Creative intensity

Afanasiy Zakharov
Dec 6, 2019 · 11 min read

Co-authored with Afanasiy Savvin

Development of creative economy and non-resource-based industries is a priority for the leadership of the Sakha Republic (Yakutia). However, even though particular cases such as the IT-industry have measurable and clear reference points for development, the state of affairs in the creative economy at large requires a more detailed study. Let us try to delve deeper into this to understand how to develop a creative economy and why, and what specialists and human resources are needed for it to take off.

In order to define the priorities for the development of creative economy in our republic we decided to start our study by measuring the principal social and economic properties of creative industries in Yakutia.

In Russia, creative economy is understood to be an amalgamation of the so-called creative industries: branches of economy that relate to arts and culture (visual arts, performing arts, crafts, literature), design and architecture (interior, industrial and graphic design, fashion, jewelry production), media and communications (advertising, television and radio, cinema, mass media), as well as digital technologies (design and development of websites and software, IT strategies and planning). However, we have found out that there is no single approach to defining and monitoring creative industries in the country and the region. There is no official classification of economic sectors (according to the Russian National Classifier of Types of Economic Activity) that relate to creative industries. Additionally, there are no indicators that could be used to understand the phenomena in this field and to set the frames of reference for development. For example: what is the contribution of creative industries to the regional economy? How many people are employed in them? What is their geography and distribution pattern by branches of economy?

With the goal of defining reference points for the future, after studying the existing global experience in measuring creative industries, we have decided to conduct our own research, which yielded the following results (preserving the comparability of indicators by types of economic activity with other countries):

- classification of types of economic activity that relate to creative industries has been defined;

- contribution of creative industries into the Gross Regional Product of the rebuplic has been measured;

- the number of employed people in creative industry has been identified;

- the number of entrepreneurs and companies involved in creative industries has been identified and their distribution by fields of activity and geographic territories has been identified.

From the results of research: in 2017 the contribution of creative industries (cinema, TV and radio, photo and video, music, advertising and marketing, digital technologies, crafts, printing industry, architecture, libraries and museums) into the economy of the republic amounted to 1.65% (for comparison, the same indicator in the United Kingdom is 5.5%), average number of people employed in creative industries was 13 thousand (3.82% from the total number of employed people in the republic), of which the highest number was employed in the spheres of music, performing and visual arts — 5.3 thousand people; museums and libraries — 3.2 thousand; advertising and marketing — 1.2 thousand; cinema, TV, video, radio and photo — 0.9 thousand. In the beginning of 2019, there was a total of 1,240 entrepreneurs (3.4% from the total number) and 1,506 companies (6.0%) registered in the field of creative industries in the republic. Over half of the organizations (63.6% of entrepreneurs and 45.5% companies) were registered in the City of Yakutsk. The full text of research can be requested by leaving your e-mail address in the comments to this article (N.B. in Russian).

It is important to note that during our work we came to understand that it is necessary to delineate the terms creative economy and creative industries. However paradoxical it may sound, it is not always possible to establish a creative economy just by focusing on the development of creative industries.

What do we mean by this?

First. Before we just start measuring creative industries (by branches of economy) it is more important to answer the question of why? What strategic goals do we hope to accomplish: to create new workplaces in creative industries? Or to increase the contribution of creative industries into the economy? And, more importantly, where will this lead us?

Second. Let us think: why only certain branches of the economy are called creative industries?

The main criteria for including certain branches of the economy in the class of creative industries is the level of their creative intensity, or, in other words, the share of creative occupations in the total number of employed in the industry (as a rule, it should be more than 30%). For example, in the United Kingdom, the creative intensity in the type of economic activity 74.20 “Activities in the field of photography” is 77.8%, thus it is part of the creative industries. Therefore, the main criteria of a creativity in a branch is the ratio of people who are doing creative, intellectual, imaginative work in it.

According to the International Standard Classification of Occupations the following occupations are considered to be creative (aggregated):

directors of marketing and sales, directors for advertising and public relations, public relations specialists, managers of advertising accounts and creative directors, marketing specialists, directors for information technologies and telecommunications, IT business analysts, system architects and designers, programmers and software development specialists, web design and development specialists, movie producers and directors, photographers, operators of audio-visual and radio broadcasting equipment, architects, urban planners, architectural process engineers, architecture and urban planning specialists, graphic designers, cloth designers, blacksmiths, weavers and knitters, manufacturers, ornamentors and glass and ceramics decorators, furniture makers and other craftsmen, journalists, editors of newspapers and magazines, librarians, archivists, authors, writes and translators, actors, performers and masters of ceremonies, dancers and choreographers, musicians, etc.

If an ecosystem is organized from the representatives of the above occupations (e.g.: occupied in creative industries + creative activities in the food industry), it is not difficult to notice that this connection can be used to raise the competitiveness of “traditional” companies, scaling of the economy (not only individual companies but also cities, territories and countries), retention of existing markets and expansion into the new ones.

The representatives of these occupations can exist as a separate industry (such as the Prostranstvo Creative Cluster in Yakutsk) or be employed in traditional branches of economy.

! At that, the most important role in the system of interaction of creative occupations is played by those creative occupations, which are employed in the traditional branches of economy.

How does it work?

We decided to study this on the example of the aviation industry and analyzed the vacancies among the top airlines of the world and Russia.

It would seem that these airlines are part of the traditional branches of economy, however, by raising their creative intensity and focusing on increasing the number of creative occupations within them (marketing, analytics, branding, programming, design, public relations, etc.), they actually become part of creative industries. By raising their creative intensity, they managed to create a unique product and gained a competitive advantage. Additionally, this format creates a multiplicative effect: the companies interact with out-of-company representatives of creative occupations: photographers, producers, movie directors, translators, journalists, musicians, performers (public relation events, video shootings, etc.).

For example, the S7 Company has its own internal creative group (Marketing Director, Marketing Communications Director, Brand Manager, Head of Creative Group, Head of Production Group, Production, Head of PR, Head of Direct Communications, Head of B2C Communications, Media Group Head), which works on organizing large-scale public relations events.

YouTube-show «Visit earth»
“Photos Come True” Advertising Campaign

It is important to note that this example is not creativity just for the sake of creativity, but a purposeful marketing strategy with a clear target audience (generation of millennials) and a specific aim to influence it. This is not a brand name for the sake of having a brand name, but for attracting and retaining the mass and active target audience. At the same time the creative industries are monetized as well, because their representatives are the actual implementors of the promotion (photo and video studios, creative clusters, musicians, actors, journalists, etc.).

In other words, in our understanding, creative economy is not a separate branch, but creativity in all the branches of economy, improvement of their competitiveness, survivability and scalability. The main driving force in the development of both the creative economy and the creative industries is the creative activities in traditional branches of economy.

In short, creative economy is the ability to use talent for commercial purposes.

How does creative economy develop here and why should we develop it?

According to the results of the business census (2015), small and medium businesses in Yakutia are mostly engaged in spheres with low economic complexity (retail, construction, services, etc.).

The nature of economic complexity itself shows the ability of countries to do things that others cannot do (high economic complexity). It is obvious that due to the globalization of the economic environment the number of complex economies will decrease each year. In this regard the businesses follow the path of not “what new things can be done” but of “how to look at the existing things with new eyes”, and not only in technological sense, but also from the point of view of marketing. In essence, they are complicating the initially simple branches of economy.

Competitive and efficient companies (regional and federal networks) are gradually crowding out local businesses (including from industries traditional for small and medium-sized businesses)

It appears that new federal and regional networks will continue to come to the republic. New shops and restaurants are opening under franchise agreements, large network players are coming to the market, displacing local entrepreneurs. This process is irreversible. From the point of view of customers this is a good thing. But what about the economy of local companies?

Source: Sakha(Yakutia)stat

Let us take trade, for example, as the most widespread type of entrepreneurship (over a quarter of all small businesses). In the last 8 years there has been no significant increase in the expenses of households, there is even reduction in the rate of their increase. In other words, the market is not growing (Business → Customer format). At the same time there is reduction in the number of market participants, the retailers (18% in the last 8 years). It is obvious that the struggle for markets leads to a certain “cannibalism” in our market: some companies in the republic started to work in the format of networks (Azbuka, Akvarel, Svoya Kopeika, Khozmarket, Roztor, Tokko, Skif, and other shops). All these factors, the limited nature of the internal market and the arrival of “external” players, inevitably lead to such struggles in all branches of the local economy.

In these conditions, the raising of creative intensity and introduction of marketing innovations can become some of the main factors for the survival of our companies.

Specialists for a creative economy

There is an obvious question: are there enough human resources in our republic to raise creative intensity? Not just to create positions to be filled, but to create competencies, people who can promote our goods and services in external markets, who can compete in local and external markets, who can monetize the products of both the traditional branches of economy and the creative industries themselves. For instance, today, marketing is understood in our republic as advertising only, while, in reality, it is a mix of complex organizational processes that are closely connected with the elements of econometrics and big data.

We need to train new specialists who can adapt our branches of economy to competition in the internal market and, more importantly, in the external market. For example, if we look at the policy on training specialists in our republic, we train excellent doctors, programmers, teachers, engineers, power engineers, etc.:

https://minobrnauki.sakha.gov.ru/Antiterror/abiturientu/tselevaja-podgotovka

However, we do not train specialists who create additional value, who can promote our goods and services worldwide, who can compete on a global level, thus improving the quality of the offered products. For example, the “Brand Management” program in the Lomonosov Moscow State University or in the Higher School of Economics in Moscow is, essentially, a mathematics (research) program:

https://www.econ.msu.ru/students/mag/curricula/mgm/marketing/ap/brand/
https://busedu.hse.ru/catalog/182457028.html

Of course, it is not enough to have only qualified specialists. In order to pursue the policy of scaling, companies need other resources as well (financial, international connections, distribution channels, etc.). Who has them? Companies, which have access to state financial and human resources, who enjoy state market protection. This means that the state itself, represented by companies with state participation, should adopt the policy of scaling (not only to foreign markets, but also Russian ones). It is obvious that in order to provide more benefits to the native region (not only in the form of dividends and workplaces, but also knowledge), it is extremely important for, say, Yakutia Air Company, to enter new markets in Russia and abroad, and for Sakhatransneftegaz Company to strive to become a federal oil and gas company. It is not possible to remain successful and develop by focusing only on the local market. Even if we talk about state owned companies. How should state companies be oriented towards scaling? Should the state come up with strategies for them? Of course not. The best way is to raise their creative intensity, that is to saturate them with correct talents.

Results

Development of creative economy is a complex and systemic process, the participants of which are not only creative industries, but all the players of a regional economy.

In order to establish creative economy in our republic it is necessary to create an ecosystem of interaction of creative knowledge in all branches of economy by raising their creative intensity.

The strategic goal of developing creative economy is not only the preservation of traditional markets for our companies, but also their scaling to external markets, promotion of our economy beyond the borders of the republic and making it more competitive.

P.S.: The following are the examples of Yakutian entrepreneurs (small businesses), representatives of simple economy, who, by adopting marketing innovations are scaling their businesses (opening branches, launching their own franchises) and are entering external markets.

Корпорация

Afanasiy Zakharov

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Корпорация

АО “Корпорация развития Республики Саха (Якутия)”

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