Working together, restoring trust—this is the admirable yet ambitious theme of this year’s World Economic Forum (WEF) annual meeting. It was due to take place on January 17th-21st in Davos-Klosters, Switzerland but has since been postponed due to ongoing concerns over covid-19. Talks among senior leaders are still taking place this week, and dialogue will be a “springboard to the annual meeting scheduled for early summer”. Fortunately, for those who are eager to get ahead, Economist Impact has covered these areas in what we believe will —or should — be discussed at Davos.
Restoring trust in the global trading system is crucial to ensure that the benefits of trade are not lost amid anti-globalisation backlash. However, this is a tremendous task. The three topics of focus— a more inclusive future of work, harnessing the technologies of the Fourth Industrial Revolution (4IR), and accelerating stakeholder capitalism—are wide-ranging and complex.
An inclusive future of work will require adjustments in management styles and culture
Our findings show that hybrid work must be humanised to make the future of work inclusive. The challenges are manifold. As the world of work moves to the digital realm, we are losing the human connection in our workplaces. Equally, working at home is not available to everyone, raising serious equity concerns about the hybrid approach. Addressing these challenges requires careful consideration and communication with all levels of the workforce. Perhaps optimistically, competitive pressures will work to find the right balance of in-person and at-home working environments, and both workers and companies will benefit. Companies tied to old management styles will struggle to recruit and retain talent and may find themselves left behind.
The fourth industrial revolution will require new rules and business models to be revolutionary
A robust policy framework is needed for the 4IR to be meaningful. For example, automation could be detrimental or supportive of jobs and growth in a given country, depending on the policy framework. The Automation Readiness Index highlighted the need for policies in innovation, labour markets, education and vocational training to shift this balance towards supportive. Digital trade agreements are also needed to aid the free flow of data between countries—the Australia-Singapore Digital Economy Agreement is a step in the right direction. In ideal policy settings, it will be companies that combine technologies and new business models that achieve success.
Previous industrial revolutions were accompanied by adaptations in business models that leveraged technology to increase productivity. This time around, an early contender could be the switch from a buyer-seller to a subscription-based model. Rather than a consumer owning the product, the manufacturer maintains ownership but provides ongoing services to the consumer. Combined with a circular business model, the value-added to the consumer and the environment could be significant. In a recent study, we explored Mobility as a Service (MaaS) as one of 12 major decarbonisation technologies that could help cities achieve their carbon reduction targets. As a business model, MaaS enables public authorities to better understand mobility patterns while also offering consumers an enhanced travel experience without owning a private vehicle.
Stakeholder capitalism should go beyond the role of the company
This is the most challenging area, given the complexity of the current economic system. Stakeholder capitalism broadens a company’s purpose beyond maximising profit for the shareholders’ benefit. This framework also has significant impacts on other stakeholders, such as local communities and suppliers. As our research proves, there is a risk with this framing of the capitalist system; it implicitly places more onus on companies to enact meaningful change in areas beyond profitability. Three areas that will underpin a sustainable economic model—sustainable food, water, and energy systems—have been studied extensively in the Food Sustainability Index, the World Ocean Initiative, and the equitable clean energy study. As these and other Economist Impact studies highlight, achieving sustainable and socially-desirable outcomes requires robust policies and regulations from the public sector alongside technological innovation and substantial investments from the private sector.
It is not solely on companies to achieve sustainable outcomes. Nor is it solely up to companies to align with the SDGs. The onus is also on governments and civil society to find suitable structures, incentives and policies that enable the private sector to contribute to these lofty goals. Trust among all parties will be vital, but this will undoubtedly test the meaning of working together.
