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THEY love superlatives at Davos. Anyone who can describe a trend as the biggest, the newest, the hottest or the scariest is guaranteed to keep the audience agog.
The tone was set at the start of the World Economic Forum in what was described as "The Big Debate: setting the business agenda".
Larry Summers, president of Harvard University and a former US Treasury secretary, said that the world was probably experiencing the third biggest economic revolution of the past millennium alongside the Renaissance and the Industrial Revolution. The resurgence of China and India and the impact of disruptive new technologies were revolutionising the global economy. "We live in a mark-to-market world where everything is tested against market forces every day," he said.
Other speakers expressed the sense that history was accelerating and time was being compressed. There were concerns that the institutional framework for global integration, such as the international trade regime, was too weak while some of the scariest threats would result from local disintegration. "People have been trying to create a global village. But this dream is over," said Peter Brabeck, chairman of Nestlé, the world's biggest food company. "Regions are drifting apart. We are also drifting apart within regions themselves."
Sir Martin Sorrell, chief executive of WPP, the advertising group, said the pace of change and the disintermediating effects of new technologies meant that companies would have to innovate more effectively and differentiate their products in the marketplace. He sounded a particularly ominous note for many multinational companies: "I think it is almost impossible for traditional companies and traditional structures to adapt quickly enough."
In a separate session, Craig Barrett, chairman of Intel, emphasised that the threats to these big companies often came from disruptive new technologies and start-up firms: "If you look at the challenges to established companies, they do not usually come from other established companies but start-ups. The biggest challenges to Microsoft have been start-ups out of universities: Netscape, Yahoo and Google."
These over-arching themes -- among several others -- were debated in six off-the-record chief executive workshops to which the Financial Times gained exclusive access. CEOs, government officials, economists and academics were asked to brainstorm about what the world would look like if the global system broke down and intellectual property rights were no longer enforceable. How could traditional companies recruit, retain and stimulate the most creative employees and become more innovative?
Some of the most radical thinking came in the sessions on how to attract the world's most creative people and how to turn their good ideas into money-making propositions.
Roger Martin, dean of the Rotman School of Management at Toronto University, who led one of these discussions, said there would be increasingly intense competition to win the loyalty of the world's "creative class", the generator of value for so many modem corporations.
Citing Peter Drucker, the management writer, he suggested that companies would have to treat their employees like volunteers: every day they would have to provide compelling reasons why their most talented employees should keep coming to work. This would not just be about money; chiefly it would be about building socially valuable corporate communities in which individuals felt valued. Managers who could create such communities and inspire their most creative employees would be like gold dust: "Finding community-building talent is the single most precious resource in the modern world."
Many chief executives acknowledged they would have to find far more flexible ways of dealing with their creative stars by "individualising" their jobs and delegating much more trust down the organisation. More attention would have to be paid to making working lives more family-friendly, more exciting and more diverse. Many companies allow chief executives to serve on other companies' boards and advise charities, in the belief that this broadens their experience and stimulates their thinking. Why not allow your talent to work elsewhere, too, for the same reasons?
If the aim truly is community building, should you then allow your stars to hire their friends? That could pose big problems within corporate hierarchies but it would certainly help ensure continued loyalty. How about giving your staff more leeway to pursue their creative mission? One businesswoman from a leading internet company suggested adopting the "rule of 10" - if an employee had a good enough idea, give them 10 people, 10 months and $10m (£5.7m) to turn it into reality: "We want marines not mercenaries. You want people to come to work to achieve a mission; you do not want people who would just sell their services for the highest price."
There was heated debate, though, about how far such star treatment should be extended. The obvious danger is that by giving exceptional treatment to the most talented staff you only alienate the rest. Why not treat everyone in the company the same way? But then how do you deal with those who abuse your trust?
Although big, hierarchical companies might not be good at encouraging their employees to dream up radical new ideas, they should at least excel at understanding their marketplace and turning projects into reality. Innovation is not just having a good idea; it is also about deployment, as US venture capitalist Geoffry Moore noted.
Several chief executives said it was vital to create a culture in which ideas could bubble up to the surface from anywhere in the organisation. Those specifically entrusted with innovation should certainly not have a monopoly on the subject. But it was equally vital to sift these ideas efficiently and kill off the bad ones quickly.
"We took on too many projects and never invested in any one sufficiently enough to ensure that they succeeded," said one ex-industrialist. "We said our strength was focus, but we focused on everything."
One US pharmaceuticals executive said his industry had been grappling with this issue for decades. You had to be as sure as humanly possible that a new drug was going to work before you pumped hundreds of millions of dollars into its development. Killing bad ideas was almost as important as coming up with good ones. Such a ruthless culling process helped ensure that a company maximised its chances of success by focusing all its time, effort and resources on the most likely winners.
If any one theme emerged from all the business issues discussed at Davos it was probably provided by Larry Page, co-founder and president of Google, and his ubiquitous disciples: "Have a healthy disrespect for the impossible."
In a session with 50 technology pioneers, Mr Page casually chewed over the possibilities of revolutionising the global energy industry or tackling poverty in developing countries. His philosophy was that you had deliberately to seek out the toughest challenges because that was where the greatest opportunities lay.
"You might as well do some social stuff because that is where the big problems are," he said. "If a lot of people come out of poverty that is a tremendous business opportunity."
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FT Syndication Service
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