A sense of optimism

During this week's World Economic Forum in Davos, Deloitte UK CEO David Sproul provided daily recaps on his experience at the Forum. Below is an excerpt from his latest blog post. To read the full article as well as previous days' posts, please visit the Deloitte UK Responsible Business blog.

Reflecting on the many conversations I’ve had with clients, and others, this week, it’s clear that there is a definite sense of optimism compared to the position at the start of 2012.

The concerns of last year—particularly of a eurozone exit—have receded materially. Despite the continued low growth in Europe there is a definite feeling of greater resilience and a growing confidence that economies are improving, albeit slowly. I’ve also seen much greater recognition of the need for business leaders to have a stronger voice in making the case for responsible business.

Alongside client meetings, Davos has also again provided a good opportunity to engage with the media—with the BBC, the Telegraph and the Times all carrying interviews.

Collaborative Capitalism: The power of business and government working together

Last year was the first time I attended the annual World Economic Forum in Davos, Switzerland. It was a unique opportunity to hear insights from influential world leaders about the most pressing business issues and to discuss the critical role America plays in the global economy.

While last year’s event was marked by uncertainty with the volatile global economy, decreased trust in business, and the U.S. presidential elections, I anticipate this year’s discussion will focus on how we move the global economy forward to achieve a state of resilient dynamism, the theme of this year’s Forum, emphasizing the need to be both adaptable and fluid. To do this, we will need a bold vision and even bolder action. In our post-fiscal cliff reality, encouraging partnership between business and government is critical to creating more effective policies, restoring confidence, and increasing certainty, while creating a solid foundation for future growth. I like to call this fresh take on partnership Collaborative Capitalism.

Frontier markets peak manufacturers’ interests

During a recent trip to Tokyo, I met with 40 leaders from Deloitte member firms across the Asia Pacific region to discuss what is happening in this dynamic market. As you might imagine, China and India dominated the conversation, but several other countries in the region, often referred to as the next frontier growth markets, were very much part of the discussion.

With the expected government leadership changes this month and signals that manufacturing activity is declining, executives are closely watching what is happening in China. Last month, a 7.4 percent year-on-year rise in China's gross domestic product (GDP) in the third quarter was announced. Some believe however that those government statistics may be more optimistic than the reality experienced by many manufacturers in China. This is the weakest announced growth rate since the start of 2009 and the seventh straight quarter of decline. Many executives are cautiously waiting to see what the new Chinese leadership will do to spur accelerated economic growth and improve manufacturing industry activity.

Rio+20: Deloitte + Me, Contributing to the global sustainability dialogue

The world is quite literally coming together in Rio for a few days 20-22 June to build consensus on a more sustainable course for our planet.  The unifying event is the United Nations Conference on Sustainable Development, which has a much more catchy title: Rio+20.

Organized by the United Nations, Rio+20 will enable thousands of government participants as well as many from the private sector—including Deloitte—to play a critical role in creating some innovative business solutions with long-lasting social and environmental impact. A related event being held in Brazil’s second largest city in the days leading up to the UN Conference on Sustainable Development is the Rio+20 Corporate Sustainability Forum, which will focus more on the business contribution to sustainable development.  The number “20” is a reference to the years since the 1992 Earth Summit in Rio where many countries rallied for the first time around a blueprint for economic growth that would consider social equity and environmental issues. 

Talent and reinvesting for growth

With the 2012 Olympics just around the corner, I cannot imagine a better venue to host a discussion on competitiveness than in London. The city provided an ideal backdrop for a recent Deloitte industry event which underscored the talent issues faced by many global manufacturers and the importance for companies to continuously reinvest for growth to remain competitive.

The Deloitte Manufacturing Competitiveness Summit event featured a distinguished panel of senior executives from three prominent manufacturers, ArcelorMittal, Siemens, and Jaguar Land Rover, as well as a senior representative from the European Commission.

The panel shared views on how they were working to ensure their companies remain globally competitive. It was fascinating to hear one of the executives say that 100,000 apprentices will be needed in the United Kingdom (UK) manufacturing industry alone in order to replace the retiring baby boomer generation in that company. Another executive reinforced the talent issue by outlining the skill shortage in fields like engineering and production supervision saying it was particularly challenging in their business to find these experienced hires.

30 percent by 2057 – Can we get there quicker?

There is no doubt that the trend to have more women on company boards and their greater representation at the senior levels of companies and other organizations is on an upward trajectory. The problem is that the trend is moving at a slower pace than many would wish. And the reasons for this are infuriatingly varied. There is no one easily identifiable issue which is holding up progress and this makes it harder to try and accelerate that progress. But there are many areas where enthusiasm, enterprising initiatives and, in some cases, government action, are making a real contribution to change.

Much of this came to the fore at the recent workshop of the OECD, BIAC, the business and industry advisory committee to the OECD, and the American Chamber of Commerce in France. I’ve mentioned this event before in previous blogs, and it is its second session on which I reflect today.

Call to action: Bringing together politics, business, and individuals for global solutions

“Knowing is not enough; we must also apply. Willing is not enough; we must also act.”

This quote by German writer Johann Wolfgang von Goethe has accompanied me through the days in Davos at this year's World Economic Forum Annual Meeting. Seeing the pressing issues to be resolved has filled me with a sense of responsibility, corporate as well as personal. Yet no one person, company, or nation can achieve this alone. Change will only happen through dialogue and mutual respect; Davos offers a perfect forum to foster this conversation and build this respect.

Only together can we address and hope to resolve the big themes our world is facing:

Optimistic in an uncertain world

Last year, I described my Davos experience as being like going to Disneyland but not being allowed to try the rides. This year, attending as a delegate for the first time, gave me an Alpine rollercoaster experience – from the highs of meeting and hearing from inspirational innovators, entrepreneurs and experts in their fields, to the lows of some sobering economic debates.

The World Economic Forum has typically contained an element of future gazing – what is the 5-10 year outlook for business and society? This year, there was a much more short term feel, with a strong focus on solving the Eurozone crisis. Perhaps unsurprising, given the presence of Angela Merkel, David Cameron, and numerous finance leaders.

Davos is a great opportunity for me to spend time with the CEOs of our member firm clients, and to get a good sense of the latest thinking of political leaders, finance leaders, and regulators. It’s also a real opportunity to hear from experts in fields I wouldn’t normally hear from, for example, on the future of medicine. This broader agenda is not only personally interesting, but gives me new perspectives and challenges my thinking.

From Academic to Actual: Currency volatility and the real economy

In April 2011, my Deloitte colleagues and I, together with the World Economic Forum, put on our binoculars. We, like others passionate about risk to the global economy, looked at the topic of currency volatility and the international monetary system, and saw a potential period of instability. At that time, it could still be argued academic. Today, it is clearly very real. As we begin 2012, the level of uncertainty in international currency regimes is now front and center. We are a long way from the U.S. government’s former AAA debt rating, Italy’s four percent bond yields, and a time when few analysts were seriously discussing any kind of “landing” in the Chinese economy, be it hard or soft.

Markets are now driven predominately by macroeconomic developments, and systemic changes to the global economy seem to lurk behind every new policy announcement. It is clear that studying possible evolutionary paths of the international monetary system has moved out of the realm of academic discussion and into the real world in a way financial services providers cannot afford to ignore.

If it all goes wrong: Rebalancing the global economy

The future belongs to those who show up. — Mark Steyn

As leaders of Deloitte Touche Tohmatsu Limited and its member firms, participate at the World Economic Forum in Davos at the end of this month, I am looking forward to engaging with clients of the Deloitte U.S. firms in New York this Friday on whether growth is still possible if everything goes wrong. The challenge is looking for the pony in the pile of horse-do-overs. I think I have discovered no less than five. Here is the first one.

The doomsday scenarios related to overpopulation, which were previously forecasted, have failed to materialize. In fact the scenario which has unfolded is the exact opposite, with its own set of challenges. Birth rates around the world have plummeted to levels where the implosion of population represents a much greater threat to economic prosperity. Populations are already shrinking in Russia and most of the countries of the former Soviet Union, as well as in Japan. Throughout much of Europe, the population pyramid is standing on its head. For every 100 grandparents there are less than 50 grandchildren.