Five Shifts of the Creative Economy

Modern capitalism is evolving again and in ways even a socialist can celebrate.  The balance of power has shifted to consumers due to the ever-expanding globalization of markets, easy access to reliable information, and increased platforms of communication such as social media.   This larger shift has been emerging and is gaining momentum now that people are discovering and exercising newly realized economic muscle.  The transactional days of “We make it, you take it” are withering in the pure light of relationship-seeking, service-oriented value creation partners.  A few organizations are now capitalizing on this opportunity by going beyond the old band-aids of better customer service (or customer experience) and working to deliver real and ever greater customer value. 

Some are calling this broader economic shift the “Creative Economy”.  Its focus appears to be continuous innovation through a keen understanding that all relevant value is co-created.  No longer is the customer satisfied with being handed a generic pre-packaged “value bundle” from a disconnected value stream which is neither relevant nor valuable.  It’s no longer “B2C”, “B2B” or the like; it’s actor-to-actor in a very dynamic and powerful service ecosystem.  In this way the Creative Economy lives up to its name, and the organizations capitalizing on it appear to have embraced five organizational shifts which are in alignment with the Creative Economy.

The end of top-down leadership methods

The days of top-down command and control have shown their fruit with the open festering sores of distrust, disillusionment, and soul crushing value containment.  Author and Forbes blogger Steve Denning says, “… the Creative Economy dynamic is enablement, rather than control. It aspires to liberate the full talents and capacities of those doing the work. It is oriented to understanding and creating the future.”  Leadership (in the purest sense) enables the workforce to create maximum value while simultaneously realizing maximum value.  Leaders in the Creative Economy are value realization maximizers for all stakeholders.  This requires understanding and perceptive skills in terms of how value is co-created in varied contexts.  It also requires perceptive understanding in the dynamics of what disparate participants find valuable.

Existing planning tools are ineffective, if they ever worked at all

Classical strategic (or business) planning basically assumes we can predict the future.  This conclusion comes from a decision bias fed by “blind-hog” success of many strategic planners, when assumptions relative to knowledge were relatively low (Occam’s Razor).  However, any perceived success (luck really) is much less likely in today’s environment of relatively low knowledge (it’s not that we know less, knowledge is growing exponentially!) and ever increasing assumptions.  Resources and contexts are changing so fast now that no planning tool can survive any planning window.  But here is the most damning conclusion from Henry Mintzberg: “Because analysis is not synthesis, strategic planning is not Strategy formation… analysis cannot substitute for synthesis.  No amount of elaboration will ever enable formal procedures to forecast discontinuities, to inform managers who are detached from their operations, to create novel strategies.  Ultimately, the term ‘strategic planning’ has proved to be an oxymoron.”  Mintzberg brings into question the efficacy of business planning altogether and points out that no conclusive data exists to prove it ever was.

Constantly evolving business models

Value proposition maturity is being reached in ever faster cycles.  The good ol’ days of value propositions lasting a lifetime have actually long been over; it’s not unusual to see them only lasting for two to three years.  To maintain viability, every organization needs to be vigilant in terms of its business models.  Business models are the engines that create and deliver proposed value while capturing value (revenue) in return.  These engines are constantly at risk due to the ever changing business realities we face.  Dr. Michael S. Jordan, Professor at the Robinson College of Business, Georgia State University says, “Today’s complex and fast-moving environment necessitates a granular focus on individual business models, their micro strategies, and the continually changing business realities that can affect these business models for the better or the worse.”  Leaders need to learn to think in terms of business models.

Efficiency is the enemy of effectiveness

Even though most of us know better by now, Taylorism is still pervasive.  Efficiencies and cost reduction remain a “holy grail” in many organizations, in spite of the fact there is often direct correlation to customer dissatisfaction when we do.  On the other hand, focusing on better value delivery to customers seems to naturally address the issues of efficiency and costs.  Simon Caulkin notes this phenomenon in Managing for the Better where he says, “Managing cost drives up cost.  Cost reduction is a byproduct of focusing on value.  Most managers assume that improving service pushes costs up.  But that is the consequence of a faulty definition of service. By driving out failure demand, working to deliver the service that people need in the shortest possible time with the minimum effort releases capacity and reduces overall cost.”  By focusing on efficiency we lose effectiveness, and by focusing on effectiveness we naturally get both.

Demonstrated knowledge is no longer a skill

Back in the day, knowledge was power.  That old axiom no longer applies.  Given the previously mentioned rate of knowledge growth, knowing is no longer a competitive advantage.  Futurist Jim Carroll says, “In a world of fast knowledge development, none of us will have the capability to know much of anything at all. The most important skill we will have will be the ability to go out to get the right knowledge for the right purpose at the right time.”  Indeed, the ability to learn supersedes anything we think we know today.   The ability to sense voids of knowledge and filling the voids quickly and accurately is the new gold standard.  Learning trumps knowing and we need more “learners” in our organizations than “knowers”; and that starts at the TOP of the org chart.