The role of creativity and innovation in an economic downturn

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Centre for Local Economic Strategies
The role of creativity and innovation in an
economic downturn Neil McInroy, Chief
Executive Natalie Qureshi, Consultant Kreative
Byer British Council March 20th 2009
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About CLES Our Mission

• The Centre for Local Economic Strategies is a
  registered charity which is committed to places
  and communities experiencing social and economic
  inequality and lack of opportunity. We want to
  improve the effectiveness of local groups,
  agencies and government in addressing these
  problems, by informing policy and developing
  practice.

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About CLES Services

• Around 50 Members (Local Authorities,
  regeneration partnerships, third sector
  organisations, public bodies, economic
  partnerships)
• Events and Training
• Policy Bulletins and briefings
• Policy Research
• CLES European Research Network (CLES Consulting)
  Our trading arm

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About CLES
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Today's presentation

• How we got to where we are and how we need
  creativity, innovation and risk
• The concept of resilience and why it is important
• New approaches to create resilient places

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Challenging times!

• Climate change, peak oil, energy insecurity
• Economic Downturn
• Unemployment, stalled property market, lack of
  capital for investment, lack of diversity
• Regeneration incomplete Even the boom times
  were not that good! Still work to do.
• Inequality
• Governance and powers- Rigidity of Local policy
  instruments

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What has come before in terms of Local economic
activity in the UK

• WAVE 1. 1960s 1970s Inward Investment
• WAVE 2. 1980s 1990s Grow the sectors. Local
  business growth as well as investment
• WAVE 3. 1990s to....Networks and clusters
• Property and land appreciation. A city
  renaissance?
• Productivity and competitive advantage

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What have we created?
We are capable of shutting off the sun and the
stars because they do not pay a dividend John
Maynard Keynes 1933


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The next wave Local Economies in the future...

• New paradigm?...
• Increasing recognition that the local matters
• Too focused on economic growth (eg GVA, GDP) as a
  means to local economic success
• Economics is not the end in itself.merely a
  means
• We need to get economics to work for us more
• Work for environmental and social priorities
• Networks are important
• Economic recession partly due to the financial
  network
• New networks of public and private sector, social
  innovators and universities needed

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Scaring traditional Local Economic development
professionals!
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Policy assumptions underlining current economic
policy
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The need for creativity, innovation and risk

• Creativity is a mental and social process
  involving the generation of new ideas of
  concepts, or new associations of the creative
  mind between existing ideas or concepts,
  creativity is fuelled by the process of conscious
  or unconscious insight.
• creativity as an assumptions breaking
  process
• Innovation is the process of both
  generating and applying creative ideas in some
  specific context

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Toward New Economic Strategies and what
interests CLES

3 thoughts for the future
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The economic resilience model
The economic resilience model

• What do we mean by resilient?
• Functional economy
• Delivers positive and equitable outcomes
• Withstand economic shocks

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The economic resilience model

• Public economy
• Public expenditure on goods and services
• Footprint of procurement activity on local supply
  chains
• Public employment

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The economic resilience model

• Public economy
• Public expenditure on goods and services
• Footprint of procurement activity on local supply
  chains
• Public employment
• Social economy
• Contribution of community activities to the local
  economy
• E.g. social enterprises, voluntary organisations,
  community groups, community assets such as
  community centres, youth clubs, halls, etc.

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The economic resilience model

• Public economy
• Public expenditure on goods and services
• Footprint of procurement activity on local supply
  chains
• Public employment
• Social economy
• Contribution of community activities and networks
  to the local economy
• E.g. social enterprises, voluntary organisations,
  community groups, community assets such as
  community centres, youth clubs, halls, etc.
• Commercial economy
• Private businesses
• Investment into development and new enterprise
• Provides the bulk of employment

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The economic resilience model

• The three spheres of a resilient economy work
  within a wider context
• Government policy framework
• Broader economy
• Need to work within environmental limits
• Importance of place. Link economy to the
  history and identity of the place

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What are the weaknesses which make our Localities
less resilient?

Scared of risk
Disempowerment
Low enterprise
Worklessness
Inequality
No innovation
Poverty
Poor health
Lack of opportunity
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Strengths which increase the resilience of our
localities

Volunteering
Quality environment
Effective community infrastructure
Fairness
Empowered citizens who innovate
Education skills
Creative spirit
Employment opportunities
Local businesses
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A creative and resilient place
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What can be done to strengthen the economic
resilience of localities?

• Four ideas
• Innovation - Creating the conditions to encourage
  innovation
• Valuing place and locality - Developing and
  strengthening networks, social enterprises,
  understanding how money flows in your economy
• Health and wealth - Look to create an economy
  which focuses on wealth and health
• Green new deal - A range of mechanisms to
  stimulate a green economy

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Innovation

• Historic track record
• Unique opportunity
• Thriving not surviving
• Creativity fundamental

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Creative Futures Innovate

• Social Innovation. Comes from two sources
• The Bees
• Community groups/social enterprises
• Driven by anger, loss or wanting to make things
  better
• 2. The Trees
• Big public agencies, companies with roots,
• power and money
• Success needs both!

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Creative Futures Innovate

• Innovation helps us to get to grips with
  recession
• Allows us to adapt and manage change in order to
  achieve positive outcomes
• Product and process innovation
• Networked approaches to innovation
• Examples
• Life cycle analysis in low carbon technology,
  waste from one company becomes raw materials for
  another
• Wool industry, where wool for textiles becomes
  wool for insulation

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Creative Futures Innovate

• Yokkaichi Japan
• 1998 petro-chemical industry in decline
• 20,000 jobs lost A loss
• Environmental pollution problems
• Shift to high value added production
• Companies sharing expertise and knowledge
• Mix of sectors
• One stop service introduced
• Advanced Materials Innovation Centre
• Raw materials (Chemists), Ideas, Production all
  together

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Creative Futures Innovate

• Portland USA
• Traditional industry in decline
• Built on strong business networks connected
  insiders and outsiders
• An outward looking network
• New regional coalitions
• It got the quality of place/life offer right
• Sophisticated networks and satellite networks

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Creative Futures Innovate

• Coimbatore India
• Traditional textile industry
• New technological industries
• Fuelled by high levels of individual
  entreprenerialism
• Social consciousness high and high levels of
  family and community networks
• Knowledge demanded by population
• Drives demand

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Creative futures Go Local

• Localism
• Supporting local suppliers, businesses, social
  enterprise
• Procurement matters - using the public spend
  wisely to support the local economy

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Even your breakfast egg
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Creative futures Progressive procurement

• The process whereby public sector organisations
  acquire goods, services and works from third
  parties
• Making money sweat
• 160 (1300dkk) billion per year on
  goods/services by public sector
• Not simply a bureaucratic process to be adhered
  to but
• Significant lever to influence local economies
  and achieve other policy objectives (social and
  environmental)
• CLES work in Swindon

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Creative futures Progressive procurement

• Understanding how Swindon Local Government will
  spend money?
• Use of Local Multiplier tool (LM3 tool)
• Public spend as a promoter of local supply
  chains
• Explored one service area within the Council
  services Street scene
• Mapped spend through analysis of invoices
• 51 of spend with suppliers 1 (8dkk) Million was
  spent upon organisations based in Swindon
• Re-spend of suppliers in local economy - 250,000
  (2,000,000 dkk) through own suppliers and
  employees
• Summary For every 1 spent by the council, a
  further 64p re-spent into the local economy

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Creative futures Progressive procurement

• Consider how procurement strategy enables
  business to tender for public services and goods.
• Widening access to tender information
• Terms and conditions
• Scale and size of contracts
• Community benefit clauses to support local
  community outcomes, eg local labour clauses
• Explore the opportunities for both revenue
  projects but also larger capital projects (e.g.
  building schools for the future)

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• Creative futures Health and wealth

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Creative futures Health and wealth

• Source European social survey

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Creative futures health and wealth

• Economics is not the end in itself.merely a
  means
• We need to get economics to work for us more
• Is economic downturn an opportunity or a return
  to crude economic growth priorities
• A wealth and health producing society
• Focus on material and psychological needs and
  support

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Creative futures Health and wealth

• An emphasis on the core economy
• Economy of the home, family, neighbourhood and
  community
• UK 40 of all economic activity takes place in
  the core economy - not currently reflected in
  GDP
• If the core economy fails, burden on public and
  private sector grows

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Creative futures Health and wealth

• Invisible economy that we take part in every day
• The economy of the home, family, neighbourhood
  and community
• It is an economic system as it involves the goods
  and services produced, exchanged and distributed
• Like a computer
• Operating system The core economy
• Specialised programs Hospitals, schools, civil
  society
• The programs may be ok, but the operating system
  is struggling!

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Creative futures A green new deal

• Getting to grips with climate change A green
  new deal
• Development of a low carbon economy through
  building efficiency
• Development of a carbon army new skills and
  knowledge
• Setting clear targets for carbon reduction at
  both a local and national basis
• Local energy production
• Heightened Global environmental and economic
  awareness

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• Creativity as an assumptions breaking process
• New economic model is sought
• Current economic situation requires change
• Paradigm shift
• This is the time to take risks
• Emphasis on people, place and balance
• Not just growth, but resilience

Final thoughts
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Final thoughts