On Monday, 23 October, the World Economic Forum formally welcomes its new President Børge Brende. He will chair the Managing Board, which has collective responsibility for the successful execution of the Forum’s strategies and activities. Børge will work closely with the Forum’s Executive Chairman, Professor Klaus Schwab, who remains responsible for the organization’s overall strategic development.
Klaus Schwab said on Børge’s appointment: “The World Economic Forum has entered a new phase, reflecting the increased need for collaborative efforts of governments, business and civil society to address the manifold challenges we face. Børge Brende has the leadership and political experience to ensure our increased relevance for international cooperation. He has served Norway with distinction, and during his previous service as a Managing Board member he has also contributed to the mission-oriented spirit of the World Economic Forum.”
Below is a recent interview from Professor Schwab, which provides context on this new phase, and the future development of the World Economic Forum.
The Forum’s Future
Interview with Professor Klaus Schwab, Founder and Executive Chairman
of the World Economic Forum, 29 September 2017
1) You announced that Norway’s Minister of Foreign Affairs, Børge Brende, has been appointed President of the World Economic Forum. Does this mean that your succession has been resolved?
Since its recognition as international organization, the statutes and regulations of the Forum stipulate separate roles for the Executive Chairman and the President, who has overall operational responsibility. Børge Brende joining the Forum offers a great opportunity to not only fill the position of President but also meets the governance requirements. As for myself, I will continue my role as Executive Chairman – on a full-time basis – and primarily focus on the strategic and conceptual lead of the organization.
2) And when will your succession take place?
Certainly not soon. When it will, there are outstanding personalities in our Board of Trustees who would be in a position to maintain institutional continuity.
3) What does Børge Brende’s appointment mean for you?
A substantial reduction of workload. At the moment, 15 colleagues report to me directly. This is in contradiction to the rules of effective management- in particular in the context of our dynamic growth rate and in such a fast-living environment –, which I have been lecturing to my students for more than 30 years. Moreover, the principle of collective responsibility is embedded in our Managing Board. Børge Brende will ensure a better coordination of our various activities. As highly respected political leader with particular experience in peace-making, for example in Colombia, Børge Brende will also extend and further strengthen our governmental relations.
4) You have been enjoying a success story of almost 50 years, going back to the founding of the Forum in 1971. Next year you will turn 80. Are there any institutional or personal signs of fatigue?
Not at all. The world is caught up in a rapid, comprehensive transformation – technologically, economically, socially and politically. Being able to help shape this transformation, and to do it in a positive way, is an incredibly motivating challenge. That pushes me and the World Economic Forum forward.
5) What is the secret of an organization that, since 1971, has grown by an average of 10% every year – in other words, one in which the volume of activities doubles every seven years?
Always look to the future and satisfy newly emerging needs in international cooperation. Being a pioneer also means taking risks. I haven’t succeeded at everything. But the very most important thing for me has always been to strengthen trust in the organization as an independent and neutral partner for government, business and civil society. Building on this basis of trust, we are going to continue our growth course.
6) You have around 700 employees in Geneva, New York, Beijing, Tokyo and San Francisco. Are they all needed to organize the Annual Meeting in Davos?
Of course not, especially given that we have outsourced a lot of the operational tasks. Davos is the focal point of efforts that extend over the entire year and include over 100 working groups and many issue-oriented and regional meetings around the world.
7) Can you elaborate on your activities outside of Davos, particularly their benefits?
We have identified 14 major problem areas that can only be solved through global cooperation between business, government and society. This requires forward-looking systemic thinking and the integration of all state and non-state actors. Think of the future of automated driving, the future of healthcare as revolutionized by personalized medicine, the future of jobs in the age of robotics, and so forth. Our role is to better interconnect the world through systems thinking by providing platforms, and in doing so, to jointly find solutions.
8) Time and again, there have been attempts to imitate the Forum. What sets you apart in what you do?
We’re more than just a conference organiser. Since 1971, we have represented the so-called stakeholder concept, which I first described in a book published that year. In its original form, the stakeholder concept means that the decision-makers in a company are responsible not only to the company’s shareholders, but to other stakeholders as well – the social groups that directly or indirectly depend on the company, such as customers, employees, the environment and the state. Over the years, we have continued to develop this principle. The major corporations, in particular, along with state organizations and civil society, are themselves stakeholders in our planet today and therefore have a responsibility to contribute to meeting global challenges. The Forum is now the most important organization integrating all influential stakeholder groups worldwide over the long term in what we call communities. In addition to corporations, international organizations and governments, these groups include NGOs, labour unions, universities and – of greatest importance to us – youth. Don’t forget: 50% of the world’s population is less than 27 years old. It is this generation that has the greatest interest in how the future is shaped. We have brought all these stakeholders together in a community. That’s what makes the Forum unique.
9) Last year you signed a headquarter agreement with the Swiss Confederation recognizing the World Economic Forum as an international institution for public-private cooperation. What is the significance of this to you?
We are now focusing our initiatives in the areas where it is clear that neither governments nor companies nor NGOs can advance alone. I’m thinking here of all of our new initiatives, like the creation of a platform for the development of principles and guidelines for the use of new technologies like blockchain, artificial intelligence, drones and genetic engineering. We have founded a campus of our own for this work in San Francisco where representatives from international organizations, the business world and governments work together to ensure that the underlying conditions for these technologies are defined such that the human being stands at the centre of these developments.
10) How do you manage to always stay up to date?
Through our network, we are connected with the world’s leading universities and research institutions, so we constantly have our finger on the pulse of innovation in the research world. One of the communities most active in the Forum comprises of the 30 most famous universities in the world, including ETH Zurich, Harvard, MIT and Oxford. We also have a network of experts dedicated to the issues of the Fourth Industrial Revolution, known as Global Future Councils. This network is made up of more than 800 experts from around the world who serve two-year terms on the councils in which they deal with specific questions and advise the Forum in its activities.
11) Your book The Fourth Industrial Revolution, published in 2016, has been translated into 26 languages and has sold nearly one million copies. What’s the reason for this great interest?
In my book, I show for the first time in summary form how current technological developments will fundamentally change not only business models, but also governance, economics, indeed all of society and even the individual. All of this is happening at a pace that hardly allows us to prepare for these massive changes. At the end of this year, I will publish a second book, and I’m astounded at how technologies that hardly anyone knew just two years ago, like blockchain or CRISPR, have already become subjects of everyday discussion.
12) How does the Fourth Industrial Revolution impact the way the World Economic Forum works?
We want to be pioneers in its application. We have made an eight-digit investment in establishing TopLink, our digital network of global decision-makers. We have a team in London developing artificial intelligence software and another team in Geneva investigating how blockchain can support global governance.
13) You are hiring at least 100 new employees worldwide this year. What do you expect of your employees and what do you offer?
The Forum is an organization that does conceptual work, above all. This calls for the best-educated talent and the greatest possible diversity. 96% of our employees are university graduates, almost all from leading universities. The average age of our staff is 36, coming from 80 nations, so we offer a dynamic, highly challenging work environment. And we live our mission every day: “Committed to improving the state of the world”. In addition, we have collaborated with INSEAD, The Wharton School, Columbia University and others to create an employee development programme leading to an executive master’s degree in Global Leadership. For these 100+ positions, we receive 17,500 highly qualified applications per year.
14) You started the World Economic Forum in 1971 as a non-profit foundation. Measured in commercial terms, the Forum now has an annual budget of CHF 300 million and with its globally known brand is worth several hundred million. Don’t you regret today that you aren’t the owner?
No, not at all. As a foundation, the World Economic Forum belongs to the public. Were it a profit-oriented organization, it would never have been able to build up the trust that is indispensable to its work. I am an employee with a salary that Forum regulations, incidentally, stipulate must lie within the range of those of heads of Swiss public institutions like the National Bank or cantonal banks. I can live on that just fine.
15) But your wife also works for the World Economic Forum?
Yes, she was my first employee. Since 1973, though, she hasn’t been an employee, but works pro bono.
16) What is her role?
She is primarily involved in cultural and social issues, and not only within the Forum. For example, she was recently appointed to the high-level Advisory Board of the United Nations Development Programme (UNDP), the mission of which is to strengthen the efficacy and sustainability of social development projects.
17) According to its balance sheet, the World Economic Forum holds substantial reserves. So it has a strong financial cushion – is that correct?
First of all, a significant portion of those reserves are provisions for our new initiatives, which the Board of Trustees approved in August, including the further expansion of our headquarters in Geneva and the Forum’s technology campus in San Francisco. An organization like ours has to finance expansion not on credit, but on its own capital resources. Furthermore, in a turbulent world, we must be prepared for all risks to be able to maintain our independence and our responsibility to our employees in all cases.
18) What financial controls is the Forum subject to?
Our accounting must first meet official Swiss accounting standards, and is reviewed by one of the largest international auditing firms. The auditor reports to the Auditing Committee of the Board of Trustees, comprised of independent individuals with financial experience. In addition to that, our annual income statement and balance sheet are submitted to the national authority for the oversight of foundations. Our entire financial department is also obligated to report annually to the American tax authority, the IRS. This is because the Forum was granted a US tax exemption by the IRS in 2016, which allowed us to integrate our American subsidiary financially and in accounting terms.
19) You seldom make public appearances. Hardly anyone knows that you have been knighted by Queen Elizabeth, that you have received the highest official decorations of Germany, Japan and other countries, and that you have been granted 16 honorary doctorates for your academic achievements to go along with your two conventionally earned doctoral degrees. Why are you so reserved?
Of course I am pleased to have received academic awards in acknowledgement of intellectual achievements. But I always have to think about the future of the Forum. The institution and the larger endeavour are more important to me than personal accolades.
20) And yet isn’t it true that you and the World Economic Forum often come under criticism?
Today, the World Economic Forum is a brand that is known around the world and seen in predominantly positive terms. In many countries, particularly in Asia, Africa and South America, it is recognized that we have been working for decades to contribute not just to the economic, but also to social development of the continents.
21) In addition to the World Economic Forum, you have started three other foundations. What is their purpose and importance?
I am especially proud of the Global Shapers Community, which allows us to include the younger generation, people aged 20 to 29. We now have over 400 local Global Shaper hubs around the world, which among other things are committed to setting themselves a specific local task for the public benefit every year. For example, the construction of a gym for a local school with 350 students in Yerevan, Armenia, or the remodelling of public buildings in Dhaka, Bangladesh, to afford disabled persons better access. I could name hundreds of other examples. The Forum of Young Global Leaders comprises, above all, executives between 30 and 40 years of age. To promote social entrepreneurs – whose primary aim is not profit but an innovative solution to a social problem, for instance improvements in the health or environmental sector – my wife, Hilde, and I launched the Schwab Foundation for Social Entrepreneurship in 1998.Up to now it has sponsored 350 social entrepreneurs. All three of these foundations ensure that we, in our global thinking, stay connected with local problems, and perhaps that we don’t lose touch with people “on the ground”.
22) The World Economic Forum has also become an internationally significant media company. To what aim?
Right. We want to draw attention to the big global issues and include the public in the dialogue. I’ll give you an example: our recently released video “Fighting back against deforestation” reached 3.8 million people and got over 96,000 shares and 62,000 likes. We are among the best-represented international organizations in the media, with over 4.5 million followers on Facebook. The Forum’s videos were viewed over 55 million times in August, while our Agenda website, to which 350 external authors contribute each week, was visited over 4 million times. Additionally, 3.2 million people follow us on Twitter.
23) The Forum’s Board of Trustees met for two days in late August in Geneva. What is the role of this body, which includes personalities like Christine Lagarde of the IMF, Jim Yong Kim of the World Bank, Mark Carney of the Bank of England and Al Gore, former Vice President of the United States (1993–2001)?
The Board of Trustees is the decision-making body of the Forum. It defines Forum strategy and must also approve our most important personnel and financial decisions. The Board of Trustees reflects our stakeholder concept. About one third of the members represent business, one-third the academic community and civil society, and one third are representatives of international organizations and governments. As you mentioned, our meeting in August lasted two days. If you know how busy these people are, you can imagine their great dedication.
24) When you look back, what are you especially proud of?
There are countless so-called achievements. But I am especially proud of the fact that the Forum has given rise to three major global life-saving initiatives: first, the Global Alliance for Vaccines and Immunization (GAVI), which has immunized 580 million children and prevented 8 million deaths; second, the Global Fund to Fight AIDS, Tuberculosis and Malaria; and third, the beginning of this year saw the launch of the Coalition for Epidemic Preparedness Innovations (CEPI), with initial financing of $700 million. Beyond these, there are the many reconciliation processes in the world in which I have been involved, especially after the fall of apartheid in South Africa, during German reunification and in the Israeli-Palestinian conflict. And it was, above all, the intervention of the Forum that prevented a war between Turkey and Greece in 1988.
25) You have met almost all of the great leaders of the last several decades. What sets them apart, and who among them has impressed you in particular?
A leadership personality needs mind, soul, heart and nerves. Or, put another way, a high degree of professionalism, moral values linked with vision, passion and empathy, the ability to execute and, as I said, nerves. It would be nice if we had many individuals who truly met all five of these criteria. I’ve met very few like Nelson Mandela and the current Pope, whose great modesty I highly value.
A shortened version of this interview was published in German in the Swiss Business Magazine Bilanz.