Bill Gates: World Economic Forum 2008
Jan. 24, 2008
Transcript of remarks by Bill gates at World Economic Forum 2008

Remarks by Bill Gates, Chairman, Microsoft Corporation
World Economic Forum 2008
“A New Approach to Capitalism in the 21st Century”
Davos, Switzerland
Jan. 24, 2008

KLAUS SCHWAB: Good evening, ladies and gentlemen.

If in the 22nd century a book will be written about the entrepreneur of the 21st century, I'm sure -- or even of the 20th century -- I'm sure that the person who will foremost come to the mind of those historians is certainly Bill Gates. (Applause.)

I don't have to introduce Bill Gates here. I just want to mention when about eight weeks ago we had a phone conversation, and we talked about this session, and we talked about the length, and, of course, in the Davos tradition I said 10 minutes. So, Bill Gates said, "No, I want to make the most important speech which I will deliver this year." And I asked him what is the subject, and he said, "I want to talk about the role of the corporation in society." And since, of course, this subject is at the core of what the World Economic Forum is doing, I said, yes, of course, you have at least 30 minutes, and that's what he has now. Bill, the floor is yours. (Applause.)


As you all may know, in July I'll make a big career change. I'm not worried; I believe I'm still marketable. (Laughter.) I'm a self-starter, I'm proficient in Microsoft Office. (Laughter.) I guess that's it. (Laughter.) Also I'm learning how to give money away.

So, this is the last time I'll attend Davos as a full-time employee of Microsoft.

Some of us are lucky enough to arrive at moments in life when we can pause, reflect on our work, and say: "This is great. It's fun, exciting, and useful; I could do this forever."





If we are going to have a chance of changing their lives, we need another level of innovation. Not just technology innovation, we need system innovation, and that's what I want to discuss with you here in Davos today.


Consider the status of women and minorities in society -- virtually any society -- compared to any time in the past.



In many crucial areas, the world is getting better.

These improvements have been triggered by advances in science, technology, and medicine. They have brought us to a high point in human welfare. We're really just at the becoming of this technology-driven revolution in what people can do for one another. In the coming decades, we'll have astonishing new abilities: better software, better diagnosis for illness, better cures, better education, better opportunities and more brilliant minds coming up with ideas that solve tough problems.


But I am an impatient optimist. The world is getting better, but it's not getting better fast enough, and it's not getting better for everyone.

The great advances in the world have often aggravated the inequities in the world. The least needy see the most improvement, and the most needy get the least -- in particular the billion people who live on less than a dollar a day.

There are roughly a billion people in the world who don't get enough food, who don't have clean drinking water, who don't have electricity, the things that we take for granted.


So, the bottom billion misses the benefits of the global economy, and yet they'll suffer from the negative effects of economic growth they missed out on. Climate change will have the biggest effect on people who have done the least to cause it.






Such a system would have a twin mission: making profits and also improving lives of those who don't fully benefit from today's market forces. For sustainability we need to use profit incentives wherever we can. At the same time, profits are not always possible when business tries to serve the very poor. In such cases there needs to be another incentive, and that incentive is recognition. Recognition enhances a company's reputation and appeals to customers; above all, it attracts good people to an organization. As such, recognition triggers a market-based reward for good behavior. In markets where profits are not possible, recognition is a proxy; where profits are possible, recognition is an added incentive.

This week's Economist had a section on corporate responsibility, and it put the problem very nicely. It said it's the interaction between a company's principles and its commercial competence that shape the kind of business it will be.







For the past 20 years, Microsoft has used corporate philanthropy as a way to bring technology to people who don't have access. We've donated more than US$3 billion in cash and software to try to bridge the digital divide.


In one case, we're developing an interface that will enable illiterate or semi-literate people to use a PC instantly, with minimal training or assistance. In another we're looking at how wireless, together with software, can avoid the expensive connectivity costs that far more than the cost of software or hardware is what stands in the way of computing access in rural areas.


This kind of creative capitalism matches business expertise with needs in the developing world to find markets that are already there, but are untapped. Sometimes market forces fail to make an impact in developing countries not because there's no demand, or even because money is lacking, but because we don't spend enough time studying the needs and requirements of that market.

This point was made eloquently in CK Prahalad's book, “The Fortune at the Bottom of the Pyramid,” and that's had a huge influence on companies in terms of stretching the profit motive through special innovation.



Because many of today's advanced products have low marginal costs, whether it's software or medicines or media, so many things, this idea of tiered pricing to offer valuable goods for the poor in a way they can afford it, can be used more broadly than ever before.

These projects I think provide a hint of what we can accomplish if people who are experts on needs in the developing world meet with scientists who understand what the breakthroughs are, whether it's in software or drugs. Together they can help find poor world applications for the very best ideas.










I'd like to ask everyone here, whether you're in business, government or the non-profit world, to take on a project of creative capitalism in the coming year, and see where you can stretch the reach of market forces to help push things forward. Whether it's foreign aid or charitable gifts or new products, can you find a way to apply this so that the power of the marketplace helps the poor?

I hope corporations will dedicate a percentage of their top innovators' time to issues that could help people left out of the global economy. This kind of contribution is even more powerful than giving cash or offering employees' time off to volunteer. It is a focused use of what your company does best. It is a great form of creative capitalism, because it takes the brainpower and makes life better for the richest, and dedicates some of it to improving the lives of everyone else.


Other companies are doing the same -- in food, technology, cell phones, banking. In fact, I would say that if other companies in a sector simply matched what the leader in that sector is doing, we would make a dramatic impact against the world's inequities.




I'm excited to be part of it.

Thank you. (Applause.)

KLAUS SCHWAB: Thank you, Bill.

Let's make Davos the starting point of a movement of creative capitalism.

Now, so I have one or two questions, being very much involved into this issue intellectually. When you preach creative capitalism or I call it sometimes corporate global citizenship, you meet very often quite some cynicism of people, people saying that's the end, I mean, you have enough arguments, the business of business is business.

Here what would you -- you mentioned already it's a reputation, it's a recognition, but what would you tell those people to go away with this wrong criticism?


We also benefit immensely that some of these breakthroughs, it doesn't take much of a change in them to make them available to the poorest. Even sometimes eventually the price just comes down, and there is the benefit there, but sometimes things get stuck because there's an assumption of expertise, there's an assumption your electricity runs all the time, and so the twists that can take it and move it out of just the upper two-thirds down to that bottom one-third may not be a very large deviation.

So, I'm not talking about some radical change; I'm talking about an evolution, and I do think the largest companies are probably the place where the real tradeoff is net positive, and that they should lead the way.

KLAUS SCHWAB: Now, very often such an engagement of business into society depends on the personal let's say characteristics of the CEO. How would you see that such a philosophy of creative capitalism is really entrenched into the genes of a corporation?

BILL GATES: Yeah, I agree that it's not something that a company is engaged in. Getting onto that path, having a CEO take a strong position and show personal excitement, be willing to take some of the really talented people in the company and give them time to learn about these needs and create special partnerships, that's a very important element to drive this forward.


The slogan of Microsoft is a computer for everyone, and do we really mean for everyone? Well, yes, even though that's a very difficult thing.

So, I think it could become both inculcated and as it's more measurable over time, then you'll get the processes working on your side, and you won't need the heroic CEO time and time again.

KLAUS SCHWAB: Then if I understand you correctly, you would give the advice -- that's my question -- that a corporation is concentrating on a few of such projects, not being all over the plate. And if I understand you correctly, you would also give the advice that a corporation, what it is doing is in line with its own capabilities. Is that correct?

BILL GATES: That's right. I mean, I'm sure that every company will do things like matching employee gifts. That lets the employee have more impact in their personal giving. I'm sure they'll do things in their local communities that are fairly broad.

But when you look on a global basis, when you look at the tough problems of the poorest, a company really should primarily stick to what it knows well: Does it know food, does it know distribution, does it know drugs, does it know media, does it know cell phones? There are, thank goodness, a lot of examples which I think would end up covering virtually all the companies that are here at the forum. But that's where in a sense you're developing something that's lower cost, and you're true to the identity and the expertise of that organization.


Now, one question, in doing so, would you advise a company, if ever possible, to work together with governments -- you hinted at it actually -- and with NGOs? Because sometimes corporations are impatient, and governments have a different style of working, and NGOs have a different style. They are sometimes suspicious. So, how do you see the notion of what very often is called public partnerships, and public-private partnerships in this respect?

BILL GATES: Well, certainly the foundation that my wife and I have has found it extremely important to reach out to private organizations. A lot of those are partnerships with drug companies where they're dedicating some of their best people and taking risks, but we take on some of the financial burden so it's within the reach of what they can responsibly do. For them the opportunity cost is actually the greatest thing that they give, although sometimes there's a financial contribution as well.

So, certainly in an area like health partnerships are absolutely important, and I think in some ways those partnerships validate the impact that can be had. If a corporation can find out a way in these poor countries to do things on their own, there's absolutely nothing wrong with that, but some of the tougher problems -- education, infrastructure, nutrition, medicine -- I don't think it's likely to happen, and so I do think where there's reasonable governance, the government is a good partner, and then there are so many wonderful NGOs that are actually now more open-minded.

Once upon a time, the NGOs had a little bit of a negative attitude towards this, and there was almost this feeling of business that as soon as you got involved, anything you offered had to be free, so it was almost like a tar baby; as soon as you did it, then it was they'd want more than was reasonable, and so companies that stayed away almost got less flack than the ones that got in and got involved. I've seen that -- you know, there's still some of that, but I think the attitudes from both the NGO and the private sector have matured quite a bit.


BILL GATES: That's right, but the idea of getting cash directly from companies, it's great, people should push for that. There are people like Shell who just came into the Global Fund with a very significant contribution.


KLAUS SCHWAB: Would you see -- you speak about a transformation, a gradual transformation, hopefully gradually in a very fast sense, but what could governments do in order to enhance this transformation, for example, tax regimes or do you see any -- would you have any advice for governments?

BILL GATES: Well, I mentioned in the speech the thing that happened in the United States. It didn't get much visibility, which is this fast track grant in the FDA.

I didn't mention this idea of advanced market commitment, which has now been applied to a particular vaccine for pneumonia and pneumococcal vaccine there's a fund of a billion and a half dollars -- virtually all government money, a little bit of foundation money -- that is out there for any manufacturer that can meet the product specification. And in that case we picked a development that should be reasonably within the reach of a couple of the drug companies, and so it should get them to make the leap to make the modifications to the rich world vaccine to add a few things to it and make it suitable for the developing world markets, and yet be able to tier that so it's not taking away from what they're doing today.

So, advance market commitment is one of the great new ideas, and I think we'll see that applied in a number of new ways.

You know, we have the Doha trade agreement which has some provisions that are to help the developing countries, so it would be kind of tragic if those things can't be resolved. I mean, the benefits of allowing trade over time accrue to be even bigger than a lot of the direct aid that gets done.


Now if you look forward at your next career step -- career may be not the right word here -- but at your next life phase, what would you like to see as your legacy in 10, 15 years?
BILL GATES: Of the new work?


BILL GATES: Well, I've set very ambitious goals, because I'm quite optimistic. If you look at say the 20 diseases that our global health program goes after, I'd hope that within 15 years over half of those we could have had a very dramatic impact.


So, huge change in the mortality rates in the developing countries, which then has this effect of reducing population growth. That's this big benefit that then makes everything like education and nutrition a lot easier.

So, I have very high expectations there, and we actually use these dashboards internally at the foundation to make everything be quite numeric. We're trying to be rigorous about that, and even share those so that people can see, oh, you fell short of what you had in mind, and then we get to explain if we have any lessons that might be learnable from other foundations.



KLAUS SCHWAB: Thank you, Bill, for having brought to us this evening a very enlightened view of capitalism. I hope many will follow you. We will facilitate it in any case, because that's the mission of the World Economic Forum. And I'm looking forward to, if I may say so, to welcome you back in your new incarnation next year. Thank you.

BILL GATES: Thank you.



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