The role of creativity and innovation in an economic downturn Neil McInroy, Chief Executive Natalie Qureshi, Consultant Kreative Byer & British Council

The role of creativity and innovation in an economic downturn

Neil McInroy, Chief ExecutiveNatalie Qureshi, Consultant

Kreative Byer & British Council

March 20th 2009

Centre for Local Economic Strategies

“The Centre for Local Economic Strategies is a registered charity which is committed to places and communities experiencing social

and economic inequality and lack of opportunity. We want to improve the effectiveness of local groups, agencies and

government in addressing these problems, by informing policy and developing practice.”

About CLES: Our Mission

About CLES: Services

Around 50 Members (Local Authorities, regeneration partnerships, third sector organisations, public bodies, economic partnerships)

Events and TrainingPolicy Bulletins and briefingsPolicy Research

CLES European Research Network (CLES Consulting) – Our trading arm

About CLES

Today's presentation

1. How we got to where we are and how we need creativity, innovation and risk

2. The concept of resilience and why it is important3. New approaches to create resilient places

Challenging times!

Climate change, peak oil, energy insecurity

Economic Downturn

Unemployment, stalled property market, lack of capital for investment, lack of diversity

Regeneration incomplete – Even the boom times were not that good! Still work to do….

Inequality

Governance and powers- Rigidity of Local policy instruments

What has come before in terms of Local economic activity in the

UK

WAVE 1. 1960s 1970s: Inward Investment

WAVE 2. 1980s 1990s: Grow the sectors. Local business growth as well as investment

WAVE 3. 1990s to....Networks and clusters

Property and land appreciation. A city renaissance…?

Productivity and competitive advantage

‘We are capable of shutting off the sun and the stars because they do not pay a dividend’

John Maynard Keynes 1933

What have we created?

New paradigm?...

Increasing recognition that the local matters

Too focused on economic growth (eg GVA, GDP) as a means to local economic success

Economics is not the end in itself….merely a means

We need to get economics to work for us more

Work for environmental and social priorities

Networks are important

Economic recession partly due to the financial network

New networks of public and private sector, social innovators and universities needed

The next wave: Local Economies in the future...

Scaring traditional Local Economic development

professionals!

GDP and Life Satisfaction 1973 - 2002

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

200%

1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001

GDP

Life Satisfaction

Policy assumptions underlining current economic policy

The need for creativity, innovation and risk

“Creativity is a mental and social process involving the generation of new ideas of concepts, or new

associations of the creative mind between existing ideas or concepts, creativity is fuelled by the process of conscious or unconscious insight.”

“creativity as an assumptions breaking process”

“Innovation is the process of both generating and applying creative ideas in some specific context”

Toward ‘New’ Economic Strategies and what interests CLES

3 thoughts for the future

The economic resilience model

What do we mean by resilient?

Functional economy

Delivers positive and equitable outcomes

Withstand economic shocks



Public economyPublic expenditure on goods and servicesFootprint of procurement activity on local supply chainsPublic employment



Social economyContribution of community activities to the local economy

E.g. social enterprises, voluntary organisations, community groups, community assets such as community centres, youth clubs, halls, etc.



Social economyContribution of community activities and networks to the local economy

E.g. social enterprises, voluntary organisations, community groups, community assets such as community centres, youth clubs, halls, etc.

Commercial economy Private businessesInvestment into development and new enterpriseProvides the bulk of employment

The three spheres of a resilient economy work within a wider context

Government policy framework

Broader economy

Need to work within environmental limits

Importance of “place”. Link economy to the history and identity of the place


Worklessness

What are the weaknesses which make our Localities less resilient?

Scared of risk

Inequality

Poverty No innovation

Poor

health

Lack of opportunity

DisempowermentLow enterprise

Strengths which increase the resilience of our localities

Effective community infrastructure

Empowered citizens who innovate

Creative spirit

Employment opportunities

Volunteering

Local businesses

Quality environment

Education & skills

Fairness

A creative and resilient

place

Creative and resilient Place Place which lacks resilience

Balance between Localised and globalised economy

Fully globalised and local is weak

Networked business Individualised and poor supply chain

Innovative business Business as usual

Progressive public spending Spending based on efficiency and the cheapest

Health and wealth generating Generates wealth

Cross sectoral connections Sectoral

Bottom up Hierarchical

Flexible governance Rigid

What can be done to strengthen the economic resilience of

localities?Four ideas:

1. Innovation - Creating the conditions to encourage innovation

2. Valuing “place” and “locality” - Developing and strengthening networks, social enterprises, understanding how money flows in your economy

3. Health and wealth - Look to create an economy which focuses on wealth and health

4. Green new deal - A range of mechanisms to stimulate a green economy

Innovation

Historic track record

Unique opportunity

Thriving not surviving

Creativity fundamental

http://www.amazon.com/gp/product/images/0965444902/ref=dp_image_0?ie=UTF8&n=283155&s=books

Social Innovation. Comes from two sources

1. The Bees

Community groups/social enterprises

Driven by anger, loss or wanting to make things better

2. The Trees

Big public agencies, companies with roots,

power and money

Success needs both!

Creative Futures: Innovate

Innovation – helps us to get to grips with recession

Allows us to adapt and manage change in order to achieve positive outcomes

Product and process innovation

Networked approaches to innovation

Examples:

Life cycle analysis in low carbon technology, waste from one company becomes raw materials for another

Wool industry, where wool for textiles becomes wool for insulation


Yokkaichi – Japan

1998 – petro-chemical industry in decline 20,000 jobs lost –A lossEnvironmental pollution problemsShift to high value added production Companies sharing expertise and knowledgeMix of sectorsOne stop service introducedAdvanced Materials Innovation CentreRaw materials (Chemists), Ideas, Production all together


Portland – USA

Traditional industry in declineBuilt on strong business networks connected insiders and outsidersAn outward looking networkNew regional coalitionsIt got the quality of place/life offer rightSophisticated networks and satellite networks


Coimbatore – India

Traditional textile industryNew technological industriesFuelled by high levels of individual entreprenerialismSocial consciousness high and high levels of family and community networks Knowledge demanded by populationDrives demand


LocalismSupporting local suppliers, businesses, social enterpriseProcurement matters - using the public spend wisely to support the local economy

Creative futures:

Go Local

Even your breakfast egg

“The process whereby public sector organisations acquire goods, services and works from third parties”

Making money “sweat”

£160 (1300dkk) billion per year on goods/services by public sector

Not simply a bureaucratic process to be adhered to but…

Significant lever to influence local economies and achieve other policy objectives – (social and environmental)

CLES work in Swindon

Creative futures: Progressive procurement

Understanding how Swindon Local Government will spend money?

Use of Local Multiplier tool (LM3 tool)

Public spend as a promoter of ‘local’ supply chains

Explored one service area within the Council services “Street scene”:Mapped spend through analysis of invoices51% of spend with suppliers £1 (8dkk) Million was spent upon organisations based in SwindonRe-spend of suppliers in local economy - £250,000 (2,000,000 dkk) through own suppliers and employees

Summary: For every £1 spent by the council, a further 64p re-spent into the local economy

Creative futures: Progressive procurement

Consider how procurement strategy enables business to tender for public services and goods.

Widening access to tender information

Terms and conditions

Scale and size of contracts

Community benefit clauses to support local community outcomes, eg local labour clauses

Explore the opportunities for both revenue projects but also larger capital projects (e.g. building schools for the future)

Creative futures:

Progressive procurement

=

Creative futures: Health and wealth


Source: European social survey

Economics is not the end in itself….merely a means

We need to get economics to work for us more

Is economic downturn an opportunity or a return to crude economic growth priorities

A wealth and health producing society

Focus on material and psychological needs and support

Creative futures: health and wealth


An emphasis on the core economyEconomy of the home, family, neighbourhood and communityUK 40% of all economic activity takes place in the core economy - not currently reflected in GDP If the core economy fails, burden on public and private sector grows


Invisible economy that we take part in every dayThe economy of the home, family, neighbourhood and community

• It is an economic system as it involves the goods and services produced, exchanged and distributed

• Like a computer • Operating system: The core economy • Specialised programs: Hospitals, schools, civil

society• The programs may be ok, but the operating system is

struggling!

Getting to grips with climate change “A green new deal”

• Development of a low carbon economy through building efficiency

• Development of a “carbon army” – new skills and knowledge

• Setting clear targets for carbon reduction at both a local and national basis

• Local energy production

• Heightened Global environmental and economic awareness

Creative futures: A green new deal

Final thoughts

Creativity as an assumptions breaking process New economic model is sought Current economic situation requires change

Paradigm shift This is the time to take risks Emphasis on people, place and balance Not just growth, but resilience

Final thoughts

Documents

The role of creativity and innovation in an economic downturn Neil McInroy, Chief Executive Natalie Qureshi, Consultant Kreative Byer & British Council