 Good morning, ladies and gentlemen. It's a great pleasure to have this panel and have you with us this morning. We have a great group of business leaders talking about the global business context. And let me just briefly introduce them. I'm Hans Papier Verkner, the CEO of the Boston Consulting Group. And then we have John Chambers, the Chairman and CEO of Cisco. Tom Enders, the CEO of Airbus. Klaus Kleinfeld, Chairman and CEO of Alcoa. Duncan Niedauer, the CEO of New York Stock Exchange Euronext. Ferit Schreink, the Chairman of Doge Group. And last but not least, Patricia Wurz, the Chairman, President and CEO of Arch Daniel Smith. We will talk about the global business context and I ask the different business leaders about their perspective on, you know, not to the world economy, but how they do in this very difficult business environment. The opportunities, the challenges and what are the key changes they do in their strategies, their organizations, their operations in order to make it work. As some of my colleagues are in their quiet period, they will publish results for the last quarter and last year in a few days' time or next week or in two weeks' time. They will have to avoid any specific questions on their specific results and I hope you bear with them. So we'll start with a series of opening remarks, then have a discussion within the group about the key opportunities and challenges and then in the third part of the discussion we'll open up to questions to the audience. So, and I would like to start with Klaus, Klaus and you, and have your perspectives on your specific business and the world. Yeah, I think when this panel was put together, the big question was, as always, and Davos, what's new and how do you all have to reshape your business? And frankly, I think there are a couple of new things that have come out more strongly, but there are also a couple of things that we have to remind ourselves of to not forget. And I would start with that one, which I would call the New True North and it hasn't changed at all. I've always talked about the mega trends, I mean, and that they continue. They continue to set the undertone. I mean, we're going to have three billion people more on this planet very soon. Almost all of them are going to live or the majority is going to live in urban environments that is changing drastically. We're going to have a big amount of middle class and that sets the true New North for our companies. That is still there and will be there for, I would say, at least the next 20 years, but it is important for companies and leaders to adjust to that. I mean, you have to look at those markets that you are present in those markets, expand in those markets and for us, I mean, it's not just the end customer markets, but it's also looking at how are some markets changing that are important for some of the supply goods for us. And I'm talking, for instance, about energy here. So this is the New True North and I believe it's still there. It's there as it was there last year, but we have to remind ourselves of this and build it into our decisions. What's new? What is new in my view is we live in a 25-8 world. And I'm saying that a little tongue-in-cheek because I don't know how you feel. But talking to some of my CEO colleagues, I feel that 24-7 isn't enough to cope with what's going on here anymore. You know, particularly with all the news that's coming in and the different news feeds have given pretty much everybody in their private room, no matter how small it is, access to the world and they can literally change the world, absolutely change the world. And that's true in every environment. It's true for politicians, as we've seen last year and some have been very surprised by it, but I think it's equally true as we've seen for businesses. I don't think we can grasp it at that point in time. We can grasp some of these things. And I don't think that we have a really good strategy around it, but I think we can grasp some of these things. And in my view, it's kind of in 25-8 you can't fake because in a way it's going to come out. You just don't know how. And you saw it last year with WikiLeaks has set a new norm in this regards for the things that could come out. And I think we've got to live with that. The question that brings back is you literally have to wherever you go, you have to learn, you earn your license to operate and you do it through your actions. And it brings the fundamentals back. And I think you cannot, you cannot believe that even you have an issue somewhere, you can brush it over and be nice and move on. I think if the fundamentals are problematic, they will come out. So you have to work very, very closely with your customers, with your employees, have a very active communication policy around it and literally make sure that society understands how do you add value. And it starts with the simple things. If your employees don't believe that you are adding value, I think you've lost the battle. If your customers don't speak positively about you, you've lost the battle. So the other thing that's new and we saw it very painfully last year is the volatility. The volatility that we see throughout the world, metal price dropped by 28% last year. Currencies have been going, I mean like crazy and we are dealing with it. So let me leave it like this and start with that and we have ample time. Good. Ferret, you provide our emerging markets view, the view from an emerging markets country and you know how you see things, Turkey has been going very strongly and your group, those group has been going also very strongly. Well, as you said, I come from Turkey. Our group is diversified in many fields. For some people, this was a big debate for conglomerates to survive. I think we are one of the examples that conglomerates who are divested in many areas from banking to automotive to media and others can survive if they have the dynamic human capital backed by technology to serve the customer and one thing is changing the last 10 years. Maybe I should start from just Turkey, not too much emerging markets is that we had our own crisis in 2001. Probably what is now going through in Europe, we had it in 2001. We pretty much knew on paper what to do, but what was the most important thing, Turkey's success I think came from the political stability, leadership in politicians who helped the business world also to implement the changes in their organizations. Turkey did a lot of reforms, Turkey changed from a state-run economy to more private economy, and it gave us chance to implement as organizations to their own changes. And when you look at the emerging markets from the 90s, we had three, four crisis up till now. And we learned our lessons from crisis. We know how to manage through crisis. Our organizations are more flexible than maybe some of my colleagues in this panel. So what we are doing is that we took family businesses to a more professional standard. But what is keeping the dynamism running in our businesses is the fact that we are run 80% professionally, but that 20% to drive the entrepreneurship and the flexibility that we have is making us still grow and invest even under these turbulent environments. Of course, 2001, we had to restructure our organizations, we had to merge companies, we had to sell companies, we had to get our cash flow balance sheet in order. So we came into this 2008 crisis in a different form. So what we are doing actually, I come from a 75 million populated country where today 35 million internet users are present. The second or third, I'm not sure, Facebook users are from Turkey. So the young demographics of Turkey, the demographic advantage that we have, the most domestic demands backed by international oriented organizations like us, now we are taking our step to region. We are doing this in two ways. Yes, there are risks. Yes, people are uncertain. Yes, people are pulling out of certain markets and people like us without losing the risk appetite, without risk management and so forth, or liquidity management, we are looking into markets, maybe the opposite from many people in the world. I think this is the cliche or the word for the emerging markets. We are still looking at growth. Our markets are growing, but also regionally, we are tapping growing markets. In banking, we have created a very good partnership with the Spanish Bank, BBBA. We are now soon, actually today, I may not give you the name, signing an MOU with a e-commerce.com company coming from Asia. We are signing in a couple of weeks an energy contract partnership with a European energy group. So we are using our know-how domestically, but we are now expanding in the region. I don't want to go into too much about the world. The only thing that I can tell you, each of us want to live better. Each of us want to do better for our kids. So I know that with the collective wisdom, the world is going to get better. With this confidence, I think that what you're seeing in the emerging market players is that we are becoming more confident, where certain Western players lost confidence. So we are closing the gap between the developed market players and the emerging market players. But one thing should not be forgotten, success should not bring too much optimism. And we should always look at the world as one, not as developed world or emerging markets. Thank you. Thank you. So you encourage us to jump in as we go. I just want to echo what Ferret said about Turkey. It is probably, along with China, the most effective emerging market in the world with government and business working toward the same objectives. You see the Chamber of Commerce being very effective there. It's a model that can be in Europe and the US can learn a lot from. Good. Tom, you have a full order book, so you should be really relaxed. Absolutely. And more I should say, it aviators are systemic optimists, otherwise nobody would have ever taken to the skies. And the same goes for the entire entire industry. But there's reason for that. We are in a very much in a long-term growth industry. I mean, we've done projections, Boeing's done similar projections, GE, others, basically says in the next 20 years there's a requirement for something up to 29,000, 30,000 new large aircraft, aircraft with more than 100 seats capacity. Now, most of that growth is obviously happening in Asia Pacific, in the Middle East. Lots of that will also be happening in Europe and in North America. But we are today already, even for most of our employment is still in Europe, very much focused on Asia Pacific. Give you one idea. We delivered out of our 534 commercial deliveries last year, we delivered more than 100 planes to China alone. I'm not talking about the entire region. So roughly 40% of our order book today is in China Pacific, 11% in Europe, 11, 12% in North America. So this is why there is this optimism. You can, we have a nice pie chart. That pie chart says, okay, here's the mature aviation market. That's about a billion people, North America, Western Europe, Southeast Asia. And look at the 6 billion. The aviation has just started. We are the outside of aviation. And that makes us so optimistic that, yes, recessions and crises and wars may happen, they'll flip on the timescale. But aviation should be a great providence. But you also mentioned when we did talk last week, you talked about some concerns. Maybe you could also share about this. Absolutely. Well, one concern and one of the changes we observe is in financing. Well, most airlines don't pay new aircraft out of their cash flow. They need financing. And obviously here we see an impact of the Euro crisis. We've seen that very clearly with some banks in Europe last year. And I think what we're doing right now, there's a process underway. And I think this is not just a short-term thing. Can you help us in this actual crisis? But that goes in sync with the shift of markets to Asia Pacific, that we look for more financing from China, from Japan. Scandinavian banks are interested going directly to the capital markets rather than working through banks. So that is something I think all of us in aviation are actively working on. And I'm optimistic on that one as well, because I think there's no scarcity of capital in this world. It's just that we need to look at where do we source from in the future? And where do airlines, our customer source? Thanks very much, Tom. Duncan, a very particular business that you are representing here, the financial markets and how do you see the environment? It's not an easy one. Obviously we'll not ask you about the exact state of the transaction that you're working on. Thanks enough other people will do that the next few days, so I appreciate it. I think before I get into our industry specifics, just a little bit of perspective on what we've all lived through the last 10 to 20 years. If you dial the clock back a little bit and you think about how companies were measured 10 or 20 years ago, if you had a good product and you delivered that product at a fair price, your customers were happy. They didn't really ask much more of you in most cases. That was good enough to be competitive and to be a leader. Nowadays that's not enough because people now expect on top of that what's your social impact? Are you a good corporate citizen? How are you going about your business? And to echo what Klaus said I thought was very interesting whether it's 24-7 or you adopt a 25-8 philosophy, what it means is we're all being watched in real time. So as you said Klaus none of us can fake it, right? Like everyone's too smart that if you pretend you're having a positive social impact but you're really not, it's just words, everyone sees right through it and we think as we look at businesses and we have the luxury of sitting in the seat we sit in where we meet people from all different industries and really all in and all around the world that we think that's in large part going to determine the winners and losers, how people see you you know being a good corporate citizen. Specific to our industry I think one of the one of the things that we talk a little less about than we did a few years ago but to me is more relevant than ever for reasons I'll get to in a minute is deleveraging appears to be here to stay and when you combine deleveraging with the increase in capital requirements that the financiers are going to be subject to going forward that comes at a pretty challenging time because it is going to choke the access to capital for SMEs. Obviously we all know in the room here SMEs are the primary job creation engine and that is the world's single biggest problem right now is job creation and yet we're being asked to do that at a time when the traditional sources of funding are not what they were and don't look like they're going to be what they have been. So from our company's point of view we look at that and try to tie these two issues how can we make a social impact and given that that's the world's largest issue how can we play a role in that and what we say is let's get back to our roots what exchanges have historically been around the world is they were at the center of capital formation they were the enterprises that connected entrepreneurs and their ideas to capital and investors and if we can get back to doing that successfully and some of that's going to be harder in certain places because it may mean you have to dial back legislation or reinvent legislation so that people think it's an attractive alternative again but you look at a place like where we're sitting in Europe where 70% of the financing has come from the banks for these SMEs if they turn off that faucet the capital market suddenly become a very very viable and necessary part of that access to capital and that gets us back to our roots of capital formation and lastly I think one of the things we all are certainly aware of is globalization just allows us to extend our footprint in ways in any industry that in ways that would have been unimaginable before the technology revolution what an enabler if you had thought about the classic New York Stock Exchange 10 years ago and where we'd have a footprint today in all regions of the world Asia Europe Latin America Eastern Europe a growing presence in places like Africa it's it would have been unthinkable and it's just easier and easier to do that I think if you tie that all back it means that we can take this job creation initiative on and away where we can make a difference globally because we operate so many markets around the world that I think few companies would be well positioned to do it with credibility and if we get it right it will be a collaborative effort because we can't do it without all the companies and without the various government officials and then it gets back to where I started which is then then you can really measure your social impact great thanks very much thank you pet again the global business that you're representing but a very different business from from the others so how do you see the world how do you see I was very impressed with my colleagues starting with the long term or quite a few of them because I think the long term it's often when you have difficulties in that short term that you lose sight of that certainly with world population growth and with wealth creation and the middle class growing that is an inevitable trend population growth is actually an inevitable trend we see and as a company that worries about how the world will feed itself a food company an agriculture company we see that agriculture has a huge opportunity contribute to that that growth in population and the good of the world that will be needed to be able to provide food and energy it will be done by infrastructure investments investments in different parts of the world technology will help a variety of things will help if you think about where that population growth is if you had a map of the world and where all the population growth is and where the crops in the world are grown they're very very different so a company like ours looks at the long term in this interconnectedness in connecting the harvest to the home so it's an important to be a global company be everywhere try to be part of what a footprint will be when there's difficulties in parts of the world whether it's weather related drought related flood related civil unrest related to be able to serve your customers needs from somewhere else so what's new about that what's different in the short term is probably volatility but maybe in a little different way than what even Klaus and others have talked about we see volatility in the commodity markets now being in commodity and in agricultural commodities being driven by things other than the fundamentals other than the basic supply demand or weather issues or things that I talked about but difficulties in Europe in capital markets effect there are different people investing today than those that moved in the agricultural commodity markets so you really have to have this bifocal vision that allows you to keep the long term in mind all the importance about growth all the importance about the importance of agriculture and food to serving the vital needs of the world but at the same time the short term challenges by region and by area are quite important I think the one thing that's different maybe in our industry is it resets itself twice a year it's a renewable commodity in the northern and southern hemisphere is planted every year you know once in the north and once in the south so twice a year you get another look at supply in a way that maybe other commodities or other businesses don't have that reset or that ability to reset and the fundamentals truly work with farmers they're attracted by higher prices they will plant more they will use technology fertilizer the things that help make them more productive sharing best practices across the globe waste management is something we've talked about that's quite important so again short and long term issues but volatility is a big one great thanks very much John the technology industry lots of changes very fast you know you within a few quarters you know some have really lost a lot be a hero or a villain exactly exactly so short term long term you know the big challenge for you well I'm going to kind of summarize it based on what class through practitioners said what we're all saying on this panel is we're in a period of rapid market transitions their economic transitions their major technology transitions their absolutely industry consolidations going on and one of the most basic transitions that ain't going on is how we reinvent ourselves as companies you've all seen statistics and we refer to it differently up here but the Fortune 500 the average life expectancy today is 15 years there what it says is during these transitions if you do not change you get left behind and there's a tendency during an economic challenging time to do what hunker back cut back be hesitant just continue doing what you do before and if you're a competitor that's exactly what I want you to do but if we're talking about this as businesses this is exactly what causes you to fall behind we had 100 great competitors in the 90s early 90s all but two of them are gone we had another dozen that were really tough in 2000 all but two of them are largely gone and the same thing will be true a decade from now the question is does Cisco make that transition we're trying to transition in our industry from talking about boxes and routers and switches which I get excited about Patricia but you don't it's how you use this technology around collaboration around cloud around video to drive productivity at 5 to 10 per year change healthcare on a global basis change how you bring expertise to your customers change your innovation cycle etc and in the technology industry those who make that transition will lead those who stay doing it the way they used to will very quickly fall behind we've been through a transition this last year we usually see things unfortunately two to four quarters ahead of our peers and we've done that through each of the challenges and we changed our company so I think the key here is about being invention it's about not using IT but business technologies you go forward and to echo what one of my colleagues said as you do this corporate social responsibility must go hand in hand those who have been successful in business usually have done a very good job on corporate social responsibility we spend 3.75% of our pre-tax earnings on corporate social responsibility that's $290 million a year we also happen to be the number one player in Turkey in China in Jordan in India where we invest at in the United States so I think the transition going on is very important as businesses we must also realize we owe an obligation the most successful must be the most effective given back and give back in concept and transitions not just in terms of money that's great John in some way of course you'll summarize sorry please can I jump in for one second because I think John made some good points that we've spent a lot of time studying recently and what he just said I think is really important for people to focus on because those aren't just words like the facts back it up if you go back to one of the things we looked at recently was we were trying to take a look at our own universe of companies right the few thousand companies that are listed in the United States how many of them had have been around for more than a hundred years to your point right because they would have had to reinvent themselves repeatedly during that time it is a shockingly few it's in the it's in the couple of hundreds and you've got two of them sitting on the panel with us so Archer Daniels and and Alcoa have both been around you know for more than a hundred years right and they're still here and they've had to constantly reinvent themselves to John's point and if you looked at the Fortune 50 in 1955 almost none of them exist anymore right they're almost all gone and that was you know the Fortune 50 that wasn't just 50 random companies and did they have an existence most of them for 75 years at that time right and the cycle of this change that John is talking about is so much faster you know we spent a lot of time internally recently you know talking about Kodak's recent demise right and that didn't take place in a half a century I mean if we really took a step back if you were if you think of the mid 90s virtually everybody was walking around with a camera with Kodak filming it right and here we are 15 years later and it's all digital right and the world changes so John's point is a really important one because the global world we live in enabled by technology means this required to reinvent is accelerating because the you know the cycle of innovation is so much faster but the stats are pretty compelling yeah right I mean John in some way of course you summarize some of the key points of course globalization is the key issue in order to be successful and I think we need to dwell a bit on it because it's not just easy it is also a huge challenge for the different organizations the other is to find the right balance between short and long term and the change and by the way when you look at the Fortune 500 you know in the 50s, the 60s, the 70s the 80s, the 90s and the last 10 years every decade there has been more change in you know in those Fortune 500 and not just in the US most almost other or the other countries too so I think the volatility, the change has accelerated over time and I think also the question how do you balance between being careful maybe making the tough decision short term and still you know building for the long term because at the moment many are cutting back and of course at the detriment for the long term when you look at over a 10 year period you know the key value creation comes from growth so how do you keep on staying on the growth path while making some very painful cuts in the short term and I think the third important element is of course the social impact or the being much more attentive to the social needs and to the needs of society because we are not just observable but we also feel a much greater responsibility and with the crisis you know having created a bigger divide in society I mean business certainly not only governments but also businesses under enormous pressure so maybe we should talk about you know how do you globalize how do you create a sense for globalization in the organization how do you keep the right balance between the short and the long term with all the pains and then the third aspect on the social impact side and maybe Tom you know given that you talked about the long term it's very clear the long term issues are very obvious I mean and of course it's a global industry but there are enormous tensions you have also gone through some of those issues Boeing has them you know how do you deal with how do you create the sense of awareness in the organization and keep them on their toes Well let me first say I feel very privileged to sit here on this panel with these very old companies mine is only as a company some 12 years old even for the brand is around a little bit longer I would say first of all globalization for the aviation industry for the aviation manufacturers in particular really works it does deliver but it requires that step by step we have more and more of the value added also in the markets that we serve the good old days where we could manufacture things in Europe or North America and sell them all over the world do all the procurement in Europe and North America that clearly over so we have supply chain elements increasingly in these countries and the other thing is it's not just kind of an offset I think today we all realize and maybe the aviation industry is one of the last because we were privileged to be in such a small club that we need to look after the global talent we want to bind the best and brightest people to the companies this is why we have started some years ago but only five years ago I should say four or five years ago to put engineering centers in into these markets to crow the number of employees the number of managers it is all fine as long as you can present to your company to your employees your unions your local political constituencies that this is win-win okay we go there we have more business but there's also more business than back home to service markets it comes much more difficult and then you have to then more leadership is obviously required then it's no longer a win-win in other words if you have to make trade-offs and say okay I have to take employment away in my home markets and go into these emerging markets we're not yet really at this in the aviation I think in this critical at this critical point but I can foresee that coming so far it has been the growth that allowed a win-win on both sides but it is coming and that is something and I think that is something we will also pick up and learn from other industries who've gone through that first phase win-win yes we'll get more market share but secondly if your own markets shrink if these markets the new markets are more demanding how do you manage that much more leadership much more vision obviously required then than in the easy days of win-win Klaus you have to deal with a lot more volatility obviously yes mentioned that prices have been down by 28 percent for aluminum and I mean the short-term pains are very real and still at the same time you painted at the beginning a clear picture of the global outlook every year 50 to 100 million new consumers entering the global market and therefore the long-term needs and demands is clear but the short-term how do you deal with that well the interesting thing I've been blessed in my life that I had a lot of opportunities to do restructurings and I've seen that there is a human element in it that I don't believe you can successfully restructure if you don't have a growth part at the same time because humans want to have something to look forward to and because in the end I mean to just cut, cut, cut, cut I mean there's no perspective and people will not will not do it well right so I've always believed and always done it to have a growth perspective and to have a true north for I mean whether it's being small or whether it's being big so that's one thing the second thing the volatility is huge and you mentioned the aluminum price aspect it's added onto it is the currency aspect of it and we've seen currency swings last year that I don't think we've seen before and as we are in an industry where our end product is traded in dollars but the input costs are in Brazilian Real Australian Dollars Canadian Dollars you know Euros and Dollars you know USDR so there's a lot going on there I think for us it has a couple of implications number one you have to build a little bit of a bigger buffer cash is king and you gotta be sure that you stay afloat I mean what we saw last year I mean when suddenly the metal price drops by 28% wow I mean we saw in 2008-2009 a very stable balance sheet where we had a debt to cash ratio of about 30% falling in less than 6 months to 43.9% right honestly that's an experience that is pretty impressive you know we changed over to cash management immediately and brought it back very quickly but the learning from that is you have to have a little bit more of a buffer there so second learning is in the past I mean if you had a little flaw on execution and you could afford it and brush it over you can't anymore you have to be much more flawless on your execution and the third learning is you gotta also look for diversification and diversification comes in many ways I mean Pat has mentioned there's also through regional diversification that's one aspect but also in business diversification right and the last but not least I believe and I've believed it for many many years that in today's world the only sustainable competitive advantage is the talent base it's your employees it's your people you have to do an outstanding job to select the right individuals and you have to select them by not only being great in their performance but also being good in working together and nobody is perfect but a team can be and the third thing is you have to be much much more conscious on the value side I mean we've always praised ourselves and I believe by the way that that's one of the determining factors how companies can survive over a longer period in time I don't think that I don't think they can survive if they are not truly and in the essence a value space company and if they haven't got a good capability to attract the best and brightest correct Farid you have emphasized I think the the restructuring needs in 2001 so you have gone through the crisis I mean what are the lessons that you would would say you know other companies I mean Europe but also in the rest of the world can learn making the painful decisions in order to really build for the future is that something where you feel you know your lessons are you know those the lessons also for others which could be applied now thank you obviously for us to change we needed a sense of urgency and this had to be communicated within the organization so the type of change you want to do on paper could be actually implemented in the workplace I mean you can make a decision at the top but the people are going to make the change are the people facing the customers they're going to give the answers about why the company is doing this and that and you have to give leadership within the organization to do this maybe sometimes the crucial hard jobs but beyond that I think for this change to occur I think what is important like it happened in Turkey country was going through a change it was not only a financial crisis it was a structural change so if this did not happen I think maybe even our company would not need to change because at that time that type of working environment we were doing fine so when the country started changing when the leadership the political leadership decided that this type of economic environment with this structure could not go on we also had to adapt to it I think the first thing is that macro picture the government is very important secondly the communication of crisis is very important within your organization thirdly you have to really show quick gains to your organization otherwise the believers who we are preaching to they will start falling to pieces as I think everybody knows in business you can always find money but the belief of people the trust of people within your organization because in this type of periods nobody's looking at elsewhere they are looking at the leader leader has to stand and the truth I think the communication of this is very important I come from a family business and at the time of the crisis unfortunately my father passed away so our thing was I'm the second generation so there were a lot of expectations and expectations beliefs and non-beliefs towards the new guy or the new leadership and his team so this was a little bit challenge for us I think for the change to occur you have to walk to talk and this is what we did it was easier for us to change because we were not a public company no invested banking or no capital markets were measuring us there was not much critics towards us so we could make the change but I think when you become a public company and our holding company is not public it's a different program you can take a little bit different decisions our bank is public our automotive companies are public we have public entities underneath but I think on the top we have to take the hard decisions Tom and then John you wanted to I just wanted to pick up on that restructuring we ran through a major restructuring from 2006-07 until 10 in the course of which we took roughly 10,000 people of our payroll it was only almost 20% the end of the year it worked because I think Laos said it we could give our people the vision but the vision is growth people are not in a declining industry we're still a young industry if we are competitive we will prevail we will survive and we will lead the industry but the vision was really growth and particularly in the emerging markets the other thing that was important in this period and was also important in the financial crisis period 2008-09 stay close to the customer stay close to the customer the customer never urrs and never is getting irritated about your commitment your future that was so damn important and also the supply chain so that the supply chain does not come up with their own guessing of what the future will be if you keep that stay close to the customer keep close inform the supply chain have a dialogue with the supply chain I think it's very important through restructuring periods but also in periods of immediate crisis John key takeaways you asked for the playbook it's pretty simple and we all word it in different ways the first is when it's opportunity or a challenge be realistic on how much is self-inflicted how much is macro second is it's mostly self-inflicted it varies by situation no not necessarily but you want to be realistic what's the tradeoff the second thing you want to do is determine how long you think it's going to last and how deep it will be and that's whether it's a market transition technology transition or economic and it usually is deeper and longer than you anticipate the third thing you do is I think several of my colleagues painted very well you paint your picture what you want to look like when you come out you communicate it to your employees again again again and the fifth thing is you stay close to your customers that's the playbook for all of us however fair it I thought you were very modest every one of us whether we're public or private if you make the decision what's right for your company long term it shouldn't matter which one you're in and you might face a little bit of heat from your shoulders in short term but if you do your job right every decision you make is three to five years out almost no decision you make has a union impact for the next six months so I think the playbook should remarkably replicable but I mean obviously you're in a business where the demand can only grow and so you should be less worried but I mean what are the short term challenges and you know the trade-offs between short term and long term while we say it can only grow it doesn't grow in a straight line so you have the fits and starts and even though it's a cyclical business often just as John said to be realistic about when you're in the low part of a cycle what you can do what you can control versus what is part of the macro environment is a debate that you have to have and you have to have it in a healthy way in an honest way we talk about earning the right to grow and so in the organizations that really have understood the macro versus the self-inflicted have really analyzed the people that are very good at that to understand as you go through cycles they've earned the right to grow and do so even in down cycles so we allocate more capital and invest more capital even in down cycles for the long term particularly those areas and those managers that have understood that and have earned that right Dan, how are you dealing with the I mean obviously the long term prospects are I would say still good you know despite the challenges at the moment but I mean there are enormous short term challenges right but I think we're perhaps being a little too pessimistic I think if you if you look at I know it's I think I said last last year or the year before boy if you come here consistently as an optimist and this place can ring optimism out of you in three or four days right you you come here as an optimist and if you if you if you leave an optimist you're in the minority but I mean I think if you look look the we've touched a lot on volatility that volatility that's been the manifestation of all the uncertainty in parts of the world you know slow down what was setting up to be a very good year in the capital markets and and that's the engine right that we've talked about it sounds like we're talking our own book when we talk about the exchange industry but the facts are pretty clear you know I think fair it's right there are some challenges with being a public company you have to be a little more transparent you know John said it right I don't think it's that big a difference because if we're all doing our jobs and we're managing for the long term it's not that big a deal but the facts are pretty clear companies that go public use that growth capital to grow which means they create jobs which means that's really really important so if you look at our pipeline for example the next six to twelve months and I'm sure it's true of other exchanges around the world it's very global it's small medium and large companies it's companies that if we can just kind of hang in there this year and it's it's modest GDP growth and a little less volatility and we all get used to the new normal I think you could have a very very positive year and if you think about it yes Klaus is right it's the prudent thing to do to to say that cash is king when we're still uncertain but the fact is corporate balance sheets in the world have not been this healthy for a long time and I'm more optimistic than most I think it's very easy to have a breakout on the upside here if we get used to the new normal or some sense that things are less uncertain and the pipeline that we've got in front of us for the next of issuance for the next six nine twelve months very very strong and I think we'll give people a good illustration where they can hang their hat on it and say you know there is a way to move forward here yeah you know Duncan's being very played also so I'll always say it in a more direct way government and business are not working well together in Europe and the U.S. or in India and we have to get back to the basics on that because our counterparts around the world are out executing us and that does give us the upside breakout if we're able to deal with issues crisply and with certainty in each of the areas and that gives probably failing marks in the present time and the funny thing is John we don't need a sea change from Washington at least looking at the through the U.S. lands right we just need a turning of the dial a little bit because the the fundamentals are there we just need we just need everyone to stop villainizing it and just like there's a there's a really easy way forward here if everyone's just constructive I'm with but let me build on this I think is there a misconception by business about I mean you talked about you know making small adjustments I mean there is a much stronger feeling in Europe North America some other parts of the pendulum has to has won too much in one extreme you know business is king and and we have an increasing income inequality wealth inequality has developed over the years and there is the sense of you know government has really to push back there has to be more regulation there has to be more pushback on on on business having a free free lunch and obviously there's an extreme picture but I think it's it's very real I mean how how to deal with is those challenges you know and and I think let's let's not complicate it I'm sorry to interrupt you but let's not complicate it right it could be as simple as just eradicating the obvious contradiction that you say you love jobs and then in the next breath you say you don't like job creators I just don't get it I'm sorry I know I know that's another simplification if we're all about creating jobs then why are you going after the job creators I just I don't like if someone can just help us resolve that basic issue good people will take care of the rest with all due respect I think it's over always yes I want to I want to let us in a right yes exactly absolutely do it I think it's very important to realize that business has to play a key role here absolutely we have to be realistic that we have used the essence us as an example we have allowed our middle class to deteriorate and we've got to get that back you've got to give the environment where we created ten thousand millionaires at Cisco that will never be done again the way the current regulations are how do we create an environment where it wins for everyone and how to be realistic and critical of ourselves because the areas we must do better but it's a classic approach which can do you do pretty well in Turkey and China he's doing remarkably well they get business and government the same way they work it through in the resolve it and both sides to your point earlier have macro issues but a large part of self inflicted so I think it's important we don't talk at each other we say how do we solve it together and and I think that's really what I'm pushing for I almost feel that the societal dialogue we need and we need it probably more than ever but I also believe that the tone should not be a tone where it's us against them or this has been taken away and this is going to be given to because that's really not how the economy works I mean you you need you will always have businesses and people that pull and and they if you don't have them in your economy you won't have jobs you won't have businesses right some some countries have realized that and have created because of that a very smart immigration policy because they realize individuals matter whether you have them there or not that is and will always be the same right I think the dialogue we absolutely need and I think we need to do it together with the media and business has to engage more in it and at the same time business also has to make sure that's not just us here on the podium the CEO is talking but a lot of the dialogue happens around the turkey you know on Thanksgiving you know when the young kids are coming in that are about to leave leave leave leave college in a year from now and are wondering hey do I get an interview do I get a job right and and that's where the answers really happen we need to make sure that our employees are enabled and empowered to give more comfort and give more confidence in where the world is going or our suppliers or our customers right and we I think we really have to engage more in this dialogue and and not just vilify one area against the other Tom can I make a very Eurocentric comment and very specifically I think I have no I have no doubt there's need for additional regulation in some area of the financial markets and it has to be done consequentially and I think we can observe that some of the obvious things that should have been reformed are a lacking a lacking behind on the other hand I'm concerned that our politicians again primarily in Europe don't do enough in terms of deregulation there's so much we can do particularly here to fuel growth to deregulate particularly the labor market I mean as was saying goes it's a terrible thing to waste a good crisis and I'm afraid that could happen here that too much regulation that we end up with more regulation that will strangle suffocate growth and that politicians are not willing to to tackle the deregulation issue that is unpopular in some parts of the of the you know constituencies and certainly the unions yeah a real quick one one of the reasons I'm an optimist is technologies move never move faster and what you see with devices like the apple and your two or three year old child or grandchild using it is this will completely change productivity standard living health care etc so I think we're on probably a decade run of job creation productivity changing health care that it can really enable new business models and government models so I'm going to put the burden back on us I think we have a chance with this business and government to reinvent ourselves both organizations have to do it and and to your point I'm the optimist that we can muddle through this at first and then pick up steam like Duncan probably articulated earlier room for the upside on the second half of the year and someone just has to go first that's all right and I think what we say to a lot of business leaders is if everyone's sitting around waiting for clarity from all the world's governments and one of the most uncertain times where we've lived in we're not going to get it we make decisions in our business lives every day without perfect information it's what we're supposed to be good at and what we get compensated to do so let's just do it let's leave from the front and you know what if we leave from the front I don't think it's that difficult for the governments to turn the dial and throw in with us what's more bipartisan than job creation I mean it's literally the world's biggest issue right now that's what this whole forum should be about that's our biggest problem right now I agree I would say your point about it's certainty and uncertainty we have to deal with that exactly all the time don't scream for certainty we'll never have certainty I think if we together lead business has a lot more to contribute without pointing blame to others take it on we can do it I think we should be aware that you know and John you mentioned about the middle class that has been hurting in the U.S. not only in the U.S. I think in many parts we see the rising inequality and people feel the certainty in the past you know you could have a job and it was therefore much longer than it is today we see a lot more uncertainty about job security and therefore I think people craze for our government to come in to protect their jobs to subsidize things and so forth and I think that I think you know if we're not creating the jobs we will see a lot more government pushing in and making life more difficult that's why I think what you said Duncan about leading taking the lead is so important you know what's interesting if you and this kills me saying this being a Republican but if you watch our president Clinton did he did a very great model you grew GDP for eight years at four percent plus per year you created 22 million jobs of those 22 million 92 percent of them were private sector you had very good cooperation after a slow start but very good cooperation between business and government and I think we need to get back to regardless of your political views that type of basis around the world and Pat just on you I mean given that you have your product it's a very social product if you if you like in many ways you know obviously there the interaction with governments there's the talk about land grab and all these things you know how do you how do you deal with those and you know find it's more difficult I'm sure there's probably not two other things that government is more concerned about about their people than food and energy and we're involved in both of those so we need to work cooperatively and we do with governments making the issues known and I think thinking about the long term the more governments turn inward and try to protect their own markets try to put boycotts try to put embargoes blockades the worst it is for the ultimate outcome so we spend a lot of time sharing what open trade is all about and what how the benefits of open trade can actually benefit individual countries as well as cross-border trade I think Hans there are so many answers to those questions I mean I just think on some of the things that that Alcoa is doing I mean we are investing currently 11 billion dollars in Saudi Arabia with a partner this is going to create 5,000 jobs in the area of the east of Saudi Arabia where youth unemployment is the biggest issue I was just there the biggest issue we've now started as this thing is coming along and I've just visited before before the holidays you know we've now started to ramp up the hiring process as well as the education process I was very concerned about how would the educational and the attitudinal level be so we're starting a vocational training which is a little bit like what we've seen in the German environment right I tell you what it is absolutely amazing because there is this human thing you know when you give people education just flourish right when I go to Brazil where we are big time invested and we've built our Brazilian system when I talk to the normal shop floor employees I tell you it's not rare that I meet somebody who says if you hadn't come here I would not have had would not have had the chance to learn to read and write it's not rare and these are the things that we are seeing literally every day right in a way this message has gotten lost right and I think that's where Duncan was coming from we need to make sure that it's well understood and at the same time see but we got to work together in the U.S. we have done with very little things we've brought back the re-education process for instance we have shortages on welders in the U.S. we have shortages on industrial maintenance specialists right so we have started programs with community colleges where we offer these these type of courses and and allow people to go in there huge success the costs are almost minimal right but they give people an opportunity to upgrade their skills do it partially inside of the job partially outside of the job and increase their employability and literally what can you give today more than employability I can guarantee I mean how in 10 years our business gonna look like but I but I can be helpful in bringing the skill level up so that that they are more employable good let's open up to the audience sorry going back to the regulation side unfortunately regulation in certain countries and what took place in couple of years created the regulators to be to be very tough than they they should be and what this is bringing in one of our sectors financial industry financial services industry and as a believer of globalization for example some of our entities overseas unfortunately even though we have a better balance sheet even though we have a better liquidity management even though we have a better capital adequacy ratio we are being treated unfairly and this regulation is creating what we don't want in the world for the globalization protections and people like us who want to grow who want to not only bring values wealth job creation only to our country but to the region to other countries as well we are being treated as very unfairly this is just a warning okay good let's open up to to the audience and you know when we have questions you know it is a single sentence with a question mark at the end and no great statement so one sentence with a question mark at the end and please introduce yourself also in three words please so who are John Manley from Canada last night President Obama promised aggressive action against those who compete unfairly and said that if the playing field is level America will always win he said that he would reward companies who created jobs and punish those who outsource jobs impact on global business conditions question mark so who wants to take this out I mean John I mean I'm sure you know you have also listened at least you know to parts of that what's your reaction I never get confused with comments that go on during an election year with what long term needs to be done you can't put a wall around a city or a country and keep people in that capital or others I think in the US we have the opportunity in front of us to be very competitive on a global scale and is probably one of the very few high tech companies have been around for 25 years the majority of our employees are still in the US we have the environment that allows us to address future growth in the US which I want to do badly of which repatriation is just one more example of where our government is out of touch with every other major development in the world so I think what we have to do is say how do you create an environment where it's predictability and the jobs that you add and I think whichever political candidate this next election year is able to generate the confidence to win this morning so I didn't see the speech live but I read it on the 3 hour trip from Zurich and I think there was a lot about the future vision that even links to some of the things we talked about here of trying to have business and government grow jobs together I thought the point of that you made around outsourcing and punishing or rewarding those that here it's got to be an and world where global growth economic growth jobs wherever they add them is a positive and one of the things that the president mentioned in the speeches around exports in the United States and growing jobs in the US that help support exports is on the upswing and exports are continuing to grow in the US and that continues to add to some of the opportunity set and I think you would hope on the back of that to what was just said if that starts to get out there what Patricia just shared then we can start to get to the point where the developed world understands that we're rooting a lot for the emerging world to be successful right we want China to get it right we want India to get it right we want Latin America to get it right we want Africa to get it right because that's going to be a great boost to competitive companies in the developed world half a billion to a billion new potential customers, consumers, you name it and that's the kind of information that has to get out there right some of these comments I flew in overnight also so I didn't see it live it's too easily gets interpreted as a zero sum game and it's not a zero sum game that's the challenge we should not underestimate protectionist tendencies by the way not just in the US there's election time but also in Europe I mean in countries where you have low growth, zero growth negative growth these tendencies are clearly there and I think it's in us business leaders to really make the effort to convince politicians, political decision makers that it's not a zero sum game that's a win-win that globalization still is a win-win I'm not sure we've done enough on that one I'm very worried about these tendencies on both sides of the Atlantic I have to say another question thanks Andy Robinson one of these paper in Barcelona both at this Davos and last year's Davos there seemed to be a growing body of opinion amongst economists Raghu Rajyan even the one of the Chinese chief economist at the IMF that economic inequality is actually detrimental to economic growth because it tends to sort of create a kind of bubble oriented economic growth model where a minority with a growing share of of income invest in volatile financial assets whereas the rest of us are forced to consume based on increasing indebtedness now I wonder if the question is do you think that's true and if so would you be prepared as members of that small minority who do who have been beneficiaries of growing income polarization would you be prepared to take a smaller share thanks Klaus do you want to I mean I don't want to put you in a spot I wasn't waiting for that so well I think I think I would start at a little bit of a different point I think that to run societies successfully and for societies to excel you need a very intense dialogue of all forces and you need it with an open open mind and really to deliver a joint understanding at the same time I mean it is not income distribution that creates jobs let's be clear it is competitive businesses that find jobs for employees to pay them well and give them future opportunities and you have to always build in an economic agenda in this otherwise you run into those traps that I have seen people running in my major part of my family was stuck in East Germany and I was sent there often enough in my youth to experience an environment like that and that's certainly nothing that I found desirable at all and I believe that we've learned good lessons from what to do better and frankly I mean in 2008 it was I think it was 2009 or so October 2009 when I was in Moscow and in the US it was at the height of the points of government bailouts and partial government investments in large companies and I was talking to an old friend of mine in Russia and I said well look I mean this is about to happen here too I assume with the oligarchs you know and he looks at me was I mean like during the headlights I mean his eyes pop wide open and he looks at me and says Klaus! I mean in Russia I mean we know that the government can never do a better job in distributing money than business can right so well I mean Hans you're shaking your head but in the end I think that's a lesson that's a lesson that we should not forget and people that have lived in such environments understand how difficult it can be but the core of the issue is that it needs social responsibility in the business leaders and it needs an understanding of how different parts of society feel right that's my caveat and it's a strong caveat I'm going to just disagree slightly on that I think it should be an embarrassment to American business as good as we are not to have a rising middle class and I think we've got to say how do we turn this trend around you don't have political stability in any country without a middle class the Russians get this and Skokov which many of us are working on Turkey clearly understands how to make no mistake the Chinese and Indians understand it so I think we've got to create an environment that allows a win-win on that and I think the old definition of capitalism by itself is not the future it's how do we create an environment where the majority of the citizens in a country in the world win together and actually technology probably knocks that down for the first time my parents taught me it was all about education was the equalizer in life not true anymore it's about technology internet and education allowing you to participate and we ought to be able to increase the standard of living of the majority of citizens in this world every year on an ongoing basis and business has to think more out of the box on how we do that but John that's not a disagreement I believe you're right but I do not believe that it's just a middle class I think your point at the end is you've got to lead to wealth creation throughout society and wealth creation the fundamentals of wealth creation are also education so in a way wealth creation is like looking in the back mirror at the same time you have to bring in the substantial which comes through education give us the Turkish perspective because they are obviously the development has led to a rising middle class I'm not sure whether the income inequality has really improved but I don't think it has worsened I think with a strong economic growth it's not worsened but still ratio wise we have more to go we have to do better and the whole picture is not very different from US Europe or anywhere in the world middle class is very important and I also believe that because of the last eight years that economy started growing that's why the middle class started growing more so of course the business have to be socially responsible I mean you can see the old pictures of factory owner or boss fat with a cigar just looking at the employees from a different perspective those days are gone capitalism should find a mix with socially accepted way of doing business as well and I think this goes through touching the people doing the right things not treating the people badly and being socially responsible in the public but we talked all about this problem one thing we are missing the duty of media because sometimes unfortunately in these countries media is showing or creating us against them type of things I mean the last three years who are the most hated people in the world bankers we all live in this society people made mistakes but look at the also the contribution of banking system or financial system to this world so for the wealth creation for the capitalism to be understood rightfully I think the communicating of realities without distorting pictures or creating enemies this also will create a climate where we will have the right timing to do things better otherwise politicians are being squeezed business leaders being squeezed there is a push from the social pressures and I think media will play a very important picture in this doing the right communication to the public absolutely we have a lady over here can you get her mic I'm Jasmine Whitbread from Save the Children it's interesting that the conversation is now turned on to social responsibility really prompted by a question from the audience and also I was listening before the tone can sometimes come across as a little plaintive in terms of we are doing a lot of good why don't people understand why doesn't the media tell the story now I happen to know that a number of your companies are involved in very impressive multi-stakeholder initiatives to tackle really big issues in the world and yet none of you chose this opportunity to really mention any of those even in passing focusing instead on more of the short term in the leadership challenges generally I just wondered why you think that is and whether you might want to mention a couple of them now actually it's not quite true I think the social question came up very early in the statements if I may correct you but if you look at it now just your sister goes an example Thomas could paint our picture that way I said earlier we gave 3.75 a pre-tax income on corporate social responsibility bear with me let me finish and one of the reasons I go to Davos is the ability of business and government and NGOs to all work together toward a common goal our network academies is the number one education in the world by private sector with a million students in that 160 countries working very closely together the issues in terms of Palestine where you work with Shumon Perez and King of Deliver Jordan and the Palestinians and all the religious groups to say how do you create jobs there starting with corporate social responsibility and then building business out of it you go on to Lebanon and do the same scenario in China after the terrible earthquake in Sichuan province the ability to go in and work at the invitation of state department of the Chinese government to rebuild that part of the country with healthcare systems that last and education systems that last and do the same thing after Katrina down in Louisiana and Mississippi where we spent 90 million dollars but more importantly made a difference in the education system it took NGOs working with government working with business and I think that's what the web is all about it's how do we bring together these ideas and solve them together because one of us solving it by ourselves it does not work I think all of us are hesitant because when we talk about it looks self-serving but I give you the chance I thank you for the opportunity to perhaps summarize it I mean probably what you say do good things and then talk about them and we have been maybe a bit more reluctant although as you know I mean we the BCG is working very closely with safety children and I think all of you I mean like John has mentioned Pat Duncan, Tom Ferdin and Klaus I think they are all engaged in local groups in regional groups and in global groups and the key thing the key point being that it's not about and I know you correct you moved on to go through this cycle some of them after the courses you see the tears in there as I saying you know I've been teaching for 13 years first time I started feeling that being a teacher is a different bogey and the last one many kids in Turkey we have a foundation family foundation we looked into statistics there were a lot of school dropouts in the eastern part of Turkey because they didn't succeed in the first second grade believe it or not we'd send couple of trucks with eyesight checking doctors many of them was that they were not even aware of the fact that they need a glass thank you I would like to thank the panel obviously and the audience for I think a very engaged discussion clearly I mean what we can take away I think globalization will continue it will bring a lot of opportunities and we will deal with the short-term challenges and make it work thank you very much very, thanks very much very good very good dialogue