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Arvind Singhal: A world too flat for comfort

A volcanic eruption in a not-so-prominent region has has triggered an unprecedented tsunami of human and economic disruption

Arvind Singhal  |  New Delhi 

The world is flat as Thomas Friedman told us in 2005. How much flatter it has become since then has been so startlingly demonstrated in the last one week! An otherwise not-so-unusual event — that of a volcanic eruption in a not-so-prominent region — has already triggered an unprecedented tsunami of human and economic disruption whose ripples are now being felt across all the continents. Millions of individuals are stranded in various parts of the world leading to a rapidly compounding misery of personal suffering, stress and, in many cases, severe economic and professional consequences.

Businesses of all types, and not just those related to aviation industry, are reeling in the face of various chain reactions set in motion by the disruption of aviation services. Business conferences and exhibitions, many of them meticulously planned with several months of painstaking effort, have to be cancelled to avoid the risk of highly depleted participation by the targeted attendees. Routine and not-so-routine business meetings have been either cancelled or rescheduled all across the world since one or more participants happened to be stranded somewhere where they were not supposed to be.

Hundreds, and perhaps thousands, of students and teachers are unable to make it to their classes. Sports, music and other performers are unable to perform at events scheduled months and sometimes even years ago. If this situation continues for a few days more, then global manufacturing supply chains will begin to show severe signs of disruptions and global distribution supply chains will show signs of rupture with depleted range of products in the retail shelves. Farmers in countries such as Kenya suffer heavy losses as their cargoes perish at airports. Indeed, even those operating in the conflict zones of Afghanistan and Iraq have not been spared the incredible disruptive effect of this single event, and the war-injured have to be evacuated to other regions, rather than the logistically closer bases, in Europe.

One can argue that this particular event is one of those “black swan” events that Nassim Taleb alluded to in his highly acclaimed book of the same title some years ago — an event whose occurrence and form cannot be predicted, and hence conventional scenario-building and contingency-planning efforts are largely ineffective. Disturbingly, the world has seen at least three other major “black swan” events already prior to this one. The first was the September 2001 attacks on the US, then the subsequent SARS epidemic in early 2003, and then the subprime crisis of 2008 triggered, perhaps, by the collapse of Lehman Brothers. Each created ripples of unprecedented magnitude and of many, many dimensions across the globe.

While it is impossible to predict when and how the next “black swan” will emerge, the occurrences seem to be happening more frequently, and their impact becoming more pervasive as the world gets even more “connected” and global businesses even more inter-dependent. Indeed, a “flat and getting flatter” world is a reality. This process cannot be, arguably, reversed or even slowed. What may be more feasible is for individuals, businesses and even governments to take a pause (and many millions will indeed have a lot of time available at their hands right now) and reflect upon the inherent risk and the eventual price that a single-minded quest for either global-recreation (vacationing) or for cutting the last cent in the sourcing costs by optimising the supply-chain at a global level in a bid to compete harder or to improve returns for the shareholders, can extract from the individuals, businesses and, indeed, society.

Do we really need to always travel for leisure to far-off places which we believe are less travelled, but in reality, are getting more and more travelled? Do we really need roses from Kenya or fruit from southern Africa in the middle of winter? Do we really need to travel for face-to-face business meetings when some of them can be substituted with more investments in video/audio conferencing? Do we really need to create “off-site” meetings for hundreds and sometimes thousands of employees where the sites are a country or sometimes even a continent away? Do we really always need to find the lowest-cost manufacturing location in different continents when there is room somewhere downstream in the value chain to absorb higher production costs but manufacture closer to the point of eventual consumption?

Alas, the world is already too flat for comfort!

arvind.singhal@technopak.com  

First Published: Thu, April 22 2010. 00:25 IST
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