The Man at the Summit: Profile of Klaus Schwab (Longer Version on an Article Published in Portfolio.Com, January 18, 2008)
By Pranay Gupte
Not many people know that Klaus Schwab started the World Economic Forum in 1971 as a nice way to get together some of his fellow European academics, along with a sprinkling of management types, for some serious skiing in the Swiss mountain resort of Davos.
Schwab, the Harvard-trained management specialist who then taught at the University of Geneva, figured that in between slaloms and schnapps, he and some 400 of his friends would discuss how Europe could be made more competitive with the United States and Japan. Back then, he called the group the European Management Forum.
“Back then I had no idea that the group would be transformed into the world’s foremost organization for decision-makers from business, politics, diplomacy, academe, and other fields,” Schwab said to this reporter. Four years after its founding at Davos, the group’s name was changed to the World Economic Forum, a membership organization now comprising of a thousand of the world’s leading corporations. More than 2,500 participants, plus 500 journalists will participate in this year’s meeting at Davos, including 94 chief executive officers, and senior executives of nearly 900 corporations, more than half of them from developing countries. And nearly 100 heads of state or government will attend, as will US Secretary of State Condoleezza Rice.
Not many people know that Schwab met his wife Hilde at the forum, where she worked as an assistant. In time, she became one of the Forum’s driving forces, and a prime mover behind the creation of the Klaus and Hilde Schwab Foundation for Social Entrepreneurship exactly a decade ago. The Schwabs’ daughter, Nicole – who received a master’s degree from Harvard’s Kennedy School of Government -- now works for the Forum in a senior executive capacity. The Schwabs’ other progeny, Olivier, is an accomplished engineer who graduated from the Massachusetts Institute of Technology.
And not many people know that Klaus Schwab, a life-long jogger and physical-fitness addict, is a cancer survivor. He was diagnosed with prostate cancer in 2004, and later had successful surgery.
That scare raised the question in many people’s minds about the succession issue at the Forum, a not-for-profit organization based in Geneva. Schwab holds the title of executive chairman, and likes to say that decision making at the Forum – which has 440 employees in Geneva, Beijing and New York – is collaborative.
“I think we have now a team in place that can really share the responsibilities of leadership, which is good for the Forum, and good for me,” Schwab said in an interview in 2002. “I have enjoyed the transition to ‘shared leadership.’ It gives me time to take the overview of things, and the long view, which I like. I have always had the advice and guidance of our Foundation Board [which now includes Queen Rania of Jordan, former British prime minister Tony Blair, and Rajat Gupta, senior worldwide partner at McKinsey, and chairman of the Geneva-based Global Fund to Fight AIDS, Tuberculosis and Malaria] and our Business Council, and I like to believe that leadership at the Forum had always been a collaborative process.”
But the record suggests that some of Schwab’s top colleagues have had major fallings-out with him. Most recently, Jonathan Schmidt, an American who organized the Forum’s annual meeting in Davos for the last two years, left the job abruptly.
Another Schwab colleague, former managing director Claude Smadja – once a trusted Schwab ally – left to form his own strategic communications business. Schwab privately felt that some of Smadja’s allies at the Forum conspired to plant some highly incendiary articles about Schwab’s personal finances in The Wall Street Journal some years ago. None of the allegations was ever proven, and the investigation that The Journal said that the Swiss Government had launched against Schwab and the Forum never materialized.
“I don’t think that anyone can question my integrity,” Schwab once told this reporter. “I take great pride in transparency – both personally and for the Forum. I believe in leading the ethical life, and I have always tried to do so.”
Notwithstanding noteworthy defections from the Forum, Schwab has always been able to attract top-level table. For instance, when he and his wife started their foundation for social entrepreneurship, they recruited one of the rising stars of the World Health Organization, Pamela Hartigan, to be the foundation’s executive director. Hartigan has since expanded the foundation’s activities worldwide, running an organization that works in tandem with the Forum and parallel to it.
Schwab knows – and is privately amused by the fact – that there have been scores of imitators of the Forum. Perhaps the most prominent one is the Clinton Global Initiative, launched by former US president Bill Clinton, who used to be a regular at Davos. The Clinton gathering is held annually in New York, but it draws nowhere near the numbers of top-level political and business leaders who attend Davos. Schwab knows that “Davos” has become a metaphor for setting the global agenda, and that its status is unlikely to be challenged any time soon.
Born to German parents, Schwab – who terms himself a Swiss-German – often comes across as a rigid disciplinarian. But those who know him well testify to his wit and hearty sense of humor. He’s also an accomplished dancer. At a Davos soiree not long ago, he matched a pair of frenetic Brazilian dancers step for step, beat for beat, and drew sustained applause for his agility and stamina.
That energy is also evident in almost nonstop globe-trotting that Schwab undertakes. Since the Forum’s founding in 1971, its activities have expanded to more than 80 countries. In addition to the annual Davos meeting, it holds regional “mini-Davos” sessions in a dozen countries; the Forum also has scores of initiatives with regional business groups, universities around the world, and with leading nongovernmental organizations. Schwab’s presence is ubiquitous at these meetings.
And at these meetings, his mantra always is, “Entrepreneurship in the global interest.”
“What we have to do is to strengthen entrepreneurship and, at the same time, social cohesion,” Schwab said.
Earlier this week, he added, “What makes Davos so different? Because Davos is a true multi-stakeholder summit. We have defined 12 different stakeholder groups. The world needs such a group. We know business, government, civil society cannot meet all challenges. So this is a truly global meeting – global not only in a geographical sense, but a meeting approaching issues in a multidisciplinary, integrated, and systemic, ways. This year’s theme is the power of collaborative innovation. I feel that essential success factors are innovative minds and collaboration.”
And what will be discussed at this year’s meeting?
“Economy plus ecology plus society, plus technology, and, of course, politics,” Schwab said.
And since Schwab turns 67 in March, what is surely likely to be discussed at Davos – even if the subject isn’t on the official agenda – is who will succeed him, and what happens to the World Economic Forum when he decides to hang up his stirrups.