Flattener #5: Outsourcing Y2K

Main points:
The U.S. needed India’s large brain pool to fix the Y2K bug — a tedious process that required skilled technology workers. Since 1951, shortly after India became independent, the country’s highly competitive Institutes of Technology have been successful in educating young workers in the sciences, engineering and medicine.

India profited from the dot-com bust by being "second buyers" of fiber-optic cable. The bust made the technology practically free, allowing the U.S. to connect to India. America became second buyers of Indian brain power when India could not provide jobs for its highly skilled graduates.

After the dot-com bust, companies were under tremendous pressures to cut costs by finding the most efficient, high-quality, low-price way to innovate. GE chairman Jack Welch realized the potential for outsourcing IT work to India and other companies were close behind.
Friedman makes the point that India’s fortune did not come overnight. The country has been investing in its population’s education for more than half a century. "Fortune favors the prepared mind." — Louis Pasteur

Flattener #6: Offshoring: Running with Gazelles, Eating with Lions

Main points:

Offshoring vs. outsourcing
Outsourcing: Taking some specific, but limited, function that your company was doing in-house and having another company perform that exact same function for you and then reintegrating their work back into your overall operation.

Offshoring: Company takes one of its factories and moves it to another country to produce the very same product in the very same way, only with cheaper labor, lower taxes, subsidized energy, and lower health-care costs.

China’s entry into the World Trade Organization on Dec. 11, 2001, meant that the world has had to run faster and faster to keep up (the gazelle must run faster than the fastest lion to keep from getting eaten; the lion must run as fast as the slowest gazelle to eat). Membership has also forced China’s bureaucracy to modernize. China will continue to become flatter — political or economic upheaval could disrupt this process.

Competitive flattening: Companies scramble to see who can give companies the best tax breaks, etc. to encourage offshoring in their country (Malaysia, Thailand, Ireland, Mexico, Brazil, Vietnam).

American companies will need new business models to compete.

Between 1995 and 2002, productivity increased 17 percent annually in China. China is also losing manufacturing jobs as productivity accelerates, and gaining them in services, much like what has been happening in the U.S.

The U.S. should not use protectionist policies, which will only cause economic and geopolitical chaos in this interlinked global economy. Rather, Friedman says, America must adjust, but it can be as prosperous as ever.

The World is Flat: A Brief History of the Twenty-first Century
Thomas L. Friedman

I apparently have been sleeping for the last decade or so. Or maybe, as Friedman suggests, the triple convergence that most CEOs now understand, is being kept a big secret. The walls, ceilings and floors are gone. But we still haven’t even begun to see what this convergence is capable of in this "flattened" world. Friedman says that up until now we have been in the process of creating tools to collaborate and connect. Now the real IT revolution can begin. Companies will need to find ways to work together and combine technologies to compete and innovate in a global business economy.

While I knew most help numbers now go to a call center in India, I had not realized the extent of the technology infrastructure in the country and the extent to which they will still be able to expand.

The extent of India’s brain power in the U.S. can already be evidenced by the large numbers of Indians working in America’s technology hubs, such as Microsoft and Boeing. The U.S. education system does not produce enough technology workers to keep up with demand. This does put the U.S. at a disadvantage. While it holds the upper hand in creative innovations, there is not much to stop India, and other countries like China, to begin advancing their own technologies. The United States will need to stay on top of innovation to continue to stay competitive.

Usually, when Americans talk about globalization, they speak of it as taking jobs away from Americans. But Friedman takes a wider view of globalization. The flattening of the world, he says, will allow individuals to take control. They will have the power to improve their circumstances no matter where at in the world they are. You don't have to be born in a certain country or to a family with a certain amount of status to succeed. The flattening of the world has empowered almost anyone in the world to communicate and do business with someone on the other side of the world. The collaboration that flattening allows brings the world closer together. Americans are interacting with people around the world all the time, and sometimes they don't even know it.

The United States is not likely to keep its technology advantages. The U.S. will have to reinvent itself in an increasingly flat world to stay competitive with the rest of the world. Companies will likely become more interdependent. They will be forced to collaborate with people in other countries to stay competitive through efficiency and cost-cutting.

Technologies of the Third Mediamorphosis
Roger Fidler
Pine Forge Press 1997

When I visited my grandparents as a child, I would stand outside my grandpa’s office door and listen as he said into his radio, "N7DKY, this is N7DKY, do you read me?" My grandpa was a "ham," an amateur radio enthusiast. I remember staring up in awe at the tower in the backyard, thinking how amazing it was that my grandpa could talk to people so far away because of that tower.

Even before the Internet, people had a curiosity about people in other states and in other countries. They wanted to be able to have conversations with people in other places. Radio technology provided a medium of instant communication that cut across time and space. It’s not too surprising, then, that ham radio has persisted as a hobby for nearly a century. Only when the Internet came along was communication so efficient and economical. The Internet also allowed users to meet new people. Phones are primarily used for contacting acquaintances so ham radio remained viable for social reasons.

Fidler also makes a good point that people often confuse the surprise of new technology with its speed. I was surprised to learn that the first color television was available in 1947, but that the technology was not widely used until 1965 because of the delay by RCA. And the Internet was being developed in 1969, but was not widely used until about 1992. It gives me a little more hope that maybe I can keep up with existing trends.

Vannevar Bush
"As We May Think"
The Atlantic Monthly July 1945

It was fun to read Vannevar Bush’s predictions for future technologies. Imagine, a color photograph that can be instantly developed! I think he was certainly insightful, though, and understood the limits of his own foresight. Bush focuses on both the ways to record knowledge, store these records and consult these records. He recognizes that the "inheritance of acquired knowledge" is useless without a way to access it.

While computers have changed the way we record information, they have changed even more the way we store it. No longer are thousands of files stored in drawers lining every wall. Instead, files are stored electronically - and then usually backed up in at least one way (computers are still far from being completely dependable after all). Bush was right when he said machines would have enormous appetites for information. Personal computers have continued to provide users with more and more memory for their files and information.

Our society has come up with some amazing ways to sort through the multitude of information, not the least of which is the search engine. When Bush describes searching through association I thought of today’s search engines. You don’t have to search alphabetically or numerically when you do a Google search. Rather, the search engine finds sites that are associated with your search word or phrase. We can, as he suggests, forget information until at such time as the information is needed. I have occasionally felt overwhelmed by all the information at my fingertips. When doing a search it is easy to click one link after another, following a trail as Bush would probably call it, and end up in a completely different place than where you started.

Computers and the Internet allow people to search for the information they want in a fraction of the time it would take without computers. I think online blogs are one effect of this. People are able to retrieve more information and they turn to blogs as a way to get more information on topics that interest them. People also expect to be able to interact with the information - to respond to it in some way.

In the future, I expect information will be very personalized. People will be able to select categories of news they would like to receive. For example: breaking news, world news (select country), national news, state news, local news, sports; and there would be sub-categories: education, technology, health, Mariners. News organizations will no longer try to figure out what the masses want to read. Rather, just as TiVo now "learns" what its users like to watch, companies will "learn" what individual consumers want to know and they will provide them with that specific information. Users’ sites will be customized. I don’t think it will take until 2050 to get to this point though. We’re already headed in that direction and I think most of the technology is already available.

Determining Uses and Gratifications for the Internet
Thomas F. Stafford, Marla Royne Stafford, Lawrence L. Schkade.

The uses and gratifications paradigm tries to determine motivations for using media by focusing on what people do with mass media. I can apply this focus of understanding Internet user motivations better to my project by looking to see what ways online news sites have for readers to respond to stories and look at the ways they are used. The article lists three types of gratifications: process, content and social. It is likely that the news sites which use all three types of gratifications will be the most successful in facilitating community dialogue.

The process of responding to a story may in itself be gratifying, while the content of the story is what most newspapers are focused on. The dialogue may also be a way of socializing, especially if readers take an interest in a reporter's blog, for instance, and begin to regularly contribute feedback.

The Capture of Sound
Brian Winston

Winston's discussion on the history leading up to the telephone makes a good argument for invention being more than just a useful idea that is not subject to its surroundings. The scientific competence clearly had to be present for Bell and Gray to do their experiments.

What is interesting, however, is that both Bell and Gray had the idea for a device to transmit speech, but that neither seemed in a hurry to develop the idea into a prototype. Winston says the company office provided the supervening necessity to start building inventions that could be leased to companies or individuals. Before the office was commonplace, the uses for a telephone were not obvious. And once the need did become obvious, the diffusion was suppressed by a patent war. It's also strange that the telephone has almost always been a way to communicate between two points. One-to-one communication is also fairly standard on the Internet. I wonder if this is because people prefer to talk one-on-one or if this is another way to suppress the technology. I think the Internet will probably increase multiparty chats eventually.

What the history of the telephone also illustrated was that the best idea or prototype will not always be the adopted technology. Winston refers to the inertia that helps the diffusion of a certain technology. It's very difficult for new technologies to compete once an invention has made inroads into society. If people have become used to a certain technology, they need a very compelling reason to change technologies. For example, the videophone never became mainstream because people were used to talking on regular telephones. However, cameras in Internet communications are much more common. I think this is because the Internet was seen as a place to experiment with new technologies, whereas the telephone was an established form of communication that people were reluctant to change. In this way inertia became a suppression of radical potential.

Evolution and Trends in Digital Media

Media Technology and Society
A History: From the Telegraph to the Internet
Brian Winston

Introduction: A storm from paradise: Technological innovation, diffusion and suppression

Not only must prototypes of new technology be effective or functional to be accepted, but they must also fulfill a need in society. Brian Winston calls this need the supervening social necessity.
This necessity will propel prototypes of accepted inventions.

A recent example of a technology that filled this social necessity is the flash or USB drive. Numerous inventions have tried to replace the floppy disk as an electronic storage space. Zip disks held much more, but were expensive and somewhat balky. CDs can hold a large amount of data and are inexpensive, but not everyone has the technology to burn CDs. Another drawback of CDs is that most cannot be reused. The durable flash drive uses a USB port, which all computers now come with, and can hold 1, 2 or even more gigs of data. Flash drives seem to be catching on quickly for their economical and technological value.

Social forces have propelled most newspapers to adopt new technology and expand their online offerings. They have been more reactive than other types of media that do not rely as much on the printed word. The role of print newspapers is a good example, I think, of what Winston calls the law of suppression of radical potential. Many newspapers tried to reject the Web as a publishing medium at first, likely seeing the Web as something that would not flourish or without potential for newspapers. Perhaps they thought circulation and ad revenues would drop with the addition of online (which they have).

The law of suppression takes into account that many of these new technologies can be expensive. If technology changes too fast, companies won’t have the means financially to keep up. Many businesses take a decade or more before they will consider updating outdated technology. In my experience, changing technologies is a time-consuming, stressful and expensive process in the workplace — no wonder companies put the brakes on technology.

Newspapers have now realized that there is no stopping the increasing popularity and necessity of the Internet for society and have begun to embrace the Internet as a way to reach a generation that does not necessarily read a printed newspaper daily or go through the Sunday ads and classified. They are exploring the potential for replacing decreasing print revenue with online revenue as online circulation grows by leaps and bounds, though no one has yet found a way to replace all the revenue lost by the decrease in print circulation.

In Social Aspects of New Media Technologies (Williams, Strover, Grant) this process of diffusion is explained in four steps: Knowledge, Persuasion, Decision and Confirmation. Many newspapers made an initial decision to reject the innovation of the Internet. In later re-evaluation, however, these same newspapers made a decision to adopt the innovation.

I thought Williams, Strover and Grant were extremely insightful when they talked about cable TV and personal computers creating nongeographically based communities as part of the uses and gratification theory. MySpace.com is the first example of a nongeographical community that pops into my head. Cyber communities are increasingly taking the place of geographic communities. People chat with users around the country and around the world. Online dating has become increasingly popular and it is not unusual for online acquaintances to decide to meet in person. In television, viewers form a relationship of sorts to serial programs, and the diffusion of reality TV depends on viewers becoming emotionally involved with the show. When viewers invest that much emotion into a show, they seem to form an attachment with other viewers of the same show.

Also interesting was the precedent that the United States Congress set by allowing the privatization of telegraphy. The First Amendment of the U.S. Constitution assures the freedom of speech and the freedom of the press. Though freedom of the press is not usually what companies are thinking about when they are trying to make a profit, newspapers were regular users of telegraphy and the technical innovations that came later.

How the Internet killed the phone business
The Economist

This article predicts that "voice over Internet protocol" will one day make traditional phone companies obsolete. In the decade since this article was published, VOIP has advanced, however, not nearly as much as the article assumes. I don’t think the supervening social necessity for this technology exists yet. I think a more disruptive technology for traditional phone companies is the rapid escalation of cell phones.

For example, the article makes the assumption that VOIP is cheaper than other options available. However, when cell phone users sign contracts, they are usually paying for the convenience to call anywhere they want (usually within the United States) without paying extra fees. With the advances and diffusion of cell phones, phone lines and VOIP become unnecessary.
While VOIP is probably an attractive option for larger families that don’t want to buy a cell phone for everyone in the household, I think cell phones hold the upper hand in potential. Advances will make cell phones easier to use for connecting to the Internet (VOIP’s advantage), and cell phones have the big advantage of mobility.

The article does make a correct assumption when it speaks of a "bundle of services as an incentive to buy other things such as broadband access or pay-TV services." Internet providers, cable companies and cell phone providers have all started to bundle products together in an effort to entice buyers.