Posts about davos09

Davos09: Open Bank

February 1, 2009 by Jeff Jarvis

At the end of my Davos week, I finally saw tiny notes of hope – faint LEDs at the end of a long tunnel – and they came not from the business, government, and journalistic leaders here but instead from technologists, entrepreneurs, and educators.

I ran a session in mass innovation in which we charged groups to pick an industry and bring the benefits of open collaboration to find an opportunity or repair a problem. One group took on the toughest assignment they could today: banking.

They proposed the Open Bank. It would feature radical transparency: full disclosure of performance and compensation. The group decided that a banker should not sell a product unless he could pass a test about it. They even decided that there had to be a means to confirm that customers understood what they were buying. They proposed collective risk assessment, creating a means for its constituents to select and perhaps vote on investments. They explored how to offer transparency on each product and customers’ performance with them so that you could compare your returns with fellow customers. And they argued that bankers should be compensated on profit. It wouldn’t be an easy business to run; being answerable is hard. I said later that its slogan should be, “the only bank you can trust.” That is what would make it successful. When I asked, most in the room said they would be such a bank’s customers; many said they’d work for it; almost everyone said they’d invest in it.

Mind you, this thinking didn’t come from a bunch of crazy, webby, gum-flapping bloggers and academicians (like me). It came from the sort of business machers who come to Davos. But there wasn’t a banker among them. That was the point of the exercise: to look at an industry from the outside and see new opportunities and needs. Bankers are in fortress mode; they won’t do that.

Later that day, at one of the still-lavish closing parties, I said to a top banking executive what I’d said earlier in this space about the week in Davos: that the leadership here had to take responsibility for their failure. He sneered at me. There’s no need for that, he said. He will be the last to open up, the last to change.

But back at the workshop I was leading, the three dozen machers who came mainly from investment, technology, and education said something different: The stakeholder is taking control. That stakeholder had to be informed. And that requires transparency.

It was under those rules that they reimagined retail, education, and government.

The day before, I went to a session on educating entrepreneurs with Cisco’s John Chambers, Intel’s Craig Barrett, and other leaders in worldwide movements to train the people who will start businesses and create jobs and true value, in large economies and small. They recited statistics about the value that comes from giving young people the tools to start businesses. They argued passionately that we must change education to enable such creation. Then I hung out with fellow blogger Robert Scoble, who has been arguing that the way out of our mess is to start a million companies. And I went to Yossi Vardi’s annual sabbath breakfast with Israeli President Shimon Peres, who made a forceful argument that the future will be secured with investment in technology (including biotechnology) and education (which he as much as said was the next thing to come after the internet wave).

But instead, the governments that are flexing their muscles here to announce that they are now in charge are giving trillions of dollars to the incumbents, to people like that sneering banker. And he and his peers here in Davos are, as I said in my earlier posts from here, are circling their wagons, refusing to take responsibility, and change.

We should, instead, be investing our money in entrepreneurs and technologists, the people who will change old industries, reimagining them under new rules with new people – us, in the long run – in charge. I leave Davos thinking that more often than not, we need to look at replacing rather than just repairing these broken institutions. Entrepreneurs and educators do that.

We are bailing out the past. Instead, we must bail out the future.

Davos09: What’s missing in journalism?

January 30, 2009 by Jeff Jarvis
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The media machers at Davos got together yesterday with three economists to ask what went wrong in financial coverage that did not warn of the crisis.

Like other leaders from other segments of society here in the meeting of the machers, they did not don hairshirts. I believe that will be the worst outcome of this year’s Davos: a failure to take responsibility for the failure of leadership. But blame isn’t the most productive priority. What’s more critical is to ask what to do about the failure.

I wonder what gaps the crisis reveals in journalism. That’s where the discussion finally went yesterday. (Because it was held under the Chatham House rule, I can’t attribute quotes.)

The assembled journalists insisted that the crisis had been reported, that they can point to articles that warned of the insanity. I’m not sure whether that’s an effort at industrial whitewashing: If one reporter gets the story, the entire profession gets credit. But fine, let’s stipulate that the stories were written. But one of the wiser editors said that didn’t do any good because it didn’t make an impact; it didn’t register; it didn’t go mainstream.

So is that what’s missing in journalism: the ability to bang on a story until the world pays attention? Our assumption had been that if it appeared in a major newspaper or magazine, that was the definition of attention. It assumed that the world paid attention to our news. So under this argument, we could be seeing an admission that papers and magazines have lost their juice. But let’s get past that, too. I think there is something to the idea that we aren’t good at driving a story.

In response, I quoted Arianna Huffington telling the same group two years before that journalists have attention deficit disorder and bloggers have obsessive compulsive disorder. Josh Marshall’s key skill is dogging a story until the press and the powerful do pay attention. The press can learn from that.

But then again, as an editor said yesterday, if an editor devotes page one every day to a warning that the sky is falling, no one will listen to him, either.

A well-respected journalist told the group that in economics, there is no objective truth. It’s too complex. So it shouldn’t be declarations of doom that should dominate front pages. It should be questions: How can these companies be this profitable? What is the impact of this much leverage? How can people without income get loans? It the constant poking and prodding we need.

That requires the willingness to be a pain in the ass. We journalists used to pride ourselves on being pains in the asses — or just asses. But now they like to be liked — they think they need to be. They believe that maintaining their connections is their key value. But that compromises their ability to dog.

One of the journalists complained that companies are so opaque they are hard to cover. “There’s not much a journalist can do, or anyone can do, when you don’t know what’s going on.” That’s true. And indeed, I believe the most important reform we need to enact post-crisis is transparency, an ethic and law of openness. But this argument, too, lets the journalists off the hook. It’s our job to find out what people don’t want to tell us. Maybe that is the real definition of reporting. The rest is just information.

An economist that “it’s hard to hold the press to a higher standard than the profession itself.” There was much nodding. But I question that. If we are to be the watchdogs — instead of merely the messengers — then don’t we need to try to know if not more than our subjects than at least enough to know what to dog? I’ve long argued that journalists aren’t experts, they find experts. But maybe I’m wrong about that. Maybe news organizations need to hire different kinds of experts. One editor yesterday said he hired a cultural anthropologist who really was ahead in warning about the danger of derivatives because she looked at it through a different lens. An economist talked about hiring psychologists and even scientists and the emerging study of neuroeconomics. Papers have hired economists to cover finance. But papers can’t possibly afford to hire experts and people with different perspectives in every area they cover.

You’ve been waiting for me to bring blogs into this. Here’s my chance: Many of those experts and players are publishing themselves. They are questioning and arguing and so perhaps the key skill journalism needs is to curate that. (I also couldn’t get through a post such as this without saying “curate” at least once.

The risk now, many agreed, is that journalism will – as is its habit – overreact. A journalist I ran into in another session yesterday said she thinks we’re now in a “doom bubble.” American business journalism has been too American with too much reporting – including puffery – on companies and too little reporting on finance, on the markets that have such a profound impact on our lives. There are plenty of lessons to learn from journalism’s failure to warn well enough of the crisis to come. But we can’t stop at that, at incremental change in journalism: a few more of these people, a few more of those headlines, a better job with that kind of story. We need to look at the fundamentals of how news – a large, global, complex, interconnected ecosystem of news – can be and should be made now.

Davos09: The Davos vacuum

January 28, 2009 by Jeff Jarvis
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Maybe in some session at Davos or over some dinner table, someone’s discussing substantial ideas and plans for ending the mess. But I haven’t been there. Instead, I was in a CNBC debate this morning as representatives from business, government, markets, and multilaterals were supposed to argue the point. And this most complex of subjects was turned into 2-D cable TV as we in the silent audience were supposed to vote – interactivity’s all the rage, you know – on each of four propositions delivered in about a minute before an irritating clock cut them off. It’s as if we were supposed to say, “Yes, that’s it: Let the stock exchanges take care of it all. Good. Our work here is done. Let’s go skiing.” The snow here is much thicker than the discussion.

We heard protective self-interest, as many of the leaders preemptively argued against what they fear most. Howard Lutkin of Cantor Fitzgerald was the most growly on the point. “Let’s just make banking boring and we’ll go back to a better time, like the 1920s,” he sneered to discussion about regulation. “Boring is good,” said the chairman of Lloyds. It took a long time before we even heard the word transparency as part of a fix and then the representative of corporations snarked that “transparency is OK in principle.” But who’d want to try it in practice?

This was all foreplay. The consummation came when Montek Ahluwalia, a government official in India, listed five reasons why only government can take the lead:
* recapitalizing banks, which only government can do
* fiscal stimulus, which only government can provide
* avoiding protectionism, which only government can have the courage and will to do
* working with the developing world – government again
* cooperating among nations: government.
He pointed out how well India’s regulation and banking systems are working. Government.

Finally, the heads nodded all around, most of them resigned. It’s government’s day. There’s a session here on the the new dawn of government. Even Lutkin knows that’s where it’s headed — his head nodded, too — but he still snapped that once government gets involved in banking, it won’t get out. I wonder why CNBC didn’t start the session with the proposition that governments are in charge now and ask what they should do; it would have saved us and the viewers at home a hot mountain air with little oxygen.

Martin Sorrell made the most important point in the discussion: It’s our money being used now and we must have more of a voice in how it is being used. Someone else pointed out that at least politicians — unlike CEOs or nongovernmental commissioners or market bosses — are answerable to their publics every few years.

And that’s supposed to make us feel better — somebody is in charge now — until we remember everything that government fucked up. It didn’t watch, didn’t regulate, and encouraged the madness. Once disaster came, governments have squandered billions — soon trillions — of our money without goals or accountability, with our money going to dividends and salaries for those who already skimmed too much off the latte that was our economy. Where’s the plan? I haven’t seen it here.

I’m talking with other people who are getting more depressed as the day goes on and here, I think, is why: We are surrounded by the leaders who fucked it up: bankers, marketeers, regulators, and the press. They were in charge. That’s what Davos is: the people in charge. So who’s to say that we’re going to find the answers in Davos? Well, the people in Davos will. But I think the evidence is strong that the answer is not here.

I’m going skiing.

Davos09: A crisis and failure of leadership

January 28, 2009 by Jeff Jarvis
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The crisis the world is suffering through now is a failure of leadership. The leaders of the world are in Davos. If the world is watching what happens here this week, it will be to hear solutions and see responsibility and accountability. I’d say that’s not off to a great start, at least on the latter.

This morning, I started my Davos week with talk of trust. The Edelman Trust Barometer presentation revealed plummeting trust in financial, government, and journalistic institutions: 62% of adults in 20 countries trust companies less than they did a year ago. Trust in government is even lower.

Nonetheless, the first trend I spot here: the rise of government. News reports have been saying that this will be a dialed-down Davos, but I don’t see that; it’s the same Davos with the same pastries and parties. The change I do sense is less of a presence and apparent swagger from business and more from government. “Power has shifted from Wall Street to Pennsylvania Avenue,” said a speaker the Edelman event.

The other obvious trend is America to the woodshed. “America is the new Europe,” Richard Edelman said. In a decade of the survey, they have never seen such a precipitous drop in trust in one category: American business, falling from 58% to 38% in a year, now stands equivalent to France and Germany and under the UK. The least-trusted industries in the U.S.: no surprise — automotive and banking.

In most markets, trust in business remains higher than trust in government, “which is not a good thing for either,” Edelman says. Asked who can fix the economy and prices, government is now clearly the preferred leader, the survey says. The percent who agree that government should impose “stricter regulations and greater control over business across all industry sectors:” 61% in the U.S. up to 84% in France (65% worldwide). The percent who trust business less: 62% worldwide, ranging from 77% in the U.S. down to 49% in India.

The survey reveals a new world spit: optimists in China (where trust in business rose from 54% to 71% in a year), Brazil, India, Indonesia, pessimists in the US, Europe. “The United States picture is really bleak. I can’t put a better face on it,” Edelman said.

Edelman advised companies to make change and not wait for regulation, to recognize mutual social responsibility, and to show “shared sacrifice…. This is not the French Revolution yet but it is certainly not the roaring 2000s,” he said.

His advice on communication: “It can no longer be Moses from the mountaintop.” You have to inform your employees and enable them to blog, for they’ll talk anyway. Communication moves from messaging to informing the conversation, he said. If one can trust companies — only 29% do. Government is worse; only 27% trust what they say.

Lionel Barber, editor of the Financial Times, began the session saying that trust is an issue for the press as well. Edelman found that trust in business magazines and analysts fell from 57% to 44% and from 56% to 47% respectively. Trust in TV news is down from 49% to 36% and in newspaper coverage from 47% to 34%. Stop on that: Two thirds of people don’t trust newspaper articles.

After all this talk about trust, though, breakfast ended up serving spin. An executive of AIG split a very long hair, drawing a distinction between distrust over morals and distrust over competence and he argued that our issue now is the latter. An executive at another company said trust fell from a record high to a record low and he wondered whether business had simply oversold itself. Then there was much discussion of a new concept (or new buzzphrase): “private sector diplomacy.” Isn’t that a fancy way to say PR?

Later: A video of Richard Edelman after the session on trust:

: Crossposted at the Harvard Business Review, where I hope another discussion blooms.

Travelin’ man

January 21, 2009 by Jeff Jarvis
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I’m flying to Munich tonight to meet with editors at Burda and at the German publisher of What Would Google Do? (Was Würde Google Tun?). Then I get to attend and participate in the great Burda DLD conference. And then it’s off to Davos, which should be fascinating this year as the machers grapple with crisis and tectonic change. There, I’m taking part in sessions on mass innovation, the end of privacy, and the need for employee health care. I’ll be blogging as I go.