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Feb 04, 2015

Japan, Asia & the World World Economic Forum Annual Meeting 2015 2)The tide is turning at Davos

On the morning of the second day of the Davos meeting, I woke up around 6 a.m. and began replying to the numerous emails from Japan that had piled up while I was asleep. I then got dressed, and headed to a private breakfast meeting organized by Edelman. It was still dark out.

When I arrived at the hotel where it was being held, there was a long queue of people waiting to get in because of the extensive security checks at the hotel. I ended up waiting for 15 minutes in the cold. This year, security checks in Davos are particularly tight due to the terrorist attack in Paris.

Because many people were kept waiting at security checkpoints, the breakfast meeting was hugely delayed. Once it started, Edelman President Richard Edelman began reporting on the results of his company’s annual survey on trust.

Note: President Edelman spoke at the last plenary session of the 2013 G1 Global Conference. Please watch the session video on the GLOBIS website. Japanese Minister of Health, Labour and Welfare Yasuhisa Shiozaki also participated in the session as a panelist.
Building Trust in Business and Government: Japan and Beyond (G1 Global Conference 2013)

The main points of President Edelman’s speech are as follows:

WEF founder and chairman Klaus Schwab pointed out the “four prerequisites of the company’s survival; profitability, growth, risk protection and earning public trust.” The fourth one - to gain public trust - is the most important.

Edelman suggested several ideas for gaining public trust.
--It’s good to join hands with governments. It was a good call that Uber had a partnership with the city of Boston.
--It’s important to pay taxes. Apple’s avoidance of taxes using loopholes in Ireland, the Netherlands and other countries will result in a loss of public trust. Efforts to reduce taxes will cause a sense of unfairness and lead to distrust. That is not good.
--First and foremost, there should be good communication with employees. Employees are the most important stakeholders. Without their trust, companies will create a bad reputation among outsiders.
--To gain trust, give thorough and “radical” disclosure
--And to solve social issues, it’s important to show that an organization is benefiting society and individuals. Trust is obtained when words are matched by actions. The latter is more important than the former.

After President Edelman’s introductory remarks, the panel discussion began. The past two times that I participated in the Edelman session, I had been given a role of a panelist. But this time, I participated for the first time as a member of the audience. It was interesting. I got to really concentrate on the discussion.

The biggest change at the Davos meeting this year compared with last year is that participants are openly criticizing the technology sector. People criticized Uber, and accused Apple of tax evasion. There was also a lot of talk about the presence of the Dark Web and their encrypted communication, as well as the dangers of cyber attacks that Sony just experienced. In addition, participants expressed dissatisfaction over the lack of transparency and fairness caused by ineffective government controls.

Fadi Chehade, the Chief Executive Officer of the Internet Corporation for Assigned Names and Numbers (ICANN) which determines Internet domains and protocols, began speaking with a sense of strong concern about the Internet and society, which will be one of the main agenda at the U.N. General Assembly in September. He said that as the world has become increasingly critical of the Internet, governments around the world are bound to start imposing regulations unless the industry takes the initiative in establishing self-regulations rules.

In the past, the finance industry had been criticized for using new financial engineering on its derivatives and hedge funds which are difficult for lay persons to understand, charging outrageous fees and engaging in the dark practices of shadow banking. Ultimately, the financial bubble collapsed, public trust plummeted, and the industry came under heavy regulation. Will the technology sector follow the same path? The IT industry also writes codes that are difficult for lay persons to understand, uses artificial intelligence engineering to charge outrageous fees, and is increasingly under the shadow of the Dark Web. Will the IT bubble eventually collapse and further ruin public trust?

The interesting thing about the Edelman Trust Barometer was that all sectors saw their trust levels decline. Former Australian Prime Minister Kevin Rudd, who was sitting next to me, offered the following opinion.

The trust that people initially had in governments was lost due to numerous political scandals. Then the public began to trust the markets, and their expectations for business ballooned. The income gap widened, and people began criticizing profit-driven markets, and shifted their expectations to NGOs. But NGOs failed to expand, and lacked transparency regarding disclosure. Ultimately, people began to build expectations on technology. But now, the technology sector is also experiencing a decline in trust. In other words, people have constantly changed who they trust, but now, all these sectors are suffering drops in their trust levels, which spreads a sense of hopelessness. Now that it has come full circle, maybe people will trust governments again.

After Rudd’s comment, ICANN CEO Chehade immediately retorted. He said that trust will not return to government but will ultimately shift toward platforms where diverse, cross-sectoral stakeholders get together.

This is an interesting thought, and it is very true. The WEF has the power to move the world, and the G1 Summit in Japan has started to move Japan toward the right direction. We’d like to continue our endeavor so as to maintain public trust.

Either way, this year will probably be remembered as the year when people’s perception of technology changed.

After leaving the venue at the hotel, I headed toward the main event venue. Inside, I was able to see many familiar faces - a former foreign minister of Singapore, Victor Chu from Hong Kong, the BBC’s Nik Gowing, the head of Lippo Group in Indonesia, the Dean of the China Europe International Business School (CEIBS), and others. Participants from Japan included Mitsubishi Corporation Chairman Yorihiko Kojima, Takeda Pharmaceutical Co. Ltd. Chairman Yasuchika Hasegawa, Recruit Holdings Co. President Masumi Minegishi, Suntory Holdings Ltd. President Takeshi Niinami, and others.

Every time I bumped into an acquaintance, I would stop, chat and start walking again, only to stop and chat with someone else. Interesting conversations started everywhere I went. While I thoroughly enjoyed these chats, I tried to participate in as many sessions as possible.

First, I attended a 30-minute talk by Financial Times writer Martin Wolf, the world’s most influential economics commentator. I took a seat in the very front row.

The other sessions I attended were all related to technology. For the past eight Davos meeting, I participated in various sessions on politics, economics, finance, management and leadership. But this year, I decided to concentrate on technology sessions in order to understand the latest trends.

The session mainly dealt with topics such as robots and artificial intelligence, the visions of digital creativity, and DNA and AI chips. Because warnings by Elon Musk and Stephen Hawking about the threat of artificial intelligence made headlines, many leaders were interested in these topics.

Slightly past 5pm, Chinese Premier Li Keqiang was giving a speech. But the audience showed little interest. Ian Bremmer later tweeted that Li’s speech sounded like propaganda for the Chinese Communist Party.

What left an impression on me today was that even if the leaders of governments, businesses and the non-profit sector participating in the WEF come to agree on something, there are numerous issues that are left unresolved. Rather than particular states or governments posing a threat, the greater threat is now from organizations and networks transcending nations. Some examples include the Islamic State in Iraq and Syria (ISIS), terrorists, and hacker groups such as Anonymous.

From tomorrow onwards, I hope to attend even more sessions and exchange opinions to broaden my horizons. Tomorrow, there will be a breakfast meeting with Japanese Education Minister Hakubun Shimomura. At night, we will have the Japan Night and the GLOBIS Night. The GLOBIS staff who will be working on GLOBIS Night seem to have arrived in Zurich today.

I’ll be going to bed early to prepare for tomorrow. Good night!

Yoshito Hori
In Davos
January 21, 2015

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