Two writers that I admire greatly – Tom Friedman and Richard Florida – appear to clash with each other. Tom in his best-selling new book says “The World Is Flat” and Richard in a new article in the October 2005 issue of Atlantic Monthly asserts “The World Is Spiky".Richard’s article is a great read (supported by highly visual maps) and I highly recommend it. Tom and Richard are both right, but they both risk missing the real point.
Richard focuses on one particular quote from Tom’s book: “In a flat world you can innovate without having to emigrate.” Richard responds that location still matters and that, by a variety of measures, the world is extremely spiky – meaning that activity is very concentrated in a relatively few locations. Richard looks at
- population concentration in urban areas
- light emissions (as an interesting proxy for economic activity)
- patent filings
- citations to scientists in leading fields to demonstrate this spikiness.
Using topographical metaphors, Richard divides the world into
- peaks - the cities that generate innovations
- hills - “the industrial and service centers that produce mature products and support innovation centers”
- valleys - “places with little connection to the global economy and few immediate prospects”
Focusing on the peaks definitely highlights the spikiness of the world. For example,
When it comes to actual economic output, the ten largest US metropolitan areas combined are behind only the United States as a whole and Japan. New York’s economy alone is about the size of Russia’s or Brazil’s . . . Together New York, Los Angeles, Chicago, and Boston have a bigger economy than all of China. If US metropolitan areas were countries, they’d make up forty-seven of the biggest 100 economies in the world.
But what does all of this mean? Flat or spiky? Who is right – Tom or Richard? Here is my take on it – framing the debate in these terms is misleading. It obscures what is really important.
Flat or spiky – these are metaphors of space. More importantly, they are static metaphors – they describe a point in time. The world is either flat or spiky. What is missing is any sense of trajectories or relative pace of change. Instead of studying snapshots, we need to study movies showing change over time.
Richard’s article offers relatively little in terms of dynamics – with the notable exception of population movements. Here the evidence from the article is clear – the world is becoming much spikier. In 1950, only 30% of the world’s population lived in urban areas – today, it is more like 50%. More and more of the world’s population are clustering into cities in search of economic opportunities. Cities are, as they have always been, the flywheel of innovation, talent development, productivity improvement and economic growth.
To the extent that Tom believes that cities will become less important as centers of economic growth, I would disagree with him. So I would amend his observation and say that, if you want to innovate and you are not in a major urban area, you might want to emigrate to one of these areas, even in a flattening world. Even though you can participate in innovation from more remote locations, if you want to develop your talent more rapidly than others, you are more likely to be able to do that in a major urban area.
Richard makes an important point:
Because globalization has increased the returns to innovation, by allowing innovative products and services to quickly reach consumers worldwide, it has strengthened the lure that innovation centers hold for our planet’s best and brightest, reinforcing the spikiness of wealth and economic production.
So, here is where we see the beginning of a paradox – some of the forces that Tom Friedman eloquently describes as flattening the world are at the same time helping to reinforce spikiness.
But then the question becomes, which urban areas will become the most fertile ground for innovation and talent development? Richard has written extensively and eloquently on this topic in The Rise of the Creative Class and The Flight of the Creative Class. In these writings, he makes clear that creative talent seeks out environments that encourage and reward innovation. He also makes it clear that talent will migrate to urban areas that provide more promising environments for creativity and innovation.
This is one of the missing elements in Richard’s article. In its focus on describing the spikes that exist today, the article loses the dynamic element of competition among spikes and the speed with which new spikes can emerge - themes that are front and center in his books. Because the world is flattening in terms of connectivity, it is easier for new agglomerations of creative talent to come together and connect into the global economy, whether they are in Shenzhen or Bangalore.
Now, by Richard’s topography, Shenzhen and Bangalore don’t count – they are mere “hills”, not spikes, because they focus on manufacturing and support services. This distinction reveals another limitation of Richard’s article – he defines innovation much too narrowly as either product innovation (things that can get patented) or more fundamental scientific innovation (citations to scientists). Shenzhen and Bangalore are extraordinarily innovative as well, but their focus so far has been on rapid incremental process innovation, something that is not so easily measured by Richard’s indices. It is this form of innovation that accounts for extraordinary economic growth in a very short period of time.
By leaving this rapid incremental process innovation out of the picture, Richard misses some of the key dynamics that are already reshaping the spikiness of the global map. Companies in some of the rapidly growing urban areas like Shenzhen and Bangalore are pursuing a powerful form of innovation bootstrapping that starts with relatively modest incremental innovations pursued in rapid iterations and amplified by rich interactions with dense local business ecosystems. This bootstrapping is powerful because it accelerates learning and capability building and ultimately bridges into more fundamental product and technology innovation, as is already happening in areas like wireless technology in both China and India. With aggressive use of bootstrapping, even the most modest hills have the opportunity to become formidable peaks.
In this world, patents and scientific journal citations may be lagging indicators. What we need to find are the leading indicators that will help us to understand and anticipate the dynamics reshaping the global economy.
Most of all, we need to move beyond the snapshots – instead, we have to make and study the movies. This is where real wealth creation will occur. Tom and Richard both understand this, but let's not frame the debate in terms of flat versus spiky. The greatest insight will come from understanding the paradox that the flattening of the world is creating opportunities for even greater spikiness.