‍[00:02] Jennifer: Hi everyone, thanks for listening to The Founder Spirit podcast. I'm your host, Jennifer Wu. In this podcast series, I interview exceptional individuals from all over the world with the founder spirit, ranging from social entrepreneurs, tech founders, to philanthropists, elite athletes, and more. Together, we'll uncover not only how they manage to succeed in face of multiple challenges, but also who they are as people and their human story.

“I'm always shocked when I meet people who have a negative outlook of the future. Let's not forget the future is not happening - we are 

“For me, it all boils down to a very simple concept. As a leader, you have to have soul, brain, heart, muscles, and nerves.”

Joining us today is the preeminent Professor Klaus Schwab, Founder and Chairman of the World Economic Forum, the International Organization for Public-Private Cooperation based on the Stakeholder Concept he pioneered in 1971. 

Best known for its annual meetings in Davos and with its mission to improve the state of the world, the Forum has been a driver for reconciliation efforts in different parts of the world, acting as a catalyst of numerous collaborations and international initiatives.

A serial entrepreneur, the German-born professor also founded the Schwab Foundation for Social Entrepreneurship together with his wife Hilde, the Forum of the Young Global Leaders and the Global Shapers Community. 

An engineer and economist by training, Professor Schwab has received countless awards, distinctions and honorary degrees.

Just how did a young academic manage to create a non-for-profit platform to bring together political, business, academic and civil society leaders to shape the global agenda? Well, let’s talk to him & find out.

Welcome, Professor Schwab, welcome to the Founder Spirit Podcast. It is my honor and privilege to be sitting across from you in this beautiful office, and we're grateful for your time.

[2:16] Professor Klaus Schwab: It's a great pleasure to talk to you, and to go a little bit into the history of the World Economic Forum,

[2:24] Jennifer: Professor Schwab, you were born right after the annexation of Austria at the start of World War II in Europe. How did growing up during the war shape your life and your views on the world?

[2:39] Professor: I experienced the second world war as a child. And of course, it had an influence on me because if I look back, most of the children who went to school with me had lost their fathers. And I asked myself, how did it come that people do such terrible things? And it had a great influence on my life because my life was devoted to dialogue, to reconciliation. 

And actually, even during my high school time, I was very active because I took a leading position in the German-French youth movement, which played an important role after war in the reconciliation efforts. And today, nobody can imagine anymore a war between Germany and France.

[3:37] Jennifer: I understand your father was a industrialist, and your mother are quite a character (chuckles)

[3:44] Professor: Yes.

[3:46] Jennifer: What qualities did you inherit from them?

[3:49] Professor: No, they were so different. My father was really committed business leader, but already with a great understanding and concern for social issue, for societal issues. So he was not just a business leader. He played quite a substantial role in the after war time in reconstruction and so on. 

My mother was completely different. She was a very warm-hearted, very energetic person. And I'm happy that I probably inherited from my father's the more intellectual, rational approach; from my mother the enthusiasm and the temperament.

[4:45] Jennifer: I understand she was also very free-spirited. 

In the ‘60s, you earned two doctorate degrees, both from universities in Switzerland, a PhD in mechanical engineering, and one in economics. In 1966, you left Europe to study abroad at the Kennedy School of Government at Harvard University. And there you met several influential professors, including John Kenneth Galbraith, a Keynesian Economist, George Baker, the 5th Dean of Harvard Business School, and not to mention Henry Kissinger, the former National Security Advisor and Secretary of State. 

So tell us, just how did these people, during this time, impact your life trajectory?

[5:36] Professor: Pretty much I had such a chance, also supported by my parents, to have an excellent education. And I was interested in engineering, but also, of course, in economics. 

And, then my father felt if I want to do a business career, I have to go to Harvard Business School. So I applied, I was accepted, but then I wrote to the dean and said, I want to come directly into the second year because I have already two doctorates. And the answer was, no way. 

So I opted for the Kennedy School, cross-registered to all the second year classes of the Harvard Business School. And at the Kennedy School, I had such a chance to meet such great personalities like Henry Kissinger, who became a friend and a mentor, and John Kenneth Galbraith.

So actually, the impact during those years was to move from a more business-oriented person to become much more interested in what's going on in the world in geopolitics, geo-economics. 

[6:50] Jennifer: And I'm also super curious (chuckles), what was Henry Kissinger like as an academic?

[6:58] Professor: He was already, I would say, a megamind, a mega-brained certainly. He was interested because I was a young German student and we could speak German. And I cultivated a friendship actually, and he was a mentor until he died at the age around 100 years. 

So I was very fortunate that he paid so much attention to me, and actually he helped me afterwards quite often by being so much associated with what I was doing.

[7:44] Jennifer: Excellent. Before becoming a Professor of Management at University of Geneva, where you remained until the age of 65, you had also worked at VDMA, which is the Mechanical Engineering Industry Association in Germany, and Escher-Wyss, a Swiss industrial company. 

And it was during this time you developed the concept of stakeholder capitalism. Can you tell us what it is and how this idea came about?

[8:12] Professor: Coming back from the States, I had a short but very important role in business, and also with my previous time at the German Machine Building Association.

Suddenly I was asked why don't you write the book about modern management? Because you have studied in the latest management methods at Harvard, you have a very successful business experience, you are now a young professor for our business strategy. 

So when I accepted to write the book under the title Modern Management, I asked myself, what is actually the purpose of business? And don't forget, it was ‘70, ‘71. It was the time of Milton Friedman. And Milton Friedman, of course, it's the business of business is business. 

And I came to the conclusion also of what I have seen, and also the example of my father, the business of business is serving society. And that's how I described in that book, what is now called the Stakeholder Concept, which means that business should not serve only its shareholders. But it should serve all stakeholders, all those people who are dependent on the business. 

Of course, to serve shareholders is very important because one of the social tasks, I would say, of business is to create prosperity. But that's not enough. Business has to take care of its social responsibility, its environmental responsibility - it has to contribute to society.

[10:04] Jennifer: And as a young academic, what motivated you to start the European Management Symposium in 1971?

[10:13] Professor: After having written the book, I felt it would be interesting to bring the stakeholders of business together, which means to have governments, business leaders, representatives of civil society coming together, and to discuss what is the responsibility, what is the success formula for business. 

So I had this idea of a global village, and actually, I was also influenced by a book, which was written by a famous Canadian professor (Marshall) McLuhan. And the book was called the Global Village. 

So I wanted to create a global village, and that's why I had chosen Davos, and I wanted to bring all those people together. And I did it. I mean, my main profession until 2003 was professor and not, let's say, managing a foundation. And actually, I organized the first meeting in Davos as an entrepreneur taking the financial risk. 

And then I decided this is such an important issue that I created the foundation. And again, don't forget, my main profession was actually professor for business strategy. And at that time, I also had quite a number of advisory functions, board functions later in business. 

So at the beginning, the World Economic Forum was a mission, it was a service to the public. And I never dreamt that it would develop into such a large international organization.

[12:09] Jennifer: And as luck would have it, you also met your first collaborator during the organization of the first annual meeting, who became your wife, Hilde, of over five decades.

And I also understand that at the inaugural European Management Symposium, it was mostly organized by your students from University of Geneva and some friends at Harvard. 

And it actually took place over two weeks. And the first week, the focus was on the challenge of the future, which is always a timeless theme, and while the second week, it featured debates and discussions on corporate strategy and structure. 

Can you tell us, do you recall what the first annual meeting was like?

[12:56] Professor: Of course, it was an idea. And, I was missing organizational experience. So I did an ad and I met my first collaborator and my wife, my partner for all life, Hilde. I was very fortunate. 

Then I needed money, so I took a credit (loan). I was fortunate that the first meeting, which I organized (at) my own personal risk in Davos, became a success. So I took the surplus of the first meeting, actually, to create the foundation. 

Now, the first meeting was also a success because I went back to the Dean of the Harvard Business School and asked him, why don't you chair the first meeting, which he did. 

And of course, many Harvard Business School alumni were attracted to the meeting. So, such as the beginning. And actually the foundation was created during the first meeting in Davos.

[14:17] Jennifer: That's right. With the leftover profit of 25,000 Swiss Francs. But why, since it made money already the first year, why did you set it up as a nonprofit?

[14:27] Professor: As I mentioned, I was in my main profession, professor, I had many opportunities with my advisory functions, with my board memberships. So I was not really attracted to (going) into an entrepreneurial direction.

It would have made me probably a rich man, but to consider it much more as a service to the public. And I'm very happy that I did so, because the Forum probably would not have had the success if it had been a commercial undertaking.

[15:13] Jennifer: And the subsequent years proved to be quite challenging with the collapse of the Bretton Woods and the Yom Kippur War in 1973. But also, it's the same year where the Davos Manifesto was created. 

[15:27] Professor: You are right. As usually you have an idea, people are fascinated. It's something new - it was 1971, the first meeting. 

But then actually, the second meeting was already much less (interesting). And the third meeting was a flop because we had to actually, my wife and I had to rescue (the) Forum financially with the credit. 

But since ‘73, the Forum grew every year and was successful every year. And what happened in ‘73, you mentioned already the war, it was the oil crisis.

But I think ‘73 showed business that in order to have a successful strategy, it's not only dependent on what you do inside the company, it's very much dependent on what's happening outside the company. 

So I changed the direction of the Forum, and instead of concentrating mainly just on issues like how are you more successful in formulating strategies, the direction was how do I become as much informed about and knowledgeable about what's going on outside in the political and the economic and the social area, and translate it successfully into my corporate strategies. 

And then, in order to get the base, I formulated the Davos Manifesto, which means a commitment to stakeholder concept. And I asked, it was the only time when I asked people to vote. 

And I still remember, there was unanimous acceptance with one vote against. But this person who was a Greek entrepreneur became, afterwards, my best friend. And he was against (it) because he felt not against the concept, he felt we shouldn't have voted.

[18:01] Jennifer: The original mission of the European Management Forum is to promote Stakeholder (Concept) with the regional focus on Europe, in contrast to the mission of the World Economic Forum today, which is to improve the state of the world. 

And later, you also changed the name to World Economic Forum in 1987. How did this transition take place?

[18:26] Professor: I think it's anchored in the concept of the stakeholder approach. And it's actually expressing that we are always part of a community. 

Now, in a company, in an enterprise, you form a community. And as a community, you have specific obligations, also to the outside world. Now, you could translate the stakeholder concept from an enterprise level to the global level. 

And you could say, if you look at the fate of humanity, it depends on the different stakeholders of humanity. It's not just nation states; it is business, it's of course governments, it's international organizations, it’s the NGOs which we have.

So the Forum underwent a transformation not, let's say, moving away from the business stakeholder concept, but adding to the business stakeholder concept, what I would call the global stakeholder concept. 

So Davos and what we did became much more a platform where you brought stakeholders of global society together to address global challenges.

[19:56] Jennifer: And maybe to just put that (on an) even broader level, we're now going beyond non-human stakeholders, right? We're talking about animals, other animals and plant species, and…

[20:16] Professor: Of course, I mean, when you look at global stakeholder responsibility, you have to define what objective you have. And I think we could define the objective very easily. And I may use standard words, but I take it very seriously. 

It's to create a more peaceful, more collaborative, more resilient and more inclusive, and more sustainable world. And the more sustainable world means also to redefine our relationship with nature. 

Nature is not a resource, nature is an asset, and we have to take care of it.

[21:01] Jennifer: On a previous podcast, someone said, we're not fighting for nature, we are nature fighting for itself.

[21:07] Professor: Yes, what is important is to see all the nature (as) the overall responsibility we have for humanity. 

[21:17] Jennifer: Yes. In 1998, you founded the Schwab Foundation for Social Entrepreneur(ship) together with your wife. Can you tell us a little bit about the vision and the mission of the Schwab Foundation?

[21:29] Professor: Yes, with pleasure because it's close to my heart and to Hilde’s heart.  

When we talk about stakeholders of global society, of course, you have the political leaders, you have the business leaders, the civil society leaders whom we all brought to Davos. 

But actually, we felt there was something missing - it's the people who (are) on the ground and who also have the direct experience when you address global challenges, health issues, and so on. 

Of course, you can discuss it in broad macro terms, but what's actually happening in a village somewhere in Latin America and so on. how do you best provide the health services adapted to the real needs of those people? 

So we became interested in social entrepreneurship. It was a time of micro-credits and so on, so we felt we should look at those social entrepreneurs also as a community, as a stakeholder community. And that's the reason why we created and also endowed this foundation, Schwab Foundation for Social Entrepreneurship. 

And today, I'm glad to say we, after 25 years, all social entrepreneurs who are integrated into the community have had, according to some research, a positive impact on over half a billion people.

[23:19] Jennifer: That's excellent. And you also created a separate foundation for the Forum of Young Global Leaders. I'm just curious, why did you set it up as two separate foundations and not incorporate them within the Forum?

[23:33] Professor: I think so as certain groups and certain stakeholders, like young people, like social entrepreneurs, they wanted to have a certain autonomy, they wanted to be self-governed. 

And the Forum, of course, has become a very big organization. So they wanted to be associated with the Forum, but they wanted to have a mechanism where they could self-determine the future and the role. 

And that's the reason why we created separate foundations for the young people and for the social entrepreneurs, and also for the arts and culture.

[24:23] Jennifer: And fast forward today, the World Economic Forum was recognized as an international organization in 2015. 

And with 140 different initiatives in place, where do you think you've achieved impact?

[24:39] Professor: I think we first have to define what achievement means. If I look back (at) the last 53 years, there are several levels of achievements. For example, the influence we had on other people just, for example, to embrace the stakeholder concept instead of being just shareholder-oriented. 

But I have to repeat, I'm very business friendly because it's business and entrepreneurship which creates prosperity for the world. But I think it needs more than just, let's say, having business objectives in mind today. 

The incorporation of broader objectives is more important than ever before.

[25:34] Jennifer: And besides your own dedication and that of your team, why do you think the Forum has been so successful?

[25:42] Professor: The Forum has been successful because it fulfills a specific need. For an organization, you have to serve a certain purpose. 

And in a world which is becoming more polarized, I think we combine four different dimensions which provide the World Economic Forum with a specific unique role in the world. 

So, first, of course, is that we are global, impartial, independent organizations. So we can act actually as a trusted platform for dialogue and collaboration. But there's something else, it's (the) Stakeholder Concept. As I mentioned, the big challenges can only be solved by stakeholder collaboration. 

But in addition today, as you mentioned, the different initiatives. So people would say, why are you all over the place and why are you not concentrating on one issue, like the World Health Organization and so on? 

Our role is to connect the dots today, political, economic, social, environmental, technological developments are all interconnected. And by being active in environmental initiatives, geopolitical initiatives, social, let's say, we have a big initiative, for example, in skilling, reskilling and upskilling.

By bringing all those different experiences together, I think we create the right background knowledge to solve those issues in an optimal way.

[27:37] Jennifer: And as you had mentioned, the Forum has turned 53 this year, and you've grown now to over 700 employees across five different offices around the world. 

In your opinion, how has the world evolved over the last five decades?

[27:57] Professor: The world has changed completely over the last, over the last years.

But I have to come back to your 700 employees. The Forum is successful because we have 700 people, yes, but we also rely on at least 300 what we call secondees. We work together with organizations, so we have people from governments, business and international organizations directly involved in our different initiatives. 

Now the world, if you ask me what is my outlook, I think the world will not come back to how it has been. And so it is a fourth differentiation of the World Economic Forum. In addition to being a global platform with the stakeholder platform and let's say, multi-dimensional platforms, I think we are also very much always future-oriented. 

It comes back maybe because I'm by heart still an engineer - it's a fascination with new technologies. 

Today, I say we are living in the most crucial transformation driven by the new technologies. I have written a book about the Fourth Industrial Revolution, and I coined this expression. 

But today, it's much more than just a technological revolution. It's like moving humankind from an agricultural society to an industrial society. Just think how deep this transformation was 200 years ago. 

But today, we are moving from the industrial society into what I call the intelligence society, but at the speed, which is exponential. And we are not really, most people are not prepared for it, even I don't understand everything.

[30:28] Jennifer: I'm not prepared for it. 

[30:29] Professor: And I’m spending a lot of time about this issue. 

So it's clear that people are more fearful because they question, they cannot understand, really, what's what the future holds. So our role is also to give people, not just business leaders, but political leaders, much more understanding about challenges, but also about the opportunities of those new technologies. 

That’s the reason, for example, why we have a big alliance related to artificial intelligence, where we bring together business and government leaders.

[31:17] Jennifer: And what skill set do you think we need in terms of adapting (to) this big transition now that you're describing from the Industrial Age to the Intelligence Age?

[31:32] Professor: I think we have to define here not so much skills, but leadership capabilities. Of course, technical skills of how-to… I had to learn how to use digital devices. 

And now if you look at the leadership capabilities, I have met practically every leader in the last 30 years. And I have read so many books in my capacity, 32 years of professorship teaching my students what leadership should be. 

But for me, it all boils down to a very simple concept. As a leader, you have to have Soul, Brain, Heart, Muscles, and Nerves. Let me explain. 

The Soul stands for purpose, and you have to know what your direction is. And what has changed, to come back to your question. Today, this compass is even much more important because the world is changing so fast, you have to adapt. So people who work for you have to know what is driving you, what are your values, so that’s, let’s say, key (to defining) a direction for our lives, the mission. 

So the second one is the Brain, I would say the Brain stands for professional capabilities. And in the past, you had to know as much as possible about your field to succeed. What has changed today is that you have a systems view. You understand where you stand in the big context, and you have to understand how the context changes and how you have to adapt to those changes, or even proactively react to those changes. 

And then you have the dimension of the heart. The Heart is passion, you will not succeed if you're not passionate about something. But today, you also need compassion because you have so many people who are lost. And so you have to be compassionate about those people. You have to understand why people have difficulties (finding) their way in this new context. 

And finally, Muscles, of course, we have to translate our vision, our purpose, into action. 

And Nerves, I mean, the world (has to be) has become much more complex, much more fast driving. So you have to have resilience to deal with uncertainty. And I would add today, you do not only need resilience to deal with uncertainty, but you need resilience to deal with adversity.

[34:57] Jennifer: Absolutely. 

And on leadership, you mentioned that you've met a lot of leaders over the last five or six decades. Who do you look up to for inspiration?

[35:08] Professor: So many people, particularly social entrepreneurs, whom I met, who incorporated those five dimensions and whom I consider as great leaders. They may not be known, but for me, they are the heroes. 

But then of course, you have also well-known leaders. And for me, the most outstanding one is (Nelson) Mandela. I had the opportunity… I met him as one of the first when he came out of his isolation. Then I think I saw him last time, just some weeks before he died. 

He really was, for me, the most esteemed, appreciated hero of our times.

[36:05] Jennifer: And he also has a beautiful soul, he has all those five things that you were talking about. He has a very strong intellectual capability, and very passionate.

[36:15] Professor: Yeah. And of course, he could translate his mission, to a certain extent, into reality. And he had great resilience. I mean, if you spend so many years in prison, you have resilience.

[36:29] Jennifer: That's right. I also understand that you consider Lee Kuan Yew, the first prime minister of Singapore, as a mentor. Can you tell us what you admire most about him?

[36:42] Professor: Of course, he was a very strong personality. And again, I had the chance to meet him on many occasions, to have discussions with him. In one of the hotels in Singapore, there is even a photo still showing him and myself.

I think it was particularly his geopolitical wisdom. He understood, I mean, standing in some way, with one foot in the Asian tradition, with the other foot, to a certain extent, in the West, he understood very much western thinking and so on. 

For me, he was also a great person allowing me to understand (Asian mentalities much better). And today, I mean, where we have divisions, particularly, between the west and not only Russia, but some Asian countries also, I'm thankful to him that he has given me some understanding of what the roots of those, I would say, misunderstandings are.

[38:13] Jennifer: And it's ever more important in today's world, understanding and building the bridge between the East and the West.

[38:20] Professor: Yes, I think the future of the world will be multicultural. 

And, we will have peace and success in this world only if we come not only to rational solutions, but such rational solutions are underpinned by a deep understanding of different cultures.

[38:50] Jennifer: And besides your family and your work, what are you most grateful for?

[38:55] Professor: I am grateful to my students, for example, because they kept me young. I remember it was a tradition for me at the end of any university year to invite my students for a grill party at my home. 

And one of the highlights of the grill parties was that I burned all my documents, which I had used for teaching the year before, just to force me to rejuvenate myself and to recreate completely from zero. 

And I'm grateful to the social entrepreneurs - I remember the visits Hilde (Schwab) and I did, to visit some of our social entrepreneurs. And when you see, that’s the perspective you have when you are sitting in some way at the top of the world compared with the daily worries you have, when you are really confronted with the true problems of our times. 

I think that makes you to a certain extent, how shall I say, modest. You may also be desperate because you feel how can we solve all those issues? But it makes you also more motivated because you feel you can make a contribution to it.

[40:41] Jennifer: Klaus, you are 86 this year. You're in excellent health. What is your secret of staying young?

[40:48] Professor: I think curiosity is important and as I said also before, the world, so much (is) changing. Change is a kind of stimulus, you feel that you have to update yourself continuously.

What I do not underestimate is discipline. I'm very disciplined with my time, it's also discipline related to food, even if I would like to have some kilos less. But what is as important as food is probably also to be active. So I'm doing my sports, at least for one hour every day, half an hour swimming, walking, and so on. 

Yeah, and it's frightening to a certain extent, but it's a fascinating world. And I feel with the right attitude and also looking at the potential technology is giving us today, we can (still have) better lives tomorrow. 

I'm always shocked when I meet people who have a negative outlook of the future. Let's not forget the future is not happening - we are constructing the future. And collaboration is the key word, collaboration is the key word. 

If we work together and working on all levels together, and particularly on governmental levels, stakeholder levels. If we work together, I think we have the means to create a much better future and to address issues like we have, let’s say, the environmental issues, social issues, and so on. 

We just have to stick to the (narrative) which has driven mankind since ancient times. And it was this narrative that you create a better future. And it's not happening, you have to contribute to create a better future. And that's what's driving me.

[43:25] Jennifer: Excellent. Thank you. And what's next for you, professor? I understand there's a book in the works, another one?

[43:34] Professor:  No, no. Next is, just looking at my age of 86 and being responsible for making sure that this founder-created organization becomes really an institution. 

We are already the International Organization for Public-Private Cooperation. It has to be independent (of) the founder. So as a first step, I'm just moving out now of my executive function, remaining Chairman of the Board of Trustees. 

But of course, I have ideas after having written quite a number of books. I'm now fascinated by this transition of humankind from the Industrial to the Intelligent Age - what does it really mean, to get some understanding (of) this big transformation of humankind. 

And then there is something else. I had a big chance from a health point of view, from a professional point of view, from a family point of view, to work until now more than 20 years after my retirement age.

And I feel that we neglect the potential of older people. We should look at this development as a fact - the world is getting older, what loss of resources, all those who have the capabilities still to contribute, they shouldn't be idle. So my thinking is now how can we keep those people actively engaged into serving society.

[45:36] Jennifer: Another venture. So last but not least, what does the founder spirit mean to you?

[45:43] Professor: The founder spirit is to have an idea, to believe in the idea and to withstand all the doubts you may have, and doubts coming from third-parties, from people critical about what you are doing. 

I come back, have a compass, follow your compass, don't be irritated by the negative reactions. And I would say, enjoy success.

[46:21] Jennifer: Beautiful, thank you. 

We're now coming to the end of our interview, and as you know, we end every episode with a quote. And for this episode, we have a quote from Pablo Picasso, a Spanish artist:

“The meaning of life is to find your gift. The purpose of life is to give it away.”‍

Professor Schwab, thank you very much for coming on the Founder Spirit podcast today and sharing with us your journey of improving the state of the world. Thank you very much.

[46:52] Professor: Thank you for interesting questions.

[46:58] Jennifer: If this podcast has been beneficial or valuable to you, feel free to become a patron and support us on Patreon.com, that is P-A-T-R-E-O-N.com/TheFounderSpirit. 

As always, you can find us on Apple, Amazon and Spotify, as well as social media and our website at TheFounderSpirit.com. 

The Founder Spirit podcast is a partner of the Villars Institute, a nonprofit foundation focused on accelerating the transition to a net-zero and nature positive economy and restoring planetary health. 

[47:37] END OF AUDIO