Our world is flat. According to New York Times columnist Thomas Friedman, it became that way around the year 2000. A convergence of technologies and political events in the late 1990s, aided in part by a massive investment in information technology, in effect leveled the playing field and enabled people all over the world to work together. The "flattening" created a global platform that let more people plug and play, collaborate and compete, share knowledge and share work, than ever before in history.
Any business in a flat world, large or small, will have to adjust to the new realities. In my daily interactions with business and IT leaders around the world, I often hear about the new competitive rules for the Flat Business era. Here are a few examples:
Knowing why is better than knowing how: 24/7 Customer, a customer life-cycle management company based in Los Gatos, Calif., has successfully implemented an integrated "multishore" global delivery model from call centers in India, the Philippines, and Guatemala that handles more than 8 million customer transactions per month.
Using their own algorithms and analytical models, 24/7 Customer continuously mines the information generated by its operations to discover better ways for its customers to interact with their customers, to provide optimal access to resources such as talent, language skills, and infrastructure, and to enable faster implementation of customer management processes.
Extreme collaboration drives extreme performance: Opting for a radical lightweight design for its next-generation 787 Dreamliner, Boeing (BA
) put 80% of its fabrication in the hands of outside suppliers, compared with 51% for existing planes. Coordinating the work on three continents of 43 suppliers, some of them fierce competitors, is an information-flow and communication challenge.
But the company's decision to push the boundaries of the possible has already made the 787 Dreamliner the fastest-selling new plane ever. It will be the first commercial jet to be built of lightweight carbon composites, will burn 20% less fuel than other jets its size, and will give passengers a quieter, more comfortable ride.
Change is the only constant: Determined not to become complacent because of its business success, FedEx (FDX
) decided to launch the "6x6 Transformation" initiative. The goal: transforming the use of information technology by FedEx's six operating companies by improving six different customer-focused strategies that drive its growth. But isn't FedEx already a successful, well-known model of IT deployment?
As early as 1979, FedEx's founder, Fred Smith, said, "The information about a package is as important as the delivery of the package itself." So why change? FedEx realized that its customer needs are changing and will continue to change exponentially, requiring the company to become a more nimble organization that can move IT resources around to fit business requirements and respond quickly to change and new challenges.
GLOBAL TALENT. The Flat Business is focused, fast, and flexible. Scale—getting larger and larger by dominating more and more components of an industry's value chain, is no longer the end-all and be-all for the corporation. Instead of trying to be all things to all people, companies find it more effective to be the best at certain things for specific, well-defined market segments representing everything from heavy manufacturing to management consulting.
The amalgamation of physical assets is replaced with the judicial corralling of global talent and expertise. Internal coordination and integration is augmented, just at the right time and for the right product, with a cooperative network of specialized partners.
The health-care industry provides an example of what's in store for many industries. The delivery of medical care involves a complex web of caregivers and health-care organizations as a patient is diagnosed, treated, and monitored over the course of his illness and recovery. Patients, medical institutions, physicians, insurers, employers, and government agencies are all important participants in delivering and continuously improving health-care safety, quality, and efficiency.
TOGETHER FOR HEALTH. The increasing use of information technology by this network of focused specialists provides many benefits, including improvements in physicians' productivity, the tracking of medial outcomes, and the possibilities for remote care. More and more we find an Electronic Health Record (EHR) for each patient at the heart of this network.
From any number of resources, the EHR brings a consolidated, centralized, and secure view of a patient's clinical, imaging, administrative, and insurance-billing information. It delivers a unified view of patient information from birth to present day, serving as a repository that can be quickly accessed by authorized physicians, clinical labs, pharmacies, hospital staff, and insurers.
In coming years, many industries will resemble the health-care industry. The familiar industry structure, dominated by a number of large firms that own subsidiaries selling related products and services, will turn into layers that consist of competing specialists. They will create networks of peers in other layers to form an ecosystem, sometimes built around a shared and secured knowledge repository. In the process, the traditional boundaries of many industries will be redefined.
THE LAYERED LOOK. Today, different industries are in various stages of transition. The information technology industry, for one, started this journey about 15 years ago.
In the 1990s, the traditional server-centric model that dominated the industry for four decades was replaced by horizontal layers. Each layer consists of a few leading companies focusing on, and accumulating expertise in, a specific information technology: semiconductors, servers, storage, networking, operating systems, applications, or services.
Companies such as Intel, Dell (DELL
), Cisco (CSCO
), Oracle (ORCL
), SAP (SAP
), Microsoft (MSFT
), and EMC (EMC
) rose to a leading position in their respective industry subsegments, contributing to a more flexible and open IT-buying process and the rapid development of the flat world's global infrastructure.
STATIC TO DYNAMIC. More recently, businesses have sought to tame the information explosion and to make IT more responsive to the changing needs of the business. The answer for many was the strategy of information life-cycle management: aligning the IT infrastructure with the business, based on the changing value of information over time. IT infrastructures are becoming more aligned with business than in previous generations, and a global business won't be able to compete as a Flat Business in a flat world without a next-generation IT infrastructure.
The transition to the Flat Business model will be enabled by a transition away from networks built around specific applications, such as databases or e-mail servers, to a service-oriented IT infrastructure. It is a transition from static to dynamic, from information locked in application silos to information shared seamlessly across the organization and beyond, and from monitoring the health of individual infrastructure elements to understanding the relationships between them.
To support the Flat Business, the next-generation IT infrastructure will easily extend beyond the boundaries of the enterprise to include all partners and customers. For many companies it will reach all the way to consumers' homes and a multitude of mobile access points.
HOLDERS OF KNOWLEDGE. It will support completely new sources of information emanating from device-to-device communications (e.g., RFID tags) and digitization of previously analog content. The "Information Technology" industry will be redefined to include consumer electronics, content-producing industries, and communications, all largely based on digital input and output.
IT managers will become the knowledge experts of the business, responsible for linking information assets with all employees and stakeholders, and for preserving and enhancing the business's unique expertise.