in 2004. They are pushing for a code of socially responsible manufacturing practices around the world, aimed at their huge networks of suppliers. Called the electronics industry code of conduct, it bans child labor and embezzlement, includes rules on using wastewater and hazardous materials, and promotes regulations on occupational safety.
This flat world described by Friedman is exciting and unsettling. Most Americans don’t understand yet the nature of the new economic and political environment, but they do know that things are changing. And they know that these changes are wrenching for those directly affected. Government and business leaders must help us deal with the transformations going on around us, and they can start that process by educating people on the nature of the challenge, and the ways in which we can meet it.
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Russ Linden is the principal of Russ Linden & Associates, a management consultancy based in Charlottesville, VA. He is a management educator and consultant, specializing in organizational peformance and change methods for those in the public and nonprofit sectors.
He has written four books; the most recent is Working Across Boundaries, which you may order by clicking here .