It's a Flat World After All - Literature review Example

A critique of “Its a Flat World, After All” using Information Systems principles In “Its a Flat World, After All” the raises two key arguments. First of all, technological innovations and modern geo-economics have fundamentally reshaped how we do or ought to do with regards to carrying out day-to-day living. Competition that previously used to be conducted between nations has been lowered by this disruptive change in technology to competition between corporations, before the year 2000, to its most basic level today, which is competition amongst individuals. The second argument is that America is in a state of crisis. America’s crisis is neither the typical crisis archetype of poverty, disease or hunger nor is it a-here-and-now crisis. This is a crisis that is more of a premonition. According to Friedman (2005) America’s crisis is that it may lose its competitiveness, economic might and eventually superpower status in the near future to the BRIC (Brazil, Russia, India and China) economies. This argument is a call to action, for the U.S. to wake up, get focused and implement strategies geared towards building strong individuals given that the playing field has been levelled. Following from the article, “Its a Flat World, After All”, it is evident that the major driver behind what the author refers to as flattening of the world is the coming together of globalisation and information technology (IT). And if we were to view America as a business entity – not just as a country – then we would be in a better position to use principles that apply to business entities to critique Friedman’s arguments. In this discussion therefore, we shall assume that America is a mega-corporation that seeks to survive, grow and develop, and sustain its profitability in today’s ultra-competitive global market. We shall use two principles that have thus far proven to be successful for other corporations in our evaluation. These principles are business process reengineering (BPR) and enterprise resource planning (ERP). Business process reengineering (BPR) and Freedman Business process reengineering (BPR) is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance such as costs, quality and speed (Hammer & Champy, 2003). In this definition we identify four keywords: fundamental, radical, dramatic and process. A quick overview over the definitions of each of these key words enlighten the discussion on how BPR has the potential help America take advantage of the technology and geo-economic changes to tackle its looming crisis. Fundamental refers to the re-evaluation of primary goals and ignoring rules and assumptions formulated in the past (van der Aalst & van Hee, 1995). Friedman calls on America to forget that it is the world’s biggest economy because at the rate at which other economies are growing it may not remain there for long. Friedman is dismayed by the fact that Americans still believe in the past in that they continue to think India and China are racing the U.S. to the bottom whereas the reality is that they are racing America to the top (Friedman, 2005). The question here would be what are the new primary goals for America? What are the new rules that the U.S. needs to institute in order to avert the looming crisis? Friedman (2005) highlights three gaps that need the fundamental rethinking that BPR proposes: the ambition gap, the numbers gap and the education gap. The principles of re-engineering advocate for outcome orientation which in this case would imply removing the sense of entitlement among its youth, encouraging more youth to undertake science and engineering courses and overhauling what Bill Gates refers to as an “obsolete” education system. This brings us to the second keyword in the definition of BPR, the word radical. According to van der Aalst and van Hee (1995) radical in the context of BPR means that you should not try to improve the existing situation, rather seek to invent completely new ways of accomplishing work. BRIC economies have bettered America in terms of provisioning low-cost and efficient labour. The point here is that the U.S. need not seek to become better than the BRIC in terms of these two elements rather it should devise new activities to give it sustainable competitive advantages. America can provide leadership in areas such as technology design, business intelligence, knowledge management, management style and techniques, and marketing and branding. These elements are now more important to the success of global businesses than ever before. For example, Berke (2008) stated that foreign companies are attracted to the U.S. by attributes of the American economy such as U.S. management style and technique, U.S. branding, or U.S. design knowledge. The third keyword in the definition of BPR is the word dramatic. In BPR, the term dramatic refers to aiming at achieving order-of-magnitude improvements and not at obtaining marginal improvements. The American crisis will not be solved by conducting mere, marginal improvements from the current state. What America needs to keep in mind when seeking to achieve dramatic improvements is to identify and nature those core competencies that Prahalad and Hamel (1990) referred to as being: (1) capable of providing potential access to a wide variety of markets; (2) capable of making significant contributions to the perceived customer benefits of the end products; and (3) difficult for competitors to imitate. All said these order-of-magnitude improvements will not come on a silver platter. Much like BPR requires the full support of top management to succeed, Americas political and business elite must be willing to take part in this fundamental rethinking and radical redesign of business processes to achieve dramatic improvements. The final keyword in the definition of BPR is the word process. Van der Aalst and van Hee (1995) this keyword is used to remind us that the part to focus on is the business processes and not the organisational structures. When referring to process in BPR, four principles of re-engineering come to mind: integration, local responsibility, accelerating the process, and empowering and control. With reference to these principles, for the U.S. to succeed in re-engineering itself to prevent the looming crisis it should do the following. First of all, the U.S. government needs to involve all sectors of its economy – academia, industry, non-profits – as stakeholders to develop workable solutions. The more inclusive the process the greater will be the sense of ownership by the American people. Secondly, the U.S. government needs to bring down the decision points to the lowest civil society levels where the real transformative work is going to be performed so long as it has put in place adequate controls to check and ensure that the whole country is moving towards the desired strategic direction. Thirdly, the U.S. government will have to find ways of reducing red tape and other bureaucracies that stifle innovation, investment, business growth and opportunity grabbing. Enterprise resource planning (ERP) and Freedman In as much as technology and geo-economics have fundamentally reshaped our lives through levelling of the playing field and moving of competition down from country level to company level to individual level, they have also brought forth a fair share of challenges. The core challenge in the context of this paper is Friedmans (2005) “American crisis”. According to Aberdeen Group (2007) Enterprise Resource Planning is a mission-critical component of any globalization strategy. They argue further that the information made available through ERP is key to providing visibility to Key Performance Indicators (KPIs) and meeting corporate (or in this case American) objectives. To fully appreciate how the principles of ERP could be of benefit to the U.S. with regards to tackling its crisis we must first get to know what the ERP principles are. The first principle of ERP is functional simplification. ERPs simplify business processes by lifting them out of their complexity and also by turning processes into procedures. This in a sense is modularity which offers systems clearer design and control of module interdependencies. If this is applied into the context of the American crisis one could argue that a viable and probably effective way that the U.S. could tackle the three gaps – ambition, numbers and education – would be to have each of them targeted and solved as separate modules. This way the strategists, consultants, legislators and so on will have more flexibility when handling their module. The second principle of ERP is standardisation. On the one hand, standardisation especially in IT is a key driver of the world flattening and cause of the rising threat to America’s dominance. On the other hand, standardisation could bring to America benefits such as better communication across different sectors, improved access to data which leads to better access to information and decision making, and integrated, consistent information, and so on. The relative autonomy of each of the states in America has meant that it has become difficult to mobilise resources, ideas, personnel etc. to the level needed to get America ready to face the challenge from the BRIC (Brazil, Russia, India and China) economies. The third principle of ERP that the U.S. could adopt is centralisation. Centralisation offers several benefits such as computing cost savings, increased control over resources and organisational transformation through use of shared services. Alternatively, we could look at the main reasons why organizations undertake ERP and evaluate how and whether they would apply to America. According to Wailgum (2008) the five chief reasons why companies undertake ERP are as follows: to integrate financial information, to integrate customer order information, to standardise and speed up production process, to reduce inventory and to standardise human resource information. When it comes to financial information federal bodies such as the U.S. Treasury and IRS in collaboration with private entities such as the Federal Reserve Bank, and Wall Street have fairly sophisticated mechanisms of integrating the countries financial information. Probably the area that America could borrow a leaf from corporate sector would be with regards to collecting and analysing customer order information. From this the country could be better placed to know which sectors of its economy or knowledge base to invest in so as to remain competitive in future. To give balance to the discussion on effect of ERPs on globalisation we have to also mention their negative side. ERPs are typically standard, global software packages that have been designed to convey industry best practises to their users. This means that they lower barriers to entry for new players by offering them support in form of modules that can with ease be used to effectively perform a vast array of organisational functions from marketing to finance to human resource to supply chaining to human resource tasks. The fact that they embody industry best practices new entrants into the global economic landscape that use ERPs can easily engage in global competition while incurring minimal sunk costs. This in a way could be equated to providing these countries a free pass to innovations and technologies that other countries paid for dearly to acquire or build. From this perspective ERPs somewhat support the erosion of America’s and Western Europe’s competitive advantages. Conclusion Friedman’s first argument is that technology and geo-economics have fundamentally reshaped our lives. From his article, “Its a Flat World, After All”, Friedman provides several examples that strongly support this argument. It is his second argument that America is in crisis that much of this paper has aimed to address. We concur with Stanford economist Paul Romer that a crisis is a terrible thing to waste; therefore much of this paper looks at how America could protect itself from this crisis. The paper borrows heavily from the principles of business process engineering to argue that America could avert the looming crisis through focus, deep rethinking and radical redesign of its current business processes. The message here is that the U.S. should not focus on competing with the BRIC at their level rather it should identify and nurture new competencies in those fields/sectors where it has continued to remain superior. Also, we have found that even though Enterprise Resource Planning has numerous principles that America could use to strengthen its competitive position it is somewhat a double-edged sword because it could be used by other countries as well to weaken the U.S. competitiveness. References van der Aalst, W.M.P. & van Hee, K.M. (1995). Framework for Business Process Redesign. In: Proceeding of the Fourth Workshop. 1995, Berkeley Springs, WV, USA: Eindhoven University of Technology, pp. 36-45. Aberdeen Group (2007). The Role of ERP in Globalization. Berke, J. (2008). Outsourcing--To America. [Online]. 29 May 2008. Forbes.com. Available from: http://www.forbes.com/2008/05/25/foreign-labor-auto-oped-cx_jhb_outsourcing08_0529america.html. [Accessed: 6 December 2011]. Friedman, T.L. (2005). It’s a Flat World, After All. [Online]. 3 April 2005. The New York Times. Available from: http://www.nytimes.com/2005/04/03/magazine/03DOMINANCE.html?_r=1. [Accessed: 24 November 2011]. Hammer, M. & Champy, J. (2003). Reengineering the corporation: A manifesto for business revolution. New York: HarperCollins. Prahalad, C.K. & Hamel, G. (1990). The Core competence of the corporation. Harvard Business Review. (May-June). p.pp. 79 - 91. Wailgum, T. (2008). ERP Definition and Solutions. [Online]. 17 April 2008. CIO.com. Available from: http://www.cio.com/article/40323/ERP_Definition_and_Solutions?page=2#fix. [Accessed: 7 December 2011].  Read More