Thursday January 26, 2012, 05:04 PM
Davos, the buzzing networking Swiss village for the last week of January is back in focus. But will the snow clad promenade which witnesses the world's most influential once again fail to get the pulse of the world? Over the years it’s becoming clearer that many subjects discussed at the World Economic Forum along the corridors by the world’s best CEOs, are getting predictions wrong. And it’s not the economists alone.
From an India standpoint, this is starker than ever. At the previous Annual Meeting in Davos in January 2011, India celebrated the 5 year anniversary of the ‘India Everywhere’ campaign, making another pitch for vibrant India and the economic promise. Except that in the 12 months that followed, it was proved that India was ‘not quite there’ as it saw its GDP dip, corruption soar and gloom enveloped the country.
“Today we are trapped in individual goal chasing and a fractured resolve,” says Vineet Nayar of HCL Tech “The crying need of the hour therefore is to come together as a nation, pool all our resources together to create a unified vision, take decisive actions and most importantly collaborate across all stake holders to get the most important things done. Maybe we needed an external crisis to wake up the giant … that crisis is now right at our doorstep.”
But does WEF really reflect this reality? Anand Mahindra says, "I'm more comfortable with their being bullish, even if they often prove to be off the mark." Davos sees attendance from many of the people who make the world turn. Indian CEOs believes the feel good factor is more encouraging. "It would be a little scary if they were always pessimistic about the global economy," says Mahindra.
Lee Howell, MD of WEF believes more leaders come here for a sense of change and there "are keen to know of what can be the opportunities of the existing situation." But Soumitra Dutta, just appointed dean of Cornell doesn't entire agree, "The danger is Indian optimism should not turn into arrogance."
Sentiment vs Reality
History is testimony to the ironically timed discussions at Davos, which often would see just the opposite play out in the world economy in the following year. In 1999, there was plenty of bubbly flowing to celebrate the peak of Internet boom, one that was expected to be everlasting. Bill Gates who attended WEF that year was worth $101 billion and called the Centibillionaire. Most CEOs at the forum’s corridors were smug and upbeat but just within the12 months that followed, the Davos Man began shivering. The boom had gone bust. The same people talked about how Internet stocks were grossly overvalued.
2007 played up the rise of Asia in the forum’s key agenda but entirely ignored the underlying threats to the world economy, that it was slowing down and facing major risks including the American subprime and the over-heating in China. Exactly a month after a bullish Davos forum, the Shanghai Stock exchange tumbled 9%, the largest in the preceding ten years, triggering a world wide sell-off. What everyone forgot was the rise of Asia, particular China is closely linked to the US economy and so the economic muck began to float to the surface with 2007 triggering off the start of tough times. Why go far? Even as the subprime crisis held the US economy hostage, Davos had little premonition about it earlier in the year.
When CEOs gather from across the world, each is trying to pitch to investors and often that selling point is a tad inflated. Rahul Bajaj, who goes there every year says, “ We are going to have a different tone here and there. We have a different purpose of opening our mouth. We need to attract investment, we need to put our best foot forward.” But Azim Premji of Wipro takes this with a pinch of salt, admits the euphoria has seen a correction "I think hypes have come down. That's not a bad thing because if we over-hype ourselves, then there can be a little disappointment. Plus the growth has come down which is a dampener on the situation, there is no doubt about that."
Less India Star Power
Whether Davos gets it right or wrong, it’s definitely become a once-a-year stop for a quick networking binge. But overtime, CEOs have been faced with dilemmas about what they really gain from it. Bajaj quips, “I haven’t earned a penny from going there!” He is in his 35 year of visit and believes its “an expensive holiday for me. I love it” This year much of India’s star power has decided to stay back. Kumar Mangalam Birla has called off his visit while Anand Mahindra is skipping Davos for the Sundance Festive. The finance minister has yet again decided not to go. Also not attending this year are WEF favourite Nandan Nilekani, bankers like KV Kamath, Chandha Kochchar. Montek Singh Ahluwalia and later Kamal Nath have also decided to drop out. An economist at Davos wondered,"Could they be worried about the world seeking explanations to the mess over India's scams?"
Nayar of HCL Tech has in the past questioned the relevance of Davos in an article he wrote, "Do the issues being debated at Davos by the world's movers and shakers, in both public and private forums, result in significant change? In short, does the event create more light than heat?" That's question many introspect on but most return to the forum.
Davos is planning to move its 5 day business-avangza to another few days of January or yet another month. We don't know if its numerology for luck or just a desire to keep date with the Chinese who can only make it after their Chinese new year celebrations end in January, but hopefully whatever the case, it may mean better fortunes for forecast and getting the pulse right.