Davos - The world is watching!

Difficult times demand real leadership and a sense of responsibility, and never more has the world needed those individuals meeting in Davos at this year’s World Economic Forum to front up to the severity of the current economic crisis. I for one believe we will need a period of radical change and innovation to get the world's economies back onto an even keel. I heard someone on the radio this morning describe the current action of governments as the greatest ever inter-generational shift of debt and this is before we factor in the pensions black hole. While we can throw money at the current crisis the challenge remains one of building trust and confidence and avoiding protectionist actions (which increased the severity of the 1930's crisis) and which in modern parlance is being described as de-globalisation.

At Davos each year we launch our annual CEO survey. It provides a barometer of opinion from around the world and you won't be surprised to know that there has been a marked decline in CEOs confidence, which is likely to have deteriorated further since the survey was completed in mid-November 2008.  Do take a look at the survey, it has a lot of interesting content. The main thing I took away was that UK CEOs appeared to be more pessimistic than their global peers - is this just part of our make-up or has the UK got more to lose? Of concern was the significant majority who believe that the current crisis will impact investment plans, reduce the development of new products and services and make them more cautious about expansion in overseas markets. Unsurprising, I hear you say, which I would agree with, but it’s these areas of business activity which are going to be so important in positioning UK business as economic activity starts to stabilise and grow.   

I was also taken with CEOs responses to the things that are critical to competitive advantage: access to talent, brand and reputation, customer service, efficient supply chain and innovation. Again not surprising, but when asked about the adequacy of the information they have, and whether it was comprehensive, a somewhat concerning picture emerged.

Does the diagram (below) from the survey reinforce a picture of businesses still relying too heavily on historic financial information for decision making?

Download CEO Survey diagram

At uncertain times such as these, waiting for the financial numbers to tell you what’s happening in the business is risky if not cavalier. But my impression supported by these survey findings, suggest that more needs to be done to understand the critical drivers of competitive advantage. This has always been one of my hobby horses, but I think the current crisis may make it a 'mission critical issue' for a number of companies fighting for a competitive edge. 

And while I'm on the subject of serious thought, let’s go back to Davos. While many are quick to undermine the event’s value, and some CEOs have realised it's better to stay at home and mind the shop, I believe it should provide a critical forum for our world leaders from business and government. The question is whether those attending understand the responsibilities they are carrying and the impact and influence they can exercise. All those CEOs present represent global multinational companies whose success is dependent on a globalised world. Someone quoted a statistic to me a few years ago, that the top 500 companies controlled 70% of world trade. Whether that statistic is right or wrong, the CEOs represented at the forum have the ability to effect change like no others. However the mood of the meeting appears gloomy and there is little conversation on what needs to be done at this critical time when nationalistic agendas are rising to the fore?

I would be really interested in hearing your views on this by commenting on the blog.

 

David