How to remove the risk from creative enterprise
The creative industries in the UK can only compete with their global rivals if they receive the financial support to develop ideas.
My brief is to write about a strand of recent thinking that may be of use to marketers. However, on this occasion, I’m going to do something dangerously off-piste and talk about my own industry, or rather the sector we call ‘the creative industries’ that includes everything from architecture to software design, via film, publishing and – yes – advertising.
The catalyst for this bout of introspection was an evening I spent in the company of people who had joined the IPA’s recent mission to learn from California’s leading digital media and entertainment businesses.
It seems that everything and everyone over there is brighter, shinier and more exciting. They embrace failure. They are optimists. They are always in beta.
All this starry-eyed admiration prompted me to point out that California is surely a major threat to Britain. It boasts the world’s eighth largest economy, it created the mythology of the 20th century in Hollywood and the operating system of the 21st in Silicon Valley. I then asked the following puckish question: Faced with these overwhelming advantages, how on earth can the UK’s creative industries compete?
IPA president Nicola Mendelsohn gave a characteristically robust reply. Britain is a leading creative powerhouse. Its creative industries employ some 1.5 million people and account for 10.6% of the UK’s service sector exports.
Impressive though such numbers are, I can’t help feeling there’s a sense of frantic boosterism around the sector, somewhat redolent of Cool Britannia, but with Lord Fellowes of Downton Abbey standing in a little awkwardly for Liam Gallagher. Derivative financial instruments have ruined the economy; let’s hope derivative screenplays can somehow tide us over. Or so the argument goes.
The boosters do have some impressive facts on their side. Apparently, there are no fewer than 80,000 Brits working in Hollywood and Silicon Valley. But let’s remember, that’s 80,000 expensively British-educated brains helping grow the gross value added of the US, not the UK.
Speaking of education, Britain is rightly famous for a school and university system that allows creativity to flourish, sometimes at the expense of science and technical skills. However, according to my friend and noted creativity expert Professor Jonathan Plucker, the Chinese educational system now devotes more curriculum hours to creativity than that of the US or the UK.
Such caveats aside, I can’t deny that Britain possesses a number of trump cards in the international creativity game, not least the English language, an unrivalled tradition of public broadcasting and a degree of cultural diversity that constantly re-infuses the UK with new perspectives.
Yet there’s one vital thing missing from our creative industries that California and the rising Asian economies seem to have little shortage of, and that’s capital.
Ideas may be free, but developing them costs money. And as my bank manager keeps reminding me, money is in short supply at the moment. I therefore have three proposals to offer, which will form the backbone of my stump speech when I stand to be MP for Soho, Fitzrovia and Shoreditch.
The first is directed at the financial sector. Faced with a choice of investment options, a business with a physical factory and a familiar corporate model is more understandable, and thus more attractive to lenders, than one where the principal assets go to the pub at lunchtime and sometimes don’t come back.
One way of helping the financial sector derisk creative investment is to give experienced creative industry professionals places on investment review panels. They have an eye for what works and a good nose for bullshit.
My next proposal is directed at creative innovators themselves. One of the concepts the delegates brought back with them from California is called ‘pretendotyping’. It’s a way of derisking innovation by using dirt cheap techniques such as keyword searches to assess the demand for creative properties. Buy a Google ad for your fictional book or movie and see if anyone clicks.
It’s called what it is because it doesn’t even require the development of prototypes. And since it helps quantify the demand for things that don’t yet exist, rational people like investors love it.
The last of my prescriptions is directed at Westminster and Whitehall. It is clearly unrealistic to demand direct subsidies for the creative industries. Even if it were fiscally or politically possible, it would not be healthy for the sector’s long-term competitiveness.
However, in pursuit of derisking creative enterprise, one thing the government could do is offer a significantly increased number of credit guarantees targeted at new or expanding creative businesses in exchange for a nominal amount of equity participation.
As one of Thatcher’s children, putting such an interventionist thought down on paper makes me feel physically ill. However, compared with what we have done for the banks, it’s small beer indeed. And perhaps it’s high time that the creative industry got as many guarantees from the taxpayer as creative accountancy.
Richard Madden is chief strategy officer at Kitkatt Nohr Digitas.