Escape the Creative Ghetto

Escape the Creative Ghetto

by Chris Powell

This is one of the most creative cultures in the world. In visual arts, scientific publications, world-class universities, design, popular music and publishing Britain continues to punch above its weight. But if that is so, why are we so bad at turning those ideas into business success?

The rate of new business formation in the UK is about half that, pro rata, of the US and even further behind the burgeoning Asian economies. As the DTI's Chief Economic Advisor Vicky Pryce explains, there is a productivity gap between Britain and its competitors - a gap of 25 per cent against the USA - because it does not invest in Research and Development. Britain's R&D spending is among the lowest in the developed world.

This is the background to Sir George Cox's review into how small and medium sized enterprises can be more creative, and make more use of the services of the creative industries. It is important because we can't hope to win at being cheaper so we'll have to win at being cleverer, constantly reinventing what we do and how we do it.

We know that Cox will have seen their National Survey of Firms. The survey found most firms were indifferent to design. Two thirds think that design made no contribution at all to their turnover or their profitability. More than half made no use at all of design, either in-house or through consultants. If that seems remarkable, consider this, 58 per cent of all firms had neither developed, nor introduced any new products or services in three years.

This is a huge oversight and something that NESTA (the National Endowment for Science Technology and the Arts) is looking to address, through promoting and supporting the creative industries. It has already helped to set up over 50 new businesses in the sector through its Creative Pioneer Programme, now in its third year, which offers training and investment funds to recent graduates with unique business ideas.

But it would be a mistake to concentrate exclusively on the creative industries. That was the mistake that the Department of Trade and Industry made when it fixated on the 'knowledge economy', giving the impression that making stuff was old hat, and we would all live off our intellects. To his credit, the chancellor, who commissioned the review was one of the first to insist that creativity should not be 'confined to any one sector of the economy', but was needed across industry and elsewhere.

The last seven years have seen a remarkable experiment in supporting the cultural sector and promoting the creative industries. Buoyed by lottery money, the DCMS built citadels of culture in almost every city. Everybody wanted to be thought of as 'creative'. Those Young British Artists, filmmakers and New Media entrepreneurs were the role models for the next millennium. Enrolment on art and design courses soared, while sciences suffered. But investors got burned in the dot.com era, and came to distrust the creatives, who seemed to make a virtue out of their exceptional status.

George Cox is right to emphasize that the spirit of innovation needs to take hold across all sectors. And that means escaping the creative ghetto. It is not just that industry needs to employ designers and brand managers. The whole culture of business has to change. Creativity cannot be seen as something that happens over there, that you can buy in after the event to tart up mediocre product.

However, applying creative skills within business is only one link in the chain of innovation. There are others that also need support.

The culture of enterprise can be improved and the government to its credit is making inroads through initiatives like Enterprise Week. Despite this, most young people still don't see setting up in business as a real career option and the right support for emerging businesses can be difficult to find.

NESTA is looking to address this. We have learnt a lot about working with innovators, about the need to match money with advice and mentoring and the need to follow through the early successes to second and third round investment by private investors. There is now something there wasn't before: a sympathetic backer for innovation at that very first, most risky and vulnerable stage.

We are helping new and emerging businesses get off the ground, investing in commercialising UK ideas before any other investors. Our most recent success saw Advanced Transport Systems Ltd win a £7.5m investment from BAA to pilot its new driverless transport pods at Heathrow.

Great innovative societies have a system of enterprise support that is in alignment, from encouraging entrepreneurialism in the young, to providing strong networks, the right business support and access to early capital.

The UK's system of innovation is currently not aligned, but Sir George Cox has identified a link in this chain and what we need to do to strengthen it. He has looked at how SMEs can prosper through integrating creativity into their work and we are looking to improve the flow of new businesses that grow into SMEs, take on board his advice and develop into the leading enterprises of the future.