The World Is Spiky

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.

Comments

[Tapsearch Com - Tapart News advocate]

Before talking about the spiky and flat world we need to get into human dignity in the workday and who controls it. The workers who are the core of any economic process have no voice in it. There is a certain "communication by rank" based on elite groupings who do not do the work but only talk about it. See Experience Designer Network by Author, Brian Alger who explores the voids in education and communication. He provides an overview of Ray Tapajna "network" world where if one does not belong to any type of network, they do not exist. See http://www.experiencedesignernetwork.com/archives.000636

Basically workers have been made the commodities of Free Trade and Globalization. They are now the main product being traded based on their wages. We had the slave trade in the past and now we have a new kind of wage slave trade. Production has been made a portal tool of Free Trade and Globalization. Factories and farms can be moved from place to place anywhere in the world based on the least line of resistance and the cheapest possible labor. It is assumed when a factory is moved it stays in place for a long term to build up a community or society but this is not the case. The U.S. first moved factories to Asia. Then they moved some back to Mexico and now they are moving again back to China while China is contracting even cheaper labor outside their country. In the U.S. high tech is becoming the last job some one wants to train for since the prospects of outsourcing and insourcing affects security. Why take a job that will last only a short time? How can anyone plan a family in this vacuum? Not much of anything else can be planned in this void. Freidman talks about the Y2k crisis and how India high tech grew as a result but he leaves out the one of the main causes for the Y2k crisis. Millions of workers in the computer industry lost their jobs in the late 1980s up through the late 1990s due to Free Trade. Work can not be done when all the workers are fired.

Friedman in his flat world also uses statistics that vary from the past.
He does not use any disclaimers and makes his assumptions based on stats that are very questionable when compared to past ones. Certainly our unemployment rate data collection is quite different from the past when primarily only full time jobs were used in the reporting. Today someone making only a $100 a month or someone who is working on the family farm for nothing while seeking a job are considered employed. The first question to be answered before proceeding with any study or comparisons is to ask how many workers are working full time and how many workers want to but can not find a full time job. Unemployment rates are no longer based on unemployment insurance offices since only about 38% of all workers in the USA now qualify for unemployment insurance. They either do not work long enough at one job or make enough money to qualify for unemployment insurance. Reportedly over a 100 million workers and would be workers are missing in action from any kind of real reporting.

Also historically, trade and even Free Trade was based on trading products. One country traded products they had for products that they did not have. Today Free Trade is based primarily on the value of labor. Workers are the main commodity being traded in a new kind of wage slave trade. It is also obvious that the contols in place are outside the power of the workers involved. Elite groupings, big business, governments acting as brokers and international organizations like the WTO control the flow of wealth outside and real democratic process. They are not part of any declared network and do not exist in many forms of community and society.
Things like Rerum Novarum that once set the standards for human dignity and the common good in the workday are ignored.

Capitalism and Free Enterprise are challenged. They are manipulated by power and money forming a new kind of economic processes which defy history and common sense. A loss leader economy where the entities with the most money outlast the ones with the least govern the process. The companies with the most money can sell under costs for a long time in order to capture a market. Other companies use their money to manipulate the value of their stocks to make money this way and not on free enterprise as it is defined historically.

Workers are the tools of this new raw Capitalism and this prompts wars and terrorism. A new kind of colonialism and imperialism surfaces as countries find they must protect their interests world wide and now even up into space.

High technology and things like the world wide web are just highways in the sky with out any real connection with upgrading people lives. As a matter of fact, it seems to act in reverse these days. We have workers in India handling the welfare processes in the USA. None of it makes sense and we should be preparing for the post-globalist era since any common sense order of things will evolve.
For more information, see Tapart News and Art that Talks at http://tapsearch.com/tapartnews/
http://tapsearch.com/globalization - tells how the U.S. Government sponsored and funded the moving of U.S. factories outside the USA since 1956.
( All the editorial art and cartoons from Tapart News can be viewed in one place at http://arklineart.fotopages.com

[Larry Irons]

The key question to ask about innovation is what benefit it provides to the businesses that pay for it. You might think Friedman’s point on innovation is correct for no other reason than its cheaper to hire educated staff with technical and creative skills in India and China. No doubt, that is correct. But, cost isn't the basic concern for organizations that innovate better. It isn’t clear at all that spending less to buy more time from creative people in R&D will change the impact of innovation on business results. The cost and benefit of innovation is more closely tied to the organization of business processes and dialogue with customers than the amount of creative time bought.

A recent study on the top 1000 Global Innovators by Booz, Allen, Hamilton indicates that no relationship exists between the number of patents issued to an organization and its actual business results. So, Florida’s reliance on patents as an indicator of innovation probably points to a spurious relationship. The report concludes that “when a company is seeking to grow through innovation, it’s more important to develop a robust business model and good cross-functional capabilities than to boost the R&D budget.”

By cross-functional capabilities the Booz, Allen, Hamilton authors mean cooperation between R&D, marketing, sales, service, and manufacturing. Concentrating innovative, creative people in urban centers, or leveling out the playing field so that innovators don’t have to emigrate within a country or between countries to work on innovation projects, does not speak to the key issues in designing processes that increase the effectiveness of collaboration. Rather than focus on whether the world is flat or spiky, serious attention is better paid to how global enterprises organize collaboration and what limitations place and cultural context impose on that organization.

[Chris Crawford]

It seems important to keep in mind that these projects depend entirely on how we define an innovation. For most people in the "knowledge" world this is a relatively simple definition (but too simple by my measure). Most write from the assumption that innovation means newest high tech gadget. And perhaps that is the most accurate measure of innovation across a handful of the most post-industrial nations. But I submit that innovation falls under the radar screen of Friedman and Florida. This is, of course, by no fault of their own. The fact is that innovation occurs regularly in every nation. If hungry farmers in Somalia grow a better hybrid of corn that can exist in their arid climate then convince me that is not an equally (probably more) important innovation. Now before authors jump out and write and additional chapter on Somalian farmers, I think it behooves us to look at the global process of innovation (perhaps as Rogers did) then build socio-demographic trends on ALL innovation rather than that which pokes us in the eye daily.

[jennifer rice]

Great post; I need to read everything you are referencing before I can make an intelligent observation/comment, but one thing you don't mention is a "virtual spike"... ie. the coming together of creative minds via social technologies like blogs, collaborative gaming and (in the future) VR. Does either Tom or Richard touch on this? I envision a time in the not-so-distant future where we've got both real-world geography and virtual-world geography, in which case the whole urban/rural issue becomes largely irrelevant.