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MAR 26, 2015

Avengers Assemble! – 3 Takeaways from Davos

By Yoshito Hori

Yoshito Hori, president of GLOBIS University, managing partner of GLOBIS Capital Partners, shares his views from an entrepreneur’s perspective.

Every year I am lucky enough to attend the World Economic Forum in Davos, Switzerland.
It’s one of the best places for getting real-time insights into the big issues that are shaping the world.

This year, I detected three big new emerging trends. They covered the technology sector, the changing nature of threats to global order, and the general disappearance of trust in institutions.

1. Tech on the Back Foot

There was a time when the heads of the big tech companies were feted like heroes at Davos. That has changed. They are no longer seen as the face of a benign future. This year Silicon Valley stars like Sheryl Sandberg of Facebook, Marc Benioff of, Marissa Mayer of Yahoo and Satya Nadella of Microsoft all faced tough questions and had to defend themselves as the public mood toward the tech sector soured.

Suddenly companies that could do no wrong seem to be losing their way. A major power shift is taking place. The tech companies are becoming the big brother corporations that everybody loves to hate.

What has caused this abrupt change in perception?

I think it’s a whole host of things, some small—like the sheer rudeness of Travis Kalanick, CEO of app-based taxi service Uber, or the tactlessness of Facebook’s Year in Review, which presented the death of a user’s daughter as an event for him to recall with pleasure and share with his friends—and some large, like the aggressive tax minimization practices of firms like Apple; issues of privacy (data collection and usage, the right to be forgotten etc.); and finally the use of the Internet for nefarious purposes such as the Sony Pictures cyberattack, or for terrorist propaganda and recruitment.

At Davos, Fadi Chehadé, the president and CEO of ICANN (Internet Corporation for Assigned Names and Numbers), pointed out that the relationship of the internet with society was set to become a major issue at the United Nations General Assembly from September 2015. “If the industry does not step forward to makes its own rules,” he warned, “then governments around the world will likely begin to implement regulations and restrictions.”

Tech companies are accumulating power, with massive profits, great political influence and global dominance of their particular niche. Jeff Bezos’ personal acquisition of The Washington Post newspaper is a clear example of how the vast financial resources of tech companies are enabling them to encroach into new areas of public space.

The tech firms’ own hubris has triggered a general desire to restrain their influence. The very nature of the Internet, however, makes tech firms hard to regulate. Servers can be moved from one jurisdiction to another and shell companies can be set up in accommodating places like Ireland to help reduce taxes. Lobbyists can take control of the political agenda. (Witness how Silicon Valley crushed Hollywood’s efforts to get legislation against online piracy passed.)

How these issues will play out is anybody’s guess, but lesson one at Davos was that the honeymoon period is well and truly over for the “star” tech firms. They have become the new establishment and will be expected to behave “properly” in future by addressing not just their own interests, but those of other stakeholders too. Tech firms will need to balance their interests against the needs and demands of governments, individual users and other companies—and it won’t be easy.

2. Shapeless “Monster” Threats

Once upon a time, threats to the global order came from unique, clearly definable entities—states like Libya, Iran or Iraq. Now the biggest threats we confront are all from non-state actors, or “monsters.”

These new monster threats are unclear and hard to define. They continuously evolve and shape-shift; they are hard to pinpoint or understand, and indifferent to conventional restraints such as moral values or national borders.

Monsters take a variety of forms: they can be ad hoc transnational groups of people like Islamic State (ISIL) in the Middle East or Boko Haram in Africa; a disease like the Ebola virus or an environmental problem like climate change, both of which freely cross borders; or even a stealth technique like cyberterrorism, which can inflict huge damage while concealing its point of origin.

Engagement with these complex monster threats will be ugly and messy, but not engaging them is more dangerous. At Davos, I attended a session on tackling Islamic State (ISIL) sponsored by the Wilson Center. A consensus emerged that the only way to deal with the ISIL threat is through cooperation, with the US leading a coalition of European and Arab forces. A similar flexible, alliance-based approach is, I believe, the right approach with which to tackle all such modern “monster” threats, whatever form they take. Complex, border-crossing threats demand complex, border-spanning solutions.

3. Trust Goes Missing

The third trend I noticed is more abstract than the first two, but no less serious: trust has evaporated in every sector of society.

Government has lost trust due to its incapacity to fix problems. The private sector, especially banking, has lost trust due to endless scandals. The market has lost trust because all it has done is give us increased inequality. The media has lost trust because it is no longer seen as telling the truth. (Think of NBC’s Brian Williams with his fantasy helicopters crashes in the US, or Asahi Shimbun newspaper having to retract its reports on the forcible recruitment of comfort women in Japan.) The technology sector has lost trust, as mentioned earlier, because of tax evasion and privacy issues.

So where can we put our trust now?

At a Davos session coordinated by Edelman, the world’s largest independent PR company, various alternatives were put forward. NGOs were one candidate—until their limited capability and scalability ruled them out. Kevin Rudd, former prime minister of Australia, was confident that government would regain trust and rise again—a point of view that few others shared.

The final consensus was this: In a complex, “flat” world with multiple “monster” threats to confront, no single entity is capable of solving problems alone, so for the public not to trust them actually makes perfect sense.

We have already seen that in the future, the best—indeed perhaps the only—way to tackle global problems will be through the multi-stakeholder approach: everyone getting together to discuss the issues, devise solutions and co-implement them.

The leaders of the various stakeholder groups involved, from government on down, will win the trust of their publics through proactive, ultra-transparent communication, explaining what they are doing and why—exactly as is done at the World Economic Forum in Davos.

Perhaps the simplest way for me to sum up my takeaway from Davos 2015 is with a film analogy. In Hollywood, when the world faces an existential threat too big for any one superhero to deal with on their own, several superheroes unite to do battle as the Avengers or as the Justice League.

We have to do the same thing. To deal with our current existential problems—an over-powerful tech sector, shapeless transnational “monster” security threats and the general collapse of trust—all the different global “good guys” have to get together to fight for the world, and we need to get behind them.

This article is published in the Agenda of World Economic Forum, as well.

Yoshito Hori, President of GLOBIS University, is a contributor for LinkedIn Influencer Program.

(Photo: Rawpixel agenda/shutterstock)