- Thank you, Klaus. We're definitely privileged and thankful
that you've come back.
And we want to thank you not only for what you've done for this
school, but for what you've done for the world.
your life to making the world a better place. Something which
goes to the heart of what the Kennedy School is all about.
It's been striking to us as we've had the pleasure, and this
goes back to Dean Elwood, that when you brought the
Leaders program here for executive education and then the Schwab
fellows, but there are two countries in the world now in which
the Young Global Leaders have emerged.
Tell us just a bit
about that in terms of the governance.
- Yes, actually, there's this notion to integrate young leaders
as part of the World Economic Forum since many years.
And I have to say, when I mentioned now names like Mrs.
Merkel, even Vladimir Putin, and so on, they all have
been Young Global Leaders of the World Economic Forum. But what
we are very proud of now, the young generation like Prime
Minister Trudeau, president of Argentina, and so on, that
we penetrate the cabinets...
So, yesterday, I was
at a reception for Prime Minister Trudeau, and I know that half
of his cabinet or even more than half of his cabinet are
actually Young Global Leaders of the World Economic Form.
- Right, and that's
true in Argentina true to, wow.
- That's true in
Argentina as well.
It's true in
Argentina, and it's true in France now. I mean, with the
president, with the young global leader. But what is important
for me is those Young Global Leaders have an opportunity to come
- And we have
established a course now since several years. And I think it
has, this corporation has a tremendous impact because being here
for a week really creates a strong community.
And we, in
addition to the Young Global Leaders, we have now the Global
Shapers in 450 cities around the world.
I just wonder, is there any Global Shaper here? Yeah, see, see.
Global Shapers here.
- Terrific. (laughs)
- And what is astonishing is to see how those young people
really have a different mindset.
And I have great admiration because when I have a group of
Global Shapers in the room and then ask them, are you thinking
in global terms or national terms? The majority would say in
If I ask them what is
more important for you, to make money or to serve society? More
certainly, 80% would raise their hand and would say serving
society. So, I'm very optimistic about the future of the world.
Because with the young generation, I think we can build what I
call a new renaissance, particularly using technology, solving
all the issues moving forward.
- Let's talk a bit about technology and its impact. You've
written a book, which I would commend to all of you called, it
just came out a couple of years ago,
The Fourth Industrial Revolution.
It sold over a million copies around the world, over a million
copies. And it is essentially, Klaus argues that there were
three earlier revolutions.
One late 18th century, early part of the 19th century, then late
19th century, early 20th century.
Then a third one starting in the 1960s with the digital age, and
now since the advent of the 21st century, a new industrial
revolution that's even more influential. Can you describe this
revolution to us as you see it?
- Yes, very often people would say, it's not really a
revolution. It's a prolongation of the computer age which came
into being in the '80s. The last century already.
But it's much more. If we look at this revolution, it's not
characterized by one technologies, you have so many
technologies. You have nano technology, brain research, you
have, I mean, you name it.
In essence, in the
long run, what is very essential is to see if this new
revolution will lead to a fusion of our biological, our digital,
and our material existence. And look at, for example, the
Internet and things and many other, let's say, new technologies.
Say, what is very important, say do not just set another
Do not just influence or improve what we are doing moving faster
in the traffic, or whatever it is. But that has an impact on us,
say change us.
Just look at how the Internet has already changed, or big data
is now changing the behavior of people.
So, say affect our identity. And when we look for an explanation
of the problems we have now in terms of BREXIT, or whatever you
take, I think a lot has to do with the search of identity in a
situation where you are confronted with the technology which
most people do not always, technological wave, and changes which
most people do not understand.
Now I am coming to a third
characteristic of this revolution: the speed...
I wrote the book
(The Fourth Industrial Revolution) 2
1/2 years ago, actually or just two years ago. And when I look
at certain elements, I mentioned, for example, block chain. Two
years ago I had to explain to everybody what block chain is.
Today every major bank has a research team to look how block
chain could impact the business model.
If you look at let's say self-driving cars, two years ago,
people assumed this will be reality. Some were around '20, '25.
And now, even in Switzerland, you have the first self-driving
bus in one of these small cities in Switzerland.
And you have one of
the cantons now in Switzerland, canton of Zug, which is
introducing block chain for all financial transactions, tax
declarations, and so on. So the speed is enormous.
And all those
elements together, I think, create a revolution which affects
us, which is not just a technological revolution. It's an
economic, it's a political and it's a social revolution.
- The book is fundamentally optimistic. You call yourself a
pragmatic optimist in the book.
There was one area where you seem to be worried. And that was
the question of jobs and inequality as it relates to jobs.
You're worried about the women in jobs. And you pointed out that
in 1990, the three biggest companies in Detroit had a market cap
value of $36 billion.
And had 1.2 million employees. And two years ago, the top three
employees in Silicon Valley have a market cap of over $1
trillion, and only 1/10 as many employees, just 137,000
How do we best address this? Because one hears it again and
again and it has entered into our politics, as you well know,
not only in this country but in Europe.
- We don't know,
I mean, we use words like we need upscaling, rescaling, but,
actually, let me address this issue from different angles.
First, if you look at the magnitude of this issue, I just take
In the U.S., as far as I know, more than 10 million people are
driving vehicles. And more than 10 million people are working as
cashiers in the distribution system, in retail.
Those shops will probably have gone to a large part in the next
10 years. So what we see in a erosion of the lower middle class.
And, of course, and we do not know yet, like in the past
revolutions, we had new jobs in the service sector, first in the
industrial sector when we moved from agriculture to
manufacturing and then from manufacturing to service.
There were new jobs
created over time.
Now we do not know yet where those new jobs are coming from. Not
everybody can say, let's say, a drone dispatcher or a robot
polisher. I mean, we have no, of course, we will need more
So this will create a kind of fraction in the society.
You have the people, like a bus driver, who knows that he may
lose his job in the next 10 years. And in the first revolution,
in the first industrial revolution, you had this level of
society which was called proletariat.
Today you have this new class of society, which is called
precariat because they know they are in a precarious
situation, or they are already working in a ublized
situation, where they don't know where they'll still have an
So, we don't know.
What I know is that probably one of the consequences will be
that we have to redesign, we need an educational revolution 4.0.
I think the whole educational system has to be moved much more
into the direction of life-long learning of a good combination
of face-to-face and digital transmission of knowledge, and so
But we haven't thought it through yet. And a last remark, more
optimistic now, we may go through this transition phase. We in
Switzerland, we had, two years ago, we had a, you know
Switzerland is a country of referendums, so we had a referendum
on, should we introduce minimum guaranteed incomes?
And even in, my wife, Hilda, when we talked about it, she said
no way. We're living in Geneva, we have a pucatanian attitude.
So, how could someone get money from the government without
And I was asked by the media what I'm thinking about. And I
said, it may be a good idea. We are just not yet arrived for it.
Maybe in 10, 15 years.
And when you argue, let's say with someone who has a job at
minimum income, and instead of having this job in minimum income
he gets a guaranteed income, and he can choose the job.
You could make the argument, let's take a nurse, or whatever it
is, I don't want to pick out one job, but that's take a nurse as
an example. Who is working, I don't know the salaries in the
states, but I take it in Switzerland, she is working for 4,000
Swiss francs, she will feel underpaid and will not have a
necessarily great job satisfaction.
Now, if she gets a minimum income which is guaranteed and she
chooses not to stay at home, but to do some work, she will do it
with much more enthusiasm.
So, I feel we may go into a kind of new renaissance where we see
out of the fourth industrial revelation, a fourth sector. So, we
have a evolving, we had, of course, we had the agriculture
We had the manufacturing sector. We had the service sector.
Mainly as consequence of revolutions.
And now you may find the creation of a fourth sector, which is
the social service sector. So you don't worry anymore about your
income, but you are free to serve society.
And I'm sorry to be long, but that's the reason why I am so much
engaged in fostering social entrepreneurship because we feel
social entrepreneurship has to become a mainstream in society,
not just being something marginalized good idealists, no, it has
to become a pillar of society for two reasons, to provide the
jobs for those low, I wouldn't say, for those who will lose
their job in the fourth industrial revolution.
But second, also, I'm
coming from the U.N. General Assembly.
There was a lot of
discussion, of course, on how to implement the social
development goals. And I think the social development goals, of
course, government action, new technologies, but it needs
We have to do it on the ground. We have to do it, everybody of
us is challenged.
So I'm an optimist. We may go into a new renaissance, where
people serve society, where people are free also to exercise
creative professions, being an artist. Hopefully we have many,
Nobody will reach your level of professionalism.
- You said in the book too, that governments themselves might
move in this direction of service and become public service
- That was an
- Yes, I think governments will be much more measured on the
basis how they really fulfill the individual needs of citizens.
And we see the first governments moving into this direction.
example, is a good example of a government which perceives
itself not so much in pure political terms, but how much it can
really optimally fulfill the expectations of citizens in terms
of health, in terms of education, in terms of social services.
- In terms of looking
at countries that might be models or certainly suggest
directions about preparing people for jobs, Germany, would
Germany stand out? Or are there other countries that stand out?
- I would say Germany has a long tradition in embracing the
concept of stakeholder democracy. When I grew up, the keyword
was social market economy.
Germany is certainly a good example. Switzerland is a good
But we don't have too many examples yet, good ones.
- Not enough.
- Yeah. Not enough,
we're still struggling with this question.
You read about the importance of governments becoming more
agile, and I know you have a particular concern about the
regulatory state and how regulations are now written and how
that process might be revised.
- I think this is one of the
biggest challenges which we have because the technological
progress is so fast, the governments cannot catch up anymore.
And, by the way, it has also an impact on competitiveness.
I remember I organized a meeting for, I mentioned here, for
Chancellor Merkel with some of the real CEOs of the highly
advanced digital economy companies.
And I asked her afterwards,
what is your impression?
And then she says, I see now the difference of Silicon Valley
with Europe. So, I asked her, what is it? She said, look, in
Silicon Valley, everything which is not forbidden is allowed.
And in Europe, everything which is not explicitly allowed is
(David and audience
So, that's the
situation which we have.
And when you look at the let's say difficulty or incapability of
governments to follow the technological progress, you have a
situation where society loses the control over the technological
progress. And you see it here in the discussion on big data.
Last year, the conflict between Apple and the government, and so
on. - Right. - So we coined, I coined in the book the notion of
And what it means that the today with the
fast technological progress, you cannot set regulations anymore,
create regulations anymore in the old fashion where you have an
innovation, you go through a parliamentary government commission
treatment process, and after some years, you come out with the
You have to work together on an ongoing basis to create
self-binding protocols and principles and rules. Look at
artificial intelligence, look at the ownership of big data, and
so on and so on.
So what we have done in the World Economic Forum, we created a
campus in San Francisco to bring, to have a platform where
governments and business continuously could cooperate, also with
civil society, to make sure that those new technologies are
human centered because we have to have an objective, and the
objective would be they have to serve humankind.
So we work on
artificial intelligence, we work on precision
medicine, on drones,
Internet of things, and so on.
dream or wish is to create a whole network for such an approach
because it has to be based on the ownership of governments
around the world.
And to have such centers in each city or in those cities really
technological progress is eminent. So I could imagine maybe when
we meet again in five years or in three years, or with the speed
of The First Industrial Revolution, maybe in one year that we
have our center here.
- But your center of
focus in terms of, I've heard you say, if you want to predict a
future of a country, don't look anymore at its GDP growth.
Look at its rate of innovation.
- That's right. And I
also, I was very much in the news because I coined another
expression. I said today we have moved, we are not anymore in
the age of capitalism. We are in the age of talentism.
Which means it's, capital is abundant.
If you have a good idea, you have so and so many investors who
run after you, but what is scarce, if you look what is very
scarcity, it's good ideas, it's in talents.
So talent is in some ways replacing, even conceptually,
capitalism. And it leads also to this gap of wages, of minimum
wage for talents versus non-talents.
And this polarization, to a certain extent, of society. So,
certainly, I think we will see conceptually. I mean, talking
here, it's a Wiener Lecture, I should also say something about
I feel that we need completely new concepts.
We also haven't yet, maybe here, it's the Kennedy School. But I
haven't found yet the right answers what economic policies we
really need in times of shared economy, in times where there's
less materialism among the young generation, and so on.
How do we deal with this situation?
- We should go to the
floor here in just a moment.
But I have one more question for you. But if you do have a
question, we're going to have a short time with Q and A from the
So you might want to hang out now. But let me ask you this
question finally. And that is, we have at this school in this
some of the most promising members of the new generation, of the
What advice do you
have for them about preparing for lives of service and
leadership in this new world?
- I would say, if I would characterize, and I did it to a
certain extent in the book, and I do it more in the new book
which comes out end of the year, which is called Shaping
The Fourth Industrial Revolution.
I think we need two capabilities.
It's emotional intelligence and contextual intelligence.
Today where everything is interdependent, we have to learn to
think in ecosystems, which people like to, how shall I say,
particularly also in the academic world, to define in narrow
lines specific issues.
But today everything is interwoven. And so, contextual
intelligence, to be able to link the dots, to bridge the dots, I
think becomes what young people should learn. And the other one
is emotional intelligence.
productivity, and I would say personal satisfaction comes mainly
out of preserving your own identity but living in a diverse
society. And if I look around here, it's such a diverse scope.
But if you are embedded into a diverse community, you really
have to understand what are the motivations behind the behavior
of the people you deal with.
And this needs emotional intelligence. And maybe one word
because I'm very often, particularly when I'm with young
leaders, and I remember a day when we had a similar discussion
several years ago.
I'm always asked, you have met so many leaders in your life.
What creates really leadership? And I would say it's very
simple, it's just five things. So many books, and I was a
professor, of course, I had to read all those books.
But now after having met so many people, I would they there are
five very simple elements. A leader needs brains, soul, heart,
muscles, and nerves.
Let me explain, let me explain. You have to be a professional.
I mean, you all are professional, you have to be the best at
what you're doing, or at least among the best. That's the
brains, but you have to have values.
You have to be you have to have a vision long term based on
values, that's the soul. You have to do with passion what you're
doing in compassion, and that's the heart. But you have also to
translate your vision into action, that's the muscles.
And, of course, you
have to have good nerves.
- (laughs) Why good nerves? Why good nerves? Unpack that.
- Some people ask me, usually, who is fulfilling those five
(audience laughs) Now I will give the question back to you.
Do you know any leader who really fulfills the five criteria?
- It's a little bit like the German answer, not enough.
- Not enough, and I
have met very few. I would say for me, I had the great fortune
because I met him. I was the first to visit him when he came out
Nelson Mandela certainly incorporated all five of those
dimensions. But then it becomes very difficult. Usually one or
two dimensions are missing.
So, I would wish you brains, soul, heart, muscles and good
(David and audience
- Perfect, let's go
to the floor...