Davos FOMO

January 22, 2014

Andrew Ross Sorkin is a very old Davos hand — he’s been coming for years, he knows the ropes, he knows what happens and what doesn’t. Which is why his column this week is so very odd.

Whatever their reasons for staying away, the leaders of some of the largest and most transformative companies are demonstrating, with their absence, the difficulty of convening a global conversation with all the main stakeholders…

At a time when globalization has so transformed business and economics, and at an event that bills itself as drawing the top stakeholders, it easy to understand why it is so difficult to make progress on the big issues when so many key people are not in the room.

This fundamentally misses what Davos is about. Sure, if you ask Klaus Schwab, the autocratic chief of the World Economic Forum, he’ll tell you that Davos is all about “convening a global conversation” and trying “to make progress on the big issues”. But I don’t think that even he believes his own rhetoric — after all, he never tires of complaining that the Forum is being commandeered by the big companies whose dues have made him extremely rich. It’s entirely possible that Sorkin is the only man in Davos who seems to genuinely believe that the purpose of Davos is to put Schwab’s ideals into practice.

The fact is that there is no global conversation; there is no “room”. (Or if there is a room, it’s the room which holds the IGWEL meeting, which is open only to public officials: the entire private sector is explicitly excluded.) If you’ve ever tried to throw a dinner party for more than ten people, you’ll know that it very soon becomes impossible for all those people to participate in the same conversation — everything fractures very quickly. A highly formal setting with a tough moderator might be able to double that number, but when you’re talking about an event with thousands of delegates, simply being in the same Alpine town as everybody else hardly means that you’re part of some grand conversation which is going to improve the state of the world.

For instance: the Pope made a minor splash, today, by sending a message to the Forum, in which he calls, among other things, for “deeper reflection on the causes of the economic crisis affecting the world these past few years”, which should in turn result in the assembled CEOs adopting a “precise responsibility towards others, particularly those who are most frail, weak and vulnerable”, along with “integral promotion of the poor which goes beyond a simple welfare mentality”. To which I can only say: yeah, good luck with that. While it might be self-evident to the Pope that the global financial crisis was caused by a failure to care about the weakest members of society, that’s not exactly a viewpoint which is going to be forcefully articulated at tomorrow’s panel on the “Global Financial Outlook”, wherein various bank CEOs will talk about “consequences of continued monetary expansion” and the “impact of regulatory shifts and harmonization”.

Of course, the panels themselves are pretty much a sideshow. The secret to Davos’s success is no secret at all: you invite a very carefully hand-picked group of people to travel thousands of miles to a small and remote Swiss town, and then ask them to stay there, generally, for a good four or five days. You remove them from their normal gatekeepers and power structures, and force them to mingle in a space which is too small to fit them all comfortably. The result is a series of more or less serendipitous meetings, and an opportunity for the global elite to get to know each other in a largely agenda-free context. That’s why so many journalists come to Davos every year: it’s not because anybody is committing news, but just because it’s a rare opportunity to talk off the record with extremely important people, and to get a bit of a feel for what they’re like, as people.

The conclusion one draws from such meetings will not come as any surprise: CEOs are pretty normal people, who have a pretty shallow understanding of most things in the news, and who can often be stupid and/or obscene, especially when drunk. Yes, they have money and power, but that doesn’t make them particularly insightful or admirable. Often, the exact opposite is the case.

Why do these CEOs come to Davos? It’s not to reflect painfully on their failure to live up to the Pope’s calling. Instead, Occam’s razor absolutely applies, here: the simplest explanation is absolutely the correct one. They come because they are invited; because they can get their companies to pay for it; because it’s generally considered a hot ticket that lots of people want; and because they get to rub shoulders with heads of state and global celebrities.

Which is not something anybody will say in public, of course. The official reasons for coming are much more serious: Jamie Dimon “one top bank chief executive” told Sorkin that “it would take me an entire year, and I don’t know how many flights, to see the number of people I can in three days at Davos.” That might even be true, or true-ish, for Dimon. But Dimon is the schmoozer-in-chief in a high-touch client-service business: one of the main ways in which he’s managed to stay on top at JP Morgan Chase is precisely his political ability, and the way in which he can charm just about any client in a CEO-on-CEO meeting. Most CEOs don’t have that job, and their meetings in Davos are therefore much less integral to what they do.

Davos is a town of insecurity: everybody worries that they’re missing out on something better than whatever it is they’re doing. But the ultimate missing out is not coming at all.

Are all these powerful CEOs so insecure that they worry about missing out on Davos if they don’t come? Yes, they really are. Once you get that coveted invite, it’s much harder to say no than it is to say yes. The true lesson of Davos is nothing about making the world a better place; it’s that even global plutocrats get stars in their eyes when presented with the opportunity to hang out with Bill Clinton, or when they get an invite to the Google party featuring Mary J Blige. Schwab shouldn’t bellyache so much about such parties: after all, panels on the global mining industry don’t make for much of a junket. The parties and the extra-curricular activities are the real reason that half the attendees even bother turning up in the first place.


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