Davos 2010

Davos 2010_0001This was my ninth visit to the World Economic Forum – the global cocktail party/speechathon that brings together a unique mix of CEOs, government leaders, artists, scientists, philanthropists, regulators, and non-profits in Davos Switzerland. Or, as one reporter noted, it was a meeting of the people who have screwed up the world in the last two years.

Here are my quick personal observations. Please excuse the length of this post -- the volume of interesting facts overwhelmed my editing sensibilities.

1) Compared with the gloom of last year, members were far more optimistic and positive about the economy. Most executives I spoke with said that their business began to turn in Q3 and Q4 of 2009 and that their prospects for 2010 were brightening. That said, economists continually highlighted the fragility of the recovery. The head of the IMF said that the discontinuation of stimulus packages will cause the recovery to sputter. He also said that it may take between five and seven years for some countries to return to “normalcy,” whatever that is.

2) We are at an historical economic articulation point – with the Chinese and the American/European economic models standing in stark contrast. Emerging countries like Vietnam and Brazil are looking at the two models and wondering if distributed decision-making/democratic capitalism is still a viable way forward given its recent disintegration. In contrast, China’s command and control economy grew at 7% through the recession and it appears to be right back to 9% growth. China bulls roamed the halls of Davos – spouting the growing conventional wisdom that China will easily be the dominant world economy by 2040. 

3) Why don’t I believe this? I saw signs of U.S. creativity and innovation everywhere at Davos. Startups like Boston Power (twice as much power per square meter of battery), Metabolix (biodegradable plastic), Ning (special interest social networks) were in evidence. The big tech news during Davos didn’t come from China – it came from an American company (Apple). Western venture capitalists seemed to be perched in every corner, looking for their next deal. 

4) The battle lines were starkly drawn when Eric Schmidt, the CEO of Google, stated that, “We want to improve the lives of the Chinese people by opposing censorship in that country.” There it was, simply stated: U.S. openness versus the more controlled model of China. 

5) I was a speaker at a session on social computing along with most of the CEOs of the social companies. Surprisingly, there were few cogently-stated visions of social’s future. My conclusion:  this is a very immature and young market. No one really knows anything yet – how to make money, the value of social, and the future of the technology. 

6) The Apple iPad was much discussed. The Davos consensus (if that’s worth anything) is that it’s a niche product – not destined for the scale of the iPhone or the iPod. There was a lot of talk about, “…I guess I’ll be hanging on to my Kindle for a few more years.” But hey, there hasn’t been a lot of upside in underestimating Steve Jobs over the last few years… 

7) When I asked Ian Livingston, the new CEO of British Telecom, about Davos, he said: “The world is divided into two groups: those that are desperately trying to get to Davos, and those that are desperately trying to get out of Davos.” He wouldn’t tell me which group he was in…

8) Fun facts from the tech dinner I attended: From Paul Sagan, CEO of Akamai: “Only 1% of all video viewed in U.S. homes is carried on broadband data.” 4,000 Indian villages are now networked using VSAT – enabling Indians even in remote villages to trade stocks and bonds. This network has now made the Indian stock exchange the third busiest in the world. Ever wonder why wind power companies have trouble connecting to power grids? There are 384 competing standards for smart grids in the U.S. alone… Maybe we need some Chinese-style decision-making to fix this problem…

9) I went to a session on aging. Life expectancy worldwide has risen 20 years in the last 50 years – amazing!! This has meant that chronic disease (e.g., Alzheimers, Parkinsons) are now more prevalent and costly than sudden diseases (cancer, heart disease). David Bloom, professor of economics and demography at Harvard noted that, “If progress is built on capital and labor, the aged give neither.” So can societies afford old age? It now appears, according to Bloom, that with birth rates rising in many countries, that there will be enough people in the work force to support the growing groups of aged. And older people will be working longer, further relieving the social support burden.

10) Green has reached the tipping point. Prime Ministers and Ministers of Trade talked about “greenizing” their economies. Felipe Calderon – the President of Mexico and the host of the next UN summit on global warming to be held in Cancun – said that the two biggest problems facing mankind are global warming and the division between rich and poor. He thinks that they can be linked – e.g., re-foresting Haiti. According to Calderon, “…we can fix poverty and climate change at the same time.” But he also noted that you can’t grow China at 9% per year and cut worldwide CO2 emissions . Ed Markey, Congressman from Massachusetts, was hopeful that the U.S. Congress will pass substantive legislation to lower American CO2. As he pointed out, “We must set an example. You can’t preach temperance from a bar stool.”

11) I went to a session on personalized medicine. This is the concept that in the future, people will have different medications, based on their specific DNA. You can now have your DNA decoded for around $5,000 in six days. The report will reveal your chances of developing ALS, Parkinsons, and a number of other diseases. Paul Stoeffels, head of R&D at Johnson and Johnson, believes that Alzheimers and many cancers will be defeated using DNA-targeted medications. Many HIV patients are presently treated this way – transforming the disease from a terminal to a chronic affliction. 

12)  A session on the status of banking, real estate, hedge funds, and the media was fascinating. These are the three industries that took down the economy, and the one industry that was supposed to be warning the world but didn’t. Josef Ackermann, head of Deustsche Bank, said it best: “Never have so few done so much damage to so many.” While all of the speakers gave lip service to new regulation, they are all urging “caution,” “go slow,” and “thoughtfulness.” In other words, make sure you don’t:  A) get me fired, and B) cut my compensation. This cast of characters still doesn’t understand that, in the words of Niall Ferguson, professor of economics at Harvard, “There will be blood.” Politicians (starting with Obama) are going to have to get big changes (including rolling some heads) in the guilty industries if they are going to get re-elected.

13) Larry Summers, economic adviser to Obama, had some interesting comments. He thought that we were having a “Statistical recovery but not a human recovery.” He noted that in the U.S., for men aged 25-54, unemployment has become a systemic problem. One in five men in the U.S. are not working – contrasted with the 1960s when 95% of men of that age-group worked. Another problem with the recovery is that medium-sized businesses still do not have access to credit.

14) I always go to Davos with one question to ask all of the luminaries. This year’s question was: “Coming out of the recession, what is your number one priority?” Nearly every leader answered the question in a similar way: “Focus on growth.” As one executive said: “My organization has been hunkered down for two years – now is the time to get moving again.” I think that’s about as bullish a signal as I could have imagined coming out of Davos.

I hope that these observations and thoughts are helpful. I’d love to get your comments and conversation.



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Thanks for the update, a great post and very indepth summary.

As someone that observed the summit from afar, I'm curious to ask how well you think the 'Davos Crew' were aware of the complexity that surrounds them? To me, the fact many answered your question with 'focus on growth' seems a simple regression to an old and outdated mindset. Sure, 'growth' is important - but in a world where it only costs $5000 to map your entire DNA and we have added 20 years of life expectancy isn't the idea of 'growth' inherent?

I think I betray my own point of view through my question, but I would be keen to hear your thoughts. :) thanks again for the post George.

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The focus on global warming and growth says it all: These people who meet in Davos are truly out of touch with reality! That means world problems will have to be resolved the natural way (by evolving towards catastrophy) and the human mind will be erased as a non-benefeciary trait.

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In reference to note 7): which group are you in?

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Thank you for sharing your insights on Davos. Let me share my humble thinking but unfortunately perhaps utopian… Let me know if I am totally wrong.

CEOs and all decision makers think about “growth” and I think this is a good thing. But what they do not know yet, or do not want to share because it could decrease their bonus, or do not want to see is this is probably not the same type of “growth” that they lived during the 60s.

I think it will take time but there are “new values” to reflect this new type of "growth" for enterprises 2.0. An early example is the accounting how much time Saleforce and Google employees spent for humanitary things. But these are not yet directly relating to the value this time brings back to the enterprise past and "new values". But there is a time not so far that the enterprises will include far more “new values” in their balance sheet which will represent a better assessment of their long term value.

This will be reinforced by the new generation of employees who do not want to work for enterprises making huge profit but at the expenses of children, environmental, country or earth, etc. Employee retention will become a major issue for these enterprises.

For that there is still a big issue which is financial analysts who should change their valueing system only based on short term profits. They should include some of these new values like employee “loyalty”, environmental or social role, country role, etc. The current crisis have revealed that even the most capitalist countries like America becomes protective about their important industry role players. European did the same. Why not the reverse? Meaning what value an enterprise brings to local, departmental, regional, national or even continental level? The people who will finally pay for the finance loss will be keen to ask in return more humanity.

Social computing will succeed (and bring the 5% to 15% promised productivity increase) in the enterprises only if some new staff incentives will appear about for example “kindliness”. So the new values at the enterprise level will turn also at the employee level. For example we could also incent a green behavior if this is beneficial at the enterprise level.

Smart Computing that Andrew Bartels wrote about is all about the information system bringing the manner to deal with this new balance sheet providing a more 360° view of the enterprise.

Am I utopian? Probably. But some of these ideas (probably not really new) seem to resonate at the moment.

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Yes, the growth imperative would appear to be simplistic, but many of the leaders I met with were looking for "enlightened growth," predicated on sustainability and long-term thinking rather on the old "Burn your way to growth" mentality. With the possible exception of the financial services industry, many of the world's leaders get the idea that they must take new approaches to old problems.

So I came away encouraged.


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I always dread Davos on my way there, but find great value once into the grind. There is no place else in the world where I can: 1) connect to many clients quickly, 2) make many new good connections fast, and 3) replenish my database of ideas and important information. So I'm very glad to be involved.


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You may be right. Human beings may not have the political will or systems sophistication to avoid catastrophe. But remember -- the Europeans fought each other for 200 years. In the last 65 years, through cooperation and negotiation, they have been able to avoid war. If they ever create a motto for Davos, I think it should be: "It's better (and cheaper) to talk than to shoot." So I remain hopeful that we can somehow muddle through.


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I would love to have your comments about the muzzling of your analysts / bloggers.

I think this is one the biggest fail in the history of web 2.0.

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George, Thank you for the summary. I find item 2 very troubling. I think people may be confusing political/economic systems with the types of growth being experienced around the world. Emerging economies have been experiencing a Ricardian style growth (reallocation of resources and talents) while the US, having experienced that in the 19th century and early 20th, is now moving into a Schumpeterian style of growth, built almost entirely on our inventive efforts. Another way of saying it is that we have exhausted our ability to leverage our muscle and are now in need of relying on our ideas to experience a growth in the quality of life.

It has been the slow decay of central planning and control that have allowed Ricardian growth to happen within the 'newer' economies, not because of it.

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George --

Thanks for this excellent summary. The Larry Summers comment is telling. There’s an increasing disconnect between a systems level view of what’s happening and a “human view”. Some of this but not all is a function of economic disparity. But the systems level view seems to be increasingly failing to take into account on-the-ground facts and as was pointed out in an Atlantic Monthly article a while back (sorry no cite), the standard metrics are not doing the job. The article pointed out that GDP for example is no longer an accurate yardstick because it doesn’t provide a holistic view and defines a number of negative social trends as economically beneficial.

I would argue that our “systems” (to take that perspective for the moment) are driven by an unprecedented acceleration of technology that increasingly defies our broader conceptual understanding. British anthropologist Robin Dunbar’s work suggests a cognitive limit to the number of people that can constitute a circle of stable relationships for a single individual. While the human mind is an amazing operating system, it does have certain limits. In many ways the complexity of the world we’ve created over the last 20 years is eluding us.

On the financial front, I would content that most economists are still using smokestack econometric methodologies to try and explain and encompass a world that is very different. I wrote about this in “Digital Mythologies” in an essay called "Internet Economics: The Complex Synergies of Wealth Creation". "If we assume that computers and communications and their capacity for workforce automation can generate new forms of wealth then the dissonance that emerges from this econometric analysis takes on a another dimension altogether and must be recast as a problem of equitable economic distribution and perhaps even in a more political sense as a problem of social justice…the problem can no longer be solved by any one country: a new economic system will need to be designed to compensate for the somewhat artificial and transitory phenomenon whereby the idea of information-as-wealth shifts the vast majority of computer-related economic gains towards any given society’s symbolic analyst community or those who manage the wealth associated with this group…"

Greenspan, for all his missteps, was one economist who connected the dots between computer-generated wealth and the so-called new economy (I’m not referring not to monetary wealth you understand but rather towards a new definition of wealth that needs to be shaped.) Mainstream economic thinking however still seems to be in the dark ages about this...


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Regarding Forrester's approach to analyst blogging, the best place to get an update on what we are doing can be found here:


And there's more from Josh Bernoff (a Forrester analyst and co-author of Groundswell)at:


And the views of Augie Ray (another Forrester analyst) can be found here:


I hope you find this helpful.


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George thank you very much for this great post - so many of the DAVOS folks will set the global economic trends. Very important to have a feel for the buzz there and glad to hear it was optimistic.

I also think the notion of fretting over a "US/Europe or China model?" is unnecessary. I'd argue that technology and globalization will erode boundaries and distinctions so much by 2040 that borders will be less important to us than economic relationships which by then will be the dominant form of international interaction, driving people and policy forward and beyond petty (and even substantial) political divisions.