How does creativity get turned into big commercial innovations that ultimately lead to new businesses, new jobs, higher wages and economic growth?
This is something I've spent a lot of time thinking about ever since I wrote The Rise of the Creative Class a decade ago. Skeptics counter that creativity and the creative class are at best loosely connected to innovation. The real key to the kinds of technological breakthroughs that power economic growth, they argue, comes from clusters of innovative firms and industries, not from creative workers spanning arts, design, culture and media as well as science, technology and management.
A new study by Neil Lee and Andrés Rodríguez-Pose of the London School of Economics takes a hard look at this important issue. In a forthcoming paper in the journal, Environment and Planning A (that expands upon a working paper from the U.K.-based innovation think tank Nesta, summarized in a post over at the World Economic Forum blog), they takes a close empirical look at the varied contributions to innovation made on the one hand by creative firms, and on the other by individual creative workers, regardless of where they work.
Echoing a theme that has been central to my own research, they point out, "While the emphasis from policymakers has been on the creative industries, workers in creative occupations may also be significant drivers of innovation and economic growth." (While their definition is different than my own, they also define creative workers based on the work they do and the skills they employ by using occupational data). After all, an administrative assistant at Facebook and one that works in a shipping supply company have fundamentally the same job. And by extension, a graphic designer is doing creative work, regardless of whether she is employed by a tech start-up or an old-school manufacturing firm.
The study focuses on the United Kingdom, where, as of 2009, an estimated 1.15 million workers were employed by firms in the country's "creative industries" — including advertising, architecture, publishing, and design. But, as the researchers point out, creativity extends far beyond these specific firms and industries. Roughly 2 million people are employed in creative occupations across the U.K. economy, more than 40 percent of which are in other industries.
To get at the connections between innovation and creative firms on the one hand and creative workers on the other, the study uses six key measures of product and process innovation. It is based on results from the U.K.'s annual small business survey for 2007-2008, which covers 9,158 "small and medium sized enterprises" (with fewer than 250 employees). Using U.K. government definitions, they found 7.3 percent of these firms were in creative industries. They compared this industry-based data with the U.K.'s Annual Population Survey to see how individual workers in creative occupations contributed to firm-level innovation.
Their research generated three key findings.
First off, they found that found firms in creative industries were more likely to introduce original new product innovations than firms in other sectors of the economy. That's not surprising; firms in creative industries — like software, computer games, design, arts, media and entertainment — are by definition in fields that are faster-paced, more disruptive and more innovative than many others. But probing a bit further, they found the overall connection between creative firms and innovation to be "weaker than expected." As they note, creative businesses were not more likely to incorporate "learned" innovations pioneered elsewhere, which would help spread new and innovative processes or products across the economy.
Second, creative workers play a substantially greater role in innovation. According to the study, creative workers were a "significant driver of product innovations overall" and a "key driver of learnt process innovations." In other words, workers in creative occupations across all industries were essential in spreading innovative processes and products around the economy, as they introduced learned innovations to other firms. The key to innovation is creative workers, both within and outside of creative industries. Or, as Lee and Rodríguez-Pose put it in their working paper from April, "employing a worker in a creative occupation is an innovation input in a similar manner to employing a scientist."
Third, cities especially matter in channeling the contributions of creative workers into actual innovations. The study looked closely at the role of cities and urban environments in the innovative contributions of creative workers and creative industries. Here, they find "cities are important but only for creative occupations." They uncover no relationship between creative industries and cities, meaning that these urban firms are no more innovative than their counterparts in other locations. But cities play an important role in the innovative capacities of creative workers, who play an important role in introducing new processes from other firms and industries. Creative workers in cities with a high firm density move between jobs, sharing best practices and introducing knowledge about innovative processes to their new workplaces.
The authors rightly conclude that their results:
raise questions about the dominant perception of the creative industries as an ‘innovative’ sector. Instead, it might be more appropriate to focus on creative workers regardless of the sector in which they work. Government policy which now aims to help creative industries firms to innovate may be better directed to ensuring that firms in all sectors have access to the creative workers.
At bottom, their findings suggest the need to shift from firm-based policies to more talent-based approaches — something I have long argued for. It's time to stop the old "industrial policy" approach of subsidizing private firms and industries and focus instead on developing the broader creativity of workers. As their findings make clear, the better, more effective path to generating the kinds of innovations that underpin job creation and economic growth comes from creative workers in cities.