On the importance of spreading risks geographically.
Visibly enthusiastic about this exercise in style before such an unusual public, Germany’s former Minister of Foreign Affairs Joschka Fischer highlighted the transitional nature of our times. With the fall of the Berlin Wall in 1989 and the disappearance of the Soviet superpower, the world was thrown out of balance. As the lone survivor, the American superpower has financed three wars while cutting taxes ; at the same time, the world has witnessed the phenomenon of the Chinese miracle. The spread of new technologies has radically changed our perception of the world, and telecommunications have everywhere given rise to demands for a better quality of life. “No one can stop the emerging countries from aspiring to leave poverty behind, while in Europe government bankruptcy is no longer unthinkable,” Mr. Fischer stated. Southeast Asia is turning out to be very unstable. While the West is in decline, the U.S. is not and represents the only power capable of taking on the role of the world’s policeman, especially since the re-election of Obama, who could bring the country back up to strength as a player on centre stage. Because their economies are so closely intertwined, the Americans and the Chinese maintain a paradoxical and inextricable relationship. Yet China must solve a number of domestic problems before it can take a political interest in the rest of the world. Another area of high tensions and profound changes is the Middle East, which Mr. Fischer says is in a situation similar to Europe’s in the 19th century, with its well-known historical consequences. He expressed the hope, among others, that Iran will give up on nuclear weapons; if it does not, the region will become explosive. The last question the former Vice-Chancellor raised was whether the rise of Islam will be moderate, as in Turkey, or give in to radicalism? He described this phase of global uncertainty as a new form of stability/volatility.
Adding her voice to this observation about the spectacular rearrangement of the balance of power, researcher and geopolitical forecaster Virginie Raisson transported the audience forward to 2030 and 2050 – noting that she hoped some of her analyses of certain broad trends and emerging phenomena would prove wrong. Demographics will have reversed, with a shift to the south. (For example, by 2030 Europe and Africa will have reversed their 1950 percentages: 9% and 19% of the world’s population.) Today’s labour pools will become tomorrow’s consumer markets: while Europe and the U.S. contributed 60% of the middle class in 2000, this share will fall to 10% by 2050. This redistribution of wealth seems inescapable, with all G8 countries regressing and all of the emerging countries progressing. The latter are accumulating enormous sovereign wealth funds to invest, especially in R&D. The most striking example is South Korea, which in 1950 was the world’s second-poorest country but today has become one of the leading economies on the globe. Tiny Qatar is only just beginning to make its purchasing power felt internationally. Reserves of natural resources will become economic weapons and access to them a question of survival. For example, 50% of the world’s gas reserves are held by Iran, Russia, and Qatar. The watchmakers must have turned pale at some of the forecasts, such as the exhaustion of diamond reserves in 2020 and gold in 2030. On a global scale developed countries consume too much, and along with the others that are jumping on this bandwagon, are preventing the planet from regenerating. Ms. Raisson made the case for raising our awareness so we would re-think our way of life, especially “out of love for our children.”
Responsibilities and strategies
Leslie T. Chang, a Wall Street Journal China correspondent, described the Chinese working classes’ aspiration for a better life. She explained that “they are learning English to escape their living conditions, and millions are going to the cities,” indicating – in line with the previous analysis – an increasing symbiosis between centres of production and consumption. Even though the gap between the rich and the poor is widening in China, one of the country’s greatest challenges will be to manage the soaring level of discontent among the masses. According to Peter Brabeck-Letmathe, Nestlé’s Chairman of the Board and a member of the Foundation Board of the World Economic Forum, businesses will have to take on much greater social responsibilities. In an increasingly interdependent world it would be possible, he said, to embed this notion in the heart of corporate strategy. Of course he cited Nestlé as an example. It would determine every new factory location using local sociodemographic criteria likely to foster improved regional living conditions, which create new consumers. “What will we do in 2050 when there will be 10 billion of us, seeing that today there are already 2 billion people who lack water and food and 1.4 billion who live on just a dollar a day?” He encouraged every leader to make a personal, credible commitment to protecting future generations, which would not be incompatible with their company strategy.
Still with regard to strategy, but without an altruistic dimension, Dominique Turpin delivered an encomium extolling the virtues of brands and branding. Citing examples of diversification that succeeded, as with Virgin and Yamaha, or failed, as with Xerox and Heinz, the IMD’s President harked back to first-year marketing courses to support his remarks. It costs more and takes more time to launch a new brand than to expand the range of products for an existing brand, a process which can also benefit from economies of scale. Essential conditions for successful diversification include the value of this new item in terms of differentiation, as perceived by the customer ; and the impact of brand recognition. Care must be taken to avoid an overly pronounced “me too” effect and to consider the relevance of one brand belonging to another (L’Oréal’s Garnier, for example).
Art and language to the rescue
“Time, blood, water, and money flow.” To philosopher and social communications expert Francesca Rigotti, this “circulation” aspect highlights the value of these things. Our brain connects liquidity with preciousness whether it is considering money and power or blood and water. There are many metaphors referring to time in space (“the ocean of history”), depicting time as mobile and fluid. Yet the ancient Greek saying “use words like silver,” for their value, has been replaced by Benjamin Franklin’s basic and well-known dictum “time is money.” For its part, the meaning of the word “luxury” (“oblique”, or “inclined” in Greek) has changed significantly. Until the 18th century, it was pejorative and associated with lust. It owes its later respectability to mercantile Europe. Philippe Daverio, an art critic and the founder of four galleries in Milan and New York, also drew a distinction between luxury and elegance, the latter of which comes from the elect. “There is no true luxury without culture or ethics” emphasised the professor of design and former head of the City of Milan’s cultural department, touching on the Greeks’ early understanding of beauty: “splendour of truth and authenticity.” According to Mr. Daverio, the most contemporary meaning of beauty comes from medieval France and Italy. At the same time, beauty can be a way of hiding from responsibility, warned the highly cultured polyglot, who also lamented that in times of crisis, leaders always cut themselves off from semantics. Hidden within words are layers of behaviour representing the history of a people. He took as an example the word “watch” (=a timepiece), which has radically different origins in French (montre, from montrer, “to show”), English (“watch,” from “to watch”) and German (Uhr, which means both “hour” and “timepiece”). He demonstrated how the clock was the voice of time, and how it embodied the Greek notion of cycles: it starts over each day. He also explained how the typically Parisian infatuation with clocks in the 15th century finally blossomed in Geneva, once that city had been freed from Savoy and Rome, and under the influence of Calvinism in the 16th century. Swiss watchmaking as we know it has its origins in Calvin’s doctrine, which brought the notion of predestination and the elect to Geneva, leading thousands of goldsmiths to put their expertise to use in service to technical elegance.
