It has become an annual ritual – I either talk to Malcolm Frank, EVP of Strategy and Marketing at Cognizant before or after the annual WEF event at Davos. This year it was after the event where he missed at least one dinner appointment due to heavier than usual snow but came back filled with even more memories. Here is part 1 of his comments:
I think that it was a very good WEF, very productive from our perspective, and of the years I've been going, was probably the most upbeat. I think that was pretty much a consensus view. However, there was such confidence in the global economy that some people were wondering, “Does that even start to border on complacency?” After all, when most everybody starts thinking in one direction the opposite tends to occur. And recessions generally appear every eight to ten years, and it’s now been nearly ten years since the credit crisis. That said, this year’s Davos had a general sense of optimism.
Three themes transcended the week:
a) The first is the notion that businesses need to step up to be truly responsible members of their communities and society in general. The call for corporate purpose was prevalent - that each company should think of what is it contributes not just to its customers, shareholders and its employees, but to the broader communities in which it operates and serves. That a company needs to go above and beyond just delivering good results, but at risk of sounding trite, needs make the world a better place. And not in a general sense, but very specifically through what it sells and how its employees behave. That was a theme that was provided in formal panels and discussions and also ran through many informal discussions as well.
b) The second and, probably the most dominant theme, was around tech. If you had a dollar for every time you saw the word "digital" for the week, maybe you'd have $278 when you left. It was plastered most everywhere. There are lots of streams that go from this focus on digital. One stream is, I was really impressed by how CEOs are up to speed on technology - even specific technologies. They would ask: What is the art of the possible? What are my competitors doing? What works and what doesn't work at scale? The key is real use cases in their industry. There was an intense focus on that and a deep appreciation of what it takes to be successful.
That is a big shift as, in the last five years, digital has picked up enormous momentum. Five years ago there was just a general awareness of this as something important. The last few years, CEOs were getting educated on the topic. Now you see people taking action. When CEOs are looking at their own companies they ask, “How do I become a digital leader?” Digital is clearly a double-edged sword. If they do nothing, they can be victimized by it, but if they make sage and shrewd moves, they can really start to gain advantage. That was, I think, CEOs looking at their companies, what they thought of digital.
Another theme tying these first two together – of businesses acting responsibly in society and what's happening with technology - is an intense focus on the FANG vendors, and their impact on society. We've been in wonder about the growth and consumer adoption of these platforms for the past ten years. Now there's a lot more scrutiny, and that scrutiny is all around this general notion that this may be a vast social experiment that we're all on together, and we don't know where it's taking us. What does it do in terms of privacy? What does it do in terms of trust? What does it do in terms of sovereignty? These are big questions that are now being asked. Also, one theme that was coming through a lot was on societal norms and values, and that those tend to be embedded in these products. That there is an inherent Northern Californian social and ethical bias embedded in these products, and yet how do those play around the globe?
Richard Edelman presented the Edelman annual trust barometer. He was describing how trust had truly collapsed in several areas. It had collapsed in and with the United States. It had collapsed with the media as an entire sector. A common denominator in all of those was the role of social media. This is now having really, really big impact. People are starting to think through, “What do we do about it?” I could go in lots of different directions on that, but that was a big topic.
And there were not only questions on the societal impact of the FANG vendors, but also – more prosaically - their industry impact. If you look at the digital ad market, it's become a duopoly. The majority of US ads now online are either on Google or on Facebook. If you start to look at what's happening in the Cloud, we're starting to see similar concentration. Probably the most significant one is what's happening with mobile operating systems. It's between Android and iOS. That is, I think, now 99.7% of the market, just those two platforms. Of course, then, what goes through the platform of Google, the dominance that Facebook has in their space. There's, I think, real conversation on, is it healthy to have that level of industry concentration? Additionally, people are thinking through and starting to realize, it's not just about market share or revenue or market cap (which are more traditional industrial measures and constructs), but it's about data. How do we all feel when that much data is concentrated, and growing at radical rates, on individual platforms? That's now very much in the conversation.
c) The third topic is the health of the economy worldwide. The view was, things are pretty good. Around the world, by and large, you get this parallel growth of societies and large economies firing on all cylinders. China continues with this strength. India has sustainable momentum. The euro zone, surprisingly, is doing very well. Japan is healing. Then the US is probably as strong as it's ever been.
In fact, the optimism of US CEOs was the highest, I think, in the history or measurement at Davos, certainly the highest in recent memory. US CEOs are quite excited about the economy, but that was not just in the US. That sentiment was fairly broadly held, I would state, with the exception of the UK. Real concern post-Brexit.
In the context of this economic optimism, there is still a view that there are a lot of things up for grabs right now. In the language of the west, we're leaving the third industrial revolution, and we're going into the fourth industrial revolution. In that context, there's a real need for leadership across governments and corporations.
There are some very important issues that need to be thoughtfully guided and determined. In the same way that America had an important voice through the 20th century, in those times, it needs to continue to have an important voice in the 21st century. Many at Davos openly spoke about that... this longing for continued American engagement as this new digital economy unfolds.
That said, I heard several times where people were tying this back to social media and trust. You can draw a straight line through recent political events ... You look at what happened in France. They went from a left-leaning government to a young centrist who had zero governmental experience. The UK had the Brexit. The US had Trump. In all three cases – whether people like it or not - the majority of voters said “Something completely new and unknown is better than what we currently have.” A lot of that is a manifestation of this shift, that too many people are being left behind in this transition from the third economy to the fourth. It's creating alienation and disenfranchisement. We're going through this lumpiness in economic shifts, where some gain but far too many are being left behind, and we need real leadership during that time. I think that's how people were defining it. And it requires true leadership, those who look beyond their turf battles or supporters, and establish a vision for all of society.