The World Is Flat: A Brief History of the Twenty-First Century

In Chapter 11, the sole chapter in the section entitled “Companies and the Flat World,” Friedman presents nine rules that successful companies follow in a flat world.

The first is: Dream big. “When the world is flat, whatever can be done will be done. The only question is whether it will be done by you or to you” (442). Friedman describes a Peruvian man who sells traditional handcrafted goods online to American customers; the man investigates whether he could have the goods made in and shipped from China. The second rule follows from the first: “Because we are in a world where whatever can be done will be done, the most important competition today is between you and your own imagination” (447). Americans, he writes, should not be trying to compete with others in markets that are already established. Instead, they should be competing with themselves to dream up the next new thing.

Another rule holds that small companies will thrive by acting large, and that they accomplish this by utilizing the collaborative tools available in a flat world. For example, the Jordanian shipping company Aramex started out by partnering with Airborne, a much larger American company, to handle Airborne’s shipments to the Middle East. Airborne had the customers and the tracking software, and Aramex took advantage of both. When Airborne was bought out by DHL, severing Airborne’s business relationship with Aramex, Aramex immediately worked to replicate (and improve upon) the tracking system it lost access to. Thanks to the triple convergence, Aramex succeeded.

Conversely, large companies should act small by allowing their customers to act big. Friedman explains that large companies should customize products and services as much as possible so that customers can buy exactly what they want. The example he gives is from Starbucks founder Howard Schultz, who told him that the idea of offering soy milk to customers came from customers. When requests for soy milk reached a certain threshold, the company knew that there was a gap to fill. 

One rule boils down to: “the best companies are the best collaborators” (457). Because adding value is becoming so specialized, no company will be able to master it in all areas.

Companies should also routinely analyze every element of their businesses and then sell the results to customers. Friedman calls this “getting chest X-rays,” and it means breaking down every component of a firm to identify areas for improvement. Companies must look for “vanilla” functions that can be outsourced so that they can focus on the areas of their business in which they add unique value. Hewlett-Packard, for example, used to handle all its accounts receivable and payable in each of the 178 countries that it did business with. After an internal “chest X-ray,” it decided to consolidate and standardize all of them. When it did this successfully, it realized that it had a valuable service that it could do for others, and that became a new business.

Another rule encourages outsourcing to develop—not just to slash expenses by cutting jobs. Outsourcing allows companies to innovate faster and increase market share.

The eighth rule is to remain aware that “HOW you do things as a company matters more today than ever” (467).

And the final rule is not to build walls when faced with a flat world. Instead, companies must dig deep inside themselves to meet the challenges of a flat world.