Klaus Schwab
Founder and Executive Chairman of the World Economic Forum
“Leadership for me is simple. It is brains, soul, heart, and muscle. Let me explain. The brain stands for professionalism. If you are a leader, you have to be a professional. You have to know what you are responsible for. Now, the soul stands for your values and for your mission. You have to make so many changes in your life, but you have to have a direction. You may not always know the itinerary, but you know in which direction you go, and sometimes you may need to adapt the course of your journey. You need heart. You need passion for what you're doing right now...And finally, it's the muscles. You have to implement. It's all well and good if you have great ideas, but you have to have this force of implementation."
Summary
In this episode of Leadership Matters, Alan and his close friend Klaus Schwab, Founder of the World Economic Forum, discuss the importance of listening to and support younger generations, outsiders, and social entrepreneurs in order to benefit and shape the future of the world.
A global thought leader in stakeholder capitalism and leadership, Klaus outlines his view of what makes a leader great and those leaders he has looked up to, including Nelson Mandela. He shares that leaders should not be content to settle into old patterns in our post-COVID-19 pandemic world, but chart new courses and create a new normal, while continuing to champion integration of cultural leaders and preservation of culture as part of this new normal.
Mentions & Resources in this Episode
COVID-19: The Great Reset- click here to learn more about Klaus’ new book
World Economic Forum- click here to learn more about the World Economic Forum
Nelson Mandela- click here to learn more about Nelson Mandela
Schwab Foundation for Social Entrepreneurship- click here to learn more about the Schwab Foundation for Social Entrepreneurship
Wallace Foundation- click here to learn more about the Wallace Foundation
Guest Bio
Professor Klaus Schwab was born in Ravensburg, Germany in 1938. He is Founder and Executive Chairman of the World Economic Forum, the International Organization for Public-Private Cooperation.
He founded the Forum in 1971, the same year in which he published Moderne Unternehmensführung im Maschinenbau (Modern Enterprise Management in Mechanical Engineering). In that book, he argued that the management of a modern enterprise must serve not only shareholders but all stakeholders to achieve long-term growth and prosperity.
Schwab has championed the multistakeholder concept since the Forum’s inception, and it has become the world’s foremost platform for public and private cooperation. Under his leadership, the Forum has been a driver for reconciliation efforts in different parts of the world, acting as a catalyst of numerous collaborations and international initiatives.
Follow the World Economic Forum on Twitter @Davos, and Professor Schwab @ProfKlausSchwab.
Clips from This Episode
On how the wef has continued to move forward with it's work during COVID-19
"We have to listen to the aspirations of the young generation!"
Episode Transcription
Alan Fleischmann
Today I'm so honored to be joined by someone I've long admired, Klaus Schwab. And to be so bold, I would also consider him my friend. Klaus is the founder and executive chairman of the World Economic Forum, I should actually say Professor Schwab, which is how everybody in the world calls him. The World Economic Forum is a transformational organization with offices in Europe, the United States and Asia, and is best known for its annual meeting in Davos. Every winter this quiet ski resort in the Swiss Alps becomes the center of business, civil society, economic and political universes bringing together corporate executives, political leaders, and other leaders from civil society to discuss the biggest challenges facing our world. The convening in Davos has led to enormous partnerships and breakthroughs that have literally transformed the global economy, particularly with the concept of stakeholder capitalism. This has made corporations more responsive to the needs of society, their local communities and the environment. Professor Schwab has been the driving force behind Davos from day one for over half a century. He's also dedicated his incredible energy to developing leaders by creating the forum of Young Global Leaders for people under 40. The Global Shapers community for potential leaders in their 20s and his philanthropic activities with his wife, Hilda have led to transformational change all over the world. He is a prolific writer and thinker. His doctorates both in both economics and engineering, as well as a Master's from Harvard's Kennedy School of Government. I am thrilled to have you on the show today on leadership matters. And I'm really excited to dive in. Welcome Professor Schwab clouds to leadership matters this morning.
Klaus Schwab
Oh, it's a great pleasure to be with you Alan and to spend some time for intense discussion.
Alan Fleischmann
When I think back to your early career, because some of the most significant concepts you've been involved in, even up to recently, and a lot of the conversations we're having around the world, sadly, but also true, have to do with some of the work that you've done in your early work. In fact, it was your 1971 book, Modern Enterprise Management and Mechanical Engineering that argued that corporations should try to serve all stakeholders. This was a groundbreaking idea at the time, it still is a groundbreaking idea, I would argue today. But it's led to a whole concept that is universally known as stakeholder capitalism. Can you walk me through a little bit of what made you come up with the idea? And what was the reaction to it in 1971?
Klaus Schwab
I really have devoted my whole life to the development of stakeholder capitalism or stakeholder responsibility. Now as the oil chain was, even in my very early life, I was born before World War Two, I experienced World War Two, I experienced, let's say, the damage done by war and disputes. So I became very interested and also, based on my family background, my father was the head of a large machinery the company, I became very much interested in what is actually the role of corporate management. And at that time, early 70s, it was quite some discussion, because Milton Friedman, is a Nobel Prize winner and published a article in New York Times, really argued, the business of businesses business. You have to make your newest social service if you're just concentrated on short term earnings, and I know our corporations are not just economic units, corporations are also social organisms and as such as a social responsibility. Of course, they have a responsibility towards the clients. Thye cannot cheat them, so on. They have a responsibility towards employees, self responsibility towards the government. So I just defines this idea and described it in a book and several spies away as a reason because writing a book I felt I should bring stakeholders together. Business leaders, government leaders, and Samarasinghe, original idea of governance. Are you still today striving for systems.
Alan Fleischmann
And it was in 1971 that you actually brought, I guess you called it the European management symposium I guess that was the first meeting, I guess, right? Is that right?
Klaus Schwab
It was the beginning, yeah. I was focusing on Europe. But already, quite some years later, I felt this is a universal idea. And to have a platform for dialogue on a global dimension. So that's what's missing. So actually, even if we kept the name of European Management Forum until 87. But we were more or less international homes beginning on and I remember I, having studied in the States, partially, when I went to see to come to the states since the early 70s, I already at some time, I met many business leaders were interested in the stakeholder the concept and supporting my idea and becoming involved into Davos from the beginning on, for example, Mr. Watson from IBM, and I could give you a whole list of very well known business leaders.
Alan Fleischmann
So these are some of the great thinkers and leaders of our time with Watson being one of them, obviously, as well. I love that you stuck with the Davos location. I'm sure when you started, it was a nice place to be and it was more intimate for many years, you know, and I think there's something. It's not just the geography actually, you know, that there is something very special, unlike other gatherings, when you do your annual meeting, people go in and out, I find that maybe because you're in Davos, people travel there, it's not easy to get there. They take the gathering much more seriously. You know, from the outside, many people think it's very glamorous, the reality is people work very hard and they work hard from early morning to late at night, you included. And I think partly because there are no distractions, people work doubly as hard. It's a little bit of a mindset, not just a physical geography. But when you think of Davos, and when people think of Davos, I don't think they always get it right. I don't think they realize what I do, and I think you have built so beautifully is this gathering of leaders who come together really, truly, to roll up their sleeves to get work done together.
Klaus Schwab
You know, the world has become a global village. And we have become neighbors in many ways. We are interdependent. Today, of course, even more so than in the 70s. But when when I had the idea for this get together of the global decision makers, I was reminded of a book which was written by a Canadian Professor McLuhan, which was called The Global Village. So I wanted to convey the kind of village like in the old times where people meet on the street, have still some time to have a short discussion about, at that time about Cerezo. Of course, you could say now about politics, that was the idea. So I was looking for a place which was, as you mentioned, just enough to be not distracted, but which at the same time had the infrastructure in terms of conference facilities, of hotels and the hotels being in close distance to the conference facilities, so you could walk and a double slot for me, a place well known, I was many years and after particularly my use a keen scale. So I use a place and I felt such exactly what I'm looking for.
Alan Fleischmann
You know, it's amazing, because I always say to people who have never been to the annual meeting, that they should go to as many of the sessions as possible, obviously, in many cases, because they're leaders, they engage in many of the conversations on stage and in rooms, but I said the magic happens when you're having a cup of coffee. The magic happens when you're having those conversations in the hallway.
Klaus Schwab
I feel Davos is a symbol it's, it's not necessarily a place that was could happen somewhere else. What is important is the spirit behind. You have to feel that you are part of a community, a world community. People speak also about the Davos community and that means a community of a common interest. And maybe at the beginning, it was just a community of common interest coming together to listen, who learn. But now if I'm proud of something, I said, where I feel we have transformed these meetings and our meeting of the World Economic Forum into much more into a purpose and action-oriented community. So at the moment, we pursue about 100 different initiatives. Just take, for example, what we are doing to save topical forests, or the Global Battery Alliance, where we have brought companies together with political decision makers to have a responsible approach for the usage over the lifetime of batteries. So we have many, many such activities, and people come together, to really being committed to improve the state of the world, not ever, I mean, the public expects always to come up with grand ideas. There have been some grand ideas coming out of Davos. But the essence is to make progress in such a small multitude of challenges which we have, economically, socially, and environmentally.
Alan Fleischmann
You know, there's so many things that in many ways, you're very humble, and we take for granted some of the things that were created in Davos that you originated at the World Economic Forum, but when I think of public private partnerships, for example, these are terms stakeholder capitalism, these are terms that, you know, that are becoming second nature, but they, they're not easy to do. And they were constructed, and the vocabulary even invented, you know, in at the offices of the World Economic Forum, and at the annual meetings and the regional meetings, and you know, what you do, because you do attract people who are focused on action, is that you do see when you're there, conversations, new ideas, some of the initiatives launching that you're describing, even here, that we know, they don't happen so easily. They happen because you've bring the—it's like, it gets a bit of the engineer you. You bring the right people together with the right ideas, and let the—let nature kind of fix itself a little bit sometimes.
Klaus Schwab
The world has become so fast moving, so complex. So one of the, say, concepts we have is to prepare people for tomorrow. And in order to do so, you need, sometimes, narratives. Because otherwise people are lost by the wealth of change. I also should say by the threat of change. So we have created certain narratives, of course, stakeholder capitalism is one, Public Library Corporation, which means—so it's a big issue is the need to see cooperation, of governments and business and civil society to be solved. But also social entrepreneurship, which means that you need social innovation, and you're fast. Not everybody can be a Bill Gates and make outerface innovation—billion or several billion. We have to have young people who drive innovation without necessarily having big profits in mind. And some—one of the things I'm particularly now lately, I'm proud of, is we have created this concept of the false witness revolution, which means that the world really has entered a new age, which requires fresh thinking if we want to master the fourth industrial revolution. So in the last four years, I have a lot of time I have invested into thinking—so what does artificial intelligence—What does cryptocurrency and so on mean for our lives? I got so excited. We have created for example, a global steering group for artificial intelligence to make sure that artificial intelligence is applied in human-centered ways which serve society, or we have created a steering committee on cryptocurrencies. So steering committees comprise key political, key economic, key academic and key business leaders—cryptocurrencies to make sure that they are not misused. So that's the real essence of what we are doing and what Babel stands for.
Alan Fleischmann
What I love also is, you know, when you say the fourth industrial revolution, you also—you come up with these bold ideas about what the future will look like. But you also are willing to evolve them. And probably in many cases, it's because times obviously change rapidly nowadays, you're bringing up several that are technology based. But there's also, you know, people speak up, you talk to a lot of stakeholders from all walks of life, you know, the whole issue of inequities, the whole issue of vulnerable communities, the whole issue of coming up with initiatives that serve greater purpose beyond those in power. You know, that's what I think of the fourth industrial revolution now, because I saw between your first book and your second book, conversations that you've led, you've also led in changing the discourse, as as the world changed.
Klaus Schwab
I try to create a positive attitude towards change. People usually are afraid when you say fourth industrial evolution, people's see, let's say the displacement of labor. You don't understand what artificial intelligence means, and so on. So what we want to do is to seize those technologies as opportunities. And we, if you're just look at the environmental area, I mean, this is not just a cost. If you if you want to solve the issues, it's a great opportunity for business. And, for example, the world can make, created as standard research, where we show that 250 billion invested into nature-based solutions, which means solutions, which let's say, move away, or remove some of the damage which we have done, could create millions, millions of jobs. So I think 37 million we came up. So the key is to understand the future, because we have to attempt to shape the future—to shape the future in a positive way. And to make sure that we use the human progress. When you look back in history, we always had progress. I mean, you are right, we also have to look very much at equity and inclusion. But in principle, we have made great progress in humankind. Just look, I mean, you and I, we are probably 20 years more of life expectancy compared to our grandparents. So we have to look at it in a positive way. But that means also responsibility to shape the future in a positive way.
Alan Fleischmann
Now you—and this mindset that you were talking about is very important. You're listening, you're listening to Leadership Matters. I'm your host, Alan Fleischmann. I'm here with Professor Klaus Schwab, the executive chairman and founder of the World Economic Forum. We're having the show today from Switzerland to Washington. And and the conversation really is about stakeholder capitalism, partnerships. So many of the things that we aspire to be and issues that we want to deal with and are dealing with are spoken about, led, and dealt with in Davos at the annual meeting, and that the regional meetings and other initiatives that are launched by the World Economic Forum. One thing that I don't want to forget, which I'm always very struck by, you know, after 911, you know that I guess that was proof of something you just refer to, I think the only time the annual meeting was not in Davos was at—was in New York City, to show solidarity with the United States and frankly, all Western-focused world about we are in this together. And you move the annual meeting from Davos, where it had been for decades for one year to be in New York City. And I'm always struck by that because it took such vision to do that. But what it did is it also illustrated to me what we were talking about before—that there's a mindset. It is that community that you're talking about. It's still that community that you're building. Is there are aspects of that when you're thinking about that next frontier? You mentioned technology and you've opened up operations in Silicon Valley and you've embraced conversations that that include younger generation. You've gotten involved and you really are the one who first coined the term, I believe social entrepreneurship. As you're looking at that mindset of not where we are, but where we should be, that same Davos mindset that could be anywhere in the world, what would you say it should be? Not what it is, but what it should be? Or it will be maybe even.
Klaus Schwab
I think it would be wrong if we, the older generation, determine how it should be. I think here we have to listen to the aspirations of the younger generation. And so it's a reason why there's a World Economic Forum, we have created this community of Global Shapers. We have a rebel, we have a community of over 10,000 people in over 400 cities around the world, we have to listen to those, we have to listen to those who are left out. We have to listen to those who do not want necessarily to go into business, but to want to be social entrepreneurs. I think if we, afterwards, are capable to integrate inspirations, not only by listening to them, but also to make some co-owners of our future. So I think we are on the right paths.
Alan Fleischmann
Well it is true when you think about it. I know that the forum attracts, you know, Jane Goodall, who's traveling 300 days of the year when we're not in a pandemic, and is in her 80s. But it also attracts young activists like Greta—Greta Thornburg. And she's there because she wants to be able to, you know, speak with, meet with, and pushes. And I mean, literally, from the very youngest activists to those who are still fighting for both the environment, racial and economic equality, you name it. These young activists are not only invited, you spotlight them.
Klaus Schwab
Yes, because I think it's important to listen to different views. It's important not only for us citizens, it's important for government leader, it's important for business leaders. I would say, a business leader, just a society marker. A business leader who listens solely to his own people probably will not survive the next 10 years. You have to have 10 hours, you may not like what Greathouse says or what others says, but at least you have to listen to some uncertainty, you have to reflect how does it resonate with your own beliefs, with your own ideas. And sometimes you can pick up maybe only a little bit of the thinking of other people to improve your own thinking. And I think that's, to a certain extent, what we believe in, for this reason, the dialogue, and the dialogue, not only in a, let's say, homogeneous context, but in a context where you really can get the pulse on what other people feel. That's why system lock is so important that I would add, we are living now in a very polarized world in a very, not only internationally. I'm thinking of the different conflicts we have globally, geopolitically, right. Even regionally. We have conflicts inside society. And I feel that the platforms which the World Economic Forum has created, never have been as important as they are now, particularly in a world which is disintegrating. We need a disintegrating force, but this disintegrating force cannot be a—cannot happen in a hierarchical way where we'll all come together. It has to be in a platform where you're trying to listen. And maybe you are convinced to act together.
Alan Fleischmann
You know, I once had a conversation with someone not long ago, where I made a comment that you would be a fantastic recipient of the Nobel Peace Prize because of all those partnerships you created. And that person corrected me and said, No, he should be for a Nobel Economy Prize for all the stuff he does for the economy. In a way though, when I think about you, there would be wonderful to have a prize out there on leadership, because what you've been doing your whole journey with the World Economic Forum and what you continue to do with the journey ahead, is not only do you create opportunities for people to lead, you also nurture them, as we just talked about. You also have great ideas about what it makes to be a leader, and you spend a lot of time on it. And this show Leadership Matters focuses a lot on not only speaking with leaders, but getting their advice and their thoughts about it. And I remember having a conversation with you about the like, the part of the anatomy equivalent, that you know, you know, that you haven't you know, about what it takes to be a leader. I'd love to get your thoughts, and then I'd love to talk to you about who you think. and that's hard to mention, I'm sure, who are some of the great leaders that you've actually met over the years some have gone and some you may want to identify that are still working.
Klaus Schwab
Yes, of course, I have met probably most leaders in the last 50 years in all walks of life. Sometimes leaders whose names are not known, but who have time extraordinary things in their local community. I of course, as having been, in addition, a professor for 72 years, teaching leadership, I was intellectually very much involved. But if I take the whole experience of my life, intellectual and practical experience, I come down to a rare and a very simple group. Leadership for me is simple. It is brains, soul, heart, and muscles. Let me explain. The brain stands for professionalism, if you are a leader, you have to be a professional, you have to know what you are responsible for. Now, the soul stands for your values and for your, for your mission. You have to make so many changes in your life, but you have to have a direction. You may not always knows the intinerary, but you know in which direction you go, and some you may adapt in the course of your journey. You need heart. You need passion for what you're doing right now. As a professor, students came to me because I was teaching in the last year and said, Professor, what should I become? Should I go into industry? Should I go to governments or banking on whatever? And I said something like, ask yourself first? What am I passionate for. And if you are passionate for something, you will succeed, if you are not passionate, you will fail. And finally it's the muscles. You have to implement. It's all good if you have great ideas, but you have to have this force of implementation. And I would add maybe be a fifth dimension. You have to have very good nerves, particularly today in a world where you have quite a number of shocks. So brain, soul, heart, muscles and good nerves. That's my recipe for leadership.
Alan Fleischmann
So muscles and nerves and hearts. The nerves one actually, I— it's amazing, but you're right I guess you have to have an idea and stick with it. And even if others around you think that your idea's crazy in times you—if you believe in in keep that heart and then mind focused on it. I guess nerves are very important.
Klaus Schwab
Exactly. You asked me who was a leader. When you take those five criteria, and you apply them to the people in the world today, it's very difficult to find people who would match the best scores in all five dimensions. But one outstanding example I have is Nelson Mandela. I was probably the first person who visited him—a restaurant. Who visited to him when he came out of prison. I had the chance of many encounters with him until I saw him last only some weeks before he died. He was really—he was a professional, knowing way more than me what he was doing. He had a clear objective and great values. He had, of course a passion. Even, I mean to have some passion doesn't mean that you are passionate in your showing and ethusiastim for continuously—it's more some inner feeling. He was a great professional. And he, I mean, if you have so many years in prison, and do you don't give up, it shows you have good nerves.
Alan Fleischmann
And the other thing too. There was there was a poetry to how we inspired us as well, I guess that's the passion with the brain. It's the heart of the brain coming together in that regard too because he had the courage to show vulnerability and inspire others as well. Which I guess is one of his lasting legacies.
Klaus Schwab
Exactly, if you, if you, if you apply those it's five dimensions, you have certain moments where you'll fail in one or two dimensions. But if the people know those dimensions are really built into set into your personality, you can afford to show, at certain times, a weakness, because some people will say, that's a deficiency in a moment and say don't put yourself into question.
Alan Fleischmann
Yeah, even what you said before, when I was talking about envisioning the future, what the world should look like, your cautious response was very telling. I mean, I wouldn't want one generation to tell the next what it should or shouldn't do, which obviously is so important that you're spending your time engaging leaders and giving them the forum, giving them the opportunity for them to both ask the questions, learn from them, but more importantly, have the audience in which they can actually say what the world should look like, as well, which is very powerful. You know, we're, we're now dealing with something that I would have said, would have been a bad science fiction movie, this pandemic. Where, you know, we're having conversations, you know, where people are either in their offices, with masks, or they're sheltering in place in their homes. And it doesn't matter where you are around the world, we are dealing with this pandemic, what I've been struck by is the pandemic has not slowed down the World Economic Forum one bit. In fact, if anything, I feel from my side being active with you, and someone who spends a lot of time, you know, connecting to what the forum does, I would say that I'm struck by how you seem to have almost increased the speed of action and activity during this period when maybe others may have decided to slow it down. I'd love you to—you're redefining I guess a little bit of what a forum is, again, guess once again, because you're doing a lot of things on Zoom, you're doing a lot of things on WebEx, you're doing a lot of things on all forms of technology. But again, you haven't slowed down.
Klaus Schwab
No, it just, how shall I say? It popped into evidence, what the forum really stands for. Some people still feel with the popularity of Davos, the World Economic Forum, is a series of events and certainly would have been very effective. When actually, the World Economic Forum is, I would nearly say, a big basket for many, many initiatives. And those are purpose oriented, and don't depend necessarily, in which way you meet, you have to meet. So we could switch relatively easy—easily to video conferencing, and nevertheless, to make progress and I have to say, many people may wonder because they see us as a conference organizing organization, how much we suffered, we ended our year, which concludes the 30th of June, with more partners, with more engagement of partners than ever before. But I want to add a second remark here. The forum as let's say, exploring the future, all that we can do is explore, we cannot describing future, exploring the future. We—I have noticed and seen how much that pandemic will change everything we are doing. It's accelerating the force industry evolution. It has such a big impact which we cannot still yet imagine. So what I decided to do is to write a book. And I'm very happy that four weeks ago it was published in Kindle. It's called COVID-19: The Great Reset. And I think it's the first book which describes all the consequences of this virus. It doesn't predict the future, but it shows a context which will be with us in terms of change. And a great reset means we have now, so much change happening. So many problems, lack of inclusion. The next big crisis we see is global warming just around the corner. So we have to, we should not come back just to the old policies, if we create a new normal, we should use this opportunity to create a better world.
Alan Fleischmann
You know, the book, I have the book, actually, it's a great book, The Great reset, and it is, I cited, the only one, certainly the first one that came out of the COVID— it kind of explains what's happening a bit here as well. You know, I'll tell you one thing that has been wonderfully uplifting for me, is, you know, one could have thought your 50 years of work, which got tested with COVID, it got tested with a pandemic in the sense that among the things that you've been pioneering and working on for so long is stakeholder capitalism. And if there ever was a test whether corporations were going to step up, or whether they were going to fail with this idea of this newly—I say newly only because it's becoming much more of the consciousness of leaders, and their stakeholders that they have to do business differently, it could have been a moment of failure for companies, but from what I see, with all the demands of society, especially in the wake of COVID 19, I feel like a lot of leaders from the corporate world are stepping up and saying, We're listener stakeholders that add—financial sacrifice, in some cases, a personal sacrifice in others.
Klaus Schwab
It was actually, even before COVID when a big breakthrough happened when hundreds of large American enterprises publicly stated engagement and said, We are moving now from shareholder capitalism to stakeholder capitalism. That was for me, how shall I say, a great satisfaction after 50 years to have won against Milton Friedman. For a small professor like me to have carried victory over an overpriced riddle is more important since class itself. So of course, we had COVID coming. So we had to save the class, some of it led, by the way, to a revised stakeholder manifesto in Davos CCL. And now we have the COVID crisis. And what is very interesting, COVID-19 cases, I think, reminds people more, even business leaders, that they do not have—that they are not just, an then economic, let's say, mechanism, but say have social responsibilities. And when you look, what is the difference between shareholder capitalism and stakeholder capitalism? It's not so tremendous, it's not a whole difference in ideology. It's a difference of being short and long term. So instead of maximizing your short term profits, No, you say, I'm looking to invest into the vitality of my company. I invest not just in pay outs to the shareholders, but also in my technology in my people and so on. In the long run, shareholders will be even better satisfied. And what we have seen is that the companies who practicize stakeholder capitalism, have faired, have done better in the crisis in the last six months than those who didn't.
Alan Fleischmann
That's what's so fascinating, is you would have thought the opposite. I had a conversation the other day with some of the leadership of the Business Roundtable that BRT and they're the ones that came out last year, and they credit you. They credit you. You know, there there's a humility, you know, this one year anniversary since they came out with that conversation—that statement that said that we business leaders are going to move from shareholder capitalism to stakeholder capitalism. They are the first to say—didn't invent it, they just came out with a statement because it was important to do it. And the leaders wanted to speak up and speak out. But they're very, they're very—they credit you because they said, Look it, it took 50 years of hard work, to get companies to have, in many cases, the courage to say so. And it took a lot of that next generation you referred to that you've been helping. Who said, I'm a customer now. I'm an employee now. I'm an investor now, and I expect it.
Klaus Schwab
Exactly. You are not—it's not ideological, I would say it's a self interest of people. Because the new generations, they will not work for a company which is socially harming. Clients will not buy products anymore if they know they are destroying the environment. Look at some progress we have made in decarbonisation. So it's not such a great thing. It's what I'm, what I'm preaching today, is that that is in the self interest on every company.
Alan Fleischmann
And it is showing, it's working. What I love is what you said also. Not only is it working, it's the companies that embraced it, the companies that have embraced stakeholder capitalism actually faring better during this pandemic. In particular than those who didn't, you know, because I think people have choices, you know, they have choices. Now values, I guess, that's one word we could use here. It's not just a value proposition, but a values proposition as well.
Klaus Schwab
Yes. If you, if I come back to the, to the notion of passion, if you practicize stakeholder capitalism, you should not act as a cold blooded capitalist. If you really take it seriously, you care for the people, you care for the environment, you care for the government to be able to provide the best health and educational systems and so on. So this notion of caring is very important.
Alan Fleischmann
You know, that passion part. I—it would be wrong for me to have a conversation with you, and not talk about culture, and talk about international culture, music and art. Because one of the things I know from knowing you and your wonderful partner, your wife, Hilda, who you do so much philanthropically with as well, you have a wonderful love of the arts, and many great, I think of the Menuhin, you know, musicians, who came and played. The diversity of entertainment that you support. You believe in that passion, and that community, as a way to be tied together through culture. Culture not meaning that we all become one, but culture meaning we respect each other. But a lot of your love is through music, isn't it?
Klaus Schwab
Yes, but what I'm interested in, not so much output of those artists, but the message which say can provide. And when I talk about artists, I'm not talking just to, let's say traditionals, the big names. I like some very much. The famous—the world's most famous violinist is in my board of trustees— Yo-Yo Ma. But I'm talking also about the the young voices. For example, I'm a great admirer of will.i.am. And what we have to do is to make sure that those artists and cultural leaders really have a voice in the world of today. I come back to the stakeholder concept. And if you applie the stakeholder concept on a global level, you have politicians, you have business leaders, you have NGO leaders, but you also have cultural leaders and we have to integrate those cultural leaders. I think the world—I spoke about, so fourth industrial revolution, we've become much more technology-oriented. We risk to lose our souls. And cultural leaders and artists are for me, the carriers of the global soul. And that's also the reason why—actually, it was an idea of the late Menhuin, also famous violinists—probably the world's most famous at the time. We have created a prize where we select every year cultural leaders, which also play a big recital.
Alan Fleischmann
You know, the Menuhin violinists come to Davos, I was very inspired. They're young violinists, they're global. And they come to Davos to perform. And I will say, it reminds everybody that it is all about tomorrow. And it is all about what unites us. And it's all about young people, because they're these young, brilliant, talented musicians who come from all walks of life.
Klaus Schwab
Yes, one of the things we did in Davos recently was, for example, to invite a all women orchestra from Afghanistan. So first women orchestra from Afghanistan. So we sponsored some, and it was not just to have a wonderful musical event, it was to give a message. And the message is look, those women, from—partially from rural areas, say, also can perform in our world. And they have a message. And so, this messages is, we also want to be integrated into what's happening. We are not just support people, somewhere. And some women somewhere in Afghanistan. So that's how we want to make health show a much better dimension. In the moment, we are in danger that when you go to a concert, I mean, the ball performance or most famous festivals, one of the biggest concerns which we have is that the average age of people who are coming to those beautiful concerts, it's getting older and older and older. And we have to make sure that we preserve culture as a very strong narrative of our societal development.
Alan Fleischmann
You know, I love opera. I'm on the board of museums and the opera here in Washington. And when you look at the average age of who attends a lot of the music festivals, and the art festivals and stuff, we're doing everything we can to expand it because it is a challenge. And it's important to make sure that the conversations we're having have to do with something you said earlier: inclusivity and diversity as well. You know, I would—I want to also spend a couple minutes if I could, on the foundation that you and your wife Hilda created. You mentioned some of the initiatives that were born out of it. But it's really quite a formidable Foundation, the Schwab Foundation, I'd love you to spend a couple minutes on what that does, because you use it as a platform adjacent to what the World Economic Forum does. It becomes very supportive that I guess it's a little bit of the brain and the soul. And maybe a little nerves too.
Klaus Schwab
Let me give you two answers. The first one is specifically related to the Schwab Foundation for Social Entrepreneurship. And the second one relates what the Wallace Foundation is playing inside or on the side of the World Economic Forum. Now, Hilda and I, we became very, let's say, interested in the notion of social entrepreneurship. Already in the 90s—80s and 90s, we were not really the first who coined the expression, but we probably promoted the notion to a much better prominence on a global level. So the idea was to wake a person. We created it in 2000, actually in the year 2000. At the moment, you may remember when the internet boom, was, let's say at the top. So what fascinated me was, Why are those people just idols of every young people who in Silicon Valley or wherever in the world, in a very short time, made several millions or even a billion and so on. They have become—in some ways, they're all models. But there are people who have done more for society, and were founded more on a mission—purpose-oriented basis. They really wanted to resolve an issue. So in order to give more poignance to those people, we created a community. And every year we nominate new people into the community, we help some to develop, and we have about 400 people in this community. Now you write your observations, that's a forum. The World Economic Forum, which is now based on a treaty with the Swiss government, which is now an international organization. But we have, on this side, so those small foundations for several reasons. For example, the Schwab Foundation and the Foundation for Young Global Leaders between search and for, we're partially endowed by us—by my wife and myself. But the main reason for those separate foundations is to give the community its own ways to make them autonomous. So we didn't want to say you are just part of the World Economic Forum. No, you have your own foundation, and your interact as an equal with the big brother, the World Economic Forum. So all of those foundations have separate balls. But of course, they work very closely together with the World Economic Forum. And today, the World Economic Forum, is also partially—is in politics, those foundations financial.
Alan Fleischmann
What would you want people to think about when they think of social enterprise, when they think of philanthropy, when they think of social entrepreneurship in this, hopefully soon to be post pandemic world? Because I know that's evolving. I mean, there's a lot happening here, where, but that's also evolving very quickly, actually.
Klaus Schwab
I would say, all models in the world for many people, let's say, Bill Gates, or some of the other big Silicon Valley entrepreneurs. For many other people, Mother Teresa is their role model. So—because she devoted her life to a social cause. So I would say, to respond to your question, the role model for young people should be a mixture of Gates and Mother Teresa.
Alan Fleischmann
Mother Teresa and Gates together.
Klaus Schwab
For Bill Gates, his entrepreneurial spirit. I believe very much in entrepreneurship. Doing—let's say, creating innovation, taking the risk, taking the responsibility, being able and ready to fail and to stop the game. So that's—we're, let's say, people like Bill Gates, thankful. But on the other hand, do you have Mother Teresa who says no, I'm devoting my life to those poor people in Calcutta. So I think we need something in between as a role model for young people.
Alan Fleischmann
Yeah, I love that. I love the combination of Mother Teresa and Bill Gates and be willing to take risks but have that nerve, that perseverance, both I guess, Mother Teresa and Bill Gates had, and has to keep moving these forward. In our—in our last couple of minutes, you started our conversation talking about your father, and family I know means so much to you. As you're thinking about your father, and maybe your parents and what you overcame and what you grew up in and the world that we're living in now. You know, you—I would say you came into a world and you started leading the world that has always had challenges. Obviously, we're dealing with them now. What gives you optimism today, as you look forward? Not just—. You know, even the values that you took from your father that you were saying earlier on. What would you want to share with others as a way to look at the world and as a way to approach the world as we go forward?
Klaus Schwab
Right, so first, what I learned from my father, of course, he was successful in business, not as an element, but as a manager. And at the same time he devoted parts or a lot of his life, to the reconstruction of Germany after the war. So he was in many, in many functions, he was very essential. So I learned, let's say to be an entrepreneur, but at the same time to have this notion of public service. What makes me optimistic is when you look back, when I created the Forum 70 years ago, you could take all the criteria, which describe the human well being on a global level —on a global level, let's say, life expectancy, education, child mortality. Of course, if you look at poverty, we have made tremendous progress. If—If I look at the year 71, at that time, just imagine, we were only 4 billion people in the world. And we had 2 billion people, more or less, 2 billion people who live in poverty. Today, we are close to 8 billion, so nearly stuck. And we have probably somewhere or depending on what criteria you apply, we have 1.5 billion people who still suffering from poverty. So you could say what shame it is. Still 1.5 billion people. But if you look at it in a historical perspective, we have made tremendous progress. And of course, we will have setbacks. The pandemic is a great setback, because the emerging countries will suffer, livelihoods will be destroyed, a young generation may see that its future is put into jeopardy. But if you take a earlier historical point of view, I think humankind has made progress. And I'm sure if we fulfill certain conditions, we will make tremendous progress in the coming years. If the conditions is— are to be concerned about the deficiencies which we still have in the world, which means to care, not just to think of ourselves. Second, to cooperate. I think nobody will—if what the virus has created. And even before the virus, we have seen the tendency. When you are under pressure, you have a tendency to become more egoistic. You want to preserve what you have created. So you become negative against change. And of course, you become egoistic on a group—on a national level, you become more nationalistic, because you want to protect your national interests. I think the biggest challenge we have is to remind everyone that, yes, we belong to national communities. But we are also part of a global society. And this has nothing to do with opening the markets and so on. I was always preaching what I call smart globalization, which means to protect the social tissue on a national level and at the same time to find some balance with opening up markets. But this, I would say, this readiness to cooperate is absolutely essential if you want to safeguard the future of humanity.
Alan Fleischmann
Wow, that's that's a wonderful message. I mean, look, we've got great challenges, you're not afraid of them. You continue to work at them and lead them and the idea that we can actually overcome them I hope because we can come together in the partnerships that we envision to discuss. I would urge people who are listening to this great show today to get The Great Reset, your book, and I would also urge listeners today to go on the website of the World Economic Forum. Because there's a lot of thought leadership, a lot of thinking you do, a lot of reporting you do that are—I guess, as you put it, they're action oriented. It's not just intellectual. And if people want to see how, how the World Economic Forum and its partners and—are actually dealing with some of these issues across public, private and civil society, there's a lot there, and a lot that could get you involved and inspire you. This has been Leadership Matters on the business channel of Sirius XM Radio. I'm your host, Alan Fleischmann. This has been such a pleasure talking to Professor Klaus Schwab, who's the executive chairman and founder of the World Economic Forum. He's a great humanitarian, a great inventor, I guess that's the engineer in you, Klaus.
Klaus Schwab
Yes.
Alan Fleischmann
The engineering has never been lost on this journey. We've learned a lot from you today. And I am grateful for all that you continue to do as we deal with challenging times. So thank you. Thank you. Thank you for joining us. And I'm looking forward to much more with you and from you in the years to come.
Klaus Schwab
Thank you very much. I appreciate it very much the an opportunity to talk to a large American audience.
Alan Fleischmann
We're very grateful for you and keep doing what you do. I know you've got a lot of supporters and a lot of folks who are counting on it as you build partnerships and ideas and alliances around the world. So we're grateful for you. Thank you very much. Talk to you soon.
