GENEVA, 15 September 2007 — Although most do their best to avoid it, change is at the core of the human condition. Consultants promote it. Poets lament it. And historians record it. And despite a natural aversion to it, individuals and communities often defy expectations with their ability to adapt to change. Yet this surprising resilience rarely reveals itself in the largest of human designed institutions, namely corporations and nations. And this is worrying. Far too many leaders in boardrooms and capitals do not realize that they are in the midst of a shifting power equation that will eventually test the resilience of their respective institutions.
Not all leaders of course are unaware of the coming change. In Davos, German Chancellor Angela Merkel cautioned that, “the fact is, a completely new global balance of power is being created.” This is a profound admission, particularly from the host of the recent G-8 summit. Although the Group of Eight industrialized countries represent over 60 percent of the global economy, the chancellor’s realization is based on the fact that China and India, neither of which are G-8 members, are fast emerging as the future drivers of global growth. It should then come as no surprise that at some point in the near future, an entirely different cast of companies, cities and regions will emerge as the “New Champions” in the world economy. But the challenge posed by this scenario is that a corresponding shift in mindsets around the world has yet to happen. Again it seems individuals cope better than institutions with such changes. On the one hand, a growing number of shopkeepers and hoteliers in Europe and North America recognize that the increasing number of Chinese, Russian and Indian tourists are a demanding but lucrative client base. On the other hand, multilateral institutions such as the WTO and World Bank are clearly uncomfortable that the fast growing economies creating such tourists are also looking to assert greater influence in global economic governance — despite the fact that Asia alone now holds over $3 trillion in foreign currency reserves.
Historian J.M. Roberts observed that we discuss an ancien régime only when it is no more and that “societies cannot be aware of having an ancien régime until something has actually changed.” It is too early to speak of the G-8 for example as an ancien régime. However, globalization, arguably the greatest of all change agents, often masks important changes because life experiences, particularly among the more affluent and educated, begin to converge. Adding to the deception is our confidence that “western civilization” derived mainly from Europe will not fade away but instead will be emulated and adopted by the rest of the planet. Thus the conventional wisdom is that, “New Champions” will naturally emerge from a shift in power but they will only be updated, upgraded versions of a “Western” vintage rather than be of a unique origin. No one contemplates the emergence of a “Chinese” or “Hindu” civilization that would usurp the dominance of the Western cultural and economic influences in our daily lives. This is not because those of us in the West have come to believe or accept some form of cultural hegemony over the rest of the world, but rather because we feel that the competitive advantage we currently enjoy with respect to technology, innovation, productivity and education is a very large, and lasting, one. But the stark reality, seen time and again, is that no company or economy can ever enjoy competitive advantages in each or all of these areas forever. So what to do? Should we protect ourselves from further economic competition? Again change is at the core of the human condition, therefore we should begin preparing for a period acclimation, whereby both old and new actors get accustomed to a future environment that will feature greying industrialized economies alongside fast growing, young markets. If we avoid acclimatizing the parties together, then we are assured that the ensuing change will take on a confrontational tone for one of the stakeholders. And if history is to serve as our guide, then such a sequence of events must be avoided at all costs, particularly when nations are involved.
My own institution, the World Economic Forum, is now working to change mindsets so that this shifting power equation does not result in a zero-sum, but rather a win-win, approach toward global growth. The key is to allow for competitive and collaborative impulses to coexist in the global economy. Today our largest stakeholders are our members representing the world’s 1,000 leading companies. Over the past 30 years, that membership has been oriented around the Trans-Atlantic business community. But our future ability to shape a common global agenda for the next 30 will be predicated on broadening and deepening our ties in Asia, the Middle East, Africa and Latin America as those regions will give rise to tomorrow’s global growth companies. More important is that the most respected corporations of today engage industry leaders of the future to ensure that they understand what it means to be a Global Corporate Citizen. Future business leaders from every corner of the world will inherit an environment replete with global challenges such as climate change, income inequality, natural resource scarcity, to name only a few. Although challenging the status quo with innovative strategies and superior execution is one trait of a “New Champion,” true global success will require Brazilian, Russian, Indian and Chinese multinationals to measure the contribution they are willing to make to society and the environment through their core business activities, their social investment and philanthropy programs. This is the context in which the forum is reaching out to the next generation of fast-emerging companies and high growth economies from every continent.
(Klaus Schwab is founder and executive chairman of World Economic Forum.)
