Aart de Geus, CEO of chip-design software company Synopsys, said some interesting things to me in the Congress hall the other day that I asked him to write down. He emailed me the following, which is worth sharing here:

“SOME QUICK COMMENTS ON WEF 2005
WEF 2005 felt definitively different and more positive than the three previous times I attended for two fundamental reasons:

1)     Visible “upward mobility” for significant segments of the world (or at least the active begin of addressing fundamental issues that will lead to upward mobility)

2)     Increased systemic understanding and a willingness to start addressing issues not in isolation but as highly interdependent.

1) MORE GLOBAL UPWARD MOBILITY
Most visible was the selection by 800 participants in the town-hall meeting of “poverty” as the #1 topic that needed to be addressed.  Reinforced by the themes of “equitable globalization”, “education” and the increased emphasis on dealing with the overwhelming health issues, the focus of this theme is clearly aimed first and foremost at Africa. (In WEF linguo often referred to as the bottom of the pyramid.)   It was enormously encouraging to witness the beginning of action by motivated and competent leaders from Africa and from the traditional west including Bill Clinton and Bill Gates. If in addition some progress is made around debt relief, there is a beginning of practical hope.  This is in stark contrast to previous years where endless diagnosis often found no path to remedy.

Stepping up a few layers in the pyramid,  a number of other countries were clearly moving rapidly towards economic betterment as well.  The opportunities in South America were highlighted via President Lula da Silva’s progress and systemic approach to reforms and connections to other economies.  The speech by President Yushenko was particularly intriguing given the recent democracy shoot-out in his country.  What impressed me more, though, was his economic agenda and plan that left little doubt about his ambition to move the Ukraine up on the economic ladder.  Clearly both of these leaders came across as statesmen rather just politicians and lead a slew of countries that will fundamentally change the make-up of the global economy in the decade to come.

Stepping up on the pyramid one more time, one quickly arrives at China.  Remarkably present in most discussions, it had surprisingly little representation in the meetings.  In the Governors of IT meetings that brings together the CEOs of the leading software and hardware companies in the world, for example, the lack of China presence was duly noted given the rapid growth of the high tech market in that country.  Nonetheless, there was no doubt that China’s role (and India’s, for that matter) will grow rapidly and that China will soon join the ranks of the other economic heavy weights.

Which brings me to the European Union and more pointedly to the US.  The clear topic for that category was “leadership” or the absence thereof.  Whereas the European Union is certainly making strides in integration and geographical M&A, to use a business term; the discourse around the US is still mostly tainted by the situation in Iraq.  Although the voices are significantly less strident than last year, there were strong voices urging the US to move  towards  a significantly more “participatory” global leadership approach. 

Nonetheless, overall I sensed a significant increase in optimism and forward movement on many economic fronts and would predict that over a period of a decade we will see roughly a doubling of the consumer middle class in the world!

SYSTEMIC UNDERSTANDING AND ACTION

Underlining my optimism was the observation of dramatically increased systemic understanding and dialogue on how issues interact.  For example, poverty cannot be addressed without working on health;  health requires education; education requires modern communication;  modern communication requires effective technology;  technology must be low cost but also complete (computer and network, and content, and business model, and, and, and..).  One can point to hundred of chains like these.  What was different or at least sharper at this WEF than before was the clarity of the dialogue around the systemic nature of the issues.   Sure, all these topics have been debated and analyzed individually many times before at WEF, but I saw a marked progress in viewing them as an interacting set of challenges. 

It felt a bit like seemingly unrelated puzzle pieces that become meaningful as the puzzle picture suddenly becomes recognizable.  Remember how at such a moment everybody around the table sees where additional pieces fit and feels the urge to place at least a few of them in the puzzle.  The higher level view (the emerging picture) guides the subsequent lower level moves.  It feels like WEF has been working for years on getting some corner pieces of the puzzle in place and in 2005 things are starting to align a bit more on their own.

In technical and economic systems the value initially grows by having individual pieces get better and better.  That is until they mature.  At that point the natural next step is to move one level up and solve things at the system level.  For example, the US health cost explosion (another WEF topic) cannot be stopped without addressing the killer dynamics of medical litigation.  Cellular phones, MP3 players, and other electronic consumer products cannot prosper unless one deals with the protection and the business models of embedded content.  Terrorism cannot be reduced unless one deals with poverty, corruption and education. 

The system is truly bigger than the sum of its part and all the examples above were visible in discussions at the WEF.

Which brings me to one dark cloud: terrorism.  It takes allot of effort by many to assemble a compelling puzzle,   but very few can shake the table on which the puzzle is being assembled with disastrous consequences.   The threat of biologic pathogens such as smallpox or anthrax in the hands of an individual or small determined group is clearly the most dangerous short term threat facing mankind today.  Following the systemic premise above, we must start by minimizing the causes and sources of extreme discontent to first reduce the statistical risk of terrorism.  However, experts agree: the statistics of lethal terrorism will never be zero!  It forces one conclusion: we must deal with the systemic challenges to handle such an event when it occurs. 

At WEF the recent Tsunami was frequently cited as having aligned the world in terms of support.  But the Tsunami was equally often highlighted as a tragedy of which the consequences could have been greatly mitigated using modern and systematic sensing and communication technology available today!  The same applies to terrorism; first prevention but second systematic preparation towards disaster relief.

The bottom line on the 2005 WEF feels quite positive, though.  The combination of increased understanding, a sense of urgency to take action,  technology and economics that could support progress on a much broader base: all give a sense that humbly we are starting to see a bit more of the global puzzle!”

That was Aart de Geus of Synopsis. Many of you may find it surprising that a CEO is thinking and talking about this stuff, but that’s the way Davos was this year. -DK