Creative Class

Technology push or technology pull: it’s an age-old question. In his new book, The Venturesome Economy, Columbia University’s Amar Bhide comes down squarely in favor of the technology pull view. The real source of America’s innovative edge is not simply in great universities, research intensive companies, government sponsored innovation efforts, or tech-savvy venture capitalists and Silicon Valley-style entrepreneurial companies, but in something much more basic - a large body of “venturesome” consumers ready, willing, and able to try new things. Sometimes I call them the creative class Having lived and worked in the technology push world of Washington D.C., this book should be required reading for members of the incoming Obama administration’s economics and science and technology policy teams. The Financial Times has a nice review. A power-point summary is here.

Nobel-prize winner, Joe Stiglitz says the stimulus should invest in the innovations that can power our future, and not just breathe life back into the industries and economic patterns of the past (via Mark Thoma).

Would a ban on fast food restaurants in our cities and towns help lower the rate of heart disease? Would a program to collect Dog DNA from poop left on our streets and sidewalks help us target negligent owners? Could we harness our own bio-mechanical energy to charge our cell phones, even our cars? Does ‘redshirting’ children, holding them back so that they can enter grade school at an older age, wreak havoc on social security programs? Would local stock markets for regions no larger than Barrie, or Muskoka, help citizens allocate capital more efficiently to businesses that need financing? Could we switch our dietary habits from cow to kangaroo to help save the planet?

If you think I’ve just stolen and plagiarized part of the manuscript for the yet unpublished Freakanomics 2.0, you’d be wrong. These are the hypotheses and real life programs that earn brilliant and bizarre minds recognition in The New York Times’ “Year in Ideas.� If these few examples tickle your fancy, try “spray on condoms� on for size (not literally- these bespoke coital solutions are not yet widely available). Human ingenuity never ceases to amaze, eh?

One thing that stood out for me while reading these stories was how many of these truly remarkable ideas came from Canadians - three from Toronto academics and scientists alone. For The New York Times, where Canada’s parliamentary crisis earlier this month barely registered a blip on their radar, that is a pretty impressive showing from the Great White North, and I believe it speaks to the creative incubator that Toronto has become. Read the article and take notice of where many of these ideas began. There is perhaps no better indication of a “creative city� than the brilliant ideas it fosters and develops, and some of my favorite creative cities - San Francisco, Montreal, Washington, D.C., Minneapolis, and Boston, as well as my hometown, the T-Dot, get plenty of love.

I’m a member of the Net-Generation, people born between 1978 and 1997. At first glance, my cohort seems tailor-made for a decentralized and “flat world,� so we shouldn’t care so much about the place where we work. After all, the internet, like no other technology, has lowered geographical and temporal barriers for communication and collaboration, and N-Geners, like no other generation, are the most comfortable and capable working, learning, and communicating online. Case in point: I recently found myself collaborating on a project with two college pals on Skype (the free online video phone application): one in Palo Alto, California, the other in Alaska, while also chatting and sharing photos with a friend who was in an internet café in rural Vietnam.

However, while technology has lowered barriers and allowed people all over the world to participate in the global economy, it’s a mistake to suggest now that ‘place’ is no longer important for today’s emerging creative workers. Indeed where one works matters now more than ever.

Whether interested in finance, law, politics, computer programming, consulting, or medicine, young friends and colleagues of mine are drawn inexorably to the epicenters and major nodes of their respective fields; in cities, suburbs, and exurbs that also happen to score very high on the creative class index. This is certainly true for my friend in Palo Alto, a city straddling the area between San Francisco and Silicon Valley. He is a talented computer programmer working for an internet start-up. But what about my friends in Vietnam and Alaska, you ask? Did Google just open a server farm in Juno? Is rural Vietnam the new Silicon Valley? Why do your friends want to live there? Truth is they don’t.

My Alaska friend was working for Mark Begich, a Democrat, who defeated the incumbent Senator (and convicted felon) Ted Stevens. If ever there was an appropriate time to say “got out of there like a bat out of hell,� Jeff’s escape from Alaska after the big victory was it. Jeff is passionate about politics, and he is now in Washington, D.C. looking for full time work. Truth is he would rather struggle for a little while in D.C. than be instantly employed anywhere else. After all, every politically engaged young person he and I know wants to be in the U.S. Capitol and, as a result, a burgeoning social scene of smart, creative, and ambitious young people has flourished there. Dave, my friend in Vietnam just graduated from McGill’s School of Management and is wandering Southeast Asia barefooted and bearded trying to ‘find himself,’ but really he’s just on vacation. Like me, he will soon find himself up to his elbows in financial statements and spreadsheets. He is returning to Toronto to work at a boutique private equity group. Jeff was drawn to the epicenter of the political world. Dave, a former business student with an entrepreneurial streak, will return to Toronto- Canada’s financial capital, because he knows the city offers great opportunity for a person with his interests (it also helps that he is a die-hard Leafs fan). In both instances, the where did not merely influence their decisions, it determined them. If anything, their stints in Alaska and Vietnam simply reinforce the notion that the Creative Class, and young people in particular, travel and move throughout the world with increasing ease.

Though not identifying it as the “Net Gen� specifically, Richard Florida presciently foresaw the emergence of a new generation of the “Creative Class� in The Rise of the Creative Class, a theme that has surfaced in ensuing works. His experience interacting with students at Pittsburgh’s Carnegie Mellon University revealed that young people are drawn to certain hubs, crowding together in thriving and diverse places where like-minded individuals share lifestyles, cultural tastes, and work interests. While the moniker ‘Creative Class’ is not generation-specific, by 2018, when all members of my cohort will be of working age, the Net Generation will, simply put, dominate the creative class. As Boomers retire and Generation Xers fill the ranks of senior management, there will be an overwhelming demand for these young, highly educated people. Attracting them to companies and regions where they can thrive and prosper will be the next great imperative for today’s corporate leaders and politicians.

I encourage everyone to share your thoughts and opinions with me.  If a conversation begins, I will be happy to engage in it with you.

The UK-based, independent, National Endowment for Science, Technology, and the Arts (NESTA) has released a new report on the influence of arts and humanities research on innovation. Their work explores how arts and humanities interact with science and technology in the innovation process and infrastructure. Check out NESTA’s site and view the full report:

But innovation does not happen in isolation. It requires cooperation between government, universities, third sector organisations, entrepreneurs, businesses and consumers.

Innovative performance depends on their relationships and on the quality of the overall system. Innovation flourishes when there is a strong knowledge base combined with a culture of tolerance that embraces novelty and a diversity of ideas.

Traditional understandings of innovation emphasize the importance of science and technology research. In contrast, this paper investigates the role that arts and humanities research plays in the innovation system.

A recession can be a good time to re-think corporate strategy, products, and especially R&D approaches.  Indeed, what many companies want to achieve is the next breakthrough that launches the organization forward or in a new direction - a disruptive innovation.

The challenge can be to, (a) get enough people on board and (b) actually shake things up enough that change can happen.

In a recent Knowledge@Wharton article, the author highlights a presentation from Jeong Kim, President of Bell Labs at Alcatel-Lucent which describes in detail these challenges as well as how he has managed to surmount them.

The problem is that success creates a virtual construct, a paradigm of “How to Do Things,” inside of which new thinking cannot flourish. Kim calls it “The Curse of Knowledge.” Cross-discipline teaming “is one way of breaking the Curse of Knowledge,” he says. Another is “experience pairing,” or matching a senior employee with an individual who has considerably less experience, but a fresh perspective on how to solve problems.

….

Kim offered a case study from Alcatel-Lucent - Lucent Technologies at the time - on how to inject a spirit of disruptive innovation into an existing and stagnant culture. Lucent’s optical networking division was severely underperforming and the company fired the unit’s top managers. “I was really convinced that the reason I was put in there was that nobody else would do it, and they needed somebody to blame,” says Kim.

The division was moribund: Financial results were disappointing and morale was low. Kim shook up the management team and took the survivors to an off-site retreat that featured whitewater rafting. “First thing they do is say, ‘Why are we doing this …?’ After a while, they get really bored.” The exercise, intended to foster teamwork and cooperation, was designed with the help of a psychologist. Instead of cooperating, the managers began splashing one another with their oars, “like little kids.”

But the exercise-psychology experiment wasn’t over at the end of the rafting run. “After six or seven hours of whitewater rafting like this, they were tired.” That evening over dinner, people let their “at-work” guardedness down and spent time learning about one another.

The next day included all the off-site strategizing and white board sessions one might expect, but Kim says the interaction was more genuine and productive than if they had met as they were previously, a grouping of near strangers. In the first quarter following that meeting, he says, the group posted revenues of $510 million, $560 million the next quarter, then $730 million, then $970 million. The point, he adds, is that “teamwork is so critical for the success of a company.”

….

“You have to make an investment in capital, human knowledge and networking,” says Kim. “That’s the way to get ahead.”

A key point to remember here is that there are many ways to invest in “human knowledge and networking.”  There are also many ways to “disrupt” existing norms in order to shake out a more disruptive innovation.

Workplace change could be one - having employees to sit in different places, or around different people.  Another option would be introducing new employee activities (whether rafting or something else that gets people interacting and connecting to different people and in different ways).

What efforts (if any) at “disruptive innovation” are you seeing?

Technology has enabled the newer mobile, flexible workplace that allows for better collaboration, faster decisions, and higher productivity.

The White House, as well as the U.S. government generally, over the past 8+ years has demonstrated an increasing performance deficit in these areas of collaboration, decision speed, and productivity, particularly when compared to private corporations, who have embraced new technologies and new workplaces.

Consider these three examples: FEMA’s inability to manage the crisis in New Orleans; the CIA and FBI and other agencies not being ready on September 11, 2001; and the clumsy response to the current economic challenges. Inquiries and reports related to these examples have revealed that various key people and agencies have lacked access to timely information or have been unable to collaborate quickly.

Then consider comparable private sector capacity: Wal-Mart is a world leader in logistics, infinitely superior to either FEMA or the military and indeed did end up helping out with post-Katrina needs. Within the Google servers is probably more information about what potential terrorists are up to than at the FBI or CIA.

For U.S. government agencies to catch up even modestly to the productivity and innovation capacity, a new approach to workplaces is likely needed.

It could start at the top. I would suspect that few Presidents of major, successful corporations don’t have a Blackberry or the equivalent.  Anyone who wants to have a laptop with high speed Internet access on their desk can have it. Denying this to Obama seems ridiculous –and if the President cannot decide this for himself, exactly who is in charge of the USA?

Security is a huge issue at every big company; this therefore does not seem like a good reason to tell Barack Obama he can’t have a Blackberry.  The White House should be able to employ top IT people to put in appropriate security measures.

One argument I’ve heard as to why he shouldn’t have one is that all of his correspondence becomes public record. But what does that have to do with the Blackberry?  In 2008, considerable official correspondence between all types of companies and organizations happens in e-mails. This is just 21st century workplace reality - the Office of the President needs to catch up. (I’m sure Obama knows what should and should not be said in e-mail messages!)  And, he could always decide to read only.

Electronic communication is a key part of dynamic workplaces today that enable better collaboration and higher productivity. It was key to how Obama mobilized a nation to become President-elect.  I would think that it will be key in the new White House — but it will be interesting to see what the Obama team decides to do.

This article from PM magazine of the International City/County Management Association (IMCA) gives a local government viewpoint on the importance of arts and creativity to a local economy. Here are a couple of quotes:

Nationally, the nonprofit arts and culture industry generates $166.2 billion in economic activity annually, which is a 24 percent increase in just the past five years. That amount is greater than the gross domestic product of most countries. This spending supports 5.7 million full-time jobs in American cities and counties-an increase of 850,000 jobs since Americans for the Arts studied this in 2002. What’s more, because arts and culture organizations are strongly rooted in their communities, these are jobs that remain local and cannot be sent overseas.

Our industry also generates nearly $30 billion in revenue for local, state, and federal governments every year. By comparison, the three levels of government collectively spend less than $4 billion annually to support arts and culture. This is a spectacular 7-to-1 return on investment that would thrill even Wall Street veterans.

and

New research by business scholars demonstrates a greater understanding that creativity is at the leading edge of innovation. In the 2006 report, Are They Really Ready to Work?-prepared by the Conference Board for its Fortune 1000 business constituency-U.S. employers point to “creativity and innovation” as one of the top skills needed by new hires to succeed in the workplace.

The applied skills that support innovation, such as critical thinking, communications, and problem solving - all skills commonly acquired in a quality arts education - were rated even more important than the traditional skills of basic reading, writing, and math. These business leaders further stated that the importance of creativity and innovation will only increase in the future.

The lost decade is often talked about in Japan. From 1990 to 2000, the Japanese economy was stuck in the aftermath of a burst housing bubble and the inability to channel investment into the “next big thing.” Of course that was the Internet. Today the U.S. is in a similar situation. We are in a post-housing bubble, a credit and banking crisis. We also face the difficult choice of figuring out the next big thing to invest in. If we miss it or do not get it right we will be Japan in the 1990s and Germany, Singapore, China, and Denmark will lead the next economic expansion. Where to put the money? The answer is simple - it’s The New New Deal. The Obama administration has a chance to set America on the right course. The question is… will it?  Will they cave in the old New Deal (bail out the auto industry) or can they embrace the New New Deal? What is the New New Deal? According to Jefferey Sachs:

• The development of mass-market, battery-powered autos that achieve at least 100 mpg of gasoline on fleets by the year 2015.
• An efficient power grid that can carry renewable energy - solar from the Mojave Desert and wind from the Great Plains - to the population centers of the U.S.
• A utility industry that can reduce 80 percent of emissions per kilowatt on newly built power plants by 2016. For the U.S. to achieve this it will have to decrease consumption and increase investment. One policy to help would be for a gasoline tax to keep gas prices high to reduce consumption and create tax revenues to fund R&D. I would suggest a tax that would keep gasoline prices at $4.00 a gallon rising by 50 cents a gallon over the next four years. This would create the incentives to invest in our energy efficient and sustainable future.

A turbulent economy can generate some “creative destruction” in your career path. The best thing that ever happened to me was the dot-com I worked for going bust in 2001 and that sector staying weak for long enough that I moved on and considered all possible industries. Where I am now turned out to be a much better fit.

A number of companies and industries will do some restructuring over the next few months, both shedding some workers but also potentially hiring others as they refocus. In case you end up with the opportunity (whether forced or not) to consider new career and employment possibilities, here are some helpful issues to ponder from a recent CBC website article:

Tips on finding a great place to work

• See which employers have put some effort into building a high-trust culture.
• Assess the space: Get a sense for the company’s physical environment. Do you feel inspired by the space itself, and what would the commute be like for you? How would that affect your work-life balance?
• Talk to people who say the workplace is tops: Do you have a sense that they’re proud of what they do? Is there a feeling of camaraderie that you get when you go into the workplace?
• Ask about the perks: If an employer is describing the perks or benefits that they offer, make sure you ask how many employees actually use those perks and benefits.
• Long-term plan: Ask about the opportunities for career development and progression throughout the organization. What’s the long-term plan for you in this organization?

The article mentions several top Canadian places to work and how they live up to these above standards. For example, at pharmaceutical giant Nycomed’s Canadian operation:

The company’s permanent employees have access to $3,000 a year in post-secondary tuition funding or $5,000 for post-graduate studies. Last year, about 30 percent of the company’s employees took advantage of this perk.

Being encouraged and supported to grow your knowledge and skills is a wonderful workplace benefit that also can provide new options in times like these.

And, in these turbulent times, a great place to work also offers some job security as those companies tend to outperform rivals:

Companies on the Great Place to Work list outperform standard stock market indices by a factor of two to three,” Jen Wetherow, the institute’s director, said. “Their results are above average.”

What will be interesting this economic cycle, and something I’m actively trying to monitor, is which employers stick with plans to create better, more effective workplaces as productivity enhancing tools and means to better attract and retain talent. I’ll also be looking to see if talented people continue to keep criteria like those on the list above in mind. So far, intriguingly enough, I’m hearing affirmative from both camps (particularly in the accounting / finance / consulting sector).