How to be Smarter

John Howkins, author of The Creative Economy and a leading commentator on the global culture of innovation, tells Julian Cribb how societies can tap into their creative genius.

During the 1970s, economist John Rohmer put forward the then-controversial view that it wasn’t so much capital that built economies but human capital. He was referring to knowledge, skills, education, motivation, imagination, innovation and other factors that are not readily captured by economic formulae. Since then the knowledge society, ideas economy, clever country, innovation nation and other buzz phrases have been used in efforts to encapsulate what gives smart societies their economic and social edge over others. British author and media guru, John Howkins, prefers the term “the creative economy” and thinks smart societies have a greater ability to tap into their creative genius and knowledge banks. 

Julian Cribb: What is the creative economy? 

John Howkins: The creative economy is the business of ideas and is today’s dominant economic model. It is the most effective means of changing organisations, introducing new products, generating wealth and determining competitive advantage. 

Creativity is the ability to generate something new. It could be the production of one or more people of ideas and inventions that are original and meaningful. It is a talent and it flourishes in the arts, the sciences, in levels of business where novelty and invention are possible. 

The defining asset of the creative economy is intellectual property because, on its own, creativity has no value. It needs to take shape and be embodied in a tradeable product. It also needs a marketplace with active buyers and sellers and some rules. 

The creative economy is worth A$5 trillion worldwide and companies are advertising urgently for people who can do things differently. Having ideas and putting them to work is vital in business – for quality of life and for bringing much-needed new approaches to social problems from local communities to national organisations. 

Is it universal? 

Some places seem stuck – especially Africa and India. In contrast, “creative” places such as London, Barcelona, Sydney and Seattle are magnets. The main centres are New York, London and Tokyo. The creative economy is also big. The number one export from the United States today is copyright – the rights to books, films, music and television programs. The big players in the ideas economy are the American media conglomerates, but it is an international business with the top companies being Sony, Viacom and the Murdoch empire. 

Worldwide, the creative economy is growing at more than 5 per cent per year. In some countries it is growing even faster – 14 per cent in the United States and 12 per cent in the United Kingdom. 

Is the creative economy just for big players? 

No. The creative economy is as much about individuals as it is about corporations. Hundreds of thousands of people are coming up with successful ideas and having fun as well as making money. More people spend their time on and earn their income by living off ideas. There are two choices – we either live off our own ideas or we live off other people’s ideas. Human history is the result of people having ideas, owning them and exploiting them, whether they are good, brave, bad or indifferent. Modern economies are based on turning new ideas into private property. 

To what extent is Australia involved in the creative economy? 

Australia was one of the first countries in the world to recognise creativity as a key national feature in the Creative Nation report of 1994. However, it still has a relatively low level of ideas-based output. Knowledge is not the same as creativity. Creativity is the start of a process and a single idea can lead to a million dollars – or to nothing. Sony invented Betamax and made a loss. Matsushita invented VHS and made a profit. 

Are there any examples of where Australia is doing it right? 

The wine industry has been a great success, although I’d question whether this is better described as innovation or creativity. So far its success is due to both R&D and industrial restructuring. In the film and television industry, Reg Grundy is the best-selling producer. 

What are the preconditions for a country participating in the creative economy? 

Literacy is key and having the English language is a big help. Other conditions include affluence, competitive spirit, size, lack of opportunities in other sectors, availability of capital and a big ego. 

Is there a risk that the creative economy will widen the gap between those with access to knowledge those without? 

Yes, although knowledge, wealth and poverty are hard to define in this context. There is nothing inherent about living off ideas that will level or tilt the playing field. Ideas, like capital, are global and move fast. We still need politics to oversee and regulate market failures. Governments have not yet begun to address this. They deal with culture and technology but not with creativity. 

In a country such as Australia, where do you see the founts of creativity on which we can build opportunities? 

In everything and everywhere. The raw material for creativity is the human brain. It’s all about attitude. 

What are your rules for managing creativity? 

First, you need to have an idea that works. This means the idea is personal (it’s yours), original (no one else has had it), meaningful (you can communicate it to others) and practical (it’s useful). 

Second, there is no connection between creativity and intelligence, IQ or artistic ability. Forget the idea of the romantic genius. 

My third rule is to know your chosen domain thoroughly, whether you are a scientist or an artist. 

Fourth, you must manage. Set objectives, arrange resources, be aware and monitor the process efficiently. 

A process is also important. My own personal one is RIDER: Review, Imagination, Dreams, Excitement, Reality checks. 

Review is the process of taking stock of events and making connections. 

Imagination means letting our ideas sort themselves out. It involves a time of rest. 

Dreams are unconscious wanderings where we are free of constraints. 

Excitement is the adrenaline that powers intuitive jumps – not looking before you leap. 



And reality checks are there to ensure your dreams haven’t taken you too far away. 

Learn to manage the brain. For years, it was assumed the brain’s right-hand cortex, the source of the imagination, was also the source of creativity.

Research shows otherwise – creativity occurs when a person manages the relationship between the cortices in a certain way. Managing this involves knowing when to dream and when to think rationally. This is the key to effective creativity. 

You need to use your own memory inside your brain as adeptly as you use your own filing cabinet. Know when to use the filing cabinet and when now.

And use your consciousness as if it were an executive toy – tinker with it. For success you have to take risks and be ruthless. 

In the creativity game, ownership is critical. It is vital to know if you are using or borrowing other people’s ideas against their will, and to know how others might wish wo possess yours. 

This is a challenge for employers. They need to understand how to treat and reward employees who have good ideas. In building an ideas business it is also essential to know when to give your ideas freely and when and how much to charge for them. 

What is creative capital and how do you get it? How do you discourage people from investing all their spare money in bricks and mortar? 

Treat your brain as the source of your wealth. Bricks and mortar are the result of wealth – not the cause of it.