With the introduction of money, a new method of determining the values of products and services had to be invented.  In a simple bartering transaction, values were determined by consensus between the bartering parties.  Auctions were probably then invented to determine values of products and services through mass consensus.  In the auction process, the price of a product/service was determined by demand and supply, which could be viewed as a process of mass consensus regarding price determination. It was only after the discovery of money, the introduction of auctions where demand and supply determine prices that entrepreneurship activities started to get momentum. The term entrepreneurship has for the 1^st time been described in the 1800’s when the French economist Jean Baptiste Say produced the following definition:

 “An entrepreneur is a person who shifts economic resources out of an area of low productivity into an area of higher productivity and greater yield”.

Economic Evolution

The economy of the world evolved through major phases, starting with the extraction phase where Man discovered how to extract metal from rock.  This phase was followed by the artisan phase where, man made artefacts from the various metals.  The artefact phase was followed by the industrial phase (late 18^th and early 19^th century), which had a huge impact on the general standard of living.  In this phase, entrepreneurs managed to build machines, which were capable of producing in mass.  As machines replaced artisans and workers, many people lost their jobs.  The demand for crafty hands was fortunately soon replaced by a huge demand for administrative skills.

The next phases to follow emerged due to increased competition between mass producers.  Marketing (principles and concepts) was invented by entrepreneurial producers to create a competitive advantage, and to gain market share.

The marketing phase then paved the way for customisation and niche marketing.

The so-called new economy emerged when information technology replaced many administrative skills.  This is a mirror image of what happened during the industrial revolution when manual jobs were taken over by machines

At this point, producers started searching for new markets.  These “new” markets have also reached saturation, and the “new economy” is now in need of revolutionary new products/services and therefore new economic solutions. Entrepreneurship has now become a key driving force in this new economy and is accurately described by the following definition:

“Entrepreneurs are those people who manage to create/develop/ supply new and/or better economic solutions.  These solutions are in the form of goods/products/services, created to solve problems for customers in various target markets”.

Real entrepreneurs are, however, only individuals who manage to create new and/or better “economic solutions” for the market. New venture creators are definitely viewed as real entrepreneurs, but many other individuals could also fit this description.

These individuals were and still are responsible for the improvement of the standard of living of mankind.

This new economic phase will require more lateral (intuitive) thinking, not only vertical (logical) thinking, which was perceived to dominate during the industrial economy.  New revolutionary products and services need to be created.

In my opinion, education institutions are unfortunately still producing “administrators” and not entrepreneurs.  Entrepreneurs are the key-driving forces in the “new economy”.

We therefore need a “fundamental rethinking of what education systems are actually supposed to deliver”.

- Compiled and written by Entrepreneurial Business School -

Are the education system producing products (people) capable and able to function and excel in the “new economy”?  The aim of this article is to analyse and then attempt to answer the question above.

Let’s start by establishing what exactly is meant by the term “new economy” and how it differs from the old economy.  We should then be in a better position to judge the relevance of the present educational outcomes.  Current economic realities and specifically the key success factors needed to excel, are surely the elements, which will describe the “new economy”.  What are these key success factors?  As to answer the latter, we will all agree that the “new economy” could be described by the following set of new and emerging trends:

v      Ever increasing competition between producers of products and services.

v      The old fear of inflation has been replaced by the fear of deflation.  This means that there are simply too many of the same products and services on the market.

v      Companies have to and are getting leaner and more efficient as globalisation breaks down national barriers.  The world has now become a global village.

v      The so-called right sizing or down sizing of personnel in organisations are causing large-scale retrenchments.

v      The job market is also further shrinking as companies are outsourcing their non-core functions to smaller companies.

v      The introduction of new information technology resulted in even more retrenchments and fewer job opportunities.  This is simply because computers and computer systems are far more efficient than humans (one computer has the administration capacity of many skilled admin people).

The overall result of the above trends, are simply fewer jobs and therefore growing unemployment.  The South African economy is currently, for example, growing at a good pace, but fails to create many new job opportunities.  This is nobody’s fault, but simply a trademark of the “new economy”.

In an article in Die Burger 9 to 5, 2^nd March 2005, it was clearly spelled out that so-called highly talented young people couldn’t find employment.  These so-called talented people include those who had many “A” symbols in matric and achieved university degrees, Technikon, as well as college diplomas and certificates.  These are the current economic realities, the trends and trademarks of the “new economy”.  What has happened to the “old economy”, why are we now in this new economic environment?

How did the world economy progress towards this current state?  An analysis of the economic historic path could be the ideal starting point in order to understand and to find solutions to the unemployment problems we are facing today.  It will therefore make sense to start by exploring the prominent historic phases we went through.

The first definite stage in the history of economic growth is known as the “extraction” phase.  In this phase, man managed to extract metals from rock.  These metals enabled humans to make many new problem-solving products, but also to make artefacts with more precision and effectiveness. In this phase a new energy source, coal, was discovered and utilised. One key success factor for this economic phase was not only the ability to obtain mineral wealth, but also the know-how to find, and also to mine.  Another key success factor was also effective and efficient methods to transport these minerals and metals to strategic locations.

The next and most dynamic phase in the economic growth history of the human race, is known as the “artisan phase”.  This phase was characterised by many new artefacts.  They were invented and made by applying human creativity, utilising theses metals and minerals, discovered during the 1^st phase.  This phase was also characterised by numerous new inventions, new theories and new scientific principles were laid down.

The many theories and principles developed during this phase provided the insights and laid the scientific foundations for the centuries to come.  Examples are electricity, algebra, calculus, arithmetic, statistical analysis, to name but a few.   Other brilliant individuals from this era were Pascal, Galileo, James Watt and Leonardo da Vinci.  This was the era of Isaac Newton and many other people who changed the world.

By manufacturing new artefacts, and by making new scientific breakthroughs, many more problems could now be solved and the economic standard of living was lifted to great new heights.

The additional key success factors for this economic phase were mainly new inventions, better craftsmanship, and also the development and application of scientific and mathematical principles and techniques.

The next phase, the “industrial phase” came about as a result of the numerous scientific breakthroughs made during the artisan phase.  This phase has a really big impact on the economic growth and the standard of living on this planet. This phase sold man-building machines, which were capable of producing products in masses – fast, efficient and effective.  At first, many people lost their jobs as machines took over their functions.  These products, which were produced on a large scale, were much cheaper, and took over the markets of many of the small artisans.  As time went by, many new, but different jobs were however created in the industrial phase.  These new jobs were created by the distribution, administration and maintenance needs of the factories, which were now producing large volumes of products.  This new demand for labour grew at a very rapid pace as more and more new factories were created.  More and more complicated machines were developed, which produced many more and different kinds of products in mass numbers.

The key success factors needed in this phase were mainly administrative, organisational and operational skills, as well as know-how in the fields of distribution, engineering, bookkeeping and accounting.  This was the era of efficiency, meaning that you have to do things right, correctly according to instructions. Doing the right things became the sole function of a small elite.  The majority of people became routine freaks and as time went by, they were conditioned that the only way to success was via good employment. Academic qualifications became the major route towards top posts and into the circle of the elite.  Intelligence was judged by school and university results. Quickness of comprehension, the ability to learn and the quality of the memory, were the main criteria.

It was however a sad day when specialisation of labour, ridged job and task descriptions and the importance of speed in operations. Typical of the industrial phase, it pushed the importance of creativity, innovation and entrepreneurship to the back of the queue.  The success of achievements in this automation phase had a blinding effect on people, and the world forgot what the real drivers of economic growth were, and still are.

The industrial phase was followed by a few minor phases, of which the marketing phase was the first one.  As more and more industrialists started to emerge, competition intensified and companies realised that they can’t only manufacture, they also needed to market their products.  This phase had a lesser impact on the standard of living than the previous phases, but new key success factors however, also emerged.

The new success factors for this phase were advertising and marketing know-how.  The science of advertising was developed and people started to believe that if you can advertise well enough, you could almost sell anything.

The marketing phase was followed by the customer knowledge phase.  The primary reasons these phases emerged, were more intense competition in the economies of the world, and because the effects of advertising were neutralised by counter advertising from competitors.

In this phase groups of customers, who had the same needs, were grouped in segments and products and services were customised to satisfy the needs in a specific segment better than the competition.  Niche marketing became the new game.

The additional key success factors for this phase were therefore market research techniques and know-how.  These were of utmost importance in order to understand customers better than that of the competition.  This knowledge was also used for better customer service and to create customer loyalty, which provided a competitive advantage to companies.

The next major phase started to emerge during the 1990’s and brought us into the current so-called “new economy”.  Like the industrial phase, this phase also introduced drastic changes and caused major economic shocks.  Many people lost and are still losing their jobs.  The knowledge and skills provided by the educational system are now marginalized to a great extent.

During the transition from the artisan into the industrial phase, the educational system had to deal with a very similar situation.  The key success factors, required for every new economic phase provided the guidelines for the educational system to follow. The important question to be answered today is, what are the key success factors needed for this “new economic” phase we find ourselves in today?  Since we have defined and analysed the “new economy” at the beginning of the article, it is now relatively easy to identify what is needed to excel (the key success factors) in this phase.

The key success factors are therefore:

v      The ability to create new and revolutionary products, concepts and services.  (A higher degree of creativity and innovation have therefore become key success attributes).

v      Success will also be a function of abilities to develop local and international networks.

v      Successful people will be those who understand the mechanisms of the national and international economies.

v      People need to re-learn how to motivate themselves, take risks and live with uncertainty.

v      People need to learn how to identify and how to utilise new business opportunities.  Successful participants in the new economy need to know how to un-learn and how to shift old paradigms.

v      The over-emphasis on memory needs to be replaced by a much stronger focus on intuition and creative insights.

v      Old paradigms regarding scarcity need to be replaced by new abundance mindsets.

v      Education needs to focus on techniques and principles for creating new mindsets.  Advanced knowledge regarding the mechanics of the human mind has now become critical.

The new economy is providing us with problems and therefore, many potential solutions, where we have to utilise more of our given brain capacity in order to excel.

It is also clear that the attributes and skills needed to succeed in the industrial and related phases are not relevant any more.  What is really needed now, are entrepreneurial mindsets, knowledge, skills and attributes.

It is time to teach our children the basic economic principles in order to understand the rules of the game and the dimensions of the playing field.  We all need to realise that prosperity is a function of the human mind (to solve problems for one another).  We need to realise that we all have different talents and every single normal person is brilliant in his or her own specific field.  We have to stop pushing young people into the few and limited fields of study.  These fields were relevant during the industrial phase, but we now need much more in order to face the challenges of the new economy.  We must stop making people, who do not excel in the traditional study fields, feel stupid. They have other talents, which are outside of the current boxes.  Besides, we are only using between 5 – 10% of our brain capacity – how on earth could any person be labelled as stupid?

We urgently need to develop our natural creative and innovative abilities, which are currently severely depressed by traditional education.  People’s mindsets need to change from that of job seeking, towards that of opportunity seeking.  People, who are caught in job seeking paradigms, will not be able to see new business opportunities.  Business opportunities, needless to say, simply boil down to solving problems.  It could be new solutions to old problems, or solutions to new problems.  We need to understand that solutions are never perfect – there is always room for improvement.  For example, if looking at the transport problem, the ox wagon was fine at a time.  It was a fairly good solution for the transport problem, but we have surely improved dramatically on that one.  Prosperity is not a scarce article; it can never be, because it is a function of creativity and innovation on the one hand, and solving problems on the other hand.  Problems and their solutions are not only relative, like the ox wagon, they are also growing and becoming more as our standard of living increases.  As we move up the ladder of economic prosperity, problems, which were not perceived as problems before, are now becoming problems.  Things you did yourself in the past, suddenly become hassles; like getting your car washed and cleaned, for example.

This is now the time to create a culture from where “new” Isaac Newton’s can emerge.  Newton, the founder of the scientific principles we are boasting with today, formulated his theories in sixteen hundred already.  The other super brain, Albert Einstein, was also born 150 years ago.

We need to teach our young ones that wealth is not a scarce resource – it is in fact available in abundance.  The wonderful principles of “the more you give, the more you’ll receive”, is also a key factor for economic success.  If we can manage to vest these principles as part of our culture, the world will take the quantum leap towards the love and peace we are surely all striving for.

The “new economy” will therefore be known in future as the entrepreneurial phase.  People need to realise that problems we are facing, are in fact potential opportunities when solved.  This phase therefore demands a total attitudinal makeover.  We need to realise that success is not going to be a function of demanding or taking, but success is the result of providing solutions to problems. The human mind always had, and still has, the ability to solve any problem it can conceptualise and formulise.

Similar to the industrial phase, the entrepreneurial phase has the potential to lift the economic standard of living to new heights.  The opportunities are there – we only need to learn to utilise them.

I would like to conclude by asking the following questions:

v      Is the present public educational system capable of producing graduates who are equipped to excel in the Entrepreneurial Phase?

v      Why does the educational system continue to produce people who function in the outdated Industrial Phase that is not relevant any more?

v      Why is the system so slow in adapting to the demands of the Entrepreneurial Phase?