At the 2024 annual meeting of the World Economic Forum in Davos, Switzerland, we’re sitting down with business leaders to ask what’s on their minds. For Paul Knopp, the CEO of KPMG US, that includes the business potential of artificial intelligence, the risks of wider geopolitical conflicts, and continuing diversity, equity, and inclusion efforts despite the political backlash.
The following interview has been lightly edited for length and clarity.
Quartz: What issue did you come to Davos feeling most excited about?
Paul Knopp: I would say generative AI, but more specifically, the velocity at which it’s, it’s changing businesses, maybe society, ultimately. Davos, January 2023, almost nobody mentioned gen AI. You fast forward only a year, and uses of the technology have almost gone mainstream while still being in a fairly nascent stage—meaning that future developments around gen AI are probably going to make the transformations that we see in three to five years really, really impactful. So I’m excited about that kind of traction in one year—not just generative AI as a as a tool but as a hope for what it might help us with for solutions in the future.
How is KPMG using generative AI at this point?
We’re using it today largely to upskill our people. What I mean by that is, we’ve always had databases of information we could search, but what we haven’t had, and really no one had before generative AI, is a tool that not only searches the content, but then frames or organizes the content in a way to produce something that on the first pass can be potentially used as the work product. If you’re researching an accounting issue, not only can the gen AI search your content, you can say, “Please put it in a form or in a fashion that will be used for the following purpose.” That saves a lot of time. And that’s just one small example of where we use it.
We’re going to be using Microsoft $MSFT Copilot; we’re procuring more than 20,000 licenses in the US to put in the hands of our people to make their jobs and their lives easier. And then, really importantly, we’re with our clients every day trying to work with them to determine how we move it from the pilot experimentation phase to the integration, implementation, and industrialization phase.
Is there a risk that this becomes sort of like the big data trend from the past decade, where there might be new ways to deliver all this data, but businesses have taken awhile and maybe still haven’t caught up to what they need to do to actually make use of all that data?
What you just described is pretty accurate. But generative AI has put a new urgency under the data analytical efforts that enterprises have been working on for literally decades, because now you have this powerful tool that can maybe produce incredible insights and advances from the data that you have, and with the content that you have. So everybody’s going to feel more of a sense of urgency and wonder: What is my competitor doing? Are they moving faster than me? It’s why I think investments in AI are only going to increase over time.
Is this going to become a key differentiator in the consulting space, how consulting companies can help clients with AI?
My expectation is that we will be able to use AI to differentiate ourselves in the short term—with the recognition that our competition is really excellent, and that they have at their disposal the same software providers and technology companies from which we’re procuring. The first mover advantage could be very meaningful, but you also have to be ever cognizant of the fact that everybody else is moving, too, and we’re all trying to develop what I say is AI at scale.
I still think that the elements of the human touch, the culture of your organization, is going to be critically important with the way you deliver the products and solutions that are accompanied by generative AI. So number one is making sure your culture is one where your clients trust that you’ve done things with an ethical framework that allows what you’ve produced to be really impactful and can be trusted.
What issue did you come to Davos feeling most worried about?
Last year, for me, it would have been the economy. I’m a little more concerned right now about the number of geopolitical concerns around the world that could create shocks. The war that’s happening in the Gaza Strip, in Israel, what’s happening in the Red Sea and the Suez Canal and how that’s disrupting some supply chains, the continuing concerns around the war in Ukraine and the continuing impacts on energy security and food security that still have extreme importance to a lot of parts of the world, including Europe, and then, you know, just the tensions among countries that might be a little more nationalistic and their behaviors more isolationist. To me that warrants some higher level of concern.
Why I don’t overly worry about some of this is that we’ve been dealing with some of these things for almost four years now, with the supply chain disruption brought on by the pandemic, so there are better playbooks for the disruption coming out of the Red Sea, for example. We’re a little bit more nimble and agile around those kinds of those risks now. But I’m worried about the contagion effects of these geopolitical events. As business leaders, we’d like more predictability and certainty around those kinds of things, and right now they feel a little unpredictable.
Do you think Zelenskyy will get anywhere making his case for support this week in Davos?
I would like to think he would. The case for the sovereignty of Ukraine and democracy in Ukraine should really be strong. National sovereignty and the security of a free country ought to be really important to all of us, in my opinion. And then there are concerns that if Ukraine were to fall, how could that spread beyond Ukraine? My guess is he’ll get some traction in Davos.
Closer to home: the US election. Does that figure into your concerns?
I’ve thought a lot about that. I reflect on the last 20-plus years and, you know, regardless of who controls Congress or who controls the White House, the only objective of the business community is to work with Congress and the White House to create long-term sustainable value for the companies we run. I don’t think that playbook is going to change with what might happen with the control of Congress in 2025, or who’s in the White House. I think it’s still going to be about ensuring that policymakers and legislators understand that pro-growth policies are good for the people of the country and good for the business community.
In 2024, is being pro-growth still just about tax policy or is it about other things?
Tax policy is important. But think about the all the discussions about re-shoring of manufacturing— not just near-shoring but re-shoring. If we could put forward more optimal immigration legislation, you might have more workers to work in re-shored facilities that right now we just don’t have. It’s also about continuing the same kind of support we’ve seen from both the Republicans and the Democrats around moving more chip manufacturing to the US. What is the next CHIPS Act? It may not be chips, it might be some other segment of re-shored manufacturing.
Also, we have to be realistic that carbon based energy sources are going to be here for decades to come, but there’s going to be a transition over time. So how can we invest in an intelligent, thoughtful way to ensure that that transition to lower-carbon sources of energy will be fair and equitable, particularly to people that are less fortunate, who have a bigger slice of their disposable income put toward energy and and food. All of that should be of paramount importance to the economy longer term. And, how do we support the growth of jobs in the country? If we’re not going to have student loan forgiveness, how do we help encourage more high school students to go to college? There are plenty of amazing trades that don’t require a college education. How can we advance those skills with investment? All those things are the kind of things that we’d be talking to policymakers about, that can help supercharge the US economy.
You used the phrase “fair and equitable.” When it comes to diversity, equity, and inclusion, has the politicization of it been a helpful reset in any way or is it full steam ahead on DEI for you?
We set out to achieve certain strategic diversity, equity, and inclusion objectives for 2025, and while there are headwinds right now around DEI efforts, the business imperative hasn’t really changed. What I mean by that is that, for our business to be sustainable in the long term, we need to ensure that everybody that’s in the organization experiences more equity of opportunity. It’s just fact that the demographics of the country are changing. The white population is flat or declining. The people of color in the country, their populations are growing. Sixty percent or more of new college enrollees are women. We need to recruit from the talent that’s there, and that means we need to be more diverse moving forward.
We’re also going to retain more diverse talent, and create more equity of opportunity, which means we’ll have more diverse, underrepresented individuals in leadership, ultimately, so that we truly do look more like America. In our organization, only 24% of our partners are women. Only a little more than 2% are Black. We’re not at the same level of representation in the country for Black and Latino/Latina Americans—we’re not even close. And you have to ensure you have the talent you need to be successful as a business in the future. So that’s the way we’ve been looking at DEI, that it’s still a business imperative.
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