Sex, drugs and rock’n’roll. Do world leaders really understand the value of creative industries? What would change if they did?
Guest blog by Jane Glaister, MBA alumnus of Bradford University School of Management and interim chief executive at Scarborough Museums Trust
Last year, the London Olympics showed just what a strong creative industry can do for a country. The headlines about the glorious opening ceremony talked about ‘a Britain as never seen before’ and the national pride has continued on until the New Year celebrations.
But creative industries bring more than a feel good factor. They bring hard cash and jobs to any country that nurtures this sector. This is now being recognised by governments around the world: in October 2011 a Ministry of Tourism and Creative Economy was created in Indonesia; the Creative Industries World Conference was hosted by Communication University of China in Beijing in 2009; and the UAE is attracting creative businesses to the region with its dedicated centres such as Media City, Internet City and Cultural District.
The UK is still a recognised world leader in Creative and Cultural Industries (CCI) but global competitors are catching up and failure to invest properly could be its downfall.
So where is the UK now, what is working, where are the opportunities – and what are the risks? And is this sector still too often dismissed as ‘sex, drugs and rock’n’roll’?
1. What are creative and cultural industries?
The core business of the creative industries is to create high quality and professionally produced content and products live and across the full range of platforms.
In most CCI sectors there are businesses whose domain is content creation – others which provide a supporting role in that process and others involved in the distribution, transmission or exhibition of that content.
Cultural industries are involved in the making and circulating of product that have influence on our understanding of the world.
The UK’s Department for Culture, Media and Sport defined “those industries which have their origin in individual creativity, skills and talent and which have potential for job creation through the generation and exploitation of intellectual property”.
2. Calculating the value of creative industries
Just look at some of these statistics for creative and cultural industries in the UK
- Contributes £57billion in GVA
- 6.2% of total UK economy GVA
- 2.9% of GDP
- 107,000 creative enterprises
- 1.5 million jobs
- 5.1% of UK employment
- Forecast to produce GVA growth of 4% in 2012, 31% by 2020
- Forecast to produce employment growth of 33% by 2020
3. What is hampering growth of this industry?
One of the biggest issues is the lack of proper recognition – the businesses within this sector are not clearly defined and data and monitoring of performance and growth is poor. There is a tendency to dismiss creativity as slightly ‘flaky’ and high risk. Because the sector is dominated by small businesses and individuals it tends not to have a powerful lobbying voice or cultural leadership. They do not really have marketing ambassadors who understand the need for long term investment to be attracted into the sector.
In May 2011, BIS stated that “Creative content sectors …are more likely to have their finance applications rejected by finance providers than non CIBs with similar risk profiles” but the evidence shows that creative SMEs have greater longevity than the industry average and, over the long term, deliver better returns.
Creatives often express an antipathy towards making commercial profit and their business skills can be limited – so policy makers and investors write them off as unpredictable and difficult to control, but this is stereotyping that is inhibiting growth!
To be successful in the creative industries it is not enough to have a good idea or product. A creative product must go beyond the new – it must also be of value. Within the CCI sector, the functions of business management and creativity converge in a way that they don’t in other industries. The separation of creative and management processes is counterproductive and the management of creatives and creative/cultural content in ensuring the appropriate manipulation and development of them/that content into marketable commodities is in short supply.
So there is a perceived risk in management and marketing – which is not backed up by the reality, as these figures show.
The average survival rates of CCIs after 5 years compared to all business
CCIs 49.7% All UK businesses 46.9%
And for high growth firms it is even more impressive
CCIs 7.5% All UK businesses 6%
4. The position of creatives in the creative economy
Whilst creativity is essential for business success the relative importance of individual creativity and generation in the creative industries is open to question.
Individual creativity, innovative ideas and products form only one small part in a complex production process. The most critical part for commercial success is the exploitation of intellectual property – which is consistently more lucrative than the generation of intellectual property.
5. Growing the sector
What kind of value does this sector have – and for whom?
Crombie (2010 p7) said: “The tension between the creator of a cultural work and the entrepreneur, typical of many cultural and creative enterprises, is often seen in the desire to prioritise the cultural value of the creation with little motivation for generating economic value (creation orientated), while the entrepreneur will prioritise the economic exploitation over its cultural value (growth orientated)” .
We have to accept that individual creative businesses have to take ownership of becoming better at management, marketing and finance. Should they understand a SWOT analysis and would an MBA international business management be of benefit to many?
But we need policymakers to start defining and measuring the sector properly and create policies that reflect the importance of this sector and truly understand the value (both economic and social) that creatives deliver.
That should encompass everything from ensuring schools understand the opportunities in this sector – not encourage the brightest just to aspire to banking and accountancy – as well as promoting this sector internationally. Some of the greatest export potential lies in this sector – which is what will pull us out of the recession with a potentially new business model which values social and cultural returns alongside the financial ones!
Does a skills deficit and/or the structure of CCI industries in the UK inhibit entrepreneurship in the sector? And should we be worried that the rest of the world is catching up with – if not starting to overtake – the UK?