Idealog

Idealog magazine
 
 
Doom-defying ideas for $47.50. That’s the truth, Ruth. Subscribe to Idealog

Welcome to the Creative Economy

By Vincent Heeringa, 2005-12-06 01:00:00
Originally published in Idealog #1, page 34
Welcome to the Creative Economy

Idealog January/February 2006, page 34. Picture by Tony Drayton. Graphic imaging by Linds Redding

From apples to advertising, from dairy farming to Krishnan's Dairy, the central and driving force in the New Zealand economy is not the land or even the people on it. What matters now are great ideas

In the leafy streets of Auckland’s Mt Albert a quiet and altogether healthy revolution is underway. On the linoleum floors inside the 1930s rabbit warren of the Mt Albert Research Centre, the creative thinkers of HortResearch have been turning some 20 years of research about shelf-life, taste and crunch factors into what may well be the world’s most perfect apple. Behold: the Jazz.

Jazz is probably as close to Eve’s original show stopper as an apple can be: crisp, flavoursome, not too sweet, herbaceous, delicious.

Big deal? Indeed it is. The success of Jazz, its cousin Sweetie and the long list of berries, pears and kiwifruit under development at HortResearch is an example of the next big story in the future of New Zealand: the rise of the Creative Economy.

New Zealand is struggling with a fundamental shift, from relying on the physical advantages of rich volcanic soils and buckets of rain to an economy based on ideas and our ability to sell them. What matters now is neither our land nor the things we grow on it. It may not even be the warm bodies that occupy the land. The real drivers of economic growth are the industries of our minds: science, entrepreneurship, creativity, imagination and our ability to connect.

Consider the plight of another HortResearch product, the Braeburn. It’s a beautiful apple, delectable, crunchy, quite the thing in crispy fruit, yet the week Idealog walked the corridors of HortResearch exasperated Hawkes Bay apple growers were tearing out both their hair and their Braeburn trees because no one was prepared to pay more than what it cost to grow them. In Hawkes Bay—the home of the apple industry! The popularity of the New Zealand varieties such as Pacific Rose, Royal Gala and the Braeburn have been their downfall: with millions now planted around the world, it’s pointless for some orchardists to even pick the harvest.

Jazz, meanwhile, is doing the opposite. At $30 a box it’s fetching twice the price of Braeburn and making owners Turners & Growers one pretty pile of cash. The difference is not, like the old ad said, “in the seaweed, son”. It’s not in the land, the rain, the husbandry, the harvesting, the processing or the marketing. The success of Jazz comes down to one thing: intellectual property. 

Jazz is what the industry is calling a ‘club variety’, in which the plant variety right (like a patent) is licensed exclusively to Turners & Growers. This allows T&G to control the supply—they call it ‘controlled scarcity’—and market it under a brand name. Thanks to HortResearch, the apple has been bred to become a superior product. Thanks to the branding, T&G can command a top price. “It’s only possible when the ideas behind the apple have been protected,” says Paul McGilvary of HortResearch.

The success of Jazz and the failure of Braeburn is a metaphor for New Zealand. Whether it’s kiwifruit or lamb, furniture or theatre, music or milk powder, the key for economic success is turning ideas into IP, and IP into business.

Why creativity?

Writer John Howkins points out a startling statistic: in 1997 the United States exported US$66 billion worth of books, music, TV, fi lm and other copyright products. For the fi rst time that was more than cars, chemicals, computers and planes. “Copyright became America’s number one export.”

In most OECD countries the creative sector is growing between five and eight percent annually, or twice the rate of the overall economy. According to Fortune magazine, basketballer Michael Jordan’s personal wealth, mostly gained through copyright and licensing, exceeded the Kingdom of Jordan’s GDP. And when names like Spielberg, Bowie and Jagger dominate the global rich lists, who doubts the economic power of the arts?

In New Zealand it’s hard to take copyright industries seriously when you’re up against the dominance of commodities. So are we seriously suggesting the future is all about the creative industries, by which most people generally mean advertising, design, arts, film, TV, music, architecture, publishing and digital content?

Yes—and no. The Creative Economy is so much more than the traditional creative industries. It’s creative thinking applied to:

“What quality was to the 1970s and information was to the 1990s, creativity is to the 2000s,” writes BusinessWeek. Why? Consider the three As: Asia, automation and abundance. Journalist Daniel Pink fingers these three factors as driving a new paradigm in business. Asian economies and automation are taking over the process side of business to produce an abundance of products that cost next to nothing, always work and have more bells and whistles than the Space Shuttle. New Zealand can’t compete on cost or even on functionality. The alternative is to be smarter, to connect the dots in ways never thought of; to provide meaning, not just functionality. The electric bulb has been around for 120 years, Pink points out, so why have candles become a multibillion-dollar industry? Because marketers have found uses for candles that are about anything but providing light. No logical person would have predicted that. 

“In most OECD countries the creative sector is growing between five and eight percent annually, or twice the rate of the overall economy.â€?

“Lawyers. Accountants. Radiologists. That’s what our parents encouraged us to become when we grew up,” writes Pink. “But Mum and Dad were wrong. The future belongs to a very different kind of person with a very different kind of mind. The era of ‘left brain’ dominance, and the Information Age that it engendered, is giving way to a new world in which right-brain qualities—inventiveness, empathy, meaning—predominate.”

Kiwi inventor and entrepreneur Mike Hutcheson puts it more succinctly: “If the knowledge economy was all that important then how come librarians aren’t the richest people in the world?”

Creativity is the genius that shapes something from nothing. It’s creativity that turns information to knowledge and knowledge to action. It’s creativity that precedes design and innovation. At Idealog, we’ve hung our hat on creativity as the axle upon which all wealth creation spins. We may be wrong, but we’re prepared to take the risk.

Meet the commercial creatives

The “commercial creatives” are at the core of this new economy. In a world dominated by cheap functional products, the new and the clever have become more, not less, important.

Commercial creatives are good for something else too: sex. Economists call it the multiplier effect: despite their relative small size (about six percent of the economy), creatives punch way above their weight. Some wag noted during a recent Fashion Week that the export revenues of our high-end garment industries were about third of—wait for it—the offal industry. Both are in the flesh trade, he mused, it’s just that one’s trivial by comparison. The same goes for all the ‘sexy’ industries—wine, film, books, design. They might be more fun for journalists to cover than, say, raw skins or onion exports, but their economic impact is miniscule by comparison with real business—right?

Wrong. A survey performed for Tourism New Zealand found that among those people thinking of visiting New Zealand, 65 percent were more likely to make the trip thanks to seeing the Lord Of The Rings films. Given that tourism is now our largest export earner, and that 2.34 million people visit us each year, that’s a fair amount of economic power wielded by a creative guy in Miramar.

This spin-off effect is not just in tourism, though. US economist Richard Florida argues that creative people may be the most important drivers of economic growth. Florida’s views are controversial but they have galvanised a worldwide movement of enthusiasts who champion the arts and creative industries as the key to urban renewal. Economists expounding the New Growth Theory recently decided that the best predictor of economic growth is not location, sunshine or terrain. That was important in the industrial age, goes the theory, but what matters now is technology. Others claim it’s the quality of human capital. The higher the proportion of tertiary-educated people, the faster the city grows, they say.

Florida disagrees. Bill Gates and Steve Jobs aren’t tertiary-educated but have contributed more than a little to their cities’ wealth. Florida suggests the presence of creative people—he groups them into entrepreneurs, technologists and artists—is the best predictor of a city’s potential worth. These creators are wealth makers through the businesses they run and products they employ, but also through the services they demand such as culture and entertainment. This in turn creates a rich urban environment that attracts other creative people.

“When one of my former students did an analysis of the New York City economy, she found that economic growth is not powered simply by the financial sector for which New York is famous. The most important sectors accounting for the city’s growth were, broadly speaking, culture, arts and entertainment. The arts are part of an infrastructure on which this entertainment sector of the economy is premised.”

Creative industries and creative people, Florida says, create a richer, more inspirational environment for all.

You can do it

Now, here’s the thing. It’s all very well knowing that we need to increase our level of innovation, but the purpose of this magazine, and indeed the whole Idealog project, is to inspire action. We want to provide great examples, rousing stories and helpful advice.

The first point to note is that it may be hard but you can do it. Harvard Business Review editor Theodore Levitt thunderously declared in 1965 that “creativity is not enough!” He had two pieces of advice for the “creative types” who want to rock the world with new ideas. First, recognise that other people are usually busy and will naturally resist more work. Second, ideas are useless without a defined set of costs and benefits. Speaking about innovators within organisations, he said: “The purpose of organisation is to achieve order and conformity necessary to do a particular job ... hence it is inhospitable to creativity and innovation.”

Thankfully, the world has moved on since Levitt put those creative types in their place. “Innovation ... is capable of being learned and capable of being practiced.” That’s the late Peter Drucker, who pioneered a systematic approach to innovation, identifying seven areas where new ideas can be found—from the unexpected (Alexander Fleming and penicillin) to a simple change of process (such as advertising moving from being media-owned to being independent). Since then, many systems have been developed. We’ve represented one approach by Auckland-based Ideas Accelerator in the diagram on page 42 but also check out the Doblin Group website. By tracking the level of new product development in ten market categories over time, Doblin can identify areas of unexplored innovation.

Second, learn from failure. What’s the best way to improve your success? IBM supremo Thomas Watson had an answer: double the number of failures. This is the same man who predicted a world market for just fi ve computers—but doesn’t that prove his point? Did you know that the Edsel, one of Ford’s most expensive failures, was also the most designed car of its time? That mistake, however, lead to a re-evaluation of how Ford understood the market and the company responded with the Mustang.

Learning is key. In one study we came across, scientists found kids responded better to analysis than to praise. “Smart managers don’t praise or punish—they analyse,” says Richard Farson, a behavioural scientist and author of Management of the Absurd.

A third step towards to a more innovative work-life is to borrow a leaf from the artists’ textbook. It’s no accident that artists, designers and musicians sit at the heart of Richard Florida’s creative class. What they do has an impact far beyond the sale of their products—they stimulate a creative community.

Moreover, the behaviours that typify artists are what Daniel Pink encourages us to emulate. He suggests practicing empathy — it’s a great way to find ways to serve customers better; and searching for meaning—it’s a great way to re-conceive a market. Artists take the trouble to nurture their right brain functions, looking for context and stories, questioning meaning and finding time for the frivolous.

They also laugh. Neuroscientists have found that humour is largely a right-brain function. Never before has laughter been taken more seriously in the workplace. Contrasted with times gone by, when a worker was fired for smiling on the Ford assembly line, fun at work is now considered an essential management tool. Never before was game-playing seen as a big business, but it’s already threatening that other fun-filled business, movies. “The opposite of play isn’t work, it’s depression,” notes educationalist Brian Sutton-Smith.

Idealog will return again and again to telling the stories of artists, designers, scientists and musicians. Not just because they are more interesting than stockbrokers and accountants — it’s because they are at the heart of an industrial revolution: the creative economy.

Why are we doing this again?

It’s late and the publishers are sweating blood over copy, photography, production and direction. They’ve been working on this for months now. They’re behind on deadline. Nothing is easy. Expectations are high and energy is low. Someone asks: “Why are we doing this again?”

Everyone will recognise the sentiment and know the answer. We’re doing this because it’s important. At the time of writing the Reserve Bank is warning Kiwis about the burgeoning balance of payments deficit. New Zealand is living beyond its means, even with commodity prices at an all-time high. A fall in dairy returns, a nasty drought or—heaven forbid—an outbreak of foot-and-mouth would be disastrous.

Agriculture built Godzone and will be our bread and butter for a long time, but our economy is evolving. The next phase for New Zealand must be about creating ideas and intellectual property that can be applied and sold, whether it’s in science, finance, arts, agriculture, manufacturing—anything.

Why are we doing this again? We do it because we love it.

Add your comment

HTML will be removed. Web addresses will be automatically hyperlinked.

Latest Idealog Weekly Latest issue: 128 pages of pure gold
Idealog Weekly: Rich with ideas in your inbox every Friday

Sign up now!

Tweeted

  • Fetching tweets …
Follow Idealog on Twitter

Overheard

Idealog is published by

AUT Media

Idealog is supported by

IBM

Image Centre

TelstraClear

 

Most useful

Six random stories

Most commented

Most collectible

Idealog t-shirt