I’ve been to Davos five times, and don’t miss the icy sidewalks and endless security lines. But when the World Economic Forum last week brought together government leaders, CEOs, community activists and scientists for a digital Davos, I did miss the informal conversations and was reminded why connectivity is so important.

Like the old movie title says, being there matters. The hallway conversations, the opportunity to read a room, the chance encounters—these are the real strengths of Davos, just as they are the real strengths of our offices, labs and schools. It’s why we’re all yearning to be back together as soon as it’s safe, even if it means having to navigate the odd icy sidewalk.

This year’s virtual Davos tried to address the challenges shaping 2021: the race to vaccinate the world, the effort to kick-start economies, the fight to flatten the climate curve, the long journey to racial justice, and the struggle to detox social media. Here’s some of what I took away:

Vaccine politics could prolong the pandemic

Vaccine nationalism may be the biggest challenge to our world right now. We will get through it, but the next few months could be politically bumpy. Germany, a leader, has vaccinated less than 5% of its population, and made clear it’s going to take care of its own population first. Other wealthy countries are struggling to get supplies, while the world’s poorest countries worry they will be shut out. And that puts everyone at some risk, as the more the virus circulates, the greater the risk of mutation. There are concerns of a “persistent pandemic,” but vaccine distribution is just one piece of the puzzle. Public health systems need to be strengthened in the poorest countries. The World Health Organization needs to be revised and reformed, too, as it’s the only body that can help us all understand the virus and how we can contain it, collectively. The politics of the pandemic are not likely to ease up.

Joe Biden can’t unite the world

China’s Xi Jinping helped kick off the week with a stern message to the new U.S. president and his allies. Any effort to insert values into trade could lead to a new Cold War. We may be headed that way anyway. As Biden pushes for an “an alliance of democracies,” Canada and the European Union will try to revive global trade in a new fashion that’s as much about values as it is about value. As German Chancellor Angela Merkel put it, multilateralism “doesn’t simply mean co-existence.” While we may see a revived World Trade Organization, it’s not likely to be an all-powerful body. Expect more regional trade blocs, and what Spain’s foreign minister called an age of “strategic autonomy.” Ironically, this effort to “re-globalize” misses the digital revolution that transcends borders. The Europeans, Australians and others may want more control over the cloud-based economy that’s thriving in the pandemic. But they’ll need to convince Biden they’re not out to stifle Silicon Valley and the platforms that Washington is happy to criticize at home, and defend abroad.

Get ready for smart supply chains

The regionalization of trade is leading to a rethinking of supply chains, and not just because of vaccine and PPE shortages. Countries are looking at strategic sectors, especially ones rooted in technology, to balance supply and demand more safely. As Canada is discovering the hard way—through vaccines—this may lead to trade-offs between efficiency and resilience. National security may come into play, too, as we witness the growing connectedness of every tool and appliance in our lives. Regions everywhere will want more control over the Internet of Things, just as they do the Internet of words, pictures and money. That means that, as we rebuild supply chains, we’ll need to put an even greater premium on R&D, to ensure manufacturing centres are integrated with innovation centres. Brawn and brain, in other words. Masayoshi Son, the Japanese investor behind SoftBank, believes this approach may fuel the next big disruption, in logistics and mobility. He thinks autonomous vehicles can be to the 2020s what smartphones were to the 2010s. We’ll see. But in the decades ahead, auto plants are likely to depend on artificial intelligence and cybersecurity as much as steel and aluminum. Based on patent data, Son is convinced only two countries—the U.S. and China—will dominate this new space race, and they’ll be central to the smart supply chains of tomorrow.

Climate change, the next catalyst of innovation

Mary Barra came to our virtual session with a plan. The General Motors CEO laid out her vision for a company focused on “Zero Crashes, Zero Emissions, Zero Congestion.” She’s trying to make GM climate-friendly, as she watches Elon Musk’s taillights on the electric highway. But the GM plan to be all-EV is as much about innovation as emissions. Entire sectors will emerge—or be remade—through the 2020s as consumers look for technology to transform their lives, and governments spend trillions to lay the groundwork of a new economy. BlackRock founder Larry Fink, a Davos regular, published his annual letter during the Forum, urging CEOs to see the climate transition as an opportunity not just for the climate. He figures the world will need $50 trillion more in new investment by 2050 to meet our sustainability goals. That’s already leading to plans for a Hydrogen Valley in Europe (to do for energy what Silicon Valley does for computing) and proposals for new power grids along the U.S. interstate network. As Bill Gates told the Forum, the biggest cuts in emissions this decade will come from technology, not changes in behaviour. His new word for climate change: “catalytic.”

Increasing trust is the challenge of post-COVID capitalism

Davos is the birthplace of “stakeholder capitalism”: the idea that, to thrive in the long term, business needs to balance returns to shareholders with returns to customers, employees and communities. This mindset led many companies in the depths of the pandemic to find ways to make and distribute emergency supplies and develop vaccines at breakneck speeds. In North America, corporations were also among the first to step up to the challenges of Black Lives Matter, changing employment and procurement practices while many governments were still talking. It’s one reason the latest Edelman Trust Barometer (a survey of 33,000 people globally) found business is now the most trusted institution—ahead of government, media and religious organizations—and the only institution seen as both ethical and competent. That’s not necessarily comforting. Trust in all institutions is important to the well-functioning of markets and an economy, as well as society. Coming out of the crisis, business will need to do more to help those institutions strengthen themselves, if a new kind of stakeholder capitalism is to endure.

Money’s cheap; judgment is not

The COVID crisis has created a new generation of fans for John Maynard Keynes, and his theories about government spending. Can it do the same for another legendary economist from the 1930s, Joseph Schumpeter, and his belief in creative destruction? Governments and business may soon need to come to grips with the lasting economic damage of the crisis and consider which sectors stand a chance of rebirth, and which don’t. The stock market rewards companies at the forefront of change. But it may be politically tougher for governments to do the same. That’s too bad, as they can reap the reward if their countries become transformation leaders. In 2020, many of those governments got by throwing money at the entire economy. In 2021, they’ll need to be more selective—and appreciate how low interest rates can be a rising tide even for leaky boats. François Villeroy de Galhau, governor of France’s central bank, expressed concern his fellow policymakers focus too much on liquidity and not enough on solvency. Kewsong Lee, the CEO of Carlyle, was less diplomatic, asking policymakers if they’re keeping “zombie companies” alive. David Solomon, the CEO of Goldman Sachs, argued markets tend to eventually separate the good from the bad and the ugly. It will take discipline from governments to know when to let the Schumpeterian forces prevail.

A new social dilemma: speech or reach?

Our virtual gathering was haunted by the January 6 attack on Capitol Hill, and what it exposed in social media and democracy. The heads of major tech companies assured us they were ahead of the mob on most counts. Susan Wojcicki, YouTube’s CEO, explained how her platform is using AI and bots to take down thousands of misleading or offensive videos every day, usually before more than a handful of people have seen them. YouTube’s owner, Google, just opened a second “safety engineering” centre, to add more human surveillance. The platforms are rightly concerned about stifling free speech, especially in a pandemic when so much needs to be expressed and shared. But as many media and advertising executives pointed out, it’s not just speech that’s the problem; it’s reach. The platforms use algorithms to amplify the reach of different types of content, and most of us don’t know how they work. Governments may need to lean in more, to examine those algorithms, regulate harmful speech, and hold tech companies to account for allowing abuses to propagate. “Responsible conduct” can be a new norm for tech, as it is for other companies that rely on the public good. More public vigilance will be needed, too. As we confront the next stage of a pandemic, and its aftermath, our collective success may just hinge on the most important word of the 2020s: trust.

 

The U.S. was losing to communists on the battlefield, socialism was winning in the streets, monetary policy was fighting for credibility, and young people were challenging the multinationals that had come to define global commerce.

Capitalism did win out, and for the vast majority of people, the world became a better place – more open, more educated, more innovative, and by most measures more prosperous. But at the 50^th World Economic Forum in Davos last week, a new global divide became apparent. After a half-century of globalization, of rules and ambitions that carried the world through the end of the Cold War, the rise of the Internet and the explosion of mobile computing, the world is facing new challenges, and new questions. And once again, a new generation is demanding action. Can capitalism again rise to the challenge?

This was my fifth trip to the Forum, and the first where I began to see the emergence of geopolitical systems and their economies as platforms competing for the transformation that lies ahead – and the deep implications that this holds. The 2020s may see a reordering of economies and industries, as societies respond to the threats of climate change and sectors tap the potential of smart technologies. But who defines that change remains to be seen. More than ever, business will have to step up.

Here’s some of what I learned at WEF 50:

1. Superpowers as the new super platforms

Every January, the shops along Davos’ main street are converted into showcases for far-flung markets from around the world, from Karnataka to the Caspian, with nods this year to Saudi Arabia, Ukraine and Canada’s cannabis industry. The Disneyesque displays always capture the diversity of our global economy, but the loudest messages this year came from those that didn’t have much of a visible presence: the United States and China. The two powers control 40% of global GDP, and as their trade conflict shows, they’re each trying to position themselves as a platform for global growth. That’s critical to everyone looking for global scale to solve problems, whether it’s to cure diseases, reduce carbon emissions or find new markets. It’s not just a race for scale; it’s a competition between operating systems for business, between America’s shareholder capitalism and China’s state capitalism.

I was with a group of CEOs who met with President Trump and members of his administration whose confidence was palpable. They felt their economic policies had exceeded expectations and their approach to a new trading order, based on regional and bilateral deals, would ensure the global economy continues to revolve around the American platform of capitalism, rooted in the capital markets of New York, the innovation labs of Silicon Valley and a manufacturing renaissance in between. China was less visible at this Forum, but the trade war hadn’t diminished the confidence of the Chinese leaders I met. In fact, their resolve seemed to be growing. As one regular Davos-goer noted, the absence this year of many world leaders – none of the BRIC leaders, for instance – could reflect the draw of China’s Belt and Road summit, which is held every April (Beijing last year, Dubai in 2020) and may be the new Davos. China’s rise is about more than summits and sales, however. Its approach to state capitalism is about scale, using technology and an expanding reach across Asia into Europe to create data fields that could become the OPEC of the digital age. Which platform prevails in the 2020s will be critical to every business, and country, looking for growth.

2. Government, redirected

Across the aging, slow-growth West, governments are asserting themselves with a conviction not seen since the financial crisis. Nowhere is this truer than Europe, where governments are vexed by negative interest rates and the imminent departure of Britain from the European Union, a move that could further fray the world’s biggest common market. Into this valley of uncertainty, the EU leadership came in force to Davos to make the case for a more activist state. Ursula von der Leyen, the German president of the European Commission, made clear the continent isn’t going to compromise on regulations to compete with Britain. She’s ready to impose trade measures against any country that doesn’t meet environmental, social and labour standards. The Europeans are even planning to mobilize €1 trillion over the decade for a “green investment wave” that could rival the Democrats and their Green New Deal.

Even just a year ago, many Davos-goers thought rising global frustrations might spark a return to socialism. That may still happen. But at the forefront of the resurgent state are pragmatists like Germany’s Angela Merkel, who laid out an economic model that is neither left nor right: it’s a new economic model rooted in sustainability. “The whole way we do business will have to change,” the Chancellor said at her 12^th Davos Forum. Europe’s more balanced approach to markets has carried into the cyber-economy, where its governments appear happy with their new, more onerous data regulations, and are determined to impose a digital tax on the Internet giants, for the sake of fairness and revenue. Global trade tensions won’t help, and indeed may worsen as Britain tries to cut deals with the U.S. and, eventually, China, in a race to bridge the two platforms.

3. Capitalism, repurposed

The Forum’s theme was “stakeholder capitalism,” an unfortunately anodyne description of a smart and sustainable approach to business that strikes a balance between communities, customers, employees and shareholders. Simply put, it puts purpose ahead of profit. Over the past 50 years, business has largely expected government to set rules and levy taxes to serve the public good. As trust in governments wanes, and the complexity of society’s problems grows, companies are charting their own course on environment, social and governance issues, to maintain public confidence in business and ensure the prosperity of communities that business serves. The challenge is serious. According to this year’s Edelman Trust Barometer, more than half of respondents worldwide feel capitalism does more harm than good – a sentiment driven largely by income stagnation. “Capitalism as we’ve known it is dead,” declared Marc Benioff, the founder and CEO of Salesforce.com.

In some ways, European and Canadian companies have already developed a purpose-driven approach to business that their American and Asian peers are only now pursuing in earnest. Microsoft CEO Satya Nadella made the case for this repurposing of capitalism, describing our economic model as the world’s most powerful economic learning system, rooted in discovery and testing. That learning system is needed more than ever to solve the world’s increasingly complex challenges, he argued. Mastercard CEO Ajay Banga suggested business can build the partnerships and networks needed to solve those problems. He came back to that word, scale, which may be the most important force of the 2020s. Business has proven to be the most effective model for scale anywhere, and is proving that again with global platforms. But this repurposed capitalism, and its complex web of relationships, will put ever-greater pressure on CEOs to reach beyond their walls and sectors, to delve into foreign subjects and work with unlikely allies, using the strength and spirit of their organizations to take solutions to a global scale. As Banga told the Forum, “there’s not enough philanthropic money or government money to solve these problems.”

4. Accountability, redefined

If business is to play a leading role in the 2020s, it will need more acceptance from society than ever, and that will require a more active role in developing national and international standards for a company’s performance on environmental, social and governance issues. We can’t wait for government. This year the Forum and 140 global companies launched an initiative to measure and show the progress of business across four pillars – principles, people, planet and prosperity – with 22 measures developed by the world’s major accounting firms. Properly adopted, the index can help communities, environmental groups, regulators, even employees, hold companies to account on their performance beyond the financial bottom line. And, in turn, this model can help business transparently measure its progress and outcomes, as we continue to strive to earn our social license to operate in society.

Such measurement tools carry risks, especially when they lose a sense of balance among their many variables. The risk was evident at this year’s Forum when environmental concerns overwhelmed the social and governance components of ESG. It’s important to remember how the failure of authorities, in business and government, to restore social inclusion after the financial crisis led to the rise of populism in the last decade. The governance failures of the Internet have been equally damaging. If the new capitalism is to find balance, it will need to ensure it continues to see the concerns of society as an integrated system rather than an itemized scorecard.

5. The new math of net zero

If two words defined this Forum, they were “net zero” – the idea that companies, even countries, can strive to reclaim more carbon from the atmosphere than they emit. The snowless pastures in the lower valleys around Davos this winter illustrated the realities of climate change and the urgency that Greta Thunberg brought to the Forum with her message that history is watching and a new generation is judging. She wasn’t alone. The world’s biggest asset manager, BlackRock, announced it would hold companies to a higher standard on all measures of sustainability, including their role in reducing global emissions. Microsoft set its own bar higher with a net-negative carbon policy that commits the software giant to offset all the carbon it has ever emitted. Few companies have done the hard math that Microsoft did, to calculate new emissions that can be attributed to its existence. If we’re serious about net-zero concepts, a lot of homework remains.

While much of the focus was on emissions reduction, more attention is going to offsets, especially nature-based ones that could allow our seas, land and forests to absorb more carbon, more quickly, as we work to transition industrial practices and consumer preferences. The Forum announced a bold commitment to help the world plant 1 trillion trees, increasing the global total by a third. That won’t be easy or cheap. The world’s leading financial institutions – banks, pension funds and asset managers – are also working to ensure more capital flows to carbon-reducing companies and technologies, and gradually away from major net emitters. In my conversations with finance officials and other global bank CEOs, it was clear governments need to do more – to set the rules of sustainable finance, and set clearer prices for risks, including carbon, so capital markets and business operators can get on with what they do best: optimizing the allocation of scarce resources, driving change and scaling innovation.

6. The messy math of energy

The most difficult conversations at Davos were also the most important. They were around how we plan for the next-quarter century of energy production and consumption, allowing investors and consumers to make economically rational choices that don’t lead to ecological catastrophe or social upheaval. To get there, we need more math and less emotion, because right now the math doesn’t add up. The Saudis, with low costs and low emissions, covered Davos with billboards and tea huts to burnish their image as they continue to export a good chunk of the world’s oil. They’re well positioned for any transition. The Americans, with a proven track record of innovation that’s made them the world’s Number One oil producer, show no signs of pulling back either. And then there’s China, whose ambitions could upend the world’s carbon math. As one China expert told us, the country is on course to open two new coal plants a month for the next 12 years.

I met with the world’s leading energy CEOs to better understand what they’re up against, and what they’re doing to reduce emissions. We need them to succeed. Our transition to a greener economy, with a more diverse energy mix, will take decades if it’s to avoid massive economic disruption. But it also needs to be more deliberate if it’s to avoid large-scale dispersion of capital away from some of our best innovators – the oil and gas companies that are using artificial intelligence, drone surveillance and advanced chemistry to reduce emissions. Some of those producers fear they’ll be cut off from investors who make unilateral decisions to adhere to the new carbon math. It may be short-sighted. Without a clearer plan to replace fossil fuels, we risk seeing producers hoard cash – or give it back to shareholders — rather than invest in new technologies. Any resulting decline in production, especially without a visible change in consumer behavior, might lead to a run-up in oil prices, something that could spark economic shocks and a political backlash.

7. The return of Malthus

When the Forum began in 1971, the world’s population was 3.8 billion, and plenty of Malthusian doomsayers warned we didn’t have enough land, water or food to cope. Instead, technology and trade triumphed, allowing roughly 7.8 billion people today to enjoy access to more food than the planet has ever produced. Can it continue as our population heads to 10 billion by 2050? With the world adding 80 million people a year, increasingly in Africa, the Middle East and other food-challenged regions, Davos renewed its focus on food security and the need to see global food production grow by 60% by the middle of the century.

The Forum brought together food innovators from around the world to showcase how technology may save us again. Cell-based meat production, pea proteins, vertical farming: there are plenty of ideas being developed. They will require new supply chains, changes to consumer behaviour and much more public and private investment. To show what individuals can do, the Forum launched a Future Food Day, serving locally sourced dishes, with smaller servings. Can such nudges make a difference? Not without large-scale investments in public research and the private scaling of innovation. Ramon Laguarta, the CEO of PepsiCo, suggested the world needs half a dozen Silicon Valleys of food innovation, in which universities, entrepreneurs and major producers can work with farmers of all sizes to transform how they produce food. The United Nations did just that in the 1960s and ‘70s, fostering a Green Revolution that helped avert a Malthusian mess. If we can make a renewed commitment to multilateralism, and allow for more business leadership, we might be able to do it again.

8. Currencies 2.0

The first Davos Forum inspired conversations around the dismantling of the gold standard, and emergence of the U.S. dollar as the world’s reserve currency. Fifty years later, the Forum is working with central banks and financial institutions to talk about currencies for the digital economy. A group of financial executives met with Bank of England governor Mark Carney to discuss the next frontier in payments, knowing there is a complex problem to solve: How can we reduce the friction of digital payments without undermining the financial system that is a foundation block of our economy? We’ve weathered financial crises since the end of the gold standard because our financial system doesn’t separate the storing, lending and movement of money into isolated channels. In fact, the confluence of these channels has ensured liquidity and an efficient matching of short-term savings (deposits) with long-term investments (loans). While digital currencies could make transactions easier, they risk diverting the lifeblood of our financial system to sources outside the system, like the big tech platforms that want the economic value of payments without the regulatory costs.

The next generation of payments will present another critical question: will digital currencies ever replace King Dollar? Not any time soon. Facebook’s Libra project has struggled to gain acceptance. And China’s initiative to build a digital yuan faces some fundamental problems. Beijing hasn’t explained which currencies (if any) might backstop the concept, which would be essential if a digital yuan is to facilitate trade such as an Alibaba purchase from Europe or Russian oil sales to China. The consequences are equally unclear if such a currency were to be adopted by rogue actors seeking to evade U.S. financial sanctions. The Trump administration’s active use of sanctions has already pushed many countries, notably Russia and Iran, to pursue new financial channels with Europe, the Middle East and Asia, making the notion of a new digital currency all the more appealing to them. The biggest challenge for the next generation of currencies will be to earn the trust of consumers, producers, sellers and lenders – and scale that trust. Through financial crises, wars and recessions, the U.S. dollar has done that, which is why the world continues to flock to it. For all the frustrations they can cause, America’s legal and regulatory systems remain the gold standard of global finance. Which is why the dollar is backstopped by the most valuable currency of all: trust.

9. Organizations 3.0

Businesses were first built around people. Over the last 50 years, they’ve been built around technology, too. We’re moving into an age when they’ll need a bionic blend, in which the interoperability of people and technology will be a critical success factor. I was part of a Davos panel on the “bionic organization,” led by the Boston Consulting Group and featuring Belén Garijo, the CEO of Merck’s Healthcare division, and Penny Pritzker, the former U.S. commerce secretary and founder of the investment company PSP Partners. We talked about how organizations can ensure their employees work effectively with smarter technologies, and how those technologies can be developed and refined to take advantage of the enormous human skills found in successful companies. Think of it as “intelligent augmentation” – the IA that can be just as powerful as AI to an organization. In the case of Merck, such an approach has increased demand for employees who can work across cultures as comfortably as they work across data platforms, blending tech and social skills. It’s one reason the company restated its purpose as “curious minds devoted to human progress.”

This blend of skills will be critical to legacy organizations trying to create 3.0 versions of themselves, using smart technologies and data pools to build their own platforms. One example: Yara International, the Norwegian fertilizer company, has built a digital platform with IBM that gives users the tools, data, networks and products they need for sustainable farming. Trouble is, such efforts rarely succeed without a diverse human mindset driving a platform. Pritzker told our session she looks for openness, authenticity and permission in companies she buys. “Innovation takes risk,” she’s found – and risk is rare if people don’t feel safe to speak their minds. She said a strong culture of diversity is critical to the bionic organization – something she didn’t appreciate until she worked in government and saw diversity as more than representation. “It’s also the difference in where you come from,” she said.

10. Education 4.0

Leave it to Yuval Noah Harari to rattle the sapiens of Davos. The Israeli author is one of my favourites, and he didn’t disappoint when he told the Forum about the disruptions coming at humanity through automation. “How do you teach a 50-year-old truck driver to be a software engineer, or teach yoga to software engineers?” he asked. Even more than job loss, the historian and author of Sapiens worries the greatest threat to progress will be the loss of our sense of relevance as machines do more of what we thought we were good at. Offering advice. Giving directions. Telling a story. “It’s much worse to be irrelevant than to be exploited,” he warned, suggesting a new “useless class” will be our great challenge in the decade ahead.

Over to you, educators, and that could soon include all of us. The Forum launched an initiative this year to provide 1 billion people with better education, skills and jobs by 2030, which will require educators, government and business to develop new learning models together. As Suzanne Fortier, the Principal of McGill University, told the Forum, we need to be ready for a revolution in lifelong learning, which will run from early childhood until we’re 100. We’ll need a lot more such innovations if the Forum is correct in its projection that technology investments will create 133 million new jobs over the next three years. Many of those jobs will require specialized tech skills. Many will demand trade skills, which the world over aren’t attracting enough young people. But everywhere, the greatest demand will be for critical thinking and communications, the power skills of the 2020s. There’s just too much information out there for humans to cope with. Indeed, over the next 50 years, our greatest challenge may be to ensure we’re always learning. As Harari knows, it’s what defines us as sapiens.

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I left Davos with a sense of concern for our increasingly divided world, and a sense of hope for the human spirit at the root of progress.

The balance may rest in the concept of trust. It could, as IBM CEO Ginni Rometty told the Forum, define the decade. There’s so much change happening, so quickly, that trust is the new glue, for communities and companies. Unfortunately, as the Edelman Trust Barometer shows, our trust in governments and media is limited. Companies face a fair degree of scepticism too – but business still enjoys more trust than other institutions. We will need to honour that trust, by investing in the concerns that have divided so many, and by ensuring that the positive power of technology isn’t hampered by lack of trust. Our ability to learn, share and resolve has never been more important. As is our willingness to listen. Angela Merkel put it well when she said “the fact that people aren’t willing to talk with each other fills me with grave concern.”

It’s why forums like Davos are more critical than ever, to bring people together at a time when we’re easily pulled apart. If there was any confidence to bring home, it was in the messages from scores of youth leaders who represent a new generation – one that’s creating a more positive sense of change, and an impatience in those who can’t deliver. As Natasha Wang Mwansa, a 19-year-old girls’ rights activist from Zambia, told the Forum, “It’s not about being young or old. How will you be part of the change we need?”

Without Donald Trump or Vladimir Putin, or Theresa May, Emmanuel Macron and Justin Trudeau, and all the media who travel with them, the tiny Alps town felt positively serene. Maybe the quieter atmosphere was needed for some reflection on where the world’s gone since the crisis, and to cast forward to where it might be headed.

This was my fourth Davos, and in many ways, the most enlivening. Clearly, the U.S.-China trade fight, and uncertain course of Brexit, had the gathering on edge. But the serious conversations focused on what lay beyond those crises. This year’s theme was Globalization 4.0, a concept hatched at Davos to explain the coming age of intelligent and ubiquitous technologies that will connect everyone and everything in ways the previous engines of globalization – steam, electricity and computing – could not. In this new era, smart machines will shape our companies and communities, and advanced technologies will be embedded in every object, and perhaps every person we encounter. It will be an age when data isn’t just the new oil; it will be the new water, the lifeblood of everything our society will want and need. The prospects can be unnerving, but I came away encouraged, with more clarity about how transformative technologies and a new generation of thinking can take our world into the next stage of globalization, and make it more decent, democratic and distributed.

Here are some of the challenges we need to consider to get there:

1. The China Challenge

Two years ago, Xi Jinping was the star of Davos, projecting a new vision for a world with China at the forefront. Last year, Donald Trump stole the show, in a very different way, projecting an America-first worldview. Their absence this year had the unexpected effect of placing their tense relationship into perspective. The business leaders at Davos expressed a quiet confidence that the U.S.-China trade dispute would be resolved in the next few months. With the Nafta negotiations largely behind them, Trump’s understaffed trade team has been able to focus on China. The Chinese also have come to understand who, and what, they’re dealing with. And both sides appear to be seeing the economic reality of trans-Pacific supply chains, which are too complex to dismantle without serious harm to both countries.

Even if the trade dispute is resolved, it will be a beginning more than an end. In Xi, the Americans have discovered a Chinese resolve to create a new international economic order. And in Trump, the Chinese have discovered an American resolve to resist it. The Chinese came in force to Davos, with a clear message that they will not be subjected to Washington’s worldview. They see themselves indisputably as the world’s No. 2 economic power, on their way to No. 1, and believe it’s up to the West to adjust. Given China’s success over the past quarter-century, they even think their model can do the world a lot of good. No area is more contentious than technology and intellectual property rights, which the Chinese want to develop in their own manner. Wang Qishan, the powerful vice-president who led the delegation, delivered a blunt message: the world must allow China the “right to take part in the global technological governance system as equals.” That word – equals – popped up again and again.

2. The Promise and Perils of 5G

The Huawei case seemed to be an unofficial member of the Ottawa delegation, shadowing federal cabinet ministers at every meeting as they tried to build support for the Canadian side. But interest in the company extended far beyond the extradition case of Meng Wanzhou. Huawei’s emergence as a global leader in telecommunications equipment had Davos wondering about the next generation of mobile technology, and whether the Chinese giant would lead the way. I found it intriguing that despite the buzz, many of the world’s business and government leaders seemed to know little about 5G. On the surface, the technology should help us download data and browse the Internet at up to 100 times the speed of today’s smartphones. That will make our lives more convenient, for sure. Perhaps more importantly, 5G could also become the backbone of a new economy, with the speeds and consistency needed for smart objects – self-driving cars, delivery drones, digitally-enabled appliances – to connect with each other at the speed of decision making.

It’s exciting stuff, to think of how 5G might make the Internet perform like electricity – always there, always on. But as with the development of electricity – AC versus DC – there’s a fierce debate about whose technology is better. There’s little doubt Huawei is a leader, and likely to get much better as China turns its 5G focus on its bustling cities. Will we miss out on China’s advancements if we shut out Huawei? We know Beijing has sway over the company, and can compel it to hand over foreign data for national security reasons. But we also need to better understand how Huawei’s equipment would fit into the bigger technology stack that powers our mobile lives. Who can access our data will be a critical question in 2019 – not just for Huawei, but for everyone trying to wire our mobile world.

3. Slowdown or Stagnation?

The risk is we won’t be ambitious enough going into the 2020s, to seize on new technologies and those expanding parts of the world. And if we’re not ambitious, and we settle for slow growth, we may fall short of the financial returns our shareholders demand as well as the social returns – jobs, services, stability – our societies expect. To do better, governments will need to give businesses and investors the right incentives, including smarter regulations, more coherent tax policies and a predictable trading regime. As the Economist noted in its Davos issue, under its cheeky cover line, “Slowbalisation,” we need to both manage the slowdown and think more boldly about the next cycle, and how to make it commercially led, socially minded and globally ambitious.

4. Brexit’s Aftermath

Although Theresa May skipped Davos, she sent a squadron of ministers to convey her government’s confidence that it can secure a Brexit deal by spring. The Conservatives, despite their own divisions, clearly want an outcome that keeps them in power, and keeps the economy from crashing into the wall of a hard exit. We can expect some pretty tense negotiations up to the 11th hour, with an outcome perhaps not far off what May presented in December. The Brexit bullishness wasn’t exactly what the Davos crowd wanted to hear. In one session, with about 300 people in the audience, about 90% put their hands up to say they’d favour a second referendum, hoping the public this time would vote to remain in the European Union. Privately, British officials, and even British business leaders, said that’s not likely. A vote would take too long to organize, be too divisive and risk producing another contentious result. The May government instead believes it can manage a compromise over the Irish border, amongst other vexatious issues.

That may be the easy part. If May wins the support of her party and Parliament, she’ll need to quickly win back business confidence. Investment in Britain is down about 20% since the referendum, and with each passing month, manufacturers, banks and others are moving jobs to the continent, or elsewhere. Mark Carney told a Davos audience Britain’s banking system should be fine, and can withstand plenty of shocks. But he made it clear that if the U.K. can’t lay out a coherent plan for its borders and trade, there’s little business can do to prepare. Perhaps ominously, as the British ministers tried to cheer up Davos, officials back home were laying out plans for food rationing, border patrols and possible civil unrest. If nothing else, such dire prospects should focus the British mind as the 11^th hour approaches.

5. A World of Walls

She sees the rise of bodies like the Shanghai Pact, led by China and Russia, as an effort to build alternative systems to democracy and market capitalism. She praised the G20 as the sort of body the world needs, to keep countries and regions adhering to global principles, if not global rules and standards. It’s not impossible. Merkel pointed to the General Conference on Weights and Measures, which voted last year to change how we measure the basic kilogram, showing what global co-operation can do.

That co-operative spirit is being put to the test at the World Trade Organization, whose fate hangs in the balance of a divided world. The WTO is the central plumbing of global commerce, connecting 400 preferential trade agreements and 3,000 investment deals, and yet it’s been stripped in recent years of its ability to function normally. It’s one reason global trade has been plugged up since the financial crisis. Several sessions at Davos looked at the need for a new approach to trade that would allow countries, and trading blocs, to opt into a reformed global system. As long as global principles can be maintained, the argument goes, the spirit of global trade can live on. This idea of plurilateralism, or a club of clubs, might even be a model for the newest challenges to Globalization 4.0: bioethics, cybersecurity and data.

6. A New Data Contract

How appropriate to meet in Switzerland, a country synonymous with secrecy, to talk about 21st century privacy, as it pertains to data. While the Forum once pushed for a global approach to data, there’s a growing view that any governance system will be more balkanized. As Microsoft’s CEO Satya Nadella said, we were “naive” to think about a universal approach to the digital economy. The risk now is that each country will take its own approach to data and we’ll end up with the Internet equivalent of the 1950s airline industry. Small wonder they call it the “splinternet.” As countries like India and Thailand start to advance the use of digital identification for citizens, they’re wanting to keep their data on their soil, in a drive for “data localization” that’s likely to grow as people worry more about the use, and misuse, of their personal information.

Data localization could also become a hindrance to innovation, if it undermines cloud computing and the efficiencies that go with it. Reality is, our data cross more borders every day than many of us appreciate. It’s why Singapore, a leader on so many digital fronts, is experimenting with some ideas around cross-border processing, to allow blocks of data to flow freely, while also maintaining a secure home for them. This will become even more pressing as countries try to incorporate the data economy in trade agreements, perhaps unaware that nothing could slow down the 21st century faster than data walls. Business may need to step forward, with the spirit of the airline industry after World War 2, when it set common standards to secure public trust around the world. As the Forum was told, the public in many countries now trusts business more than government when it comes to data. Our challenge is to convert that public trust to a public good.

7. A New Social Contract

The annual Edelman Trust Barometer is released at the opening of the World Economic Forum, dropping a cold bucket of public opinion on delegates just as they’re adjusting to the crisp Alpine air. The barometer, which surveys 33,000 people in 27 markets, continues to show a clear majority distrust both government and media, while business has slowly regained most of what it lost in the financial crisis. If there’s a dominant concern, it’s the trust gap – the difference between the informed public and mass population – which is at a record high. Across the world, only one in five people think the system is working for them. That concern is especially prevalent in developed countries, where an overwhelming majority of the mass population believe they won’t be better off in five years. In Canada, only one-third of that population believes the future will be brighter.

One of the reasons appears to be a growing anxiety over job losses. It’s not that people fear automation; they just worry they’re not being given the training or skills they’ll need to hold decent jobs in the decade ahead. We know the old social contract is fraying. We used to count on good public schooling, workplace security, decent pensions, accessible healthcare and affordable housing. But in many countries, a career is now a series of gigs, the price of education is soaring, and housing is beyond the reach of many young workers. Small wonder we’re seeing so much disquiet and its political cousin, populism. In the past, the public turned to governments for answers; now they’re looking to business to speak out and invest in practical solutions like skills training. The trust barometer found 76% of people – an astonishing 11-point jump in one year – expect CEOs to take the lead on change, with workplace inclusion, fair compensation and training at the top of their list.

8. The CEO’s Dilemma

I spent the better part of an afternoon with about 50 of my peers from the United States, Europe and Asia, exploring perhaps the greatest leadership challenge in business: How to meet the demands of the world today, while positioning our companies for the complexities of tomorrow? We agreed it has to start with corporate purpose. We have a clearly articulated purpose at RBC, and it’s encouraging to see so many other global companies getting serious about it, too. Our group agreed if you don’t have the north star of purpose, you’re going to get knocked off course by the constant barrage of media and investor pressures. We agreed it’s critical for leaders to keep talking about medium-term objectives – the ones that, if they were running a sports team, would bridge the current scoreboard with the end-of-season standings. It’s also important for leaders to keep their boards and major shareholders aware of the trends they’re watching.

I outlined how RBC has tried to manage this surge of short termism in the market by articulating our medium-term financial goals, and then spending a lot of time with shareholders to help them understand our differentiated strategy, the journey that we’ve planned and the map we’re following to get there. We believe that in an age of digital disruption, we can create something powerful to help our clients thrive and our communities prosper. That’s our purpose. A Hitachi executive explained to our group why the Japanese company is developing a social innovation business, to help address global income inequality and climate change, among other long-term goals. Their executive pay is now measured against those goals. Simple reason: if the world falters, Hitachi will falter. Pepsi presented its own case study of how it’s pursuing a corporate purpose rooted in human wellness. That may sound odd for a company built on soda pop, but this clarity of purpose helped it focus on healthier products and more sustainable packaging. When Pepsi’s board last year named Ramon Laguarta to replace longtime CEO Indra Nooyi, it weighed his ability to run a sustainable enterprise and deal with inclusive societies – and to communicate those needs with passion and humanity. We’re likely to see demand for such leaders grow, as our world becomes more complex and more demanding.

9. Volatility: The New Norm?

Even though January has been a kinder month to equity investors, the December market rout was still fresh on everyone’s mind. Was the sell-off too sharp and sudden? If so, how much of that was driven by automation? I was part of a panel discussion on the growing role of machines in our markets, and what we need to consider to ensure equity while also driving efficiency. Adena Friedman, the CEO of Nasdaq, made the case that it’s never been a better time to be an investor, thanks to the efficiencies that automation has brought to markets. Costs have dropped more than 75%, she said; spreads between “bid” and “ask” prices are down as much as 90%. Of course, automation has been growing for decades at the back end of markets. But in recent years, its played a more profound role at the front end, determining what we invest in and how our investments are executed.

One example: More investors are putting their money into passive investments such as Exchange-Trade Funds, or ETFs, rather than picking stocks themselves. It’s a popular and positive trend, as it gives small investors a more level-playing field with the big ones. It also carries some long-term risks, which Bill Ford, the CEO of General Atlantic, noted. He told our panel that passive shareholders now control 44% of U.S. stocks, up from 9% a decade ago. In many cases, that means there are fewer buyers and sellers of stocks. As market automation isn’t likely to slow, financial institutions will need to continue to find ways to help clients navigate those shortfalls in liquidity and any ensuing volatility. More broadly, we’ll also need to continue to better understand the consequences of passive investing – on investors and on companies that are watching these gyrations and wondering if this really is the best way to measure the value of what they’re trying to create.

10. A New Energy Equation

A decade ago, Tony Blair came to Davos to urge the world to use the financial crisis to address the climate crisis. The billions – soon to be trillions – pouring into the balance sheets of stagnant economies, he argued, could be used to stimulate the transition to a lower carbon economy. Ten years on, the global economy is in much better shape; the environment, less so. Our collective shortfall in addressing climate change is now the No. 1 risk in the minds of the Davos community. In this year’s Global Risks Report, three of the top five risks ranked by likely outcome were environmental ones, while four of the top five ranked by impact were the same. Extreme weather was the biggest concern among the 1,000 members the World Economic Forum surveyed for the report, followed by a failure to mitigate and adapt to climate change. While there continues to be concern about the divergence in climate policy between the U.S., China and Europe, there was a lot of talk at Davos about how industries are moving ahead anyway. DHL, for instance, has designed electric vehicles to make its delivery fleet in European cities carbon neutral by 2025. Boeing has successfully tested a cargo plane using only biofuels. And two steelmakers, Mittal and Tata, are developing “green steel” using new energy sources and more recycled materials.

Technology is only part of the play. Regulations have to evolve as rapidly as the planet’s needs, to spur new processes and wind down old ones. And much more could be done to connect energy systems. Daniel Yergin, the respected energy analyst, told the Forum he doesn’t see “peak oil” until at least 2040 – “and peak doesn’t mean plummet.” Supply chains, industrial processes and consumer choices, from home heating to commuting, are going to take time to change. And then there’s global population, projected to grow by 2 billion. Much of the discussion focused on finding ways to make our oil more carbon-efficient, to fuel that growth sustainably, and to use some of the revenue from old sources of energy to invest in the development of new ones. It’s why people call it a transition.

11. A Generational Bridge

One of the delightful surprises of this year’s Davos was the diversity of generations, from one of my heroes, Jane Goodall, to the six co-chairs of the Forum, who were all young global leaders and heroes in their own right. The interaction of the generations was inspiring, and should spur all of us to find more ways to connect young and old. At 84, Goodall is remarkable, doing more than 300 events a year, largely to promote her Roots & Shoots initiative, connecting young people with environmental efforts all over the world. “The next generation is desperate to protect nature,” she shared with us. She and rock star Bono, who’s 58, shared the spotlight at a lunch with Greta Thunberg, a 15-year-old environmental activist from Sweden, who upstaged them both with a warning from her generation: “Our house is on fire. I want you to panic.”