Is there a creativity crisis?

Chris Dillow reckons we are facing a crisis of creativity. “What might be the most important question in economics,” he says, is “how to encourage creativity.”

I say this is the most important question because it is the main cause of economic growth. Classical economists from Smith to Mill saw growth as a contest between the law of diminishing returns, which led to stagnation, and innovation, which tended to prolong growth. Even Keynes took a similar view (pdf). He predicted in 1931 that “a point may soon be reached” when consumers would be largely satiated and so a 15-hour working week would be the norm.

When creativity and innovation slow, therefore, growth stops. And we might be at or near this point. The slowdown in productivity growth  and capital spending in recent years are both consistent with a slowdown in technical progress. This is not just afflicting old, sclerotic firms; even Apple, the greatest innovator of recent years, is returning cash to shareholders rather than investing it in new ventures.

The reluctance to invest, says Chris, may not only be due to lack of confidence; it could also be because there is a lack of new and interesting ideas to back. Unless we can generate sufficient creativity and technical progress, he says, the under-employment which is becoming a feature of our economy will be with us for some time to come.

But are companies any less creative and innovative now than they were in the past? I joined the corporate world at the fag-end of the 80s boom and I have seen both growth and recession at least twice. Firms tend to retrench and become more cautious during economic slowdowns. At just the point where they are in need of new ideas, they stick to what they know and sideline their mavericks or push them out altogether. That said, most large organisations are not that good at dealing with creative people and wacky ideas anyway.

I wrote about this some time ago after Stefan Stern had reported on some research from Kingston University. The study found that, despite saying they wanted off-the-wall entrepreneurial types, when they got them firms found they didn’t know what to do with them. Mavericks can be awkward, disruptive and sometimes downright intimidating. And that makes people uncomfortable.

For this reason, corporate cultures often spit such people out. It’s a bit like a body rejecting a transplant. The innovators are so different that the corporate body can’t assimilate them. After going to great lengths to attract and recruit them, the corporation either finds it can’t retain the mavericks or it gives them the boot.

A few years ago a friend of mine did some research at a large blue-chip company. The firm had some creative characters who came up with new and profitable products and it was keen to understand what made these people tick. My friend’s research was revealing. All the mavericks said they would probably have left the company years ago but had stayed because something else that had happened in their lives. It might have been the illness of a child or the need to support a partner through university. For one person, playing in a band was his passion and leaving the company would probably have meant relocating which would have meant finding another band. So he stayed.

The point is that all of them had stayed with the company despite its culture, its management and its reward structures not because of them. External factors had kept the creative mavericks from leaving. It was nothing to do with the firm’s retention strategies or anything its managers had done. The awkward truth was that the company alienated its creative types and most of them left. The ones that were still there were there by pure chance.

The same is true of those organisations that, rather than hiring mavericks, try to unlock the creative potential of the people they already have. This too can lead to instability and discomfort. When people already have their places in the hierarchy it upsets everyone else if they suddenly start coming up with ideas and expecting to be heard. I worked in a company years ago which decided to train first line supervisors in creative problem solving techniques. It really spooked the middle managers. Supervisors were running brainstorming sessions and using all sorts of highfalutin’ language. It just wouldn’t do! However hard you try to break out of your box, there will always be some people who want to put you back into it.

There is a certain inevitability about all this. As Vijay Govindarajan and Chris Trimble say, innovation is unnatural. Businesses are built for efficiency, which depends on predictability and repeatability. Innovation is unpredictable and uncertain. Whatever they say about innovation, bosses tend to favour the known over the unknown.

It is true that some smaller organisations can be more creative if they are made up of people willing to think radically and take risks but, even then, they need resources to develop their ideas which usually means pitching them to bigger more conservative players. Or else being acquired by them which can then lead to the same problems of discomfort and rejection by the host culture. Wherever they come from, creative ideas have an uphill struggle to make it from spark to implementation.

Creativity has always been a long hard slog, slowed down by corporate obstacles, spiked by saboteurs and smothered by indifference. But I’m not sure this is any worse now than it has ever been. Is there, as Chris says, a creativity crisis in Britain, or is developing and implementing creative ideas just as difficult as it ever was?

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13 Responses to Is there a creativity crisis?

  1. Pingback: Is there a creativity crisis? - Rick - Member Blogs - HR Blogs - HR Space from Personnel Today and Xpert HR

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  3. Graeme says:

    I recently blogged on the slow down in technological advance in the last three decades (yes it does go back that far – recent innovation has been incremental and lacked big new inventions).

  4. Indy Neogy says:

    This is a PhD topic in reality – I don’t know if anyone has done the legwork to assemble all the evidence. And historically larger British firms have always been more about control and creativity lived with the “boffins” and as the successful “boffin” firms were bought up by the big ones, they were killed. This process was largely complete by the end of the 70s – and you can make a decent argument that British creativity has been in the doldrums since then. However, there are some “weak signals” from around the world that suggest we need to at least treat Chris’s thoughts seriously:

    1) Denning has a great graph of the decline of Return on Assets (RoA) and Return on Equity in Invested. I believe the Deloitte Edge centre had the idea first, but Denning has blogged about it a lot:

    2) Noah has a piece about Venture Capital. In essence the look of the evidence is that a lot more money has gone into VC as investment funds try to use riskier approaches to make up for the economic malaise, which is affecting returns. Only, it turns out that it seems there is a limited number of opportunities for successful investment:

    Worth noting that the Noah piece doesn’t prove anything, there are a few other factors and suggests stability more than decline. However, the whole point of the disaggregation of our large corporations was to free up the small firms to get VC money and be innovative. If innovation hasn’t increased, then we’ve sacrificed the ability of big firms to subsidise innovation – and that sacrifice has been for nothing. The whole startup experiment has gone especially badly in the UK, because startup funding has always been scarce and often badly managed. As a result, lots of small company innovation has been created and lost.

    3) I think you can argue that British firms have gotten a bit worse since the 80s, but that’s a long story, maybe we can come back to it. Conversely, some of that innovation is now undertaken by the Samsungs and Huaweis of this world.

    4) I think what I’ve said in (2) actually meshes with how you end your piece and touches on an explanation. We’ve undertaken a massive experiment in delayering and breaking up inefficient firms in our economy. We’ve created a greater focus on efficiency and predictability. As a result, it’s less and less likely that any mavericks survive in odd backwaters of the organisation, tinkering away and producing something new, because the backwaters have been drained…

    5) To take one sector in particular. Big pharma has given up on creativity. The new model is that small firms do the creating and the big ones buy it up and take it to market. Trouble is this is a great illustration of all the things I’m talking about. British pharma startups suffer from a landscape where capital is scarce and the whole structure of VC-style investment encourages a lot of “follow the leader” – new startups try to replicate the last success instead of creating a new one.

    6) There’s an ecosystem problem here too, large British firms don’t try much. It’s a lot easier to get a hearing about a new product from a big foreign firm than a big British one. So the move to “small company innovation” seems troubled. Small British firms find it hard to get enough of the vital early sales to get growing.

    7) I’ve strayed a bit from Chris’ notion of a dearth of investment opportunities. Perhaps all the small problems I’ve identified add up. But there are larger currents at work. Nanotechnology and biotechnology have up to now been stifled by the huge influx of cheap labour into the world economy. We failed at (and keep failing at) investment in more basic research since the end of the 70s, so we don’t have the raw material to get creative with and change the world. All of which could mean that we aren’t worse at creativity, but conditions mean we need to be better…

  5. Graeme says:

    I agree with Indy Neogy’s analysis of the causes, but I would say its a global change, not a British one. Large firms market share has risen in most markets in most places and the lack of creativity is certainly global. There has also been a change in attitudes.

    Large firms do not want to innovate too drastically. They do not want to run their business profitably rather than engage in disruptive innovation to create new ones. In addition to the direct effects of this they also tend to looby for law and regulation that enforces the status quo: everything from heavy regulatory burdens on British pubs (chains have specialist departments to cope, fre houses do not) to US patent law (patent thickets cut out small firms and new entrants, especially when combined with cross-licencing deals). I have blogged about much of this too.

    The drop in spending on basic research is also critical. I would be intersted in seeing numbers that show when the drop started. It reflects a change in attitudes by both governments and firms: research is now focused on areas where the commercial benefits can be clearly seen. Both firms and governemnts are either more short-termist or want more predictable benefits.

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  7. I’d have a speculative idea to throw into the mix, in relation to where ordinary people’s creativity may be disappearing to: the dumbing-down of process which is characteristic of large companies has now been applied to the social web. Advantages for its proponents? They get our data for free (because they tell us it’s ephemeral and throwaway), they use software to recombine and “re-complex” it – and creative and rather engaging content is then actually produced by the algorithms.

    There’s plenty of creativity going on out there – it’s just the machines which are mainly responsible for putting it together. Meanwhile, the rest of us have been consigned to fulfilling the role of humble unpaid data-inputters in a 21st century virtual equivalent of the sweat-shops of old. With the curious reality that we appear to be choosing to do it voluntarily.

  8. watcherandlistener says:

    You seem to be tentatively on the side of “Innovation is alive and well, you just don’t see it” due to the barrage of extreme logic (systems, organizations, etc.) or unrewarded genius (ignored, passed over, or sucked into acquistion and dismembered). I think this is true. I hear of great ideas very often, and believe there is no lack of creativity whatsoever.

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  11. Is there a creativity crisis ? YES WIll it change ? Not immediately – risk aversion is at an all time high in companies

  12. Graeme says:

    Risk aversion is not just at an all time high in companies, it is at an all time high in society.

  13. Pingback: Manifesto for Teaching Online – Aphorism No. 14, Part 1 “Assessment is a creative crisis as much as it is a statement of knowledge” « Design Futures Archaeology

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