Date of issue : Monday 28th 2002f October 2002

---

This is a monthly virtual magazine for the thinkers and doers of the 21st century.
This magazine is free! You don't have to pay any charges.
Editor: Mario Raich, Ph.D.

Everything has changed: the future isn't anymore what it used to be, our present is not what we have expected it might be and even the past is not what we used to believe.
More so, our future is changing permanently. It requires a great deal of anticipation and open thinking to cope with this changes.
There is no doubt about it: we are living in a 'New Reality'! 'New' doe's not automatically mean 'better'!
This reality is highly volatile and is constantly emerging. No more linear trends, maybe no more long term trends at all; quick big changes, fundamental transformations and many surprises. What was true yesterday might not be true today anymore; etc.

The corporations that until yesterday seemed only concerned how to grow as fast as possible, seem scared to death by this new reality, and have not only stopped to grow, they have stopped everything. It is a big freeze on the markets. From exaggerated greed the pendulum has swung to total fear!
This has nothing to do with 'scientific' or 'professional' management.

We suffer from the difficult markets, as do many other professionals those days. To be more focused we have decided to continue our business with only one firm in London. Therefore from November 1, 2002 we will continue our business relationships under the name of 'Learnità LTD'. This the reason why this magazine is published by Learnità LTD and not Raich LTD.

Learnità will continue all the business we have bee doing through Raich LTD and continue to carry the Think Tank for the Knowledge Economy.
We will also keep the Advisory Board that we have build up for Learnità. We want to involve this Board more actively into the projects we do.

I will continue to be the Chairman of the Board for Learnità. I hope to be able to present the new structure and organization in the next issue of this magazine in January 2003.

London, October 28, 2002
Mario Raich, Ph.D.

Learnità is a Worldwide Network for Management- Organization- and Corporate Development
• We provide access to experts, know-how and knowledge
• We provide coaching and consulting for the management
• We develop new ideas, concepts and do applied research for our clients
• We operate a Think Tank for the Knowledge Economy

Our life is being dominated by 'economism'. Only what has economic value, that can be counted in money is being perceived as real value.
Economism became form many people a new ideology, for some even a religion.
The engine of this attitude is sheer greed for more of the same, i.e. economic value.
We see have forgotten, that money and capital are only surrogates. They allow us to access to products, services and experiences, but set alone the have no value what so ever! They are like the menu, they help to access the food and the drinks. Nobody would like to eat the menu!
Well, it comes as not as a surprise, that corruption has grown so fast and so far.
People that have focused their life on money and capital only are betraying themselves. They live an 'Ersatz' life, not their true life. Money and capital have been conceived as a catalyst of the economy, not as an end for them selves. Today one has the impression, that the increase of capital is the only purpose of the economy.
Profit became the main purpose of each enterprise. 'Shareholder value' was the new belief, promising to everybody a golden future.
The Top Managers began to behave as if the were owners. But they did not share the business risk and put up their own capital when things did not work out as planned. They delegated the thinking an decision making to extremely well paid consultants and focused their effort mainly on their own profit.
The employees have been declared 'Human Capital', which means the y became a commodity in the business process.
All economic activities that did not increase the value of the shares, or did not produce profit, have been treated as 'non-value', which means non relevant.
Top Managers, Bankers and Politicians have been hypnotized by the miraculous value growth through options, and expected the garden Eden on Earth.
The Banks became speculation engines and promoters of the immense capital roulette.
Everything was focused on the big, international, global companies. They became all the support they needed from the government and the banks the could wish. The merger mania began.
The rich people became even more rich and could not stop their greed for more. Well, we all know the end of the story...
The main question is not so much, was did go wrong, but what we can do better.
Do we have to take the excesses of the capitalism as a nature disaster. Do we have to continue to suffer from a system that is driven by greed and fear. Did we not learn anything from the fall of socialism?
The free market is an excellent mechanism for the development of the economy. It is based on the principle of offer and demand, but when the demand is replaced by greed or fear, the system is out of control. It takes a while before it comes back to normal.
Another main distortion of the system are subventions. The government wants to become a market player. But every time the government plays the entrepreneur it is a disaster. To many political ambitions and aspirations are at stake and not enough entrepreneurial experience. And again, the government is not doing it with his own money, but with the taxpayers money!
All politicians and bankers should look at the economic statistics of the successful countries. They would realize, that the SMEs are the basis of each sound and sustainable economy. But they are focused mainly on the 'mega-companies'. Maybe they would understand, why they can not produce new jobs. They can only destroy them.
We have three categories of organizations in respect to value creation:
Those who are dealing with the preparation of the necessary conditions for the value creation (like education, lawyers, consultants, health industry), those dealing with the redistribution of the value created (government administration, trade, politicians) and finally those that actively are involved in the value creation ( production, services, F&E). The government is involved in the creation of the necessary conditions of the value creation and in the distribution of the value created. It is also often involved in the value destruction, but in is not producing any real economical value, except it owns value producing companies.

What can we do!?
We have to search for new ways and new possibilities to avoid the cyclical destruction of value through the 'roulette-capitalism' based on greed and fear. We need to reinforce the back-bone of the economy the SMEs.

Some ideas:
• Link the stock exchange to the state of the SMEs.

• Create Value Creation Clusters. All SMEs linked to specific value creation create either a virtual company or a cooperative representing their interests and delivering all support functions. All gains are reinvested in to the development of the Value creation Cluster.

• Creation of a Bank supporting the SMEs with special conditions for them.

• Creation of a Entrepreneurship Foundry developing new entrepreneurs and new recipes for business in the third and fourth world.

• Development of a Value Creation Index that survey the preparation of the necessary conditions for the value creation the redistribution of the value created) and the value creation

• Change the GDP from capital flow measurement to measurement of real value creation

• Educate all elected political representatives about the value creation

It is about time to put the economy at the service of the society. Now that the industrial society and economy is being replaced by the knowledge society and economy we have a unique opportunity for

During 2001 and 2002 we have bee working very intensively on Corporate Entrepreneurship with some of our corporate clients.
Corporate Entrepreneurship includes: Business Creativity, Creative Solutions, Entrepreneurship, Corporate Ventures and Innovation.
We hope to be able to continue to work on Corporate Entrepreneurship with ESADE in Barcelona.
If you are interesetd to get a program proposal send us an email.

Seven papers written by MBA Students from the Student Exchange Program at ESADE (Barcelona). Coming from China, India and the USA the give a refreshing perspective on several key points of the Knowledge Economy. It is worth reading!

• Lost in a Wireless Utopia, Aaron Rasmussen
• The Future Role of the Government in the Knowledge Economy, Deepak Kaushal
• Knowledge Economy and Developing Countries, Sukrut Jobanputra
• The Implications of Individual Empowerment Through Technology
• My Perspective of Branding in Knowledge Economy
• Knowledge Management within Corporate in the Knowledge Economy, Cathy Lu
• Europe's Knowledge Economy Helps around the House, Dan Lustig

We are about to start a very ambitious project. The research on the foundations of the Knowledge Economy. We invite you to participate in it, either directly, by working on a specific topic, or indirectly by sending us ideas, suggestions, questions.
We will publish the draft versions of the papers on the different topics in this magazine, hoping you will take the opportunity to give us some feedback.
In a first approach we have identified the following topic to work on:
• Beyond the Economism
• What is the Knowledge Economy?
• Dangers and Opportunities
• Economy and Society
• The role of the Individual in the Knowledge Economy
• The Evolution of the Organization
• 'Managing' in the Knowledge Economy
• Corporate Value Creation
• Science, Technology and their applications
• Teaching and Learning
• About Culture
• Work
• Management
• Paradigms
• New Perspectives

 www.esade.es for world class executive education, MBA and Executive MBA programs. According to the Wallstreet Journal the 2nd best Business School in Europe, right after IMD in Lausanne.

 www.educatis.com for online executive education and MBA programs

 The Steinbeis Foundation in Germany. They have over 400 technology transfer centers. http://www.stw.de/k060/60000/60000.htm and the Steinbeis University in Berlin, with a very innovative program the MBE www.sti-mbe.de

 www.digimount.com early stage venture capital firm in Munich

 Umantis a state of the art innovative integrated solution for competence based resource management developed by the Swiss virtual incubator b-to-v (www.b-to-v.com) at www.b-to-v.com/umantis/produkt/downloads

 Research about future living ; future interactivity and personality www.dasfernlicht.com

The virtual Magazine “Knowledge Economy” is free of charge and has no advertisement.
We invite you to send the Magazine to other people that may be interested in the dialogue between the academic research and the business application.
We use a policy of “Right to copy”. For details look at section 7 “Research” in the issue No.1, January 2000.