Gray Rhinos are highly probable, high impact crises. Introducing a framework for dealing with these seemingly obvious but nevertheless very poorly handled events, I delivered this address at the Annual Meeting of the World Economic Forum in Davos, Switzerland, January 26, 2013.
CNN In America asked me to put the brouhaha over Sheryl Sandberg’s new book, Lean In, into a global context. Here’s what I came up with:
Opinion: Lean in to learn from global examples of women
March 8, 2013
(CNN) – The courage of women like Malala Yousafzai, the 15-year-old student leader in Pakistan who was shot and nearly died for fighting for girls’ right to education; Nobel laureate Aung San Suu Kyi, who endured nearly 15 years of house arrest because of her stand for democracy in Myanmar; and of precedent-setting presidents like Ellen Johnson Sirleaf of Liberia and Dilma Rousseff of Brazil is inspirational.
America’s women and work discussion could take a lesson from other countries.
Americans make plenty of pronouncements about why countries like Afghanistan and Saudi Arabia should let women go to school, drive cars and have many of the rights American women take for granted.
But focusing exclusively on the extreme examples of restrictions on women’s rights elsewhere provides a convenient way to overlook the ways we could do better here at home.
My biggest takeaway from the 2013 Annual Meeting of the World Economic Forum in Davos was that we need to find ways to encourage long-term thinking -and acting. Read more HERE in this February 5th post to the World Economic Forum blog.
Down with Short Termism; Long Live the Long Term
If only I had a nickel for every time during the World Economic Forum Annual Meeting 2013 that participants held up short-term thinking and actions as the bogeyman standing in the way of the Meeting’s Holy Grail: dynamic resilience.
Delivering a scathing assessment of the European Union’s response to the euro crisis, especially in the early stages, Italy’s Prime Minister Mario Monti blamed it for short-term thinking when “leadership is the opposite of short termism.” IMF Managing Director Christine Lagarde similarly urged longer-term policy strategies: “If we look beyond the short term, we would indeed move past the crisis,” she said.
This is hardly the first time anyone has criticized short-term thinking as a danger. But the chorus of voices creates a real opportunity to move from talking to doing. Let’s use it to create the right incentives to encourage politicians, businesses, investors – and, for that matter, individuals – to think and act for the long term as well as for immediate priorities.
Human nature is to value short-term over long-term rewards – but policies and systems can change their priorities. In the stock market, as the average time investors hold stocks has fallen from seven years in the 1940s to seven months by 2007, incentives have shifted to emphasize short term even more than before. Some reports put the average holding period at about under a week today.
Something has changed. How can we bring short term and long term back in to balance? Ideas circulating in Davos for how to encourage long-term thought and action included financing, budgeting, business strategy, governance and transparency.
Compensation incentives, including contingent bonuses, can encourage managers to change their priorities. This strategy is already being deployed; after the 2008 financial crisis, companies – many required by new laws – moved to restructure compensation packages to delay payment of bonuses. Businesses can add long-term planning and risk management to key performance indicators on which merit raises and bonuses are based.
Businesses and governments can incorporate more scenario planning. On the financing side, one of the ideas floated at a Wharton School of Business workshop was to create a programme of long-term, low-cost loans to reduce risk. The more people and organizations hold insurance, the more broadly the costs of long-term planning would be spread – potentially lowering both the cost of insurance and cost to taxpayers.
Matching long-term financing to long-term needs can help to finance needed investment. With roughly US$ 30 trillion in pension funds, including US$ 20 trillion in OECD countries, there is a large pool of funds – especially public pensions – tailor-made for projects like infrastructure and education that will yield benefits far into the future.
Requiring companies to quantify and report long-term risks can make the costs of inaction clearer and thus help level the playing field for companies that want to act with the future in mind but fear the impact of long-term investments on quarterly profits and investors’ views. I heard talk of some public companies considering going private so that they can make long-term investments without taking a drubbing. Delisting every company is obviously not an option, but the more long-term investors there are and the more influence they have, the more leeway companies have to think and act with the future in mind.
In the long run, to be sure, we all know what eventually happens. But thinking and acting wisely in the short term can make future challenges far less costly – and can open up long-term opportunities.
Author: Michele Wucker, a 2009 Young Global Leader, is President of the World Policy Institute, a New York-based ideas incubator focused on emerging challenges, thinkers and solutions.
Three Dominicans living in New Jersey were elected recently to national legislative positions in the Dominican Republic, created precisely so that the country’s diaspora will be represented
Sumathi Reddy writes about this phenomonenon in the July 31 Wall Street Journal article, “Elected to Serve Far Away,” in which she quotes me about the significance of diaspora elected officials: ”Michele Wucker, president of the World Policy Institute, said countries ‘have been reaching out to diaspora, increasingly offering them seats in Congress…, recognizing their remittances, their technical skills and their international networks are all important assets.’ “ More than a dozen countries have created similar positions, mostly over the past several years.
Those of you who have read my first book, Why the Cocks Fight, may recall the profile of a Dominican living in Washington Heights who ran for the equivalent of a seat in Congress from his home province in the Dominican Republic, but pledged to represent the more than one million Dominicans estimated to have been living in the United States and Canada at the time. More than a decade later, the country will finally be giving formal representation to these “dominicanos ausentes.”
The media frenzy over the naming of YGL Marissa Mayer as CEO of Yahoo drew attention to the challenges women leaders face, as personal decisions become fodder for other people’s agendas. It also set the stage for the second Silicon Valley Summit July 24-27, in which I participated with about 100 other World Economic Forum Young Global Leaders.
Discussions on two panel sessions and throughout the gathering took up the challenge of closing the gender gap –a particularly salient issue in the tech industry. Not just a women’s issue, the gender gap affects business competitiveness and the health and success of every single man, woman, and child everywhere in the world.
I was delighted to join a panel on Social Media & Social Good February 17th, 2012, as part of Social Media Week, hosted and moderated by Kim Slicklein (President of Ogilvy Earth). Fellow panelists were Analisa Balares, CEO of Womensphere; James Windon, Vice President, Business Development at Causes; and Scott Dodd, Editor OnEarth.org NRDC. The panel also included great insights from some groundbreaking research on human behavior by Ogilvy Earth.
Peer Pressure for Social Good
Peer Pressure: Using the skills we learned in 6th grade for good.
As much as we’d like to think we’re unique individuals, we’re also herd creatures who are influenced by group thinking. Social media has made this more apparent than ever and magnified our desire to be part of the club. For too long, sustainability marketing has been appealing to people’s altruism, without tapping into our desire to fit in. OgilvyEarth’s recent groundbreaking research Mainstream Green demonstrated that social norming is key to driving real behavior change. Organizations leveraging peer pressure for good have succeeded in lowering energy consumption, redesigning small business, and transforming business strategy. Come hear from experts about using a healthy dose of peer pressure to motivate consumer and corporate change.
Video from my comments at the Global HR Forum in Seoul, South Korea, November 2, 2011, on a panel “Are We Headed Towards Another Global Economic Crisis?” with Professor Francis Fukuyama of Stanford University, Professor Weiping Huang of Renmin University of China, and Moderator Seunghoon Lee, Professor Emeritus, Division of Economics, Seoul National University
(My comments begin at 53:20) The short answer is no -we’re not in another global economic crisis because we never left the one we already have been in.
I’ve been arguing that Europe needs an orderly debt restructuring for Greece to avoid much worse consequences. There’s video below of my guest host appearance on CNBC’s Worldwide Exchange with Nicole Lapin May 23, 2011, discussing the challenges facing Europe as it struggles with Greece’s debt crisis.
A CNBC follow-up article, “Will Eurobonding Save the Day?” further discussed a proposal which I support -originally made by the Brussels-based think tank Bruegel- to pool European debt into a more liquid Euro-bond. Actually, it would involve two kinds of Euro-bonds: senior “Blue bonds” representing debt under 60% of each nation’s GDP, and junior “Red bonds,” for higher amounts, which would trade at much higher yields reflecting the increased risk. The Bretton Woods Project also has cited my argument for an orderly pre-emptive default in a June 13 article, “IMF’s European Austerity Drive Goes On Despite Failures and Protests“
Today’s debt crises among European sovereigns and US underwater mortgage holders both have much in common with a similar chronicle of debt foretold in Argentina a decade ago: the answer that involves the least amount of pain is a swift restructuring. In “Chronicle of a Debt Foretold,” a new paper for the World Economic Roundtable, organized jointly by the World Policy Institute and the Economic Growth Program of the New America Foundation, I argue that the answer is similar to the stitch in time that was proposed for Argentina, on which policy makers failed to act, modeled on the Brady Plan debt restructurings that resolved the 1980s sovereign debt crisis. We need a new Brady Plan for both the troubled European sovereign debtors, and for US underwater mortgages, before we lose another decade, as we did in the 1980s.