I left my hotel to attend the Harvard reception scheduled for 8:00 a.m. I was leaving the hotel a little less than an hour later than I had the previous day, so it was already light outside. Since it was no longer snowing, which made for a nice change, I stopped walking for a moment to enjoy the Davos scenery. My hotel’s location atop a hill offered a panoramic view of the city of Davos. In front of me was the pointed spire of the church, and beyond it were the Alps. On the upper part of the mountain was a gentle slope where I could faintly make out a ski slope. Ski slopes in Davos extend over flat land on the peak of the mountain.
I walked down the hill as usual to the three-way intersection, turned in the opposite direction from the main venue and walked to the reception venue. I arrived at the hotel, but couldn’t find the reception room. I asked the front desk clerk and he said he didn’t know.
Puzzled, I called my secretary in Japan and asked her to check. As I waited for confirmation, a hotel clerk approached and told me, “It starts at 8:00 p.m., not 8:00 a.m.” I had mistaken p.m. for a.m. I was stunned for a moment, but composed myself and checked my schedule.
Fri, 29 Jan
08:00 – 10:00 Harvard Reception
09:00 – 10:00 Redesigning Capital Markets
10:30 – 11:45 Rethinking Government Assistance
12:00 – 14:00 Infosys luncheon
14:00 – 14:45 Beautiful Science
14:45 – 15:45 Global Industry Outlook: Finance, Services and Media
16:00 – 17:00 Technology for Society
17:15 – 18:15 Business Leadership for the 21st Century
18:15 – 19:00 The US Economic Outlook
20:00 – 21:30 India Reception
My entire schedule today basically involved attending sessions. There were none that I needed to speak at, nor were there any specific meetings. It was a day of learning.
The first session was due to start at 9:00 a.m. It was just before 8:00 a.m. I wondered whether or not I should return to my hotel, but I couldn’t decide. On occasions like this, I always do something without thinking too much about it. So, without thinking too much, I decided to go to the Congress Center, the main venue. I boarded a shuttle, and enjoyed talking to another passenger. Arriving at the Congress Center, I walked up to the Information Desk. Learning that breakfast was being served, I headed to the room. I accessed the Davos Conference computer (a kiosk terminal) on the way and made a mental note of the speakers for the various sessions being held today. I then met an acquaintance, with whom I chatted over breakfast. In no time, the clock was minutes away from striking 9:00. I headed to the room for the first session, “Redesigning Capital Markets.”
Henry Kravis, the legendary founder of KKR and the inventor of LBO, was scheduled to speak at this session. Others in the grand line-up of speakers included the head of Bank of America, which bought out Merrill Lynch, the Canadian Minister of Finance, the head of the New York Stock Exchange (NYSE), the CEO of an Italian bank, and Chairman Ujiie of Japan’s Nomura Holdings.
Sessions in Davos are usually short, lasting only about an hour. Since there are several panelists and questions are taken from the audience, they each only get to talk once or twice. Under these conditions, it takes a highly skilled moderator to keep the discussion from breaking up.
I consider Davos to be a “trade fair of leaders.” That’s why, here at this session as well, I decided to sit directly in front of the speakers to observe the expressions of the leaders.
Kravis, as I had expected, had the face of experience, whereas the CEO of Bank of America seemed to lack experience and looked somewhat out of his depth. Apart from their expressions, their posture and what they talk about are also important. How comprehensibly and to the point do they speak? Ujiie-san, representing Japan, had prepared thoroughly and was very comprehensible. He also displayed a great deal of wit.
What was memorable in the debate was the view on the danger of making decisions based on one’s emotions. I couldn’t help agreeing with the comment made by the head of the NYSE, who said, “A decision made emotionally rarely yields satisfactory results. And that goes for the government as well. Today, people make decisions based on emotional logic. This poses the danger of excessive regulations, as with the SOX Act after the Enron incident.”
“Rethinking Government Assistance” was a session that debated how much government involvement should be permitted. The famous professor Michael Porter moderated this session. The session favorite was David Cameron, who heads the Conservative Party in the U.K.. All eyes were on how the young politician, who is tipped to become the next British prime minister in this year’s elections, would stage the debate.
His debating opponent was Jean-Claude Trichet, the famous President of the European Central Bank. And the dark horses were the head of McKinsey and the head of the Standard Chartered Bank, among others. There was a lot of attention given to how each fared as a leader.
Before the debate began, the editor of the Washington Post, who was sitting next to me, commented that Cameron was charming and witty. I kept hearing these pre-contest evaluations as the “power race” of leaders began, moderated by Michael Porter.
Cameron demonstrated a presence beyond what I had imagined. Although he chose his words carefully, he clearly emphasized what he needed to. He possesses intelligence and charm. I felt that he would almost certainly become the next prime minister of the U.K. this year. As I had expected, European political leaders are well accustomed to speaking on the big stage.
Trichet also displayed a solid presence. He possesses intelligence and moral capacity. He is like the personification of the Central Bank’s solidarity and assurance. In comparison, I didn’t see anything extraordinary in the leaders of the bank or the consulting firm. They probably seemed less significant than their peers, who are fully aware of their mission to drive a country or improve global finance.
For lunch, I attended the invitational luncheon hosted by Infosys of India. I went through the process of putting on my coat, walking the snow-covered streets, clearing security, and taking my coat off again upon finally arriving at the hotel venue. The Davos Conference is so grand in scale that the events are held in a number of different hotels other than the main venue.
I know Kris Gopalakrishnan, the CEO of Infosys, well enough that we had a one-on-one lunch together when I visited Bangalore in December 2006. Kris was later promoted to CEO, and this was the first time I would meet him since then. The invitees other than myself were almost all heads of client companies of Infosys. I humbly thanked Kris for the invitation, and settled in to enjoy the Indian cuisine. Sometime later, a panel discussion began. The title was “Social Network vs. CEO.” It debated how the spread of social networks would change management.
This was even more fun than I had anticipated. My own conclusion after participating in the session was that both organization and marketing would take the form of social networks. You can’t move people by issuing orders or by controlling them. Organizations would shift from a pyramid form to a network form, and then to a network that includes customers. (This, by the way, is exactly the same as the concept Globis has advocated since its foundation.)
Advertising would also become useless. The central form of the medium would shift from the conventional media as seen today to people. If so, the key point would be how to empower people as a medium and get them to pass on quality information. In other words, it is the power of word of mouth. When social networks spread, they bring an end to the existing one-way media.
One word that came up quite often in this year’s Davos Conference was “tribe.” People connect with each other on the internet and gather naturally into tribes according to their interests. Each individual tribe has multiple avatars (personifications of ideas), so information spreads from person to person. The key for businesses is in how they take advantage of this situation.
After thoroughly enjoying the Indian cuisine, I left the venue early to avoid the rush to the cloakroom, and headed back to the main venue.
From 2:00 p.m., it was “Beautiful Science.” This was a collaboration between a MOMA curator and a Harvard professor. The concept was fusing culture and science, but it didn’t interest me much. I took advantage of the opportunity to close my eyes, shut down my brain and gather my thoughts.
From 2:45 p.m., it was “Global Industry Outlook: Finance, Services and Media.” The panelists included leaders of the Deutsche Bank, Boston Consulting Group and U.S. NBC, but the topic was too broad and the discussion was heading toward a superficial conclusion, so I left the session early.
I had registered for the “Technology for Society” session at 4:00 p.m., but decided instead to attend “IdeasLab” hosted by Harvard University. The basic concept of the session was for President Faust to introduce the overall structure, and for around five deans (department heads) and professors of each school to give a presentation. Each professor had five minutes within which he/she could present his/her point. Group discussions would then be held for each professor, and the participants would share what they had discussed at the end.
The Davos Conference invites prestigious universities such as Oxford and MIT to participate in this IdeasLab. In effect, it is a “knowledge competition.” Each university presents its knowledge, placing its dignity on the line. Japanese universities have been invited to Summer Davos, but have yet to be invited to the real Davos. I would imagine that it comes down to presentation skills if you want to compete at the global level.
From 5:15 p.m., there was a session called “Business Leadership for the 21st Century” that was supposed to talk about leadership. The focal person here was, no doubt, Eric Schmidt, the CEO of Google. I was interested in what the CEO who had “declared war” on China would say. Other subjects of particular interest to me were Indra Nooyi, the Indian CEO of PepsiCo, and her personality, and the leadership of HSBC and China Mobile.
But, but, but… This session turned out to have such basic content that there was nothing to learn. The CEO of PepsiCo had the greatest amount of fortitude as a leader. I spoke with Tasaka-san [President of SophiaBank] and Niinami-san [President and CEO of Lawson] after the session, and they were of a similar opinion.
My dissatisfaction disappeared completely in the last session, “The US Economic Outlook.” Larry Summers, who had assumed the presidency of Harvard and was the Treasury Secretary for the Clinton Administration before that, took the podium in this session. He is currently a member of the National Economic Council of the Obama Administration and the number-one thinker on economic matters. I have heard Summers’ speeches on several occasions in the past, and they were very intriguing. He always speaks with plain, direct logic and even criticizes matters that are considered common knowledge, which always leads to intellectual satisfaction and stimulation in me.
This session was no exception. It was conducted in the form of an interview with the anchorman. The first question was, “Obama announced his restriction plans on banks – the so-called Volcker Rule. Is everyone – including you, Larry – in on this policy?” His answer was clear. The bottom line was, “The Obama Administration is serious about imposing restrictions on banks.”
The next question was, “Fourth quarter growth for 2009 exceeded expectations. How do you view the current state of the U.S. economy?” His answer was easy to comprehend: “GDP growth will continue to rise gradually, but the issue of unemployment is of greater concern. It is over 10% as I speak. Every morning I talk with President Obama about how we can increase jobs and how the economy could recover. I have strong faith in the U.S. economy. There are so many difficulties in the short term, but in the medium to long term, I believe that no other country works as hard as America, and no other country produces innovation like America does. The flexibility and durability of the U.S. are not easy for other countries to copy, and its market and the openness of its system is worthy of praise.”
The next question was another tough one. “The U.S. has China buying its bonds. In effect, it is dependent on China. Is this situation going to continue?” The questions went on: “In the Opening Speech, President Sarkozy expressed his desire to shift the U.S. dollar’s role as the dominant currency. What do you think about that?” And then the last question: “When you left Harvard, you told everyone to ‘Know what the essential value is.’ What do you think the essential value or issue is today?”
His answer was as follows: “In the short term, the U.S. will continue to have China buy its bonds. Yet in the long term, it will be important that China shift its currency to a floating exchange rate system and that the economies re-balance themselves by stimulating domestic demand in China and increasing U.S. exports. The key currency is determined by the market; not by any government. What the U.S. can do is to keep organizing the infrastructure so that the market will want to keep using the U.S. dollar as its key currency. A nation where a generation of middle-class children can have better living standards than those of their parents will sustain prosperity. The essential value lies in creating that environment.” After the meeting, I exchanged opinions with Heizo Takenaka [former Minister of Internal Affairs and Communications] and Sadako Ogata [President of Japan International Cooperation Agency]. I saw that they too had experienced intellectual stimulation and were praising the speaker. I think everyone is trying to learn something by evaluating people from his or her own point of view.
I checked my coat out, boarded a shuttle bus and headed to India Night. I was eating Indian food for lunch and dinner. India’s presence was strongly evident at this year’s Davos. I talked with the two ministers, devoured my Indian meal, chatted with friends, and left the venue. I then went to the Harvard reception. I listened to the speeches made by the president and two deans (department heads). I met numerous people and exchanged information. The “Harvard Clique” lives on.
I then rode in the car of JETRO (Japan External Trade Organization)’s Chairman Hayashi, who dropped me off close to my hotel.
I walked up the usual hill and returned to my hotel. That night, my legs were quite stiff and I was no longer able to walk.
January 30, 2010
On a plane bound for Narita,