The future of the UK rests not on its creative industries but on the creativity of its industry
Globalisation is a controversial, complex process but, says Hester Abrams, the message is simple: innovate or fail. And without wise use of design, it’s much harder to turn creativity into innovative products or services.
Is Britain innovative enough? It’s an easy question with no simple answer. But the nagging suspicion that British business could do better in this area prompted Gordon Brown, the chancellor of the exchequer, to ask Sir George Cox, the chairman of the Design Council, to look into it.
In November 2005 the Cox review was published, making a raft of recommendations designed to improve the links between business, education and creativity in general and the discipline of design in particular.
Cox’s call for a more creative industry was mistaken, by some in the media, for a belief that the creative industries – and products like Harry Potter, Grand Theft Auto and The X Factor – could save the British economy. But that wasn’t the point at all. What Cox called for was for British industry, especially the solidly run small to medium-sized enterprises which form the core of the British economy, to be 'transformed with a skilful injection of creativity.' That was the polite way of putting it. In essence, Cox was saying to these entrepreneurs: innovate or acquiesce to your demise.
Innovation is one of the most popular buzz words right now – even David Brent in The Office prided himself on his ability to think outside the box – but Cox argues that the process of shaping ideas (design) links the generation of ideas (creativity) to their successful exploitation (innovation). He boils this down to a simple compelling equation – 'Creativity plus design equals innovation' – which he hopes business and government will heed.
There is not much riding on this. Only the health of the British economy and, by extension, British society. The first golden age of globalisation – the Victorian era – ended in protectionism and war. The second golden age – which we are experiencing now – will change the balance of power if, as predicted, China and India become the first and third largest economies in the world by 2050. In this context, Cox says the UK has a window – five years, ten if we’re lucky – to act. That action must, he says, start with the realisation that 'the model of the UK becoming an all-service economy, the world’s leading repository of professional skills, is enormously appealing – and totally unrealistic.'
He is convinced Britain must start making deep cultural changes now. 'We are sending out engineers who don’t appreciate design and can’t communicate; business people who can’t manage creativity and creative people who can’t run a business.'
When you look at the checklist of things Cox says need to happen – encouraging the public sector to use its purchasing power to reward innovators; opening the UK’s business culture to creative people and creativity; setting up centres of excellence which can act as hubs of innovation across the country; and a root and branch reform of the education system so it doesn’t channel students into mutually exclusive worlds of art or science at an early age, to name but a few – a decade looks like a very short time indeed.
The British public, captains of industry and Whitehall mandarins have grown wearily accustomed to reports like this which threaten dire consequences if action x isn’t taken or proposal isn’t acted upon immediately. But the Cox review was echoed by a DTI report published almost simultaneously which found British business culture too 'risk averse.' Playing safe is the most dangerous course for the British economy and, as the DTI noted, 'The UK’s underlying creative strength and body of design expertise is an important and possibly under-utilised source of sustainable competitive advantage.'
The creative industries – a catch-all term that includes computer games, publishing, architecture, design, fashion and the arts – now represent 8% of the UK economy, which means that they make a bigger contribution to the nation’s GDP than the construction industry. And the reason that governments like them so much – apart from the fact they offer an endless supply of photo opportunities – is that, all things being equal, they grow faster than the rest of the economy. Between 1997 and 2003, the creative industries grew by 6% a year in the UK, twice as fast as the rest of the economy.
The connection between, say, the success of Harry Potter and the vibrancy of Britain’s manufacturing industry might seem mysterious, even tenuous, but it does exist. For every J.K. Rowling, Britain has produced a Jonathan Ive who had to leave these shores to design the glory that is the iPod. The creative industries aren’t always as creative as the tag suggests, but they do know how to process creative ideas. Too much British business is too unimaginative too much of the time.
Cox admits: 'You have to overcome lack of awareness, lack of ambition, not knowing where to turn and perhaps some slight distrust of innovation among smaller businesses.' It would probably help if staff thought they’d be rewarded for creative thinking but, a survey by the Work Foundation discovered, that isn’t the case.
Ask a foreign business executive to name an innovative British company and, if they can think of one, nine times out of ten they’ll say Virgin. Acquiring an international reputation for innovation and creativity is too important to the UK for the challenge to be monopolised by Richard Branson.
You have to overcome lack of awareness, lack of ambition and a slight distrust of innovation
If Cox’s vision becomes reality, creativity would no longer be confined to cyber-geek ghettos in Soho, Hoxton or Brighton. Small firms might grow faster, be more rewarding places to work and, better still, not be crushed by low-cost tech-savvy rivals from overseas. (The traditional argument by small businesses – their market is too small to worry about foreign competition – has finally been rendered obsolete by the internet.) The judicious application of creativity could transform the public sector. And Britain could stand up to competition from China, India, Brazil, Russia and a host of emerging economic powers such as Thailand, Turkey and Mexico.
The cliché that people overestimate change in the short term and underestimate it in the long term certainly applies to globalisation. 'The days when we used to laugh at Skodas and Ladas are long gone,' says Cox. 'Standards have gone up and competition is getting faster and better.' However good, bad or indifferent Chinese PCs or Indian software might seem right now, they’ll be far more formidable when these countries’ enormous investments begin to pay serious dividends. But if the UK can use creativity and design to sharpen its insight into customers’ needs, the British economy can still thrive. 'I’m not talking about a quick sheep-dip into design,' warns Cox. 'This is about sustainability. It’s got to become a way of life.'
Much remains to be done but, in the year since his review was published, much has already been accomplished. Four Regional Development Agencies have signed up to roll out Designing Demand, the Design Council’s programme to help businesses use design to improve their performance. Cox had recommended a nationwide roll-out to reach some 6,500 SMEs across the UK, at a net cost of about £22m over five years. His proposed network of creativity and innovation centres across the UK is several steps closer to fruition, with various organisations bidding for funds from the Department for Education and Skills. HM Revenue & Customs is considering setting up special units to deal with R&D tax credits as an incentive to innovation. 'To my great surprise they’ve announced they’re looking at doubling the size of companies which would get the full credit,' says Cox.
But the public sector, which has the greatest potential to influence innovation among UK companies, commanding a budget of some £125bn a year for goods and services, hasn’t, despite some promising local initiatives, acted on Cox’s call for more creative purchasing. This is a pity because if the public sector became, as Cox says, 'a more enlightened and demanding buyer,' its colossal spending power could kick start a revolution. Money talks, so the saying goes, and, in this instance, it could be saying something very eloquent indeed.
Cox, while stressing the urgency of the task in hand, is optimistic. 'After nearly 50 years of frustration, the message on the importance of design and creativity to our economy and our way of life has finally been well understood.' Getting the message across was crucial. But the hard work starts now.
Creativity, innovation and design
What do the buzz words really mean?
In his review of creativity in UK business, Sir George Cox defines these key terms as:
Creativity
Creativity is the generation of new ideas – either ways of looking at existing problems, or of seeing new opportunities, perhaps by exploiting emerging technologies or changes in markets.
Innovation
Innovation is the successful exploitation of new ideas. It is the process that carries them through to new products, new services, new ways of running a business or even new ways of doing business.
Design
Design is what links creativity and innovation. It shapes ideas to become practical and attractive propositions for users or customers. Design may be described as creativity deployed to a specific end.
Doing the maths on innovation
Trying to measure how innovative a country is is like trying to pick a lock with a bagful of hammers: whatever blunt instrument you choose isn’t quite up to the task.
Once, squabbles over national variations in innovation were settled by counting patent applications. The disparities were troublesome. If the US accounted for 27% of patent applications to the European Patent Office and China only 0.5%, was the US really 54 times as innovative as China?
The OECD adapts the patent count by factoring in the size of a country’s economy or population. But this makes Luxembourg the 16th most innovative country (ranked by patents per dollar of GDP) and 9th (on applications per capita), a status which may surprise even patriotic Luxembourgers.
So what about R&D? National levels of spending on R&D gauge a country’s ambition to be innovative. The European Union set a goal of investing 3% of GDP on R&D. Yet the EU will, at best, reach 2.2% by 2010, the very year China’s spend on R&D should surpass the EU’s. But R&D spend measures input not output. Apple spends just 5.9% of sales on R&D (the industry average is 7.6%) while General Motors, the top corporate spender on R&D in the last 25 years, has shed market share and is seldom lauded for innovation.
Scan the Boston Consulting Group’s list of the world’s 100 most innovative companies and you’ll find that over half of these envelope-pushing firms are American while Japan, Germany, UK and France have around five companies apiece. This is, to use an abstruse statistical term, nonsense.
The Economist magazine favours a device called the innovation index, which tries to measure human resources, market incentives and the interaction between science and business. Once again, the the US is top of the world, followed by Taiwan, Finland and, in 14th place, the UK.
In whatever imperfect way you measure innovation, the US tops the poll and Japan usually finishes in the top five. That tells us one thing: innovation takes time. America and Japan have been consistently creative over the long term.
Countries keen to close the innovation gap must heed the moral in the tale of the French marshal Louis Lyautey who wanted his gardener to plant a tree. 'But it won’t bear fruit for 100 years,' protested the gardener. 'In that case,' said Lyautey, 'there’s no time to lose. Plant it this afternoon.'
Article first published in Design Council Magazine, Issue 1, Winter 2006