Snow business: Does Davos still matter?

Rod Olukoya (rodwey2004) CNBC

It's 2am on a wintry January night in Switzerland and it's elbow room only in the Piano Bar of Davos's Hotel Europe, on the last day of the World Economic Forum for 2015. This year, Russian tycoon Oleg Deripaska's party, the most exclusive ticket in town, has closed its doors early, so there are more people wearing white badges (i.e. who are really, really important) than usual at this time of the night. A couple of doors down, The Killers are playing Salesforce.com's party.

It's not likely that many of those enjoying the music and seriously pricey drinks in the bar, or the smoking room off to the side, will be heading for the first of the morning's sessions. It's times like this that British financier Nathaniel Rothschild's tweeted observation that Davos 2015 was "full of MAWS (model actress whatevers) and FAWS (financial analyst whatevers)" comes to mind. The noble ideas discussed during the previous few days seem to have diffused in a cloud of hormones and alcohol, at around the same time many of the world leaders attending the meeting jetted out of the small Swiss town.

Small wonder first-time Davos attendees report feeling a mixture of seduction and bewilderment. Over a week where you can rub shoulders with people who run our banks, charities and governments, and spot Bill Gates or Angela Merkel walking through a hotel foyer, there is no doubt that you feel you'll learn more than in the other 51 weeks of the year.

Do you know what happens at Davos?
Do you know what happens at Davos?   

Yet there are a number of aspects of the meeting which are, to put it bluntly, odd. The emphasis on reaching consensus, even with regimes whose actions may leave a lot to be desired by the Western pro-democratic, capitalist countries that the vast majority of delegates come from. The celebrities appear anxious, in the words of Cher from the movie "Clueless", to "use their popularity for a good cause". The passive-aggressive, perfectly English politeness from WEF staff or the Swiss military if you stray a centimeter from the path you're supposed to follow round the conference center. And, of course, the badges. It's 2015 and you're making people at your event wear a different colored badge based on a series of closely guarded criteria?

When one of the key topics is inequality?

So, are a few days in a small Swiss mountain town in the third week of January really still relevant to the way the world will be shaped for the rest of the year? CNBC, as a news organization, has been attending for nearly two decades and here, we're taking a longer look at whether Davos is still at the top of the agenda as it approaches its 45th year.

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A meeting of minds

The "first Davos" took place in 1971 and was a rather different incarnation of today's meeting. Just like in 2015, it was in Davos, in January, and chaired by Klaus Schwab, then Professor of Business Policy at the University of Geneva. However, there were just 440 participants from around 30 countries, compared with 2,500 of more than 90 different nationalities at this year's event. You might think the meeting is dominated by middle-aged white men in suits now, but looking at photos of the first conference, the only sign of diversity seemed to be where a middle-aged white man took off his suit jacket.

The 1971 meeting was entitled the European Management Forum – it didn't get the name World Economic Forum until 1987. It also came to include people with different job descriptions, more politicians and charity leaders along with chief executives, and with this move widened its focus to political and social change.

This broadening of the forum's agenda has been rewarded by a series of triumphs for Schwab's emphasis on consensus and dialog between even apparently diametrically opposed people. By the late 1980s, the annual meeting had become a regular fixture for the world's political and economic elite, and its stage the site for marquee events.

Read MoreDavos 2015: Who said what

In 1988, the "Davos Declaration" by Greece and Turkey helped halt what seemed an unstoppable slide towards war over drilling rights between the two old rivals. The previous year, West German Foreign Minister Hans-Dietrich Genscher's plea to "give Gorbachev a chance" eventually became a key turning point in the move towards rapprochement between the West and Russia. And in 1992, Israeli Foreign Minister Shimon Peres and Palestine Liberation Organization Chairman Yasser Arafat appeared hand-in-hand onstage at Davos. More recently, the 2012 East Asia meeting saw the first foreign appearance of Nobel laureate Aung San Suu Kyi after 24 years under house arrest in Burma.

While in recent years the slew of big news stories may have tailed off, the annual Davos meeting seems to be where the spark is made for future seismic shifts. The most important events in Davos, the cliché goes, happen behind closed doors, where leaders who may not feel able to convene in public (for example, Middle Eastern and Israeli politicians who wish to meet) can hold talks in privacy.

The organization has also become a serious money-spinner, with revenues of 199 million Swiss francs ($214 million) in the year to July 2014, 54 percent of which came from partnerships, according to the WEF annual report. After expenses, profits of 1.5 million were put forward to the WEF Foundation Capital. Its rapidly expanding staff seem to be well-remunerated – if you divide the 90.6 million spent on staffing by the number of "full time equivalent" staff, it suggests the average employee salary is 194,000 Swiss francs ($210,000) per year.


World Economic Forum

The ascent of Davos Man

There is no typical Davos attendee – but you don't have to spend too long in the Congress Hotel (where the official meetings are held and speeches are made) to notice certain similarities of dress, education and outlook. While there are increasing efforts at inclusivity, the membership, cost and location ensure that attendees are often working for well-known companies in senior roles, from the U.S., U.K. or Switzerland, unafraid to be labelled elite or elitist.

The phrase "Davos Man" is used both to condemn and praise the person viewed as the typical Davos attendee. While political scientist Samuel Huntington is usually credited with inventing the phrase (he used it to criticize what he saw as a global elite who didn't realise that not all of the world wanted to live a Western lifestyle), a 1997 editorial in The Economist, "In Praise of Davos Man", was when it gained wider currency.

The concept of Davos (and it is now as much a concept as an actual place) came along at a point where capitalism itself was changing, where the old model of winner-takes-all was altering towards a more responsive, flexible way of operating, fueled by globalization.

CNBC's selfie stick Davos interviews
CNBC's selfie stick Davos interviews   

"Davos Man, finding it boring to shake the hand of an obscure prime minister, prefers to meet Microsoft's Bill Gates," the 1997 editorial reads. It's a statement that still rings true today.

In the nearly two decades since then, the composition of Davos attendees has changed, with a greater proportion of women and efforts to include more countries.


Schwab's belief in his "Stakeholder Theory" of management has stayed strong, and can be seen across the organization today. This theory, roughly speaking, holds that businesses serve employees, customers, suppliers, and the state and wider society as well as shareholders and creditors. A laudable ambition – but one which not every Davos Man has stuck to.

So, how do you get to attend? Most likely, your company has paid a fair whack for you to make the list. If you're a head of state, academic, church leader or charity head, you've probably been invited, and may have to sing for your supper by appearing on a panel or two, or even giving a speech. There are also varying sizes of entourage for different leaders, many of whom won't get the same kind of access as the people they're handling – but are working a lot harder. And there are the media, with varying levels of access, always worrying that the real story is behind that particular closed door they can't get past.

World Economic Forum

If not Davos, then what?

If Davos didn't exist already, would it have been invented in its current form? Maybe not. There is something about the secrecy that surrounds the event which, in a era where anyone with a smartphone and a decent internet connection can research what's going on behind the headlines, seems anachronistic and out of step with other summits. This also helps fuel conspiracy theories that the meeting is full with shadowy financiers carving up the world between themselves, with the aim of profiting at ordinary people's expense.

There is also often a dangerous air of complacency around the whole event. For example, there was a consensus among delegates in recent years that the euro zone crisis had been resolved – while the years of simmering resentment and activism in countries like Greece, Spain and Italy point to the contrary. There are also protests on the fringe of Davos itself, although the emphasis by security on keeping protestors out means that it is entirely possible to be in the town all week and never notice them.

Having said that, things have changed. There was a time when, apart from the big marquee events, everything was private, off-the-record, and not to be shared with those not fortunate enough to attend. This year, many more sessions were livestreamed online, and the WEF social media team was all over Twitter, Instagram and other platforms not usually associated with the closed-off nature of the conference. WEF's own homepage was filled with newsy, clickworthy headlines like "27 inspiring quotes from Davos 2015".

WEF has also tried to move with the times by setting up meetings in Latin America, East Asia, the Middle East and North Africa, and a much-feted New Champions annual meeting in Dalian, China.

Read MoreSecret insider tips for Davos

So if not Davos, then what are the alternatives? There are a few meetings set up in direct response to WEF. Probably the best-known is World Social Forum, an anti-big business and globalization gathering held in an emerging market country. This has been going since 2001, with the next one held in Tunis, Tunisia in March but rarely attracts the kind of visitors or coverage enjoyed by WEF.

There are several key competitors in countries which may feel excluded from the main WEF business. The St Petersburg Economic Forum, one of Russian President Vladimir Putin's pet projects, is one.

And of course there is the Bilderberg Group, the meeting of the Western world's elite even more beloved of conspiracy theorists than Davos. The straight-from-a-spy-novel organization has dealt with the digital age by keeping its walls up, although the meeting now has a website with a few, very scant, details about its board and purpose.

The younger generation of business leaders and (that dread word) opinion formers seems keen on hosting apparently more open events like the growing stable of TED conferences, or technology-focused events like South by South West in Austin, Texas. Internet-savvy TED in particular has fostered an air of inclusivity, by appealing to a younger crowd and going for more provocative topics with greater mass appeal. Its 20 minute speeches, with their emphasis on teaching you something different or otherwise improving yourself, have become bourgeoisie lunchtime, commute and dinner party staples. Yet it would be difficult for WEF to go down this route without sacrificing its prized exclusivity.


Altrendo | Altrendo Images | Getty Images

Same time, next year?

Was Davos a success?
Was Davos a success?   

The average person on the streets of New York, Singapore or London would probably say "What's the point?" They may never have heard of Davos or think it's all part of a conspiracy by the world's richest and powerful 0.01 percent.

There may not be big announcements which affect how their personal world works over the course of the week. And the real headline-grabbers (this year's obvious example was Russian President Vladimir Putin) often stay away.

Read MoreDavos in 60 seconds

There are plenty of other arenas and forums to exchange ideas. And there are also doubts over just how well the typical "Davos Man" has been running the world.

Still, in a world where allies can become sworn enemies in the blink of an eye, it is comforting that there is a neutral space in Switzerland, where discussion will not turn to violence.

If political leaders can be persuaded to change their minds, if billionaires pledge money to eradicate a disease, if chief executives make their companies more responsible, and all because of the conversations and meetings they have had there, the impact and relevance of Davos will continue to be felt.

Credits:
Reporting: Catherine Boyle
Video reports: Deirdre Bosa, Phil Han, Jonathan Cronin
Interactive features: Matt Clinch, Bryn Bache
Data visualization: Bryn Bache
Lead image: Rod Olukoya
Editor: Phill Tutt


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