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.

Business leaders and ‘Millennials’ agree – the purpose of business is more than just profit

The 2012 Annual Meeting of the World Economic Forum opened today in Davos-Klosters, Switzerland. Being here in Davos is exhilarating and inspiring – and the time always flies by so quickly.

One of the highlights of the day for me was taking part in a panel discussion chaired by London Business School professor Lynda Gratton. We discussed how the art and science of leadership are fundamentally changing in the 21st century. Another highlight today was helping lead discussion with other Forum delegates in a brainstorming session on the topic of the role of business in society.

These are subjects I feel strongly about. Earlier this week, Deloitte announced the results of a global survey, conducted by the Economist Intelligence Unit (EIU), of business leaders’ attitudes on the purpose, impact, and leadership of business on society.

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.

Eyes on the sky: How cloud computing is shaping society

Next week global leaders from DTTL and Deloitte member firms are meeting in Davos at the 2012 World Economic Forum to discuss the important issues of the day. While we can’t all attend, I have the real privilege to participate in a local Davos event in New York for clients of the U.S. firms. I’ll be speaking about cloud computing, and how it is not just a technology phenomenon, but is shaping society itself.

As someone who has been working with leading innovators for many years, my sense is that cloud computing represents a once-in-a-generation convergence of technologies: high-speed broadband, large-scale data centers, and flexible virtualization software. Working together as “cloud computing,” these forces are driving one of the most important global technology transformations impacting on many types of business, political, and social structures.

21st Century paradigm for water management: Business, social, and political implications

I believe increasing water scarcity is on a collision course with economic development, energy and food needs.

Without adequate water supplies, the world will not be able to feed an ever increasing population, manufacture products or generate electricity (hydro, nuclear and fossil fuels). Unlike energy, water is unique; there is no alternative.

Increasing global population, urbanization, energy and food demands coupled with declining water quality in certain regions has resulted in increased competition for water in the public and private sectors. The facts and trends highlight this increasing “scarcity” of water are as follows (Water Scarcity. The Water-Food-Energy-Climate Nexus. World Economic Forum 2011):

• Currently, about 884 million people worldwide don’t have regular access to safe drinking water and about 2.5 billion people lack access to sanitation. This has significant economic, social and political implications (www.water.org).
• Water withdrawals are expected to increase by about 50 percent by 2025 in developing countries and 18 percent in developed countries (www.water.org). As a result, projections indicate that about 47 percent of the global population will face water shortages by 2030 (www.oecd.org)
• Increased competition for water is driven by (Water Scarcity. The Water-Food-Energy-Climate Nexus. World Economic Forum 2011):

Crossing borders through global investment and education

It is with great pride each year that Deloitte is represented by a delegation of leaders at the World Economic Forum in Davos, Switzerland, an independent international organization committed to improving the state of the world by engaging business, political, academic, and other influencers of society to shape global, regional, and industry agendas.

This year, Barry Salzberg, CEO, Deloitte LLP, and Robert Kimmitt, Independent Chairman of the Deloitte Center for Cross-Border Investment, provided their thoughts from Davos on important issues around cross-border investment and global education initiatives covered at this year’s Forum. We are pleased to share the perspectives of these two leaders from this important world event.

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1:14 - Barry Salzberg on his impressions of Davos this year

2:19 - Bob Kimmitt's takeaways from Davos

3:39 - Barry asks Bob: How has the nature of cross-border investment changed as a result of the global power balance shift?

4:35 - Barry asks Bob: How should companies prepare to execute a cross-border investment?

6:08 - Barry asks Bob: What new cross-border investment models have emerged as a result of the global financial crisis?

6:45 - Bob asks Barry: How do we ensure our young talent force has the skills to compete in the global marketplace of the future?

10:38 - Bob asks Barry: How can businesses, governments, and academia work to combat the talent challenge?

14:21 - Bob asks Barry: What can businesses do internally to develop leaders of the future?

Three enlightening days in Davos

My time at the 2011 Annual Meeting passed quickly as it does every year. My three days in Davos were fascinating, engaging, and enlightening. I was pleased to begin my activities with a panel discussion on “Entering the human age – unleashing and leveraging human potential in the new reality." As the leader of an organization with 170,000 member firm professionals, I am passionately interested in how to unleash the potential of large groups so that they work together effectively toward a shared purpose.

I also had the privilege of moderating a panel discussion on “The state of manufacturing: a global update.” This was an opportunity to personally and professionally return to my roots as a leader in Deloitte US’s manufacturing practice. There was broad consensus that manufacturing is going to be led by talent-driven innovation. To support this need, manufacturing organizations must focus on education and skills-building and construct public/private partnerships to deliver the skilled talent they require.

The group also agreed that most manufacturing leaders are working to understand what a successful global manufacturing blueprint looks like in today’s new reality. While the answer to the blueprint question varied, the group agreed that industrial policies like deregulation and public sector involvement will play an important role in stimulating investment and collaboration for manufacturers and the countries where they operate.

I also attended Russian Federation President Dmitry Medvedev’s opening address. He displayed great composure in the wake of the tragedy at Moscow’s Domodedovo airport and seemed grateful for the moment of silence observed prior to his speech. While he was understandably solemn, he still delivered his message effectively, addressing Russia’s current political, social, and economic challenges and the country’s effort to improve its investment climate. It was a memorable—and at times, very moving—session.

Thursday began another full day of meetings, dialogues, and receptions. I had the privilege of joining other Big Four leaders for a discussion about accounting for new realities. Dennis Nally, Rolf Nonnenmacher, James Turley, and I discussed the possibility of redesigning corporate reporting to integrate information on the environmental, social, and ethical risks associated with global business. We were aligned in our view that while the current model does not always account for certain risks, any new framework must be developed collaboratively between the private sector, accounting professionals, and financial policy standard-setters.

I also took part in a meeting of the World Economic Forum’s International Business Council, which included a discussion with leading economists about the global economic outlook. Overall, the view was positive and the group agreed that sustained recovery is underway. They expect 2010’s improved economic performance to be stronger in 2011. There also was agreement that the key indicators of recovery will be employment growth plus GDP and that the problem of massive structural unemployment will require major skills-building.

I am honored to have taken part in another Annual Meeting. Each year, I leave Davos grateful for the opportunity I had to broaden my global perspective, engage in memorable dialogs, and connect with old and new colleagues.

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Jim Quigley is the Chief Executive Officer of Deloitte Touche Tohmatsu Limited (Deloitte). Prior to his current role, he was the CEO of Deloitte United States. Throughout his 36 years with the organization, Jim has held multiple leadership roles and is actively engaged in a number of international business organizations and committees, each working to help shape the policies for a successful and sustainable global economy.

Read Jim's guest blog on the World Economic Forum Blog for more reflections on this year's event.

The ‘devil is in the detail’ of global financial regulatory reform

At last year’s World Economic Forum meeting in Davos there was a major focus on framing the regulatory issues facing the financial services industry, including capital reform, liquidity, leverage and systemically important institutions. Those same themes have returned to Davos this year, but with a difference: this year the discussion is all about the detail.

Take, for example, the issue of systemically important financial institutions - or SIFIs as they have been dubbed. The regulators, politicians and financial services executives generally agree that there are certain institutions whose failure could have a catastrophic effect on the financial system and, as a result, should be subject to more stringent rules and regulations.

So far, so good. However, the difficulty arrives when these groups try to agree on what these more stringent rules and regulations should include, or even define which institutions should be categorized as SIFIs. Some have argued that the qualification for SIFI should be based on size, while others maintain that leverage, risk appetite and interconnectivity should all be used in measuring whether an institution is systemically important or not.

Each of these major industry issues are at a different stage in the process of having their detail defined. Some are still at the very early stages of discussion, while others are moving closer to what will likely be their final agreed form. However, one thing is consistent: the financial services industry is going to negotiate right until the very end of the process. They are lobbying hard and making sure that their point of view is heard at this year’s meeting in Davos. Much of this effort is driven by the industry’s concern that the global regulatory response might go too far, driven by the politicians’ desire to appease an angry public.

With such powerful forces still pushing and pulling the debate around the detail it is likely that the industry will experience a continued period of regulatory uncertainty. Perhaps we will witness over-regulation to begin with, followed by sensible retrenchment, before the new global financial regulatory landscape finally settles into something stable and predictable.

So what can financial institutions do while these all important details are still being debated and discussed? Well, I believe institutions should continue focusing on activities that preserve their operational and business ‘flexibility’. Take regulatory compliance as an example. Institutions may need to invest to bring more senior talent into their compliance function over the short-term, and use that experience to empower more flexible decision making and judgment to specific situations as the detail behind the new regulations unfold.

Navigating the journey into the new financial services landscape continues to require delicate decision making on the part of financial services CEOs. If they wait until all the details are worked out they risk trailing those competitors who have marched boldly ahead. However, if they move too quickly, their efforts could be undermined by the still shifting detail behind many of these key issues.

I believe it’s one of the reasons why this year’s Davos discussion will be very closely watched around the financial world.

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Jack Ribeiro is Chairman of Deloitte’s Global Financial Services Industry (GFSI) practice. He has over 32 years of experience working with financial services clients and has played a prominent role in the management of some of Deloitte’s key practices around the world.

Live at Davos | Deloitte’s response to “Preparing for the Global Talent Crisis”

As the Global Managing Director of Brand at Deloitte Touche Tohmatsu Limited, I am often asked how employer branding—the way an organization uses its brand to attract, engage, and retain its people—can protect the sustained future of an organization and the global business community.

The answer, as you might suspect, is not simple—engaging employees with their employer’s brand requires the utmost innovation. In fact, central to the idea of investing in an employer brand as a way to achieve competitive eminence is viewing talent and brand as an integrated solution to resolve the unparalleled global crisis of talent scarcity.

With that in mind, I am proud to be in the company of the distinguished government, business, and community leaders participating in this year’s World Economic Forum session on “Preparing for the Global Talent Crisis: Action Time”. The Forum is a wonderful opportunity to engage in education-focused discussions with other thought leaders.

Below are several key insights and responses on the impact of global talent risk from the Forum’s report Global Talent Risk – Seven Responses: