This is a longer version of an article that was first published in the Oct/Nov 2017 print and e-edition of Global Geneva magazine.
You’d hardly expect a business professor or company executive to name Nelson Mandela and Shimon Peres as the two people he most admires. But for Klaus Schwab, head of the World Economic Forum, both are at the top of his list of most inspiring global leaders.
This despite a testy encounter with Mandela on the stage of Davos in 1992 when Klaus tried to intervene because the anti-apartheid activist largely overran his allotted time in the first global platform to include all the South African leaders.
Mandela, for his part, said the Davos 1992 visit made a major impact on his perception of the world and particularly of free markets, influencing substantially his policies as president. He came back in 1997 and 1999 and a friendship developed between them.
Mixing with the rich, famous and powerful for over 40 years at the annual Davos meeting of his organization, Klaus Schwab – now in his 80th year – is well aware of the Forum’s image problem. “It’s very easy to say that Davos is a rich man’s club or a club of the powerful and construct a kind of conspiracy of people committed completely to shareholder principles and ruthless organization against humanity,” he acknowledges.
But he insists: “It’s just the contrary. What we want to show is that ruthless organization or thinking about business without taking into consideration social dimensions in the end is self-destructive.”
So he’s proud of having invited the German Green Party leader Petra Kelly to the Davos debates as early as 1983. He enlisted international trade unionist Philip Jennings from the Geneva region to bring international labour leaders to present their views to business leaders every year, and gave a stage to the Swiss maverick eco-campaigner Franz Weber. Equally unusual for a professor in the spreadsheet-bound MBA environment, Schwab has always believed in the importance of personal contacts.
That, in fact, was how he got his start in thinktanking and international networking. The former French Premier Raymond Barre, then at the European Union, supported Klaus – as he is known to all his staff – in putting together the first Davos meetings, when its future was in doubt. Friends from Harvard and elsewhere, such as the economist J.K. Galbraith, turned up at Davos mark 1 to introduce 450 business executives from 31 countries to the U.S. management gospel.
It’s a conviction that has served him well. It led in 1999 to the signing of an agreement between Switzerland and the U.S. settling a dispute over the accounts of Nazi Holocaust victims. Greek and Turkish leaders pulled back from the brink of war in 1988 and signed a “Davos Declaration” to defuse tension. Talks this year in Crans-Montana haven’t taken them much further forward.
Similar top-level encounters helped open up a dialogue between the two Koreas, East and West Germany, in Vietnam, the Middle East as well as in South Africa. Through Klaus, the WEF also began involving more directly the heads of various United Nations agencies ranging from UNHCR to UNICEF.
German Vice-Chancellor Hans-Dietrich Genscher’s appeal to the world at Davos to take Soviet President Mikhail Gorbachev at his word when proposing reforms is widely credited with giving the impetus to the end of the Cold War, the collapse of the Soviet bloc, and the unification of Germany. Genscher later said he was well aware of the global and privileged platform that Davos would give him, and paid tribute to Klaus in making this possible.
An informal meeting organized by the Forum led to the launching of the Uruguay Round of global trade negotiations and later the creation of the World Trade Organization (WTO). The North American Free Trade Agreement (NAFTA) emerged from informal talks in Davos. The “Earth Summit” on Environment and Development also took its first steps at the Forum in Davos.
It has held 33 economic summits under various names in India, the latest just ended. The Forum was one of the first international organizations to recognize India’s industrial exporting and investment potential, and it set up meetings to introduce India’s business leaders to interested Western companies.
The now-defunct Clinton Global Initiative (CGI) shows how difficult it is to pull off such feats, even with a schmoozer of the caliber of Bill Clinton. As you can read in The New York Review of Books (8 June 2017), the Initiative was mooted on his flight to the 2004 World Economic Forum Annual Meeting as a “different, better” Davos. Clinton’s advisors promoted CGI to their boss as a way to stimulate action on the most pressing global problems “instead of just jabbering and networking and drinking little cups of espresso”.
Apart from this gross misreading of what the World Economic Forum has always tried to be, the Initiative – which ex-President Clinton announced at the 2005 Annual Meeting – developed a new approach to philanthropy but shut down after 12 years. Critics noted of the CGI: “Too many of the feel-good, high-profile announcements have ended up meaning not much.”
The CGI was definitely a club of likeminded leaders. “People like Franz Weber, when I invited him to come to Davos at the end of the 1970s, he was looked on as the enemy,” Schwab recalls. “Today business has evolved and executives consider representatives of Greenpeace as legitimate discussion partners with whom they don’t share always every idea but with whom they consider a dialogue necessary.”
In a mantra he has stuck to throughout his Forum career, Schwab says: “Our job in Davos to a certain extent, if not to a large extent, is to confront business with the mirror of social expectation.”
He warned of a populist backlash against globalization and automation 21 years ago, well before the “me-first” political movement gained hold in the industrialized nations. Today his latest project is to help the world prepare for what he calls “The Fourth Industrial Revolution”, likely to robotize many middle-class and blue collar jobs out of existence and abolish the competitive advantage of cheap labour in developing countries.
From the beginning of his career, Klaus Schwab has attracted the devotion of a number of people who consider him a genius. Not for his double Ph.D. (in technological sciences and economics), or for his entrée to some of the most powerful and high-profile leaders of countries, global businesses, charities, academic institutions and artistic circles. They admire him more for his vision of the way in which the world is developing – and his concern with the human impact. It has earned him the friendship of unusual people, including Mandela, once the world’s most famous political prisoner, and Shimon Peres, the Israeli statesman who sacrificed power in the hope of a Middle East peace.
Born in Ravensburg, Germany, on 30 March 1938, Schwab was involved in efforts after the Second World War to promote reconciliation between French and German young people. His father was the managing director of a Swiss machinery company and led several industry and business associations.
In 1957 Klaus moved to Zurich to study engineering at the Swiss Federal Institute of Technology and simultaneously economics and social sciences at the Universities of Zurich and Fribourg. He worked on the shop floor of companies in several countries during the university holidays and was awarded all his degrees with the highest honours.
He was a Geneva management consultant and part-time professor with a masters in public administration from Harvard when he read Jean-Jacques Servan-Schreiber’s “The American Challenge”, warning that Europe was falling behind the U.S. He set up the European Management Forum and organized the first Davos meeting, choosing the Grisons resort because he liked skiing and thought his colleagues would find it an additional attraction, even at the lowest point of the winter season. That same year he married Hilde Stoll, his first Forum collaborator, whom he describes as his “social conscience”. Together they established the Schwab Foundation for Social Entrepreneurship in 1998.
Thanks to Klaus, the annual Forum meetings have dispelled the bleak image of Davos presented in Thomas Mann’s famous novel “The Magic Mountain” (1924) about a hopeless sanatorium in a world that has lost all its human values. The sanatorium where Mann’s wife Erika spent time in 1921 is now the four-star Waldhotel. At least, healthy people no longer walk around with a handkerchief in front of their faces as they did in the early 20th century. And the celebrities and billionaires are likely to walk along the snowy streets like everyone else.
Klaus found that the business people who came to Davos in 1971 have the same problems as those who attend the Annual Meeting today: “They are driven to be more and more competitive or go out of business. On the other hand, they are human beings and thus concerned with the effect of their actions. They come to Davos for a few days to reflect on the fundamentals. And the fundamentals, I think, are not just the financial issues. The fundamentals are the social issues, the ethical issues, issues of the sense of life and of course all those issues that eventually affect the business climate such as cultural tensions and so on.”
One of the most insulting labels pinned on Annual Meeting attendees was “Davos Man”, Samuel Huntington’s description of business leaders concerned only with the financial bottom line.
There is indeed a Davos Man, Schwab admits (women make up only a minority of the participants, 21 in 2017, though a lot more of the ‘talking heads’ and support staff). An informal Forum Survey in 1999 estimated that probably only 120,000 people around the world were involved in the cutting edge of global affairs. “Davos Man is the person who is at the forefront of this new revolution taking place – call it the Internet revolution or whatever – the change of life caused by technology,” he suggests. “There are very few people who really understand what is going on.”
From the beginning Schwab has championed what he calls “multi-stakeholder cooperation”. In his view, this means ordinary people, activists, academics and scientists as well as shareholders and business executives. A Forum publication setting out the first 40 years of its history says stakeholders “include the enterprise’s owners and shareholders, customers, suppliers, collaborators of any kind, as well as the government and society, including the communities in which the company operates or which may in any way be affected by it. Indeed, a broad range of actors in the national economy may in some way or another be counted among the stakeholders of any commercial organization.”
The Forum website gives space to the Open Forum originally organized by the Swiss Protestant Churches at the same time as the Annual Meeting to keep a critical eye on the “Summit of Summits” discussions. Since 2012 the Forum itself has taken responsibility for this meeting of non-business activists and people with a different perspective on the issues. Several of them are invited inside the Congress House to present their views.
The Forum’s 1974 Meeting included Archbishop Dom Hélder Camara, considered persona non grata by many governments and business leaders, as one speaker. Another was Jacques-Yves Cousteau, the environmental campaigner. Neither minced their words about multinationals (the Archbishop) or political inaction on ecological issues (Captain Cousteau).
There is now talk that the World Economic Forum should step in to mediate a re-assessment of Britain’s Brexit which many in the business community consider could be a plunge into the abyss and a dire security threat for Europe.
Schwab’s vision throughout the years has always included a way to make the Forum more than a meeting place for coffee and jabbering. Through a magazine for top executives, early electronic networking, a place on the Internet’s “Second Life”, and consultations between business leaders and experts on global problems, he has tried to make the Forum an arena for permanent consultation. This, he argues, will be the key to its survival after he is gone.
Much of the time Schwab’s vision has been ahead of technology’s capacity to deliver on his ambitions. But with a new generation of business leaders and a changed world from the “greed is good” environment (at least until the Trump backlash), the Forum now boasts 12 “communities” ranging from civil society representatives to young global leaders (aged 30-40), global shapers (20-30), social entrepreneurs and young scientists (under 40). Its Network of Global Future Councils studies developments in robotics, biotechnologies, cities, education, consumption, even the humanitarian system, and similar topics far beyond profit and loss accounts.
WEF is finally developing beyond Klaus Schwab’s personal network and becoming what he hoped it would be over 30 years ago when the European Management Forum changed its name to the World Economic Forum: a global thinktank on the solutions that business and academics – the best management practitioners and the best minds – can bring to social problems facing the world in our generation.
Contributing editor Peter Hulm wrote our article on The Fourth Industrial Revolution. Many of the quotations from Klaus Schwab come from an interview Peter conducted for Crescendo magazine in 1999.