Competing in a Flat World: Building Enterprises for a Borderless World
Victor K. Fung, William K. Fung, and Jerry (Yoram) Wind
Pearson/Prentice Hall (2007)
This book offers still another example of a book that attracted little attention when published but – over time – has developed an avid readership (and more importantly, an avid re-readership) throughout the world among leaders in both public and private sectors.
Those who have read Thomas Friedman’s The World Is Flat no doubt recall an assertion he makes in his introduction to the second expanded version: “My use of the word ‘flat’ does not mean equal (as in ‘equal incomes’) and never did. It means equalizing, because flattening forces are empowering more and more individuals today to reach farther, faster, deeper, and cheaper than ever before, and that is equalizing power – and equalizing opportunity, by giving so many more people the tools and ability to connect, compete, and collaborate. In my view, this flattening of the playing field is the most important thing happening in the world today, and those that get caught up in measuring globalization purely by trade statistics – or as a purely economic phenomenon instead of one that effects everything from individual empowerment to culture to how hierarchical institutions operate – are missing the impact of this change.”
Curiously, there is no reference in Friedman’s book to Li & Fung, Hong Kong’s largest export trading company, which has been “a flat business for a flat world” since the early 1980s. In an interview by Joan Magretta that appeared in the Harvard Business Review (September-October 1998), Group Chairman Victor Fung explains how Li & Fung reinvented itself to become and remain fast, global, and entrepreneurial. The company’s new role (then and now) is to be a “network orchestrator.”
In this book, Victor Fung, William Fung, and Jerry (Yoram) Wind explain how to build an enterprise for a borderless world, one that can “embrace the flat world” and understand how it works so as to take full advantage of the many new opportunities it offers. “Those that cannot adapt quickly enough to these new realities will fall behind or be bought out by those who have learned how to compete in a flat world. The opportunities are as broad as the world.” They then pose the question to which their book is a rigorous and eloquent response: “How do you need to remake your organization, management, and mindset to seize these opportunities?” The material is carefully organized and then presented within twelve chapters, followed by a Conclusion in which they ask their reader, “Are you ready to compete flat out?” Those who read, absorb, and then apply Fung, Fung, and Wind’s advice will be well-prepared to do so.
Of special interest to me is what they have to say in Part III as they focus on value creation. Specifically, in Chapter 9, how to capture the “soft $3″ by looking beyond the factory: ”Markdowns are a flaw in the manufacturing process. They mean that a product has lost value because it was not the right product at the right time at the right place…In a flat world of unpredictable demand, avoiding markdowns, stockouts, and expensive whipsaws in the supply chain is harder and more important.” And then in Chapter 10, how to sell to the source by bridging marketing and operations: ”For companies that are sourcing from China, India, and other emerging markets, sometimes insights from emerging consumer markets come from the floors of their own factories or call centers…The challenge is to ride the wave of consumer market growth without getting too far ahead or behind.” Moreover, ”Sourcing can [also] offer insight into many different areas, including regulations and policies, risks, competition, detailed market information, and market shifts.”
As I hope these brief excepts indicate, Fung, Fung, and Wind are relentless empiricists and hardcore pragmatists who identify the “what” of “flat-out competition” but devote most of their attention to explaining the “how” of achieving and then sustaining success. For whom will this book be of greatest value? In my opinion, they include decision-makers in organizations that are preparing to become a global network “orchestrator” or have only recently initiated efforts to become one; also, decision-makers in other organizations that are part of supply chains of one or more orchestrators. Moreover, I think this book should be required reading in undergraduate and graduate schools of business because it will help the next generation of C-level executives to help their organizations to take full advantage of opportunities that, by then, are certain to have increased in terms of their nature and number as well as their potential ROI and, yes, their peril.
Those who share my high regard for this volume are urged to check out Vijay Mahajan and Kamini Banga’s The 86 Percent Solution: How to Succeed in the Biggest Market Opportunity of the Next 50 Years, Kenichi Ohmae’s The Next Global Stage: The Challenges and Opportunities in Our Borderless World, and C.K. Prahalad’s The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits as well as Enterprise Architecture as Strategy: Creating a Foundation for Business Execution co-authored by Jeanne W. Ross, Peter Weill, and David Robertson, Dean R. Spitzer’s Transforming Performance Measurement: Rethinking the Way We Measure And Drive Organizational Success, Richard Ogle’s Smart World: Breakthrough Creativity and the New Science of Ideas, and Harvard Business Review on Managing the Value Chain.