ABRI/KIN workshop

June 23rd 2011, Amsterdam

The Dynamics of Creativity in Innovative Territories

Patrick CohendetHEC Montréal (Mosaic)

…

Montréal and the creative industries

•Storper, M., Venables, J. (2004) : “Buzz: face-to-face contact and the urban economy”, Journal of Economic Geography, vol. 4, n°4, pp.351-370.•Bathelt, H., Malmberg, A. and Maskell, P. (2004): “Clusters and Knowledge: Local Buzz, Global Pipelines and the Process of Knowledge Creation”. Progress in Human Geography, vol. 28, pp. 31-56.•Feldman, M. (2003): “The Locational Dynamics of the US Biotech Industry: Knowledge Externalities and the Anchor Hypothesis”, Industry and Innovation, Vol.10, Issue 3, pp. 311 - 329 •Grabher, G. (2001). Ecologies of Creativity: the Village, the Group, and the Heterarchic Organisation of the British Advertising Industry. Environment & Planning A, vol. 33, pp. 351-374.•Rullani E. (2001), The Industrial Cluster as a Complex Adaptive System as published in “Complexity and Industrial Clusters : Dynamics and Models in Theory and Practice, Physica-Verlag, 2002.•Asheim, B. T. and Gertler, M. (2005) The Geography of Innovation: Regional Innovation Systems, in Fagerberg, J., Mowery, D. and Nelson, R. (eds.), The Oxford Handbook of Innovation, Oxford University Press, Oxford, pp. 291-317.•Andy Pratt , Paul Jeffcutt (2009), Creativity, innovation and the cultural economy, Routeldge 2009•Landry, C (2008) The Creative City: A toolkit for urban innovators, London, Earthscan•Feldman, M. P., Audretsch D.B. (1999) : “Innovation in Cities: Science-based Diversity, specialization, and Localized Competition”, European Economic Review, vol.43, pp. 409-429•P. Cohendet;  D. Grandadam; L. Simon “The Anatomy of the Creative City” (2010), Industry and Innovation, , vol7, n1, pp 91 – 111•Scott, A.J. (2005) : “Creative Cities: Conceptual Issues and Policy Questions”. OECD International Conference on City Competitiveness. Santa-Cruz de Tenerife, Spain. 3-4 March 2005.•R.Florida (2002) , the Rise of the creative class.

References

Selected personnal references

• Cohendet.P; Héraud. J.A; Llerena P. (2011) : «Microdynamics of innovation», in M. AKRICH et al. (eds), Débordements. Mélanges offerts à Michel Callon, Presses des Mines, Paris.

• P. Cohendet;  D. Grandadam; L. Simon (2010), “The anatomy of the creative city” Industry and Innovation,, vol7, n1, pp 91 – 111

• P.Cohendet; D. Grandadam; L. Simon., (2009) “Economics and the ecology of creativity: Evidence from the popular music industry”, International Review of Applied Economics, vol23, n6, pp709 à 722

• P.Cohendet; L.Simon, (2007) “Playing across the Playground: Paradoxes of knowledge creation in the video-game firm», Journal of Organizational Behaviour,, p 587-605

• A. Amin; P.Cohendet (2004) Architectures of Knowledge: firms, capabilities and communities,, Oxford University Press, Oxford UK.

Some main issues

1. Innovation vs Creativity

2. The role of communities in creative processes

3. « Creative firms ».

4. « Creative territoires ».

1. Innovation vs Creativity

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“The interface among creativity, culture, economics and technology, as expressed in

the ability to create and circulate intellectual capital, has the potential to generate

income, jobs and export earnings while at the same time promoting social inclusion,

cultural diversity and human development” (Creative Economy Report – UNCTAD 2008)

The Creative Economy

The Creative Industries

Since the beginning of the 90s, the economic growth of creative industries is

two times bigger than the growth of service activities and

four times bigger than the growth of manufacturing industries . The ONU – UNCTAD « Creative Economy Report» (December 2008)

Advertising

Architecture

Arts

Crafts

Design

Fashion

Movies

Music

Performing arts

Publishing

Software

Games & Toys

TV & Radio

Video games

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Invention

Generation of ideas=science

Processes ofinnovation

Design

Marketing

Business Model

Environment

SocialResponsability

From inventive processes…

Inventive or creative?

(Very Strong) Business Creativity: “Apple negotiated a business model with the music industry that allowed everybody to get what they want -- the music industry to get their royalties, Apple to sell downloads and the iPod itself, and the customer to be able to select the songs they want rather than putting up with the compilations the industry offered because of its previous business model,” (Midgley 2009)

It changes the rules of the game of buying and listening to music!

(Weak) Scientific Creativity: Combination of pre-existing elements (e.g. mp3 players, hard drives, LCD screens,...) with very few real novelties (software - iTunes).

(Strong) Artistic Creativity: Aesthetic design, elegant ergonomy, user friendly +

+

Steven LEVY. The Perfect Thing.

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Invention

Generation of ideas: science, arts, local culture, etc.

DesignBusinessmodel

Processes of innovation

Creative identity

Creative processes

..to creative processes….

Different categories of knowledge (Asheim, Gertler)

2. The role of communities in creative processes

1. Penicillin: the discovery 1928

After the war, Fleming actively searched for anti-bacterial agents havingwitnessed the death of many soldiers from septicaemia resulting from infected

wounds.Fleming was already well-known as a brilliant researcher, but quite

careless lab technician; he often forgot cultures that he worked on, and his labin general was usually in chaos.

Source: Cohendet, Héraud, Llerena (2011).

2. Facing general indifference: Trying to Convince/translate and looking for allies

• Fleming published his discovery in 1929 in the British Journal of Experimental Pathology, but little attention was paid to his article.

• In the 1930s, Fleming’s trials occasionally showed more promise. In particular he treated one of his assistants, Keith Rogers, who was probably the first patient to be treated clinically with penicillin ointment to cure severe conjunctivitis. However, Fleming faced considerable obstacles to replicate and extent his inventive ideas to an industrial stage. Many clinical tests were inconclusive, probably because he was thinking that penicillin should be used as a surface antiseptic..

• Facing scepticism, doubts, misunderstandings, refusals to consider the interest of his ideas from his own community of bacteriologists, he undertook considerable efforts to alert other communities (chemists, biologists, medicine, etc.) in order to convince them of the usefulness and potentials of their discovery

3. The building of the “codebook” by the communities

• Fleming continued, until 1940, to try and interest some chemists skilled enough to further refine usable penicillin. Florey (pathologist) and Chain biologist) took up researching and tried mass producing it with the funds of the U.S and British governments help.

• Within Oxford Dunn School, Ernst Chain and his team worked out how to isolate and concentrate penicillin. He also correctly theorised the structure of penicillin. Shortly after the team published its first results in 1940, Florey Chain's head of department validated with Fleming Chain’s team results

• In the same school, Norman Heatley’s team suggested transferring the active ingredient of penicillin back into water by changing its acidity. He suggested trying the fermentation route instead of the chemical one. This fermentation route produced enough of the drug to begin testing on animals.

4. Results of the innovative process

Fleming, Florey, and Chain jointly received the Nobel Prize in Medicine in 1945.

Sir Henry Harris said in 1998:"Without Fleming, no Chain; without Chain, no Florey;

without Florey, no Heatley; without Heatley, no penicillin.“

Revisiting the dynamics of invention

• In Arrow’s perspective, the producer of knowledge acts in isolation: nothing is said about the complementary forms of knowledge necessary for the producer of knowledge to invent, and nothing is said about the community of agents who supported him in the process that lead to the invention. The main risk is the risk of being copied (at no cost).

• Evolutionary view: The group of agents who succeed in expressing and formalizing an innovative idea is confronted to the risk of being misunderstood by others (including agents belonging to the same institution). It is therefore the risk that their procedures and experience will not be reproduced by others. – Without a collective effort to reach a critical mass of common understanding

between the different actors committed in this emerging phase, the innovation process can not be viable.

– The group of agents at the origin of an innovation must undertake considerable efforts to alert other actors or communities in order to convince them of the usefulness and potentials of their discovery

Revisiting the dynamics of invention.

• In this emerging phase of production of knowledge, besides institutions and some talented individuals, the active units are the knowing communities of agents that are committed to the creation and accumulation of the new forms of knowledge:

• The fundamental cognitive building of the codes and grammar that will equip the novelty requires the active functioning and interactions of knowing communities. They achieve a process of progressive codification of knowledge, starting from a phase where the actors do not know the characteristics of the novelty, do not know each other, and do not possess the capabilities to communicate in order to reach a phase where the novelty is equipped with sufficient shared understanding and codes to become economically viable.

• Thus, the development of invention requires the progressive building of a common base of knowledge, a model and a “grammar” (a”codebook”) to be able to interpret tests, experiences and contexts of usage.

Revisiting the dynamics of invention (4)

• An essential part of the process of production of knowledge can be interpreted as resulting from the dynamics of interactions between knowing communities. These interactions can be approached through the principle of ‘translation/enrolment’ (Callon, Latour, 1991). The innovative diffusion of ideas can be seen as a process of progressive contagion of communities, where each community makes efforts to ‘command the attention’ of other communities to convince them of the relevant interest of the knowledge it has elaborated.

• This essential process of progressive codification is not a linear one. It generally involves an early phase during which the innovators encounter misunderstandings, conflicts and difficulty to convince. The first steps in the emerging phase can be long and painful. It generally requires boundary spanners, boundary objects, etc. to facilitate the dialogue between knowing communities.

• It is only at the end of the process, at a stage which can be described as the “phase of stabilisation”, when the characteristics of the novelty are fully understood, and described in codes and procedures that every agent can access and use, that we reach a situation which corresponds to the traditional context of production of knowledge as described by Arrow.

The process of creation of ideas = “Self-organised RD consortium”, Cassier and Foray (2002, p.124)

- The dynamic process of creation of ideas the precedes the innovation process is often characterised by stronger economic motives to pool and share knowledge than to delineate private domains of knowledge and keep secrecy

- It allows agents to develop concerted actions by organizing the division of labour to explore a certain domain and providing an institutional framework to assemble divided and dispersed knowledge.

- It creates spaces for sharing knowledge, in which there is a break from technological secrecy and the retention of knowledge by private agents. It generates a new economic category of knowledge called collective or pooled knowledge, which is shared among participants during the period of research.

- It can enable agents to create a more consistent and coherent initial endowment of intellectual property rights, which does not fragment the knowledge base. When the knowledge is initially fragmented (anticommons property), the consortium provides a space in which rights can be exchanged at a low cost, because partners are well identified and some collective learning can occur.

The social dynamics of innovation

Knowledge InnovationCreation

Sci

ence

– T

echn

olog

ie -

Soc

iété

– U

sage

rs -

M

ilieu

Mar

kets

Individuals Communities Organisations

Cohendet, P., Grandadam, D. et Simon, L  «Réseaux, communautés et projets dans les processus créatifs», Management international, vol. 13, no 1, 2008.

Properties of knowing communities (1)

• 1) Members of the community accept to exchange voluntarily and on a regular basis about a common interest or objective in a given specialised field of knowledge.

• 2) Through their repeated interactions and common practice, members build progressively a shared identity and social norms « The shared identity does not only lower the costs of communication, but establishes tacit and codified rules of coordination  ».

• 3) Communities have no clear boundaries.

• 4) There is no visible or explicit hierarchy at the top of them that can control the quality of work or the respect of any standard procedure

• 5) The notion of contract is meaningless within the members of the community. Traditional incentives do not apply. But reputation matters (Lerner and Tirole, 2002).

Benefits of K communities for the organisation

• Support (at negligeable costs) the fixed costs of building and accumulating knowledge in a given domain (common language, methods, models, etc..)

• Help drive strategy, build core capabilities and knowledge competencies (local units of competence).

• Brings on a permanent basis ideas from the outside world (units of absorptive capabilities). Transfer best practices.Support faster problem solving both locally and organisation wide

• Aid in developing, recruiting and retaining talent. Helps knowledge workers stay current.

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Benefits from communities of practice at

http://www.youtube.com/watch?v=mNCb7QsAb3I

Limits of K communities

• Risk of parochialism

• Risk of emergence of a « guru » 

• Risk of lack of interactions between communities

• Risk of conflicts between communities

• Fragility: risk of destruction

• Risk of « leakeages » of strategic corporate information

• etc.

Different types of K communities

Principal activity of knowledge Type of community

Accumulating knowledge in a given practice

Communities of practice

Creation/production of new knowledge Epistemic communities

Problem solving Communities of experts

Accumulating knowledge in a given domain of interest

Communities of interest

Continuous updating of knowledge in a given profession

Communities of professionals

ActivityType of

knowledge

Social interaction

InnovationOrganisational

dynamicnature of

communicationTemporal aspects

Nature of social ties

Craft/task based Aesthetic, kinaesthetic and embodied knowledge

Knowledge transfer requires co-location – face to face communication, importance of demonstration

Long-lived and apprenticeship-based

Interpersonal trust – mutuality through the performance of shared tasks

Customised, incremental

Hierarchically managedOpen to new members

Professional Specialised expert knowledge acquired through prolonged periods of education and training.Declarative knowledge.Mind-matter and technologically embodied.

Co-location required in the development of professional status for communication through demonstration. Not as important thereafter

Long-lived and slow to change. Developing formal regulatory institutions

Institutional trust based on professional standards of conduct

Incremental or radical but strongly bound by institutional/ professional rules.Radical innovation stimulated by contact with other communities

Large hierarchical managed organisations or small peer managed organisationsRestrictions on the entry of new members

Expert/Creative

Specialised and expert knowledge, including standards and codes, (including meta-codes). Exist to extend knowledge base. Temporary creative coalitions; knowledge changing rapidly

Spatial and/or relational proximity. Communication facilitated through a combination of face-to-face and distanciated contact.

Short-lived drawing on institutional resources from a variety of expert/ creative fields

Trust based on reputation and expertise, weak social ties

High energy, radical innovation

Group/project managedOpen to those with a reputation in the fieldManagement through intermediaries and boundary objects

Virtual Codified and tacit from codifiedExploratory and exploitative

Social interaction mediated through technology – face to screen. Distanciated communicationRich web-based anthropology

Long and short lived.Developing through fast and asynchronous interaction

Weak social ties; reputational trust; object orientation

Incremental and radical

Carefully managed by community moderators or technological sequences.Open, but self regulating.

Types of communities (Amin and Roberts, 2008)

Bowles, S., and Gintis H. (2000). ‘Social Capital and Community Governance’, Working Paper 01-01-003, Santa Fe Institute,

www.santafe.edu/sfi/publications/Working-Papers/01-01-003.pdf.

• ‘Community’ better captures the aspects of governance that explain the popularity of ‘social capital’, as it focuses attention on what groups do rather than what people own.

• …. By community we mean a group of people who interact directly, frequently and in multi-faceted ways. People who work together are usually communities in this sense, as are some neighborhoods, groups of friends, professional and business networks, gangs, and sports leagues. The list suggests that connection, not affection, is the defining characteristic of a community.

The ideal-typical organizational forms

Organisations

Communities

Markets

Historically, the focus on communities has changed

1.Early 90’s Communities of practice (Brown, Duguid, Wenger, Lave, Boland, Mc Dermott, etc ..), then on epistemic communities (Knorr-Cetina, David, Foray , Cowan, etc.).

2.Mid 90s, early 2000s: Virtual and open communities (Rheingold, von Krogh, von Hippel, Tirole, Lerner, Lakhani, etc.)

1.From early 2000s, communities of users (von Krogh, Dahlander, Magnusson, Jaeger, etc.)

Brown, J. S., and Duguid P. (1991). ‘Organizational learning and communities of practice: toward a unified view of working, learning and innovation',

Organization Science, 2, 1: 40-57.

(Organization can be seen) « as a collective of communities, not simply of individuals, in which enacting experiments are legitimate, separate community perspectives can be amplified by inter-changes among communities…… Out of this friction of competing ideas can come the sort of improvisational sparks necessary for igniting organisational innovation. Thus large organisations, reflectively structured, are perhaps well positioned to be highly innovative and to deal with discontinuities. If their internal communities have a reasonable degree of autonomy and independence from the dominant worldview, large organisations might actually accelerate innovation”.

3. « Creative firms ».

The creative industries comprise advertising, architecture, arts &crafts, design, fashion, film, music, performing arts, publishing, software, toys and games, TV and radio, and video games (Howkins, The Creative Economy, 2001, p. 88-117).

They integrate science, technology and arts, and use creativity and intellectual capital as primary inputs.(Creative Economy Report, 2008. p. 13.)

The Drivers of the Economy of Creativity: The Creative Industries

-Few intensive formalized R&D activities, very small R&D unit/laboratories-No subsidiary dedicated to R&D-Few direct contracts with universities or academic research centers-Very little involvement in international research alliances, consortia…

Conceptual research issues and challenges

The established economic theories of the firm (Agency, Transactional,

Evolutionary, Knowledge-based approach, etc.) and organizational theories have

been significantly inspired by the manufacturing industries.

To what extent can they offer pertinent and consistant frames of

interpretation of the creative industries?

In particular, could creative industries be seen as mere «nexus of

contracts» (Williamson, Aoki, etc..) as the traditional

industries ?

A Stylized Case: Ubisoft Montreal

Organization of the Ubisoft Montreal Studio

- Formerly a functional matrix structure (97-98) and balanced matrix structure (99-00)

- Projects-led firm, (since 2000) based on interdisciplinary, modular projects, involving diverse creative communities (or communities of specialists in Ubisoft jargon) : Script writers, game-designers, graphic artists in 2D and 3D, sound designers, software programmers, testers, etc..(Crosby, 2000).

- Intensive informal connections/knowledge flows between employees / communities members: - with the other project team members

- inside the main building, with other employees from different projects- outside the firm, in the local area, with employees from different projects

- outside the firm, with the Underground, and other creative individualsé - outside the firm, in Montréal with other employees from the video-game

cluster, with other creative groups

CEO

HRFinanceProduction &

processArtistic/creative

directionMarketing& Sales

R&D

Project

Community

Intensive knowledge flows, under project constraints

‘Loose’ knowledge flows

Knowledge flows inside a community

Accumulation of specialised knowledge

Creative slack

Projects/Creative Communities at Ubisoft

Main observations at Ubisoft Montreal Studio

“Dual” dynamics

• Classical innovation process based on projects, mostly managed by the hierarchy

• Ideas management process fed by the “creative slack”, mostly fed by communities

« Both mechanisms of exploration and exploitation are inherently shared between a component that is internal to the firm (and control by it) and a component that is not only largely external to the firm, but also essentially informal (which implies that the classical means of control, such as contractual schemes are irrelevant)….

Exploitation and exploration tend to be unfolded in an organically intricate and complementary way where they constantly fuel each other “ (Cohendet, Simon, 2007).

Creativity in “Traditional Industries”

•Ideas generation and the management of innovative project tend to be sequential.

•Once the project is decided by the hierarchy, the process of idea generation is

launched.

It mixes ideas from R&D, diverse forms of absorptive capacity (market analysis),

brainstorming sessions…

•Priority is given to the « cristalization » of the concept.

•As it unfolds, the project dynamic supposes a progressive reduction of the variety

of avalable options (traditional «stage-gate»)

•When the project is over, the accumulated knowledge is difficult to assess and to

transfer to future projects.

Idea Generation

Buildbusiness

case

DevelopmentTesting &valuation Launch

Gate 1:Idea screen

Gate 2:Go to

development

Gate 3:Go to tests

Gate 4:Go to launch

Classical Stage-Gate process(Cooper, 1988)

Sustained Creativity in “Creative Industries”

Idea generation and the management of projects are « parallel processes».

They feed and fuel each other.

The process of idea generation assures the sustained creativity of the firm.

It is essentially nurtured by the creative communities.

The fundamental component of idea generation is the « creative slack ».

The creative slack fosters complementarities and mutual fuelling between explorative and exploitative activities.

The creative slack is distributed partly in the formalised codified knowledge base of the firm but mostly in the cognitive activity of the communities.

Process of Idea Generation

Project

Creative community

Projects and ideas generation at Ubisoft

Sustaining Creativity through Creative Slack

The remarkable characteristic of the process is the formation of a creative slack viewed as a “repertoire of creative opportunities” which contribute to guide the choice of future project and beyond the growth of the firm. The creative slack is shaped by the culture of the firm and is essentially understandable through the jargon of the organization.

In line with Penrose’s vision, the firm which has accumulated a creative slack is better prepared than any other organization to derive a benefit from the creative potential of the slack. Because of these idiosyncrasies, it is much cheaper to valorize the slack within the firm which holds it than through any other organization (including through any isolated communities).

Some may argue that the creative slack appears as a cushion of redundancy which is costly to maintain. The specific conditions of formation of the creative slack in videogames companies (which relies on the functioning of quasi autonomous communities which naturally take in charge at negligible costs the production and conservation of knowledge in their domain of specialization) offer strong guarantees of the efficiency of maintaining the creative slack at low costs.

The slack is not “possessed by the firm”. It is essentially “delegated” to the communities.

4. « creative territoires ».

On Creative cities.

Houston, Texas, XXth

Elbeuf, France, XIXth

Creative projects in Chicago, XXIth

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Industrial clusters.

Territories of industrial concentration between firms, R&D units and related institutions. (Marshal, Weber, Glaeser, Jacobs, Porter, etc.).

The main creative forces are located at the articulation of science and industry (“invention paradigm”, Arthur, 2006).

On the one hand (Marshall, Arrow, Porter, Glaeser) knowledge is predominantly industry-specific and the spillovers may arise between firms within the same industry (localisation externalities).

On the other hand, Jacobs (1969), argues that knowledge may spill-over between complementary rather than similar industries since ideas developed by one industry can be applied to others.

The main distinction between different industrial clusters is related to the nature of economic externalities arising between institutions

Cluster based on « Specialization »:

Two main types of industrial clusters

Cluster based on « Diversity»:

The City and the Creative Class

• Florida (2002): for cities to develop, they need to attract a creative class of workers by providing, through investment in cultural facilities and other related amenities, a fertile place for this population to imagine new products, technologies, or processes..

• Severe criticisms: Malenga (2004); Peck(2005), Scott (2006), etc. pinpointing some major weaknesses.

• Our view (Cohendet, Grandadam, Simon, 2010): Florida considers who these creative people are, but he does not explain and analyse what they really do.

Specific ecology of knowledge where creative ideas transit from the micro to the macro-level, through the accumulation, the combination, the enrichment and the renewal of distributed bits of knowledge dispersed all over the local territory.

The dynamics of creativity lie in the interaction between three different layers of a territory:

The Upperground,

The Middleground

The Underground.

??? ?

??

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The Anatomy of the Creative City.

Creative cities: 1) the « Upperground »

• Creative firms, as well as institutions (research labs, universities, cultural and artistic centers). These formal organizations contribute to the creative process by their capacity to finance and unite the different expressions together, to integrate dispersed types of knowledge, and to test new forms of creativity on the market.

• They have no large R&D departments, nor any worldwide subsidiaries to tap into for external creative ideas, neither an access to creative knowledge through their participation in global networks of diverse partners.

• They tap a significant amount of creative ideas in the middleground

• They generally concentrate internally on the governance of multi-project activities which contribute to generate, exploit and develop a “creative slack” as a source of growth of the firm.

.

Creative Cities: 2)The Underground

• The underground brings together the creative, artistic, and cultural activities taking place outside any formal organization or institution based on production, exploitation or diffusion.

• Underground “refers to relatively autonomous processes of cultural production that unfold in the urban environment. These are typically processes of unpaid productive cooperation, which are present especially in the city. experimental and cutting edge, more authentic, rebellious and ‘cool’ than others, and thus intrinsically opposed to the corporate logic of standardization and ‘commodification’”. (Arvidsson, 2007)

Creative cities: 3) the Middleground

• In the context of creative spaces or milieus, the dynamics of creativity presuppose the existence of intermediary groups and communities that link the informal underground culture with the formal organizations and institutions.

• By progressively codifying the new knowledge, these groups provide the necessary cognitive platform to make creative material economically marketable and viable.

• As a consequence, these communities are the main sources for the accumulation of innovative micro-ideas, which may become potential foundations for the establishment of economic applications that may enter the market for creative goods and services.

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The middleground of videogames at Montréal

Source, Cohendet, Grandadam, Simon, « The anatomy of the creative city », 2009

How to nurture the middleground

PLACES

PROJETS

EVENTS

SPACES

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Places: the realm of near, intimate, and bounded relations, physically establishedSpaces: the realm of far, impersonal, and fluid relations, cognitive constructions.

Projects : engage local communities in conversations and work together

Events: open the small local worlds to new global influences.