2010 Creative Services

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IME - Service Innovation - 2010 BMAN62052
MIIRO
Innovation and Creative
(Service) Industries
Ian Miles
Ian.Miles@mbs.ac.uk
IME service innovation seminar 8

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Main Contents
Creatives
Who and What are the “Creatives”?
Creativity and Innovation – a paradox?
Understanding innovation in creative industries
Convergence
What is digital convergence?
Who does this affect?
How does it affect media, IT industries, other
sectors…

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Remember the discussion of statistical
operational definition of KIBs…
Business Service sectors: NACE 71-74. KIBS - most of NACE 72-74
NACE
Classification
Business Services Most important activities
71 71.1, .2
Leasing & renting Renting of transport, construction equipment, office machinery
72 72.1 – 6 Computer • Hardware consultancy • Software consultancy
• Data processing • Database activities
73 73.1, .2 R&D • Research and experimental development on natural
sciences and engineering
• …on social sciences and humanities
74 74.2,.3 Technical • Architectural activities • Engineering activities
• Technical testing and analysis
74.11- .12,
74.14
Professional • Legal activities • Accounting & tax consultancy
• Management consulting
74.13, 74.4 Marketing • Market research • Advertising
74.5 Labour recruitment Labour recruitment and provision of personnel
74.6, 74.7 Operational Security activities • Industrial cleaning
74.81-84 Other Secretarial and translation activities • Photography
•Packing activities • Fairs & exhibitions

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We noted that there are, however, some
other activities looking like KIBS:
Services to specific sectors
Some parts of section M (training), N (veterinary), and O
(Other community, social and personal service activities):
Nace Rev 1
91.1 Activities of business, employers’ and professional
organizations
92.1 Motion picture and video activities 921x
92.11 Motion picture and video production 9211x
92.12 Motion picture and video distribution 9211x
92.13 Motion picture projection 9212
92.2 Radio and television activities 921x
92.20 Radio and television activities
92.31 Artistic and literary creation and interpretation (includes
Technical Writing!)
92.40 News agency activities
92.51 Library and archives activities

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The notion of creative
industries
Has emerged and attracted significant
attention in last decade
Somewhat contested – some
commentators do not like notion of
“industries” applied to some of these
activities, some prefer older ideas of
cultural sectors, etc.
Social and cultural significance is
unarguable, but it is economic prominence
that has attracted attention
(even in Japan – soft power like Manga as
an economic resource)

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DCMS - definitionhttp://www.culture.gov.uk/what_we_do/creat
ive_industries/default.aspx/

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DCMS categories
Million people in industries contributing
c8% GDP
Another million professionals in these
activities in other sectors
“Creating ProducingDistributing
Displaying Archiving Educating”
• Long Tails – esp Creators
• Agglomerations, creative centres
Advertising
Film and video
Architecture …. ….
Music …. …. …. …. ….
Art and antiques markets
Performing arts …. …. ….
Computer and video
games ….
Publishing …. ….. …. .
Crafts …. …. .
Software … .
Design ….
.
Television and radio

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“Creatives” in the UK – not all in
creative industries, by a long shot!
Source: NESTA, Beyond the Creative Industries

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Disparate Activities, but some
systematic thinking
Beyond Cultural Industries, media and arts…
Creative Industries Task Force Mapping Document
(1998) definition - creative industries are ‘activities
which have their origin in individual creativity, skill
and talent and which have the potential for wealth
and job creation through generation and
exploitation of intellectual property.’
Reflecting service economy, knowledge economy
developments; digitalisation; business-to-business
creative flows….
Economists and statisticians wake up: what about
innovation research?

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MIIRO A Paradox
In the UK, too, everyone stresses
Innovation – BERR’s Innovation
Nation
Everyone recognises the importance
of the creative industries – DCMS’s
Creative Britain: New Talents
for a New Economy
Creativity and Innovation are
rather closely related ideas…
But the creative industries are
neglected where it comes to
innovation studies, measurement,
policy
Innovation Nation:
Background analysis: strengths
and weakness of the UK
innovation system
Department for
Innovation,
Universities &
Skills

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Creativity and Innovation
“Imagine.
Create.
Innovate”

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Free Newspapers
Revenue Model Innovation
Some examples of Innovation in Creative Industries

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Internet Narrowcasting
Innovation in
service concept,
design, delivery,
interaction with
(and among)
clients

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Digital Cinema (+3D)
Innovation in Production, Distribution
and Delivery, User Experience

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Videogames
Innovation in Delivery, content, user
interfaces, user interaction (online
games etc)…

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Design
Process
Innovation
– becoming
product
innovation
(virtual
prototyping
etc)

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Broadcast Media
Content Innovation – routine (“fresh”
content vs “novel” content) and generic (new
content v new structures for content).
Plus User engagement innovation

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“Content is King”
Is the reason for the
avoidance of this area a
matter of these activities
having been seen as
nonessential luxuries
– or is it the mysteries of
content?
(c)

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Content is Kong?
• Thinking about
innovation in
content gets
dangerously close
to aesthetic
judgement or
cultural and media
studies - novel,
fresh, genres…
• Safer to stay with
technological
innovation!

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Innovation in Creative
Industries
Content innovation is only part of the
story…
Innovation in production, distribution,
and delivery of creative products;
involvement of “consumers” and
relations between firms; business
models and customer relationships
And much of this is HIDDEN.
Many
creative
activities, &
forms of
innovation,
are not
captured in
conventional
metrics

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MIIRO Hidden
Innovation in
the Creative
Industries

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Case Studies
Videogames Development
Industrial & Product Design
Independent Broadcast Production
Advertising & Communications
(esp. digital media)

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Much evidence of innovation –
both well-recognised and hidden
Technological Innovation is pervasive – esp.
IT tools, delivery, formats - Numerous
examples of ICT use, investment and
development across all case sectors
Conventional process innovation – using
technology tools and new working practices
Conventional product innovation – including
new content, repurposed content, improved
products, products for new markets.

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Much evidence of innovation –
some well-recognised
Product and Process Innovation is also
pervasive (much involving ICT use directly or
indirectly)
Advertising – electronic direct marketing
services; campaign tracking services
Independent Broadcast Production – on-
line-only drama and comedy programming
Product Design – new service products:
‘full-package solutions’ - production
consultancy and management
Videogame Development – educational
packages, mobile games

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Some innovation is more ‘hidden’
Organisational and Business/ Revenue
Model Innovation (again pervasive but rarely
perceived or presented as innovation per se)
Outsourcing and offshoring – common for some
forms of activities in all sectors
Supply chain repositioning and strategic
partnering - ‘moving up’ the value chain – providing
consultancy and higher value services
New business and revenue models – novel ways
of securing payback for creative products – ‘shared
risk and reward’ strategies; ‘own brand’ products

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More ‘hidden’ innovation
Innovation in provision of experiences – and
sometimes in consumer role in co-production
Hidden innovation – beyond usual product &
process categories, and not captured by
existing R&D or innovation surveys
Innovation management is challenging –
various types of knowledge and creativity –
and often not formalised
Some examples…

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Innovation and innovation
management
Rarely an “R&D management” model (except
some “makers” and technology services)
Mentoring, groupwork, professional communities
Novel methodologies for research in relation to
tastes and preferences (vital in shaping new
products!) – a key locus of activity
Combinatorial innovation – re-combination and re-
purposing of existing technologies, processes and
(especially) content – re-packaging of content for
use on new platforms or in new products

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CREATIVE
FIRM
PRODUCTION &
PREPRODUCTION PRODUCT
COMMUNICATIONS USER
EXPERIENCE
1 General
administration &
financial
management
6 Back-office/
back stage
production
processes,
design process
11 Product format
(“cultural product”,
performance features of
product)
5 Internal
communications,
Management of
HR & work
organization
2 Revenue Model
3 Value Chain
Location
7 Transaction
(purchase, lease
etc.)
4 Communications with
suppliers, collaborators,
supply chain partners
etc.
8 Marketing and customer
relationship management
15 User Capabilities &
Media (e.g. Consumer
Electronics)
12 Delivery of
Product
13 User
Interface with
Product
14 User
Interaction,
including supply &
configuration of
content
9 Content of Product
(cultural concept
etc.)
10
Performance
and production
processes
Areas of innovation
Innovation = doing new things (or old things in new
ways) – with or without new technology and technique
FRONT STAGE
BACK
STAGE

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Recommendations
Management of innovation – relationship management,
systematising innovation and evaluation
Research and Measurement – case study work – detailed
understanding. Improved instruments - surveys and
sampling (Coverage of Creative Industry firms [SIC codes],
Inclusion of smaller firms); Investigating wider range of
forms of innovation; make questions comprehensible to
“creatives”
Training and Skills issues – limited knowledge, new
competencies
Policy: needs for better evidence, awareness. Ensure that
policy-makers are kept abreast of rapid change and
development in the innovation landscape. Targeted and
sympathetic support programmes – extend existing supports
(Tax Credits?). Creative environments (City level?)

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MIIRO Summing Up
Hidden innovation: may mean that innovation
policy overemphasises some types of activity,
focuses support on particular approaches and
skills
Creative industries have multiple innovation
trajectories. Disruptive change may occur in
many of these. IT can enable - but social and
‘cultural’ inventiveness is critical
Promote better understanding of practice,
trajectories, emerging challenges and
opportunities: awareness, shared awareness, skill
and knowledge.

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On to part 2 -
Convergence
Creatives
Who and What are the “Creatives”?
Creativity and Innovation – a paradox?
Understanding innovation in creative industries
Convergence
What is digital convergence?
Who does this affect?
How does it affect media, IT industries, other
sectors…

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Convergence
We often hear about computer/
telecommunications “convergence” - or is it
collision??
Held by many to be a defining feature of
new IT, e.g. Kobiyashi “IT=C&C”… and
related to common underlying technologies
(microprocessors, digitalisation)
But more industries and activities “converge”
than just data processing and communication

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MIIRO Digital Convergence
Distinct industries have dealt with hardware,
software, telecommunications, broadcasting, print,
recorded music, images, other media

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Digitalisation
Text
Photography
Moving Images
Sound
Instruments
Doc. Processing
Digital cameras
 “ ”, DVDs etc.
Digital Recording
Digital display,
measurement
(photochemistry)
(phonography,
electronics…)
(mechanical,
electromechanical)
(printing)
New storage devices and displays – ebooks,
CDs, MP3/4 players, etc; Web publishing
Analogue     Digital
Publishing, broadcasting, etc

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MIIRO Digital Convergence
Distinct industries have dealt with hardware,
software, telecommunications, broadcasting, print and
other media
They have varying assets, capabilities and types of
content - and regulatory and IP systems
But now they have increasingly shared underlying
technologies (microelectronics, optronics, software)
All types of data and information potentially
captured, processed, communicated, stored,
displayed digitally via new IT

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A Three-Dimensional Media Universe
Moving over Space -
Telecommunications
Storing over Time,
Reproducing-
Published Media
(Broadcast Media)
Transforming, Processing -
Computation
1 to 1
1 to many
Information
CONTENT
INTERACTION
CHANNELS
PROCESSING
COMMUNICATION

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A Growing Market Space…
Increasing size of
markets

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…Within which the offerings of established
industries expand
========Increasing
=== proliferation of
======= products

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MIIRO The Expanding Media Universe
Communications
Computation
Content
Time
The three “trumpet”
shapes represent
telecommunications,
computer, and
broadcast & print
media fields.
Over time the product space to
which they contribute, and its
market size, expands, and the
three fields overlap increasingly.

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MIIRO Early Industrial Society
INFORMATION GOODS & SERVICES
COMPUTATION(TELE) COMMUNICATIONS
Paper-based
communication:
Stationery, Post.
C19th - telephone,
telegraph
Mechanical
information
processing: very
limited till C20th -
punch cards,
calculators
Paper-based information products -
books, newspapers, etc + live
consultation & entertainment +
mechanical recorded media
(gramophone etc)
All (but
telecomms)
based on
PHYSICAL
TRANSPORT

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MIIRO The mid-1950s
BROADCAST + PUBLISHED MEDIA
COMPUTERS
Telephone
Telegraph
TV (mainly
monochrome)
AM radio,
LP records,
valve
amplifiers
Very few,
very large,
valve-based
electronic
computers;
Keyboard
calculators
TELECOMMUNICATIONS
PHYSICAL
TRANSPORT
plus
increasing
electronic
delivery
(telecomms,
TV, radio, etc.)

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The mid-1970s
COMPUTERS
Telephone
Telegraph
Telex
TV (colour) AM
and FM transistor
radio, LP records,
transistor
amplifiers
Numerous
mainframe
computers
Pocket
calculators
TELECOMMUNICATIONS
Increasing
role for
electronic
delivery,
but little
integration
of media

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Telephone
Answering
Machines,
Mobile
phones,
Pagers,
Business
Fax
Machines
Videorecorders,
audio CDs,
cable and satellite
TV, Teletext
Numerous
Personal
Computers,
Home Computers
and videogames,
Electronic
wristwatches
Electronic
mail
Bulletin
boards
Videotex
Online databases
for business &
science
Recorded
information
services
BROADCAST +
PUBLISHED MEDIA
TELECOMMUNICATIONS COMPUTERS
Some
integration
of media,
emergence
of optical
media,
increasing
digitalisation
The Mid/late-1980s

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Turn of the Century
Digital
mobile
phones,
Widespread
use of Fax,
pagers
Videorecorders,
audio CDs, digital
recording cable and
satellite TV
Numerous PCs,
laptops.
notebooks,
pocket
organisers, etc.
Numerous home
computers and
videogames
Electronic
mail,
SMS
Mobile data
comms
CD-ROM
publishing
Cable
telephony
Audiotext
Internet
World Wide
Web
COMPUTERS
TELECOMMUNICATIONS
Increasing
integration
of media,
use of
optical
media,
digitalisation

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Digital mobile
communications
in wide use -
pervasive
communications
MP3 and PVR,
Digital Broadcast TV
digital
videorecording
High definition TV
Pervasive
computers, in
many types of
device (e.g.
Personal
Digital
Assistants,
smartphones)
Internet
telephone VoI,
Internet
videotelephony
Internet TV
Video on
Demand
Interactive
TV
WiFi, Next
generation of
Internet &
WWW,
Web2.0, Video
telephones
and
conferences
DVD-R+,
interactive
video
Now  2010?
COMPUTERS
TELECOMMUNICATIONS

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Successful products/applications/triggers
Design paradigms/platforms
User implementation
Emergence and take-off of markets, market
structures
Product spaces
Capabilities and industrial structure
Governance of content (news, porn, gambling) and
property rights (intellectual property)
Other governance issues (crime, security…)
Uncertainties

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Regulators
UK system change
OFTEL (Telecommunications Act,
1984, on “deregulation”) + Cable
Authority + ITC ….
OFCOM (Communications act, 2003)

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1990
2003
spectrum
Radiotelecommunications Agency
Broadcasting Standards Commission
But not print
media – Press
Complaints
Commission etc.
1991
networks
Oftel
1984
1996?

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Jong-Seok Kim: mobile phone
companies
2nd
generation, digital services – earlier 1990s generation was
analogue
2.5 generation
3rd generation
128k
– 2m
/sec
64k
/sec
14.4
k/sec

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Convergence
Blurring industry boundaries
New convergent services
Much scope for innovation in new
services, improved service design
New players
Diversification, vertical integration (?)
Requirement for new strategies,
capabilities, organisation

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Not just Media
New categories:
e.g. chematronics, mechatronics, watch this space
for bio and nano categories…
Converged products:
e.g. “smart house” converges consumer electronics,
telecomms, utilities, construction…

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MIIRO Key Features of New Media:
CONVERGENCE and
COLLISON:
digitalisation
blurring boundaries
new modes of delivery and
use of existing (types of)
content
repurposing and
repackaging of content
New types of content (eg
MMORG)
INTERACTIVITY:
promises and realities
differential development of
applications and
competences on both - user
and supplier sides
Sometimes technically
demanding – sometimes
“democratic”
innovation around types of
content, interfaces, delivery
and “display” systems

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Some implications
Standard classifications of creative industries may
be destabilised
Importance of users and intermediaries,
continually challenging IP systems and
assumptions – not just driven by “piracy” (though
this may often predominate)
Liable to be continual dialectic between
established players and newcomers, established
consumption and production modes and new
styles.
Much creativity and innovation will not be
managed in any recognisable way!
But much will be, as major new markets are
created and accessed.

Second level
• Third level
– Fourth level
» Fifth level
Manch
ester
Institut
e of
Innova
tion
Resear
ch
MIIRO
End of Presentation

2010 Creative Services

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2010 Creative Services