Human creativity will drive value creation and create new business models that would drive competitive advantages for enterprises and nations alike
We continue to have discussions emphasising the importance of globalisation in economic growth, assertions that the world is flat, that locations do not matter and the fundamental idea of economic geography has collapsed. Nothing could be farther from the truth, as the world still differs across locations i.e., cities, districts, states or nations. The differences are clearly created by the resilience of the location, which is defined by factor conditions i.e., land, labour and capital.
The most important aspect of this would be the productivity of labour and especially how it contributes through creativity and innovation towards development of services, products and business models. The debates around competitiveness of location is clearly centred around economic geography (cities, provinces or nations as fundamental units of building competitiveness) though a deep level of appreciation needs to be built that competitiveness is a sum total of activities performed by individuals and the contributions they make.
Businesses are clearly categorised as manufacturing or service enterprises. The important matrix in manufacturing is the value added to raw materials through processes and that for services is the value added through labour that is talented and multi-faceted. In the case of services, and especially wherein the world is moving around with the idea of knowledge economies or information economies, the importance of the human mind and its ability to comprehend and come up with unique perspective cannot be ignored. The world is driven by the ideas of conquering information asymmetry: comprehending information in unique ways and providing solutions to the world that are unique and could be ubiquitously used. Without a doubt, economic endeavours today are driven by human creativity and ingenuity. Ingenuity in terms of perspectives that are deep, different, break barriers of traditional thinking, explode myths and massacre the assumptions that were once thought to be all perfect and pervasive.
Human creativity and its endeavours will drive value creation and create new business models that would drive competitive advantage for enterprises and in turn enhance the competitiveness of nations, provinces and cities wherein labour would be contributing. This is clearly not an esoteric statement, but the effects of this have been seen across industries like publishing, entertainment, music, education, etc. This is where we need to discern that creativity is not only about innovations in products and services that are disruptive. Without a doubt, creativity is about finding incremental changes in products, services and business models that continue to challenge the status quo and shifts that redefine the industry architecture.
Non-conformists who have the courage to look at different perspectives drive the shift we see rather than the traditionalists. Nations, corporates and we, as people, need to nurture such individuals, give credence to them and let them experiment. Creativity in a region is driven by diversity in forms of educational course, profession, religion and maybe sexual preferences. We as a nation, more so politicians, will have to learn to respect diversity, as this is the milieu that would driver for change.
This change will not only have a social impact but would drive a fundamentally newer model of capitalism. The model would be distinct from captive, capitalistic models, being open source, creating self-sustaining ecosystems and options to contribute and experiment. We are at a cusp wherein we would see a fundamental shift in the way capitalism will be defined. Corporate systems defined by intellectual property and the control of information would move to systems that allow a free reign over such matters. Firms of all kinds will exist, though people operating at fringes would challenge the corporate world. This would have the most profound impact on business models and creation of wealth. The competitive advantage of enterprises would be defined by how freely information, ideas and thoughts will be disseminated and youth is engaged.
A case in point here is the remarkable emergence of businesses that have transformed from supply-driven to demand-driven businesses. The models were enabled by technology, but it was human ingenuity and courage that transformed these industries. The most profound impact we have seen in the last decade is the disaggregation of the music album, which has simply transformed the music industry. Similar shifts are happening in the consumption of news, with the advent of ideas like Twitter, Facebook et al, making more and more newspapers, magazines, TV channels defunct. Even the profession of teaching has shifted through the advent of these models whereby teachers are no longer aggregators and disseminators of knowledge, but have become facilitators and nurturers of creativity in today?s world.
This surge of creativity and the creative class will certainly hit us like a tsunami and we need to learn to nurture and appreciate such ideas rather than condemn them. There is no way that any organisation will be able to keep up with this scorching pace of change whatever their size. The sooner we train organisations to believe that they would succeed in the market through a collaborative model, the better it would be for them in capturing the mind-space of the youth. Let us not forget that we need to embrace this change as it would be in our self-interest and this would definitively be the driver of wealth creation and competitiveness of a nation.
The author is professor of strategy at MDI, Gurgaon and honorary chairman, Institute for Competitiveness, India
