By Klaus Schwab and - -
DAVOS, Jan 1 2007 (IPS)

We are in the midst of a revolution in which power is moving from the centre to the periphery and vertical command and control structures are eroding, writes Klaus Schwab, founder and Executive Chairman of the World Economic Forum, whose Annual Meeting in Davos will take place January 24-28. In this article, the author writes that today global trusteeship is needed more than ever since we have to confront so many global challenges simultaneously. The world has become a complex and dangerous place requiring urgent, effective mechanisms to address all the challenges in a proactive, comprehensive and systemic way. Recent events have highlighted the realities of global impotence. We are witnessing profound decay in the structures we have historically used to manage our world. We are witnessing the de-globalisation of a globalised world as the UN, the Bretton Woods organisations and many other multinational frameworks are struggling to keep up with changing global needs. This is made clear by our collective incapability to deal effectively with rogue states, with failed states, with terrorism and other events, from the collapse of the Doha trade talks to the crisis in Darfur. Existing global governance systems can no longer meet all the challenges of the 21st century in their present form, but reforms based just on prolonging the paradigms of the past will fail in our new flat world. What we need to do is connect, and reconnect, leaders from business, politics and civil society to form new coalitions to improve the state of our world and shape a new collective will.

Unprecedented integration and interconnectedness have created a true global neighbourhood. But, there is an underlying paradox here. Power is becoming more and more widespread, but as it does it is also becoming harder and harder to harness. We have a de facto global world, but our institutions and systems of global governance are disintegrating. In principle, we should now move to a higher global level of consciousness, identity and, of course, organisational structure, but the underlying organisational principle in our world has dramatically changed. The world is certainly becoming flat, that much is clear, but that is only the first part of the equation — simply a description of the state we have reached. What is more interesting is how we will reinvent ourselves, our social relations and our power structures within this flat world.

Our global institutions and governance structures have not moved with the times; they were built on the concept of nation states, mainly designed to protect national interests but fostering no sense of global trusteeship. As we have seen on countless occasions in the past decade since the end of communism, any sense of taking action on global goals for forming a global coalition to achieve common ends — if it happens at all — is strictly limited in terms of timeframe and scope, and usually still strictly limited by the narrow interests of nation states.

What is clear, however, is that global trusteeship, global stewardship is needed more than ever since we have to confront so many global challenges simultaneously. The world has become a complex and dangerous place requiring urgent, effective mechanisms to address all the challenges in a proactive, comprehensive and systemic way. As we again aim to be a part of this search for new mechanisms and new joint approaches to global problems, we hope to marshal a broad-ranging group of stakeholders at the Annual Meeting of the World Economic Forum to tackle these multifaceted problems in a multifaceted way.

Let me highlight just some of the complex challenges that will be exercising leaders from all sectors of society as they meet in Davos this week, and which demand a coordinated, multi-stakeholder approach.

First there is the unsustainable way we treat our biosphere — increased levels of atmospheric carbon, growing water shortages, expanding deserts, shrinking forests. This environmental damage plagues countries around the world, industrialised and developing alike, not to mention all the social challenges and tensions that result from rapid resource depletion and dislocation.

Second are the economic challenges. There is a growing danger that current economic development will become stuck in the sins of yesterday and today. Despite the underlying robustness of our expanding global economy, the instability of international imbalances continues to widen, and income gaps between and within countries continue to grow. We cannot continue to follow the principle “consume now and pay later”. This concerns not only the American consumer but all of us who try to avoid the necessary reforms to safeguard our environment, to adapt our social, health and educational systems. Sometimes it seems that we as a society have lost our genetic `drive’ to take care of the next generation.

On a political level, recent events have highlighted the realities of global impotence. We are witnessing profound decay in the structures we have historically used to manage our world. We are witnessing the de-globalisation of a globalised world as the UN, the Bretton Woods organisations and many other multinational frameworks are struggling to keep up with changing global needs. This is made clear by our collective incapability to deal effectively with rogue states, with failed states, with terrorism and other events, from the collapse of the Doha trade talks to the crisis in Darfur. These developments indicate that existing global governance systems can no longer meet all the challenges of the 21st century in their present form. But all reforms that are based just on prolonging the paradigms of the past will fail in our new flat world.

On a societal level, the question is: can we cope with the speed of change? On the other hand, people have also developed a new social sensitivity for everything which is not flat. They feel instinctively that a flat world also requires a new sense of equity and solidarity. This is why the new social movements are often driven by young idealistic crowds and not by the traditional left. But there is a contradiction between this new idealism and reality because globalisation does create winners and losers. It pushes us into a world that is socially not flat. The gap between those able to ride the wave of globalisation, especially because they are knowledge- and creativity-oriented, and those left behind is becoming wider at global, national, corporate, and individual levels.

Finally, on a cultural level, we are witnessing a world in search of its soul, its roots and a re-emergence of cultural and religious identities. The Web culture, the new flat world with 2 billion people interconnected next year, does not necessarily foster a true global culture or identity in a quasi-unlimited multichannel world. Much to the contrary. The trend is towards individualisation, tribalism, renewed localisation. The buzz word in the Web 2.0 world is community — but if we are not vigilant these will not be communities acting in the global interest.

When the world moved from local to global, from the village to more centralised power structures in the 19th century, the liberal ideology evolved based on the need to protect the individual against the collective, against the superpower of governments and against bureaucratic institutions. Now, with the new revolution where power is moving back into individual hands, a new imperative seems to gain ground as a basic political principle: to protect the collective against the individual, justifying such an approach with the argument that the individual may have destructive capabilities which in the past only a few countries had. Where is the equilibrium in this fight of the collective vs the individual? If we can find this new balance then we can hope to make a flattened world work for the good of all.

This ‘flattening’ world presents ever more opportunities to which individuals and institutions must adapt. What we need to do is connect, and reconnect, leaders from business, politics and civil society to form new coalitions to improve the state of our world and shape a new collective will. It is perhaps ironic that surrounded by the mountainous peaks of Davos later this week we will be working on how to take advantage of a flattened world for the good of all. (END/COPYRIGHT IPS)

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By Klaus Schwab and - -
DAVOS, Jan 1 2006 (IPS)

We are entering a new era, for both business and the whole world, in which the \’\’creative imperative\’\’ will come to dominate our lives, at home, at work, and at leisure, and in which the assumptions, tools, and frameworks which leaders from business, government, and civil society have employed to make decisions over the past decade are no longer valid, writes Klaus Schwab, Founder and Executive Chairman of the World Economic Forum. The theme of this year\’s Forum, to be held 25-29 January, is The Creative Imperative. A global networked economy, economic imbalances, new mindsets, demographic shifts, and the gravitational pull exercised by the emergence of India and China are just a few of the factors that are radically reshaping the global environment. The \’\’Creative Economy\’\’ which is emerging is in one sense the logical extension of the process of globalisation that has been sweeping the world for the last fifty years but which has accelerated almost exponentially in the past decade. But is not just business that must adjust to this new emerging environment. Governments, multinational institutions, and civil society organisations must also adopt new policy designs and innovative approaches if they are to remain effective and credible.

We are entering a new era, not just for business but for the whole world. It is one in which this ”creative imperative” will come to dominate our lives, at home, at work, and at leisure, and in which the assumptions, tools, and frameworks which leaders from business, government, and civil society have employed to make decisions over the past decade are no longer valid.

A global networked economy, economic imbalances, new mindsets, demographic shifts, and the gravitational pull exercised by the emergence of India and China are just a few of the factors that are radically reshaping the global environment.

The ”Creative Economy” which is emerging is in one sense the logical extension of the process of globalisation that has been sweeping the world for the last fifty years but which has accelerated almost exponentially in the past decade.

But is not just business that must adjust to this new emerging environment. Governments, multinational institutions, and civil society organisations must also adopt new policy designs and innovative approaches if they are to remain effective and credible.

Moreover, for many of the world’s most pressing problems it is becoming increasingly clear that no single government, company, or multilateral institution working alone can be effective. Leaders and their institutions must learn to adopt, collaborative approaches to address issues, and such multi-stakeholder approaches have creativity at their core.

This fundamental change in the global environment comes at a time when the world is faced with weak leadership, insecure populations, and institutional fragility. In business, technology and information are becoming globalised and commoditised and with this commoditisation of knowledge core advantages are being shipped abroad — not just in manufacturing but increasingly in high level service jobs.

But the pressure is not just on the old world in this new era; simply doing things faster and cheaper is no longer enough. More and more, creativity and design are becoming the key drivers and differentiators.

But this new creative age is not simply one that business must take note of. Design Strategy connects (or reconnects) organisation to the customer, supplier. In the case of government and non- governmental institutions, it allows leaders to gain (or regain) legitimacy by becoming more relevant and addressing dilemmas with innovative approaches. Creativity becomes imperative to address global issues. The old single issue and single organisations methods of tackling world problems will no longer work.

At the recent Millennium Development Goals summit of the UN in New York (September 2005) there was, I believe, finally a dawning recognition that the world’s problems –whether HIV/Aids, natural disasters, or other– cannot be left to one group of leaders or institutions, whether politicians or NGOs.

Business for example can offer significant innovations, advantages of scale and yes, a wealth of resources too, which can no longer be ignored by so-called civil society.

Take for example the Hurricane Katrina. There yet again we saw the failure of local institutions and government to come up with the solutions by themselves. We also saw many business groups lending their expertise in key areas. And it is these creative alliances that will increasingly provide solutions to our problems. More or less loose alliances will form and dissolve and adjust themselves to deal with different problems.

Thus, more and more in this creative era we will need matrix organisations that can provide a platform for people to work. The new global organisations will be platforms that will enable creative and collegiate solutions to emerge to deal with specific problems.

There has been a fundamental change in the global economy — and concomitant changes in our globalised society and polity. It’s hardly surprising that leaders, like the led, are finding it hard to keep pace with these changes. But some leaders are beginning to see that they must change the way we do things — that they must take brave, bold, and above all creative steps to match the new landscape.

These leaders realise that we can not depend upon existing framework and assumptions that only years ago were taken as a given and must move forward in an environment of uncertainty where only creative solutions will work.

We are entering into a new paradigm and still do not fully perceive its shape — it is in this new world that citizens, business people and politicians will all have to grasp the creative imperative to thrive. (END/COPYRIGHT IPS)

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By Klaus Schwab and - -
GENEVA, Jan 1 2003 (IPS)

Progress depends on more than high-level cooperation among global decision-takers, writes Klaus Schwab, founder and president of the World Economic Forum. It also requires a different kind of leader, Schwab writes in this article for IPS — one that has contributed to social transformation by applying entrepreneurial skills to address a wide array of social challenges at the local level. These leaders are called social entrepreneurs. Social entrepreneurs enter the scene precisely where markets have failed to deliver critical public goods and services, particularly to those who cannot pay. Without market assistance, social entrepreneurs create the social value underpinning the productive healthy societies upon which sustainable development depends. The World Economic Forum uses its leverage such that the scalable solutions of social entrepreneurs can be replicated, improved, and expanded, so that their practical insights can be incorporated into government policy and business initiatives, Schwab writes.

Thirty-three years ago, I founded the World Economic Forum with the purpose of building a global community of business leaders that search for joint solutions to challenges at the macroeconomic and geopolitical level. As the Forum evolved over the years, we invited political and academic leaders as well as representatives from the media to contribute to our discussions and widen our perspectives.

With the recent emergence of thousands of citizens’ organisations, a new global political context has been created characterised by more collaborative ways of relating among the state, the market actors, and these citizens’ organisations. The World Economic Forum has welcomed the presence of strong civil sector organisations, for they are linked inextricably to democratic governance and sustainable development.

And so every year, the participation of representatives from the citizen sector increases at the Annual Meeting in Davos. Today, the Forum is committed to improving the state of the world by providing a non-partisan and independent framework enabling world leaders to address global issues in a collaborative manner. The Forum has always, since its inception, promoted entrepreneurship in the global public interest.

But the Forum by nature operates at the macro level. Over the years, it has become all too evident that progress depends on more than high-level cooperation among global decision-takers. It also requires a different kind of leader — one that has contributed to social transformation by applying entrepreneurial skills to address a wide array of social challenges at the local level. These leaders are called social entrepreneurs.

Similar to business entrepreneurs, social entrepreneurs combine innovation and resourcefulness to create value. But the value they seek to generate is primarily social. Whereas business entrepreneurs are constrained by the market from operating where financial profits cannot be generated, social entrepreneurs enter the scene precisely where markets have failed to deliver critical public goods and services, particularly to those who cannot pay.

Without market rewards or assistance, social entrepreneurs create the social value underpinning the productive healthy societies upon which sustainable development depends.

Muhammad Yunus is the world’s best-known social entrepreneur. Thirty years ago, he was a professor of economics in his native Bangladesh. He was driven to find a way to convince banks to loan to the poorest people in his country. He was thought to be mad. The poor have no collateral, he was told. Loaning them money is folly as they cannot repay. Undaunted, Yunus decided to start a bank for the poor. The first loan was for about USD 30. With that loan, he single-handedly revolutionised traditional banking policies and developed the concept of micro-credit. Today, micro-credit is mainstreamed even into the most conservative institutions. Yunus changed forever the myth that being poor was synonymous with being a high-risk investment.

Social entrepreneurs are pattern-breakers. They challenge the way things have been done, often finding unique ways of combining proven practice with innovation to address complex social problems. Vera Cordeiro was a paediatrician at the Hospital da Lagoa, a large public hospital in Rio de Janeiro. Every day, she saw the same children re-admitted, trapped in the cycle of poverty and ill health. She founded Renascer in 1991 to provide families, particularly mothers, with job training, housing improvements, psychological and nutritional support, day care, and medicine. Since Renascer’s inception, the number of paediatric cases re-admitted to the hospital has decreased by 60 percent. Today, the Renascer model has been replicated in 14 hospitals throughout Brazil. Vera Cordeiro is one of the sixty outstanding social entrepreneurs that have been selected by the Schwab Foundation for Social Entrepreneurship. She, along with seven others from Brazil, will be attending the Annual Meeting in Davos.

Social entrepreneurs share underlying core values independent of whether they work in renewable energy, micro-finance, food security, health, education, or other arenas. Among those values is an unwavering belief in the innate capacity of all people to contribute meaningfully to economic and social development. Gisele Yitamben from Cameroon founded ASAFE based on her belief that African women could develop into successful business entrepreneurs if provided training and development support, alternative financing and access to e-commerce. ASAFE today supports thousands of women entrepreneurs in Cameroon, Guinea, Benin, Chad, and the Democratic Republic of Congo.

But too often the work of social entrepreneurs and their organisations falls short of what it could be. They often lack the legitimacy, credibility, and the resources to achieve wider impact. While they have hundreds of years of accumulated practical experience in solving problems related to sustainable development, they are seldom given the platform to share with the world their methods and results so that others can emulate what they have done.

The World Economic Forum uses its leverage to attract the notice of governments and business people so that the scalable solutions of social entrepreneurs can be replicated, improved, and expanded, so that their practical insights can be incorporated into government policy and business initiatives. Social entrepreneurs are the heroes and heroines of the 21st century. Their perseverance, ingenuity and pursuit of noble goals set new standards of value, hope and inspiration for all of us. (END/COPYRIGHT IPS)

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