From 25 January the hotels, meeting rooms, bars, restaurants, and most remaining nooks and crannies in the small Swiss town of Davos will be filled with leaders of all descriptions from around the world joining the great annual debate on the state of the world otherwise known as the World Economic Forum’s Annual Meeting.
The theme for the 2012 meeting is “The Great Transformation: Shaping New Models”. “The necessary conceptual models do not exist from which to develop a systemic understanding of the great transformations taking place now and in the future,” says the WEF’s Klaus Schwab. “It is hubris to frame this transition as a global management problem of integrating people, systems and technologies. It is an indisputable leadership challenge that ultimately requires new models, bold ideas and personal courage to ensure that this century improves the human condition rather than capping its potential.”
Taking part in the debates during Davos will be London Business School’s Sir Andrew Likierman, Costas Markides and Francesca Cornelli and Lynda Gratton. They will be rubbing shoulders with the usual array of celebrities, politicians, artists and scientists. Those speaking include Murray Gell-Mann the Nobel laureate physicist; the deep sea diver Sylvia Earle; champion of emotional intelligence, Daniel Goleman; Tom Friedman, author of The World is Flat; Harvard’s Michael Porter and many more.
An alternative agenda
But what should be on the agenda as the greatest minds and the most influential leaders sit down to debate? “If I had to pick one topic, it would be growth,” says London Business School professor Rajesh Chandy. “The particular questions around growth would be different for developed and developing countries, however. For developed countries, the question is: How can we create substantial growth again? For developing countries, the question is: How can we create growth in a way that benefits as many of our people as possible?”
Of course, many of the big issues remain unresolved from one Davos to the next. Professor Kamalini Ramdas suggests a reminder: “The headlines are full of big issues -- the Arab Spring, the financial crisis, and so on. But the age-old problems of healthcare, education, housing, food and clean water persist, dragging down our global potential. Davos should focus on transformative new business models that enable us to meet these fundamental needs. For instance, in healthcare, innovation in service delivery has the potential to greatly reduce costs and at the same time dramatically improve outcomes with no new science, new drugs or new procedures. But this type of innovation hinges on ecosystems of people working together across organisational, geographic and national boundaries. The leaders of the world need to recognise this and actively drive innovation in business models and service delivery.”
The role of the corporation
Professor Ioannis Ioannou’s research looks at sustainability and corporate social responsibility. He calls on Davos attendees to lift sustainability up the political and corporate agendas. “I think the issue of sustainable organisations should be at the top of the Davos agenda,” he says. “By sustainable organisations, I mean those which can synergistically co-generate both economic and social value, while remaining sustainable within their economic, environmental and broader social domain.”
He points to important macro trends, such as the growing scarcity of the earth's resources, climate change and massive demographic changes around the globe, coupled with rising levels of income inequality and the anticipated shift of middle-class consumption from the developed to the developing world in the coming decades, as shaping a new world order with a radically different global competitive landscape. In this changed world Ioannis Ioannou anticipates that successful organisations will be those which “acknowledge these tectonic shifts today, and are able to incorporate these broader social and environmental issues into their business models and strategy. In this sense, the emergence of sustainable organisations not only challenges but also redefines what we currently perceive as the role of the corporation in society”.
The role of corporations is likely to be the subject of one of the great transformations anticipated by the Davos theme. Change cannot come too soon, according to Professor Freek Vermeulen. “Large corporations have arguably become the most dominant institution in the world - more powerful than governments, religion or cultures,” he says. “Yet, many of the world's problems are more due to the failure of management than economic failure. Specifically, the majority of firms struggle with maximising short term benefits at the expense of long term performance. The latter is much more ambiguous, difficult to predict and anticipate. The failure of the banking system, for example, is due to practices that seemed a good idea in the short run, but had devastating consequences in the long term. How can corporations better manage long term performance, without the perils and seductions of optimising for the short term?"
Another testing question comes courtesy of Professor Gary Dushnitsky. “Who will fund innovation in 2012?” he asks. “Entrepreneurs faced a challenging reality in 2011 as their capital providers experienced substantial turmoil. In 2012 , the landscape of entrepreneurial finance will continue to evolve. In addition to the traditional model of a venture-capital backed start-up springing towards an exit, there will be growing room for collaborations where banks and VC investors work along with new players such as corporate investors and peer-to-peer funding platforms.”
The future not only looks challenging for corporations and entrepreneurs but, more generally, for those in leadership positions. “I think there are some important challenges ahead for leaders in the near future,” says Professor David de Cremer. “We need leadership that is able to deal with both success and failure, especially in times of crisis. Right now we need leadership that has a clear long-term strategy in mind and that is able to identify the needs of individuals and collective needs to move forward in ways that are different than before the outbreak of the crisis. We need leadership that is able to challenge and change the status quo in innovative ways but always with a sustainable vision. This kind of consciousness is something we need to develop among our future leaders.”
Professor Richard Jolly suggests an even more focused challenge to the Davos participants: “Given the greater strategic and structural complexity of modern businesses, how can firms develop the necessary cultural and communication skills to make these complex sets of relationships work?”
Of course, the continuing economic crisis will be justifiably high on the Davos agenda. But which, of the myriad of economic problems, should be the focus for debate? “How do you maintain a common fiscal policy in the Eurozone must be one of the great problems for the next few years,” suggests Julian Franks. “The idea of a maximum deficit of 0.5 per cent of GDP is ridiculous. A related issue is can you avoid issuing Eurobonds which will solve the immediate crisis, but undermine the need for fiscal discipline. Maintaining fiscal discipline, preventing defaults but not issuing Eurobonds- is it possible to achieve all three?” Five days at Davos might begin to provide the answers.