John Howkins, author of “The Creative Economy”
As Korea embarks on the path toward a creative economy, an important question has been raised: What will become of existing industries? According to John Howkins, author of “The Creative Economy” and chairman of Howkins & Associates, individuals ― more than industries ― will decide how this new national agenda plays out.
He explains that creativity in itself is simply no more than the personal ideas of people ― something that is common and happens all the time ― but the creative economy is a step further: It is making money out of those ideas and innovations by developing and incorporating them into profitable businesses.
As such, although the best creative economy models are known to be America, Britain and Germany, Korea must shape its economy to form a distinct model of its own ― one that will fit the nation’s culture and society.
“There are many different approaches around the world. Every country develops a new economy to fit its own culture and society. An economy is not a separate thing to the rest of society. It is a way of looking at what people do in society. What is good for society is good for the economy, but not vice versa,” Howkins told The Korea Herald in an email interview.
Moreover, government must take the lead in checking that the nation’s policies, regarding education, training, tax regulation and more, are all compatible with the creative economy, as well as ensuring that markets are open, fair and transparent, he said.
The government, by officially encouraging this type of economic ecosystem as the nation’s future, can inspire the younger generation to seek job opportunities with smaller and innovative companies.
Instead of looking at the creative economy as merely the next phase of linear development, he considers it an attitude, or the way of life, that can be applied to any economic activity like agriculture, manufacturing or services.
He also believes the rigid regulation of the Korean economy, despite the nation’s prosperity under this system for many years, poses a difficulty for companies to be flexible with their ideas.
Korea faces having to adapt to the changing demographic, design and technology trends without losing what it has already achieved in its science, technology and ICT industries ― evident in its larger corporations that are now global leaders.
In reality, ideas are now not only coming through big conglomerates, but also through SMEs, Howkins explained.
“To be competitive, companies need to re-think their organization and structure, changing from tight hierarchies to more open flat structures,” he said.
Following is the full text from the interview with John Howkins.
Korea Herald: What implications does the creative economy have for existing industrial structures?
John Howkins: Creativity and innovation are the main inputs into most businesses, so the effects are many and varied. Creativity is based on personal, subjective and often fuzzy ideas that need to be developed and sharpened. In the U.S. and China, the creative economy is seen as a way of strengthening all business processes.
KH: What impact will it have on specifically Korea’s manufacturing industries?
Howkins: Korea has been successful in building its science and technology and ICT industries. It has made a bet that these industries will continue in roughly the same shape in the future. However, there are strong demographic, design and technology trends that are changing user expectations. President Park has outlined some of these. Let me give you an example. In recent years, many companies focused on software as a service, or SAAS. New companies are now piloting “services as software.”
KH: How should manufacturers cope with adjustments and new developments in response to the creative economy? What sort of attitude must they develop?
Howkins: To be competitive, companies need to re-think their organization and structure, changing from tight hierarchies to more open flat structures. That means they need different policies on recruitment, training, remuneration, and incentives. They need to rethink the relationship between “routine” management and R&D. OECD data shows that R&D costs are going down in many successful companies. In the old days, a company’s increasing R&D expenditure was a badge of success. No longer. People still need to research and develop but existing R&D policies and approaches need to change.
KH: Should all industry domains find it necessary to reconstruct their mechanisms so that they are more befitting for innovation?
Howkins: They need to be more open to creativity and more responsive to the people in their markets.
KH: Which/where might be a good example of an ideal transition into creative economy ― perhaps one that Korea might consider benchmarking?
Howkins: The best models are America, Britain and Germany, followed by China. There are many different approaches around the world. Every country develops the new economy to fit its own culture and society. An economy is not a separate thing to the rest of society. It is a way of looking at what people do in society. What is good for society is good for the economy, but not vice versa.
KH: What is your view on government responsibilities? What role must it take to fully embrace a creative economy?
Howkins: Government must lead. Governments can ensure industry has the right data. It has to check every policy to ensure that they all support a creative economy. It’s a long list, from education and training to tax, regulation, social security and even urban zoning.
KH: How might the Korean government converge its national agenda of “economic democratization” with its policies of creative economy?
Howkins: The most creative companies are open and democratic. Creative societies benefit from open, fair, transparent markets. Dictators, whether in politics or business, are bad for creativity.
KH: What role do SMEs play in this process? How important are they for establishing the desired economic ecosystem?
Howkins: All sizes of company are equally valid and necessary. That said, it is important to allow people to start companies easily, without barriers of excess capital, and for those companies to be sustainable ― which again means open and free markets.
KH: Entrepreneurs in Korea generally face challenges when securing venture capital and are often funded through debt. In your opinion, who holds the key to implementing appropriate solutions?
Howkins: All entrepreneurs outside America have problems raising money. It is often the companies’ weakness rather than the fund-raisers’ fault. However, debt funding is a real problem for funding start-ups. It is fine for established businesses and I can understand that Korea, which depends on traditional companies, sees debt as a viable way forward. But start-ups need equity investment. I hope Korea will address this problem.
KH: Are there any sectors that will inevitably have to sacrifice/endure losses during the nation’s effort to shift to this sort of creative economy paradigm?
Howkins: Many product lines will become less valuable and face lower sales. But all sectors can re-invent themselves. For example, car manufacturers are changing from conventional energy sources to new sustainable sources. Investors in film and TV know they must move away from physical units to digital streams. Architects have been slow to develop new technologies but are showing signs of radical change and are making fascinating innovations based on bio-mimicry. One sector that faces great challenges is education, especially universities.
KH: How can Korea lay the groundwork for more efficient, fair and transparent markets? Please elaborate on what you mean by “re-boot economy on the basis of people and ideas.”
Howkins: I mean, re-think society on the basis of people who are capable of thinking for themselves and developing their own ideas. In many cases, the future will be decided by how people think and work together. It’s people vs. bureaucracy, whether government bureaucracy or corporate bureaucracy. It follows that markets should be fair, transparent and efficient. This starts with a strong national competition anti-trust policy but it really depends on people’s attitude to change and freedom.
KH: Lastly, what further insight might you give on your vision of the creative economy in Korea? Please provide a few examples regarding Korea‘s learning, start-up and convergence capacities.
Howkins: These are my questions for Korea. I am happy to work with people in Korea to find answers.
By Kim Joo-hyun (
jhk@heraldcorp.com)
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