The Great Debate UK

A crisis of trust is at the heart of global uncertainty

By S. D. Shibulal, CEO of Infosys. The opinions expressed are his own.

During the first day at the World Economic Forum yesterday, we witnessed delegates arriving with two things on their minds — how heavy the snowfall was and the realisation that new business models are needed to overcome global economic pressures. (It goes without saying that the mood at Davos hasn’t been helped by the IMF downgrading world growth targets). We all agree that we’re living in a volatile world and it cannot go ignored that there are many uncertainties we face, including currency volatility and high unemployment.

The euro zone crisis will undoubtedly be at the centre of the discussions concerning “uncertainty” but what the attending business leaders, governments and global organisations must understand and discuss, is what they can do together to put in place measures to transform and change, so we can better safeguard our future.

The discussions I had at Davos yesterday support my fundamental belief that corporations have a critical role to play in creating a future where opportunities are abundant and growth inclusive. Moreover, at the heart of the global macro-economic uncertainty is the crisis of trust. Leaders across businesses and governments alike need to work together to rebuild that trust. Creating jobs and fostering sustainable growth is the first step in this journey. While businesses will need to look at measures to manage their short term crises and be truly evolved, smart enterprises will have to balance their focus between “short term needs” and investing for “long term growth through innovation”. We must also recognise that the emerging  future is being shaped by global mega trends in business and society, along with changing demographic profiles.

In view of these trends and the events that led to the recent economic crisis, leaders have their work cut out. Balance the short term versus long term, create a frame of reference to drive growth and innovation, and envision and create a sustainable future. All the views that I shared above resonated strongly with the panel that debated the critical issue of “the role of the CEO” at the Infosys Lunch Panel discussion yesterday. The panel also concurred that talent, which will be at the centre of these strategies is in short supply. Organisations therefore, not only need to look at new hubs of talent but also at retraining and reskilling existing talent pools. Businesses increasingly need to work in partnership with governments and educational institutions to ensure the mobility of talent and the career development of generation Y so tomorrow’s workers are in line with business demand.  Finally, there was unanimous agreement that leadership by example, client centricity and healthy balance of choices are the need of the hour.

Image — A visitor walks past WEF logos at the venue of the World Economic Forum (WEF) in Davos, January 26, 2012. REUTERS/Christian Hartmann

from Davos Notebook:

Cybersecurity goes prime time at Davos

- Michael Fertik is the founder and CEO of Reputation.com, an online privacy and reputation management company. He is a member of the World Economic Forum Agenda Council on Internet Security and recipient of the WEF Technology Pioneer 2011 Award. The opinions expressed are his own. -

The World Economic Forum (WEF) has named cybersecurity one of the top five risks in the world. In its Global Risks 2011 report, the WEF's Risk Response Network nominated cybersecurity alongside planetary risks posed by demography, resource scarcity, trepidation about globalization, and, of course, WMDs. This is heady stuff. Cybersecurity has officially gone prime time. This week in Davos, I'll be moderating and contributing to panel sessions on this topic.

The timing could not be more ripe. Right now we are witnessing the convergence of multiple seismic risks to data integrity. Social networks capture and mine ever larger amounts of data about humans and companies, opting users into increasingly invasive data collection with little or no notice. Apps operating on social networks and smartphones continually pull data streams about friends, families, personal connections, contacts, geo-location, behavior, preferences, tastes, and health habits -- even when these data streams are unrelated to the stated purpose of the applications.

We've seen search sites mine public data, semi-public data, purchased information that was supposedly private, and even scraped or stolen data, and aggregate them together for sale and resale on the open web, claiming cover of current law. To date, the Internet economy has been nearly perfectly stacked against individuals' control over their data. The proliferation of deep digital information about every individual on earth, along with the correlated explosion of its easy and unwitting accessibility by third parties, poses a "personal WikiLeaks" threat to each of us.

That brings us to Julian Assange's WikiLeaks, which is itself the subject of at least one session at Davos this year. Reviled by some and relished by others, WikiLeaks represents either "radical transparency" or "radical invasion," depending on your point of view. A large and growing raft of self-described "whistleblower safe harbors" pervade the Web, enabling and encouraging publication of confidential information that is difficult to authenticate as true or false. I suppose I was nonplussed by the bulk of the content published on WikiLeaks about American foreign policy -- I think it's fairly awesome that the United States is secretly saying pretty much the same exact things it says publicly.

But many people can agree that, when it comes to difficult questions of diplomacy, the ultimate resolution may be greatly benefited by the comfort of each party to talk freely within itself or with others when behind closed doors. The brilliant sunlight of transparency may be just the medicine needed to remedy a public lie, as in the case of the Pentagon Papers, but it may also turn from "transparency" to murkier "invasion" when it comes to secrets of hard-won technical innovation such as an automaker's hybrid engine code base or a nation-state's schematic for a particularly nasty weapon.

Indeed, states and non-state actors alike are taking note of the evident power of cyber tools to advance their often alarming aims. Cyber-warfare and cyber-terrorism are now the single most efficient ways to damage sworn enemies. Just as the most enterprising criminal networks have decided to abandon old-fashioned thuggery in favor of more profitable cyber crimes such as VAT fraud and identity theft, states and terrorists have taken to the Internet to realize the maximum possible benefits of asymmetrical warfare. A few smart people can infiltrate financial systems, transportation networks, energy grids, and key commercial installations to steal information, seize control of operating systems, or shut down critical infrastructure. Software engineers are now, pound for pound, the most valuable weapons in a military arsenal.

from Davos Notebook:

Shared norms, soccer pundits and dealing with the ‘New Reality’

-- Mark Kobayashi-Hillary is the author of several books, including ‘Who Moved my Job?’ and ‘Global Services: Moving to a Level Playing Field’. The opinions expressed are his own. --

And so the World Economic Forum (WEF) in Davos is underway once again. The theme this year is Shared Norms for the New Reality, which according to the WEF is: “…reflecting the fact that we live in a world that is becoming increasingly complex and interconnected but also experiencing an erosion of common values and principles.”

I think that means life is moving faster so we need to step back and review some basic principles, because some are struggling to keep up. At least that’s what I understand it to mean.

But, disregarding the headline purpose of the conference, the really interesting story I am noticing as the WEF gets underway is that partners – or sponsors in more direct language – have been asked to bring at least one woman in their delegation. In 2010, just 16% of attendees in Davos were women and the WEF wants to see that figure going up.

But this is a club for presidents and company executives and fewer than 3 percent of the Fortune Global 500 chief executives are women and less than 20 of the world's presidents or prime ministers are female. It’s no wonder that Davos is overrun with men in unimaginative dark suits sheltering from the cold.

The WEF has been around for forty years now and this is the first time any serious effort has gone into forcing the companies who attend to favour their female employees for a place in the conference delegation. Some might argue that creating female-only quotas for a business conference is the tail wagging the dog, but organisations often need some incentive to change and break free of the sexism all around us in daily life.

This week, Britain has been gripped by the controversial recording of sexist remarks by two football pundits, Richard Keys and Andy Gray. Keys and Gray made disparaging off-air comments on Sky TV about a female match official, questioning her ability to understand the game based solely on her gender and scoffed at remarks by former Birmingham City FC Managing Director, Karren Brady, that the game is sexist.

from Davos Notebook:

CEOs hoping that everything comes up roses

A few things struck me from the annual survey of CEOs that PwC (yup, PricewaterhouseCoopers likes big 'P', little 'w', big 'C') released at Davos this year.

The most obvious was that 48 percent said they were "very confident" of growth in the next 12 months - up from 31 percent last year. Pre-crash confidence again!

But I have to say, I wondered a bit about their crystal ball when 37 percent said they planned to shift sourcing to China -- with cost being the most cited reason. With inflation looming and currency moves almost certain, that isn't necessarily a bet I'd make. There are plenty of reasons to go to China -- and I've staked my career on it since 1979 -- but cost isn't top of my list in 2011.

The other thing that caught my eye was that managing talent was top of the CEO agenda -- higher even than managing risk, investment decisions, reputation or capital structure. But alas, for those hoping for a pay rise out of it -- strategy number one was "use more non-financial rewards to motivate staff". I'll be sure to ask my CEO Tom Glocer for a pat on the head while we're here together in Davos!

from Davos Notebook:

Davos fails to grab the attention of angry protesters

The days when anti-capitalist protesters could rampage through Switzerland's financial capital Zurich in rage at the Davos talkfest 100 miles (150 km) to the east are long gone.

A couple of hundred anti-globalisation activists managed to rally in the nearby town of St. Gallen on Saturday against the annual meeting of the World Economic Forum opening this week. Braving a vicious north-east wind, they assembled near the station then marched peacefully through the centre of town, barely disrupting the good burghers as they went about their weekend shopping. At the front of the demo a large red banner proclaimed: "Take the future from the capitalists - Smash the WEF".

The mostly young demonstrators pulled a cart festooned with anti-capitalist slogans, and beat drums and lit crackers to keep time. The march went off peacefully.

Is it a sign of the fading relevance of the world's greatest networking event? Just as the forum has failed to attract the political leaders of the emerging economies, so it no longer appears to grab the attention of the anarchist and alternative movements.

from Davos Notebook:

Celebrities and handshakes – is the WEF really working?

-Mark Kobayashi-Hillary is a British author, blogger, and advisor on technology, globalisation and corporate change, based in São Paulo, Brazil. The opinions expressed are his own.-

The World Economic Forum returns to Davos next week for the annual round of handshakes and backslapping between world leaders and A-list celebrities that aim to solve the major problems of the world. But when this blog (http://blogs.reuters.com/davos/2011/01/13/is-davos-still-relevant/) asked readers if the annual WEF meeting in Davos is still relevant, more than two-thirds of you said that times have changed and little will be achieved.

That seems a harsh judgement from the blog readers, so I asked my own network of online friends on Twitter (www.twitter.com/markhillary) and Facebook what they think.

Of course, mine is an unscientific survey that no academic could ever support – negative feelings tend to run higher and attract more comment than positive – but my own network agreed that little will be achieved in Davos – a full 100% of people who sent me a comment supported that view.

Some typical responses were: “Davos still counts because no one expects it to do anything”, “Stop the drama... take the hundreds of millions of expenses and develop a hundred target villages [in India]”, “I never noticed it was Davos time because I have yet to read the poor Doctor Who puns in the media”, “annual lame duck sessions that only project and boost their narcissistic, bloated egos....”

The World Economic Forum believes that the only way to create real social and economic change is to get the major decision-makers together so they can plan a future political, economic, social, and technological agenda. In a way, they have a point. Have you ever tried working virtually with people you don’t know? The team in another country that your boss insists you work with. Once you go and meet those same people, share a dinner or meet their family, what happens to your working relationship?

It improves dramatically, just because you met the people and experienced a real interaction with them as fellow humans. That makes for a more efficient workplace where decisions can be taken together. It is natural for all of us to work better and be more agreeable with people we know, rather than the unknown voice at the end of a telephone line or email address.

from The Great Debate:

Five overlooked global risks

-- Rafael Ramírez is the James Martin Senior Research Fellow in Futures at Oxford University and author of "Business Planning for Turbulent Times: New Methods for Applying Scenarios" edited with John W. Selsky and Kees van der Heijden. Ramírez attended a session at the World Economic Forum's gathering in Dalian, China, on managing global risks.

Reuters asked Ramírez to elaborate on five overlooked risks the world is confronting as it works its way through the current recession. His response is below. The views expressed are his own.

Risk one: Confusing risk with uncertainty

The first -- and perhaps most important risk -- is confusing categories of ignorance. This most centrally is about confusing risk with uncertainty. It entails pretending that probability (with data sets of past events with distributions of occurrence which are relevant for the future) is relevant for both "known unknowns" one cannot model with probability as well as unknown unknowns in one's plausible futures where no data set is available, such as those of unique events.

Unfortunately, while the uncertainty that we became aware of as the financial crisis unfolded did not obey to the characteristics of "risk", a lot of the policy interventions and "solutions" that were put in place pretended that the risks were known -- and thus are well positioned to create new trouble. What we need to do instead is accepting that uncertain ignorance - for which forecasting, probability and risk are irrelevant - is now a common characteristic of our environment, and that we need technologies based on plausibility, like scenario planning. Plausibility is not going to be easy to implant in large organizations with established teams whose livelihood depends upon calculation of probability - but is necessary.

Risk two: Failure to link different types of knowledge

A second under-explored risk is keeping different forms of knowledge disconnected. This is typically manifested as keeping knowledge in the organizations that develop and use knowledge (like universities, corporations, or patent offices) in silos, while also ignoring that different scales create difficulty to translate applicability from small to large contexts and vice-versa. Failure to link different types of knowledge together, and to organize the architectures that enable this, prevents effective action. So the risk is that insufficient conversations linking different forms of knowledge will be made available, and that "solutions" in one context create (bigger) problems in others that have not been consulted.

from The Great Debate:

Energy realism and a green recovery

-- Jay R. Pryor is vice president of business development for Chevron. The views expressed are his own. --

The concept of a "green recovery" is a compelling topic of discussion at the World Economic Forum this week in Dailan, China. It stems from the United Nations Environment Program calling for investment of 1% of global GDP (nearly $750 billion) to promote a sustainable economic recovery.

A “green recovery” speaks to two of the most important issues of our time –- the efficient use of energy and the realistic understanding of energy’s role in the global economy. It’s a role that can help lift millions of people out of poverty, while addressing a healthier environment.

We all aspire to a more environmentally sound approach to energy, but to address these aspirations we need to be realistic about energy. Call it “energy realism.”

“Energy realism” is a commitment to a long-term view of the role of all forms of energy in our lives, and the need to be realistic about the true scale and complexity of the energy challenges that confront the global community.

Every day, the world uses, from all energy sources, the equivalent of 245 million barrels of oil. Eighty-five percent of the global economy is powered by oil, natural gas and coal, despite the enormous progress we've made toward alternative energy sources.

Worldwide, we use 50 percent more energy than we did only 20 years ago. And 20 years from now, demand will have risen by another 30 percent or so.