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Short-termism kills any chance of recovery

29 January 2013 | Source: Times of India

Davos yet again seemed like the Big, Fat Indian Wedding with too much drama, too many things to eat, too many folks to meet, so much so that most people forget what that they are there for in the first place — finding solutions that could improve the lives of the common man.

But if you search long enough, the World Economic Forum (WEF) does hide within its voluminous layers some ideas that are unique, interconnected and far-reaching.

Before I share them with you, let me first begin with the mood meter at WEF. On Europe, there was a widespread belief that fiscal austerity and risk aversion of both political and business leaders was actually now beginning to harm the economy by creating unemployment and consumer diffidence. Some saw Asia as a beacon of hope, while others saw its increasing debt as a time bomb waiting to explode.

On US, interestingly, a majority felt that the country had put a lot of its problems behind it and its future seemed brighter, except on the unemployment front. Japan and its new aggression had mixed responses, while Chinese strategy to be the No. 1 economic power in the world had many more takers this time.

But overall, the mood was that of cautious optimism as global economic uncertainty seemed to have been grudgingly embraced as a reality this time at Davos.

Some ideas to address the macro challenges started emerging when I met Harvard professor Clayton Christenson. He said that over the past few years companies have focused on cutting costs and increasing productivity through what he called efficiency innovation or incremental innovation for short-term returns. What the world needs now is disruptive innovation — an innovation that creates new markets, new jobs with new innovative products, like the ones created in the past by introduction of affordable cars, computers and mobile devices.

The search for "how" led me to sessions on art. Showing the way were path-breaking artists Viz Munik who makes beautiful art pieces from unlikely materials including scrap, and Grammy award winner Eric Whitacre who created a 'virtual choir' by crowd-sourcing from thousands of people across the globe. In their path-breaking creativity, these gifted artists revealed many secrets to leadership through disruptive innovation.

But if there was one theme that presented hope for humanity, it was advanced research in sciences. After standing in long queues, I managed to attend two enlightening sessions on basic sciences by Nobel Laureates Serge Haroche on quantum physics and Eric Kandel on neuro-degenerative diseases. Their research is well documented. However, what stood out was their conviction in pursuing research, which perhaps may not even bode returns in their lifetime.

It made me wonder if our frameworks of evaluating success based on immediate returns are fundamentally flawed. Short-termism only increases the anxiety of the world and kills any chance of economic recovery and general well-being. Also, it left me worried about our own country as it became evidently clear in the discussions that nations without such long-term vision of investment in fundamental research will not only be left behind but also pay royalty all their lives, even for daily-use goods.

The last big idea was most interesting. The world would soon have over two billion interconnected smartphones and for the first time I saw a realization among leaders that this will change many things. It is obvious that businesses and brands will get redefined. However, the larger impact will be on society, governance and what we call a 'nation'. There will be more credible multi-source information in the hands of citizens who will draw their own conclusions and act accordingly, like they did so powerfully in the case of the Jasmine revolution and the Indian awakening.

However, the key question is: Are leaders ready to lead in this new world of 'informed and connected citizens' by embracing social media's 'openness, inclusiveness and accountability'?

My final take-away from Davos, therefore, was that leadership in future will no longer be an entitlement or a position. It is a right that one will have to earn by first being a good common man, as that is the only way one will know what is good for the common man.

The author, vice-chairman, HCL Tech, writes exclusively for TOI from WEF, Davos