I have been scrambling to catch up on many fronts since returning from Davos, and I am still reeling from five days of intense meetings at the World Economic Forum stretching from 7am until well past midnight. I already posted some comments about the themes of innovation and the emergence of India and China at Davos.
Before even more time passes, I wanted to reflect on some of the experiences and encounters during the time at Davos.
As always, Klaus Schwab and his team do an extraordinary job of orchestrating an extraordinary array of discussions. These sessions capture the “gestalt” of world leaders and at the same time seek to provoke their thinking (and, increasingly, their action) on key issues facing the world. This year’s theme official theme was “the creative imperative” and there was rich engagement on various facets of this topic.
More fundamentally, a curious mixture of complacency and dread seemed to pervade the formal and informal discussions at Davos. On the one hand, things are going pretty well in the global economy and the participants kept coming back to the strong performance of key economies around the world. As one economist observed on the opening day, “the outlook for 2006 is basically another goldilocks kind of year.”
On the other hand, executives in particular seemed to have a lot of anxiety about a myriad of challenges and frustrations, ranging from the possibility of pandemics to the intensifying economic competition on a global scale. On the latter topic, there seemed to be growing recognition that the cost cutting strategies that have largely driven corporate performance over the past couple of decades are delivering diminishing returns. At the same time, executives expressed considerable frustration about the difficulty in getting large organizations to deliver more significant and sustainable innovation to the marketplace.
Participating in these discussions, I was struck that certain themes kept surfacing. At one level, these themes seemed to make a lot of sense, but I found that they often distracted attention from the real issues. Here are some of the themes that shaped a lot of the discussion at Davos:
This is perhaps the hallmark theme of Davos. People from incredibly diverse backgrounds around the world come together, united by the desire to achieve greater integration on a global scale. This desire defines what Samuel Huntington termed the “Davos man”. At one level, this is an admirable goal. We all benefit from establishing richer connections with diverse people around the world.
At another level, though, participants kept talking about the need to eliminate boundaries. I take a different view. Boundaries are healthy – in fact, they become the catalyst for innovation. Without boundaries, we would not have different experiences and perspectives to bring to bear on the issues confronting us. We actually need more boundaries and more friction across boundaries. As JSB and I have written, the challenge is to harness productive friction across boundaries instead of allowing friction to become destructive or wasteful. Rather than eliminating boundaries, perhaps what we need is more respect and willingness to engage constructively across boundaries. If we can do that, then boundaries in fact become a source of great richness.
This theme came up repeatedly. Economists in particular seemed to be worried about “imbalances” threatening the global economy. Americans are not saving enough. Chinese are saving too much. Coastal areas of China are growing faster than the Western rural areas. Demand for global energy supplies is rising faster than supply.
Again, at one level, it is hard to argue with balance. Who wants to be imbalanced? I fear, though, that this obsession with balance betrays a static, equilibrium view of the world. Growth is rarely balanced. Indeed, it tends to throw things out of balance. The imbalances that occur in dynamic economies and societies are not a cause for concern as long as economic and social adjustment mechanisms are permitted to operate.
There’s a cynical side of me that notes those who are most concerned about imbalance are often those who have the most assets at risk. Equilibrium is great if you have a lot of money – it means you get to keep it.
There was a lot of talk in Davos about jobs – especially how to continue to create jobs in the West to compensate for slowing economic growth and offshoring trends. I participated in one of these sessions, where I suggested that framing the issue in these terms tends to miss the point.
Of course, we are all concerned about the availability of jobs, but the more fundamental issue is talent development. If people don’t develop appropriate talent and don’t continue to refresh that talent, there will be no sustainable jobs and certainly few, if any, high value jobs. Reframing the issue as talent development also highlights the increasing importance of talent as a source of comparative advantage in global markets.
JSB and I have written about talent development as a public policy issue in The Only Sustainable Edge (that in fact is the reason I was invited to participate in this session at Davos).
Most people immediately assume we are talking about educational policy when we focus on the importance of talent development. In fact, we argue that education is becoming more marginal as the bulk of talent development occurs outside of traditional educational institutions. As one example, the rationale for the corporation is shifting from reducing interaction costs to accelerating talent development. As we begin to recognize that talent development is a continuing process and not confined to one stage of life, we will have to broaden our view of the institutional platforms required for talent development.
We will also need to re-conceive broad swaths of public policy in terms of its ability to accelerate talent development. Everything from immigration policy to intellectual property rights should be assessed through this lens.
Bottom line, I came away from Davos with a renewed appreciation for the role of the World Economic Forum in creating a vibrant platform for debate and discussion on a global scale. But I also saw the importance of challenging some conventional wisdom. Integration, balance, jobs – who could question their value? Yet, by focusing so heavily on these themes, we fall prey to a static view of the world. We risk losing sight of the dynamics that will continue to shape global prosperity. The creative imperative that served as the theme for the Davos meeting depends on boundaries, generates imbalance and renders existing jobs obsolete. By focusing more on these dynamics, world leaders may overcome some of their complacency and begin to see more clearly the opportunities, as well as the challenges, that lie ahead.