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What is the World Economic Forum?
The Basics

What is the World Economic Forum?

The Basics is a series exploring the concepts and individuals essential to purposeful business.
28th Sep 2022

In 1970, German business professor Klaus Schwab left his senior management job at a Swiss industrial firm and set up a three-person office in Geneva. His goal: to create a platform for CEOs to exchange ideas with politicians, academics, and the media.

The following February, Schwab welcomed 450 invited European business executives to the Alpine town of Davos. He chose this ski resort destination to make guests “feel relaxed enough to speak frankly, while maintaining camaraderie of purpose and mutual respect.” There he introduced the delegates to American management practices, such as stakeholder capitalism.

Over time, the Symposium expanded its focus from management to also include socioeconomic issues. 1974 saw political leaders invited for the first time, and in 1987 the Symposium was renamed the World Economic Forum. Its mission is simple: to improve the state of the world.

What is the WEF?

For more than fifty years, the World Economic Forum has been bringing together leaders from all kinds of organisations – businesses, governments, cultural institutions and more. They primarily operate through one main meeting each year: the WEF Annual Meeting in Davos at the end of January, as well as several satellite meetings. These are exclusive. There are roughly 1,000 companies that are selectively invited to become members of the Forum, and their CEOs get the opportunity to attend Davos. Prominent non-commercial figures are also invited to the meetings, such as world leaders and academics.

“We believe that progress happens by bringing together people from all walks of life who have the drive and the influence to make positive change.”

World Economic Forum

The Forum was built on the ideology of stakeholder capitalism, in which “corporations strive to create long-term value by taking into account the interests of all their stakeholders, rather than just shareholders.” Stakeholders can include employees, customers, suppliers, communities, and the planet. The Forum believes that the world’s problems are all interconnected – so every issue matters, and by helping part we help the whole. For the Forum, progress is slow – rather than focusing on the most pressing issues of today, its eyes are fixed on tomorrow.

“We understand that real progress takes time and sustained commitment.”

World Economic Forum

What does it do?

While the WEF is best known for its annual meeting at Davos, they also host smaller meetings throughout the year and are actively engaged in research to help bring real solutions to some of the world’s most pressing problems. It has set up over 40 Global Future Councils consisting of more than 1,000 experts that serve as a brain trust for the Forum and its members. It also facilitates 50 projects on everything from tackling domestic violence to cultivating sustainable agriculture.

What does it focus on?

The Forum has 3 key areas of focus: 

  1. The 4th industrial revolution – adapting to massive and quick changes to economies 
  2. Problems of the Global Commons – working towards the global consensus required to tackle some of our biggest issues
  3. Global security issues – responding to terrorism, refugee crises, and regionalism

These three poles mark where the Forum concentrates its work, believing that progress can be made at the place where they overlap.

What has it achieved?

The meetings have always been about more than talking – they’ve been about coming up with solutions for actionable change. In its fifty year history, the Forum helped prevent a war between Turkey and Greece in 1988, supported the vaccination of over 700 million children, and hosted the handshake that marked the end of apartheid. Critically today, it is a key platform for environmental leaders like Greta Thunberg, who attended at just sixteen years old. 

A speech given at Davos in 1988 marked the beginning of the end of the Cold War. 1990’s Forum saw conversations that spurred an economic reunion of East and West Germany. Discussions about economic reform in 1998 led to the creation of the G20.

That’s how the Forum tends to work. Complicated problems have complicated solutions, and the Forum is just one part of that. Conversations and speeches may not be attention-grabbing or headline-winning, but dialogue and communication is absolutely critical to creating change. That’s what the Forum offers: the chance to build genuine relationships, and cut through the bureaucracy by meeting face to face.

It’s a catalyst. The unsung heroes of chemistry, they witness the reaction yet remain unchanged – but without them, things would happen much, much slower.

What are some of the criticisms?

Despite its many achievements, the Forum has also come under strong criticism at times, including: 

  • Producing “big dreams but few achievements.”
  • It has also been accused of reinforcing elitism, with membership to the Forum costing anything from 60,000 – 600,000 Swiss francs, excluding the Davos fee.
  • World leaders may be reluctant to attend for fear of being accused of ditching their most pressing problems at home in favour of the “party of Davos” – Theresa May and Emmanuel Macron have both given it a miss in previous years.

“Any advantage that politicians see in attending the World Economic Forum are these days weighed against the disadvantage of being seen to attend.”

The Guardian

Maybe the key is to bring the focus back to purpose. “A lot of areas in the agenda in Davos are probably more of an expression of where the shared interests are,” Howell stated. “Then it gets a little tougher to find the shared purpose and then even tougher to find that shared action.” Perhaps focusing on purpose in the first instance would minimise the distance to the shared action, making it easier for people to agree on next steps.

Bringing people together is never going to be an easy feat, but the Forum has been doing it for fifty years. It will be back in January with another edition of Davos, and judging by its history, we will see the effects for that meeting for years to come.

Further reading