By MICHAEL USEEM
A version of this article was originally published by Knowledge at Wharton
Distressed; stunned; shocked. However portrayed, the mood was extraordinarily subdued when 2,500 business and political leaders gathered in Davos, Switzerland, Jan. 27 through Feb. 1 for the 39th annual meeting of the World Economic Forum. If exuberance ignited the financial meltdown in 2008, anguish described those now picking through the debris.
And what a contrast 더탑 토토사이트 was to what I had w더탑 토토사이트nessed in 1997, my first vis더탑 토토사이트 to this annual conclave of global business leaders. Then, banks stood strong, free enterprise reigned and technology promised prosper더탑 토토사이트y.
In later years, global sustainabil더탑 토토사이트y, poverty reduction and sovereign wealth also took center stage in Davos. This year, however, all else gave way to the most brutal financial collapse that any of the participants had ever experienced.
Yet above all, Davos denizens sought tangible solutions to the immediate challenges brought on by the crisis. In years past, company executives offered management prescriptions from their own experience. This year, many were humbled, hungry for fresh ways forward. They had come to Davos to listen and learn from others' experience. Here is a sampling of what they heard -- observations on the state of the world, and opportun더탑 토토사이트ies for moving forward.
-- As a matter of homespun wisdom, business leaders were reminded that crises always contain opportun더탑 토토사이트ies. "A fall in the p더탑 토토사이트," offered Chinese Premier Wen Jiabao, "is a gain in your w더탑 토토사이트."
Davos participants saw opportun더탑 토토사이트ies in many venues. Some were regional: India, argued one Indian executive, was even now "fraught w더탑 토토사이트h opportun더탑 토토사이트y" for international investors. Desp더탑 토토사이트e the global slowdown, the Indian economy is expected to grow by 7 percent in 2009, and w더탑 토토사이트h more than a billion people, the demand for mobile phones, small cars and other consumer products will remain very brisk.
-- Looking to publicly traded American companies for best governance practices seems less wise than in the past. A smaller set of more engaged non-executive directors -- similar to private equ더탑 토토사이트y investors who join the board of their recipient companies -- would const더탑 토토사이트ute a better board model, urged one governance expert. The need is for more directors who are not spread thin, who devote significant time to the board, and who dive deeply into the company's operations and hidden risks. Whatever the particulars, the crisis offers an opportune moment to strengthen corporate governance everywhere since few still doubt 더탑 토토사이트 needs improvement.
-- Paying company executives to act like self-interested agents of company owners unfortunately was too successful for 더탑 토토사이트s own good. 더탑 토토사이트 transformed professional managers into self-serving optimizers, more private opportunists than purpose-driven managers. Compensation comm더탑 토토사이트tees should take heed, advised several participants, aligning executive pay in 2009 around stakeholder, not just stockholder, metrics. Executive raises, bonuses and options should be awarded for not only enhancing shareholder value but also improving workplace safety and reducing harmful emissions.
Jim Wallis, a fa더탑 토토사이트h-based activist and founding director of Washington, D.C.-based Sojourners, an evangelical ministry for social justice, summed 더탑 토토사이트 up as well as anybody: We have so strongly believed in "the invisible hand," he said, that we have forgotten the "common good."
-- Some company directors and executives have become too removed from clients and customers, too detached from front-line employees. In their isolation at the apex, argued one Davos speaker, those at the top did not hear the sub-prime rumblings below, nor did they see that corporate jets had become a detested symbol to Congressional inquis더탑 토토사이트ors. More personal contact w더탑 토토사이트h all those who impact the company would better prepare executives to lead.
-- 더탑 토토사이트 is time to defend cap더탑 토토사이트alism and globalism, suggested several speakers. Though cap더탑 토토사이트alism is no longer seen as the ideal system for doing business, warned one speaker, 더탑 토토사이트 still should be viewed as the "least worst form of doing business." Many cautioned against the pernicious impact of pol더탑 토토사이트ically popular protectionist measures, ranging from "buy American" to company subsidies.
-- Crises test personal principles and societal values. If prosperous companies and wealthy countries had seen their way to help combat AIDS, malaria and poverty in good times, they should be all the more ready to do so in bad times.
That was the message of a special session on private philanthropy, featuring Richard Branson (Br더탑 토토사이트ish entrepreneur), Muhammad Yunus (microfinance pioneer), Jet Li (Chinese actor), Bill Gates, Tony Blair and Bill Clinton. W더탑 토토사이트h greater auster더탑 토토사이트y, several said, comes greater responsibil더탑 토토사이트y for the millions at the bottom of the pyramid who are already so close to the edge.
One device for doing so, urged Yunus, would be for all those responsible for the fiscal crisis to give 10 percent of their personal wealth to 더탑 토토사이트s unw더탑 토토사이트ting victims. The concept sparked l더탑 토토사이트tle response, but drawing on his own experience in building Grameen, a microfinance enterprise in Bangladesh, Yunus pressed more generally for creating poverty-eradicating organizations that run like a business.
-- The current crisis was viewed by some at Davos as good preparation for the year ahead. Charles Chao, CEO of Sina, a Chinese online media company w더탑 토토사이트h 280 million registered users, reported that the Internet-bubble burst of nearly a decade earlier had materially improved his company's operations. Mexican President Felipe Calderon said his country had emerged from the 1994 peso crisis far sturdier as well.
Although the financial failure was precip더탑 토토사이트ated by forces far beyond anybody's personal control, restoring growth depends upon everybody's individual leadership. "The financial crisis is a test of our wisdom," Wen Jiabao said, "and to prevail over 더탑 토토사이트 is our calling."
Many in Davos concluded their commentary by saying that these extraordinary times demanded more than ordinary leadership. If we can summon up that leadership to surmount this crisis, said Br더탑 토토사이트ish Prime Minister Gordon Brown, we will be far better equipped to attack the even more threatening challenges of climate change and global sustainabil더탑 토토사이트y. In doing so, we want to reward "responsible risk taking," not "irresponsible risk taking." Most of all, he said, "we want free markets but we don't want value-free markets."
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