The World is Flat #1: How Sole Bicycles Went Global

Photo credit http://www.PatMurris.blogspot.com

How does one “go global?” Thomas Friedman’s book The World Is Flat showed us how our businesses are becoming global.  Here are the top 10 factors leading to globalization according to the WikiSummary of Friedman’s book:

List of Ten Forces

1.  Collapse of Berlin Wall–11/89: The event not only symbolized the end of the Cold war, it allowed people from other side of the wall to join the economic mainstream. (11/09/1989)

2. Netscape: Netscape and the Web broadened the audience for the Internet from its roots as a communications medium used primarily by ‘early adopters and geeks’ to something that made the Internet accessible to everyone from five-year-olds to eighty-five-year olds. (8/9/1995)

3. Work Flow Software: The ability of machines to talk to other machines with no humans involved. Friedman believes these first three forces have become a “crude foundation of a whole new global platform for collaboration.”

4. Uploading: Communities uploading and collaborating on online projects. Examples include open source software, blogs, and Wikipedia. Friedman considers the phenomenon “the most disruptive force of all.”

5. Outsourcing: Friedman argues that outsourcing has allowed companies to split service and manufacturing activities into components, with each component performed in most efficient, cost-effective way.

6. Offshoring: Manufacturing’s version of outsourcing.

7. Supply-Chaining: Friedman compares the modern retail supply chain to a river, and points to Wal-Mart as the best example of a company using technology to streamline item sales, distribution, and shipping.

8. Insourcing: Friedman uses UPS as a prime example for insourcing, in which the company’s employees perform services–beyond shipping–for another company. For example, UPS itself repairs Toshiba computers on behalf of Toshiba. The work is done at the UPS hub, by UPS employees.

9. In-forming: Google and other search engines are the prime example. “Never before in the history of the planet have so many people-on their own-had the ability to find so much information about so many things and about so many other people”, writes Friedman.

10. “The Steroids”: Personal digital devices like mobile phones, iPods, personal digital assistants, instant messaging, and voice over Internet Protocol (VoIP).

So is going global really that great? A 2008 CIO article states, “”Numerous surveys indicate that anywhere from 17 percent to 53 percent of customers have not realized business value/return on investment from offshore outsourcing.”  Yet, from our call centers to our coders, we still see globalization happening in our daily lives. What is the RIGHT way to go global? Shedding some light on his experiences is Jonathan Ross Shriftman, a nominee for Entrepreneur Magazine’s college entrepreneur of the year. (Vote for Jonathan here):

Q: Tell us about yourself and your business.

A: My name is Jonathan Ross Shriftman, a rising senior at USC, and co-founder of Sole Bicycles, a socially responsible company producing affordable fixed gear bicycles.

Q: Explain how you “went global” with your business? Discuss major steps and the benefit to you and your customers.

A: It’s truly amazing how interconnected the world we live in is. Most bicycles have such a huge mark up and long supply chain, first being manufactured, imported, passed through a wholesaler, distributor, then a final retailer. I was able to contact the factories overseas directly, design an amazing bicycle that I can import into the United States and sell directly through my website. The chain is simplified, which is how I can keep my costs down, and pass those savings onto my riders.

Q: Were you intimidated to go global?  What did you have to learn?  How did you have to adapt?

A: There are so many resources to contact manufacturers all over the world. Right from my laptop, I was able to find companies in Brazil, Shanghai, India, and Italy that make awesome bicycles. After plenty of 4 A.M Skype chats and emails back and forth, I found the perfect factory, where I ordered and then re-ordered more custom tailored prototypes. I finally got something incredible. I wish there was a class in my school to have taught me about dealing with other companies on a global level and international etiquette and customs , but in lay mans terms, its been awesome, a labor of love, and an adventure figuring it out along the way. I am sure, soon enough, outsourcing will be a major topic taught in higher educational institutions.

Q: How has going global changed your business?

A: Having the internet, which gave me access to both factories all over the world and to the customers who purchase my bikes, has been so crucial to my business. Most fixed gear bicycles are built piece by piece, or sold complete at a retail cost of 600+ dollars. I am able to cut out the middle man, keeping mine and my customers cost way down. I will be the first true innovative low cost provider of these cycles and my bikes will be made from the same high caliber materials of all my competitors. My business is so perfect right now. Cycling as a whole should be supported; it keeps ones body healthy and the environment clean. Not to mention, riding a fixed gear is an awesomely, totally different experience than any other bike.

Q: Is there anything we missed?

A: At Sole, even though we are a small business, we are strong believers in philanthropy, so we donate portions of profit to charities supporting the environment and urban youth.  I am also a top five finalist for Entrepreneur Magazine’s “College Entrepreneur of the Year” and you can vote for me at http://entrepreneur.com/e2009/vote/college.php#157
Thanks to Jonathan for sharing the scoop on going global, and feel free to share your war stories with me on Twitter for future posts.

Suggested exercises:
1. Have students read the summary of Milton Friedman’s book and give a summary in class. Lead a discussion wherein students share their biggest takeaway.

2. Have students pick a country and research outsourcing trends. Suggestions: India, Honduras, Korea, Thailand, South and Central America, Canada.

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