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Research report: July 2008

Hidden innovation in the

creative industries
Ian Miles and Lawrence Green
Hidden innovation in the creative industries


Innovation has been a subject of serious academic and policy interest for several decades. The
‘creative industries’ have been studied for a shorter period of time, but perhaps more intensely.
However, we do not understand well the process of innovation within the creative industries, nor
how waves of innovation from elsewhere impact upon them. Since they represent a large and
fast-growing part of our economy, this gap in our understanding needs to be remedied.

Working with the Manchester Institute of Innovation Research, this research project uses the tools
of ‘traditional’ innovation research to explore, analyse and compare innovation in four sectors
that are critical to the UK’s creative future: videogames development, product design, advertising,
and independent broadcast production. Technology is an important driver of innovation in all four
sectors, but much innovation remains ‘hidden’ – uncounted by traditional innovation indicators.
Moreover, the sectors studied display varied abilities to adapt to new technologies and increasing

NESTA seeks to pioneer new areas of innovation research but also to link these firmly to our
areas of practical experimentation. The conclusions reached here will inform our future work
on both the measurement of innovation in the UK and in the programme development of our
Creative Economy Team.

As with all emergent areas of research and analysis, we are aware that this is unlikely to be the
final word. We welcome your comments and your views.

Jonathan Kestenbaum

July, 2008

NESTA is the National Endowment for Science, Technology and the Arts.
Our aim is to transform the UK’s capacity for innovation. We invest in
early-stage companies, inform innovation policy and encourage a culture
that helps innovation to flourish.
Executive Summary

There have been surprisingly few firms in other industries to believe that their
studies of innovation in the creative innovations impact more positively on their
industries business performance.

How innovative are the creative industries? But levels of innovation vary within the creative
What new creative products are they sector. In particular, the so-called ‘creator’
producing? How are their methods of industries – which originate content – are
production and product delivery different? more consistently innovative than content
Are they more innovative in their back-office ‘distributors’. The CIS reports evidence for
processes and their relationships with their distinctive approaches to intellectual property
clients and consumers? and innovation management, though these
findings are neither extensive nor intensive
This study uses innovation research to examine enough to provide a comprehensive view of
the creative industries. Innovation research the creative industries. (They do not extend
has for many years been dominated by studies to cover all creative industries; they do not
of traditional manufacturing and high-tech explore many forms of innovation in depth.)
innovation. Recent innovation studies have We make some recommendations for future
begun to grapple with service sector and surveys.
organisational innovation; but there have been
few studies of creative industries that use such Deeper insights can be gained from studying
tools and perspectives. Our report reviews and individual firms. We have chosen cases from
extends existing studies, combining a literature four industries – videogames, product design,
review with some secondary survey analysis, advertising and independent broadcast
and presents new case studies of four creative production. We examine the nature of their
industries. innovation, how their innovation processes are
managed, and their linkages to wider systems
The Community Innovation Survey (CIS) is the of innovation.
single best available source of quantitative
information on business innovation in the UK.
It is a valuable starting point for our study.
The survey asks some revealing questions Technological innovation is rife in all
about innovation, enabling us to examine how four case study sectors
creative businesses perform on a range of
indicators. For example, our chosen creative Each case study features many different
industries include some highly innovative innovations. Technological innovation in
enterprises. They are also more likely than products and processes is common in most

creative industries, with new information for new purposes. TV programmes are
technology (IT) and the digitisation of repackaged for DVD, mobile phone or online
content driving major changes. But the study downloads; music is repackaged in a new
also uncovers less expected innovations in compilation or made available for MP3
new business models and product delivery. players.
These findings reflect the ‘hidden innovation’
experienced across many other industries. • Finally, there are numerous innovations that
take place on-the-job during the creation of
new products and which fail to be recognised
or replicated. The creative industries
Of particular importance to the creative demand innovative problem-solving, but
industries is innovation in the provision many of the new solutions are one-offs.
of experiences Businesses don’t find it easy to reproduce
such new approaches, though some technical
But the creative industries are different from developments (for example, useful lines of
most others, because their products are code in videogames) may be systematically
fundamentally intended to provoke particular archived.
kinds of response from their users. They enable
experiences to be co-produced, to greater or The creative industries are experiencing
lesser extents, with the product’s consumers. important changes that require and create
Innovation often occurs when those producing opportunities for innovation. These changes
creative content respond to the experiences include:
of consumers and users, and make changes to
their offer as a result. • New technological platforms – new
information technologies, and the
1. This taxonomy is elaborated associated digitisation of much creative
on in NESTA (2007).
content, are changing the way products
A good deal of innovation in the are created, delivered and marketed.
creative industries turns out to be This is particularly true in videogames
hidden development, but is occurring across the
creative industries.
‘Hidden innovation’ – that which is not
recorded using traditional innovation indicators • Consumers – both individuals and firms
– is common in the creative industries studied:1 are becoming more sophisticated in their
tastes and choices. Consumers are sharing
• Sometimes it is because innovation similar their views more readily among themselves
to activities measured by traditional and with producers, leading to more co-
indicators is excluded from measurement. production of creative products.
Much activity in creative industries involves
research and development (R&D) of new • Institutional changes such as new
products – though outside product design, it regulatory requirements and the
is not usually described in such terms. Such globalisation of industries, markets and
activities may not take place in conventional labour. Many businesses are out-sourcing
laboratories. But research into people’s work overseas or even relocating abroad.
tastes and preferences is vitally important in
shaping new products and services. Yet it is • New products are being generated for
excluded from R&D surveys and tax credit new markets – for example, entertainment
systems. firms moving into educational markets with
new types of videogame, or manufacturing
• Another form of hidden innovation concerns firms becoming service providers.
innovation in organisational forms or
business models – this is also very common These developments are driving innovation
in our creative industries. The most important in the creative industries, not least because
developments often involve the users of competitors use innovation to gain market
creative products in the innovation process. share and enter new markets.

• A third type of hidden innovation, novel

combinations of existing technologies and
processes, is also common, with creative
industries often using existing content

But many creative businesses struggle Policymaking: We offer three main
to formalise their innovation processes recommendations. First, further evidence
must be collected into how policy might assist
The firms we study find it difficult to manage innovation in the creative industries. Though
their innovation processes systematically. some research has been undertaken on this
Innovation often remains spontaneous or ad theme, more detailed evidence would underpin
hoc; creativity tends to involve the ideas of and guide the policy process.
charismatic senior professionals, with little
formal R&D. University links are limited for Second, targeted innovation programmes
innovation, though graduates provide vital should be available to the creative industries.
technical skills. However, communities of The creative industries welcome targeted
practice – professional associations and more innovation support where it is provided.
informal groups – are an extremely important Existing, general innovation support
source of new ideas. programmes are often not relevant to their
work. Initiatives such as the R&D Tax Credit
scheme do not, as structured, support the
sort of innovations undertaken in the creative
We make a number of recommendations industries.
for innovation measurement, creative
business management and policymaking Third, knowledge about best practice and new
innovations should be more effectively shared
Our report suggests a framework for classifying with policymakers. New forms of innovation
the range of innovations uncovered in the are emerging rapidly. Keeping abreast of these
research. We conclude by examining the changes is crucial. Ensuring that adequate
implications for measurement, management intelligence gathering systems are in place,
and policymaking. and that new approaches inform training and
competence-building schemes or targeted
Measurement: Better sampling would ensure innovation support, is central to the future
that innovation surveys are more likely to growth and success of the UK’s creative
capture organisations in the creative sectors. industries.
Current sample frames are too narrow, because
they exclude industrial sectors where creative
businesses are located, and the smaller firms
that dominate the creative industries. Similarly,
the questions in innovation surveys currently
focus on the activities of large organisations
and downplay non-technological innovation.
These, too, should be more broadly framed.

There is also a strong case for specialised

surveys (or further case study work) targeted
at creative sectors and firms. Such approaches
would cast greater light on their innovation
processes than general surveys.

Management: Firms should focus on acquiring

and developing the right skills and capabilities
to innovate – especially with the help of their
consumers. Much creative industry innovation
is based on ‘co-production’ with significant
input from the client. Networks, partnerships
and collaborations are also important sources
of innovation. Whilst conventional project
and innovation management skills remain
important, innovation managers must
increasingly demonstrate skills for collaboration
with professionals of various types and for
engagement with consumers and other firms –
skills such as team building, conflict resolution,
and problem solving.


The authors wish to express their thanks to NESTA for financial support and helpful editorial and
intellectual inputs throughout the process of compiling this report. We are grateful to Sally Randles,
Shaun Randles, Sally Gee and Lisa Murray at Manchester Institute of Innovation Research for their
invaluable assistance in the generation of interview-based materials. We also extend our thanks
to Hasan Bakhshi, Richard Halkett, Michael Harris, Jon Kingsbury, Conor Ryan and David Simoes-
Brown for their very helpful comments and suggestions with respect to earlier drafts of this report.
Our appreciation is also offered to Simon Bolton of Central St Martins College of Art and Design
for his contribution of detailed insights in connection with developments in the design sector.
Finally, we offer our warmest thanks to the very many creative sector practitioners who gave so
generously of their time in helping us to compile a detailed picture of innovation (and its ‘hidden’
components) within their industries.


Hidden innovation in the creative industries

Part 1: Introduction – the challenge of hidden innovation 11

Part 2: Exploring innovation in the creative industries 12

2.1 The creative industries share a number of distinctive features that 12

set them apart from other sectors

2.2 Research studies of innovation in the creative industries have been 13

few and far between

2.3 Creative industries in CIS4 17

Part 3: Innovation in the videogames industry 20

3.1 Introduction – innovation practice in four creative industries 20

3.2 Overview of the industry 20

3.3 Developments, trends and the innovation context 21

3.4 Drivers of innovation 22

3.5 Types of innovation 23

3.6 Management and organisation of innovation 25

Part 4: Innovation in the product design industry 28

4.1 Overview of the industry 28

4.2 Developments, trends and the innovation context 29

4.3 Drivers of innovation 31

4.4 Types of innovation 32

4.5 Management and organisation of innovation 33

Part 5: Innovation in the advertising and communications industry 36

5.1 Overview of the industry 36

5.2 Developments, trends and the innovation context 36

5.3 Drivers of innovation 38

5.4 Types of innovation 42

5.5 Management and organisation of innovation 44

Part 6: Innovation in the independent broadcast production industry 46

6.1 Overview of the industry 46

6.2 Developments, trends and the innovation context 46

6.3 Drivers of innovation 49

6.4 Types of innovation 51

6.5 Management and organisation of innovation 53

Part 7: Overview and analysis of industry case studies 55

7.1 Drivers of innovation 55

7.2 Types of innovation 58

7.3 Organisational and business model innovation 60

7.4 Innovation management and innovation systems 62

Part 8: Re-examining innovation in the creative industries in the light of 65

the sector case studies

8.1 A framework for understanding innovations 65

8.2 What does this say about ‘hidden innovation’? 69

Part 9: Conclusions and recommendations 71

9.1 Innovation surveys and measurement 71

9.1.1 The sampling frame of CIS-type surveys needs to be
extended to capture more creative sectors 71
9.1.2 Questions on types of innovation 72

9.1.3 Other questions 73

9.2 Innovation policy and management 73

Appendix A: Revealing the hidden: orientation to the study 75

Appendix B: Case study interviews 78

Appendix C: References 79

Part 1: Introduction – the challenge of hidden innovation

What types of innovation are found in the

creative industries? What new creative
products are they producing? How are their
methods of production and product delivery
different? Are they more innovative in their
back-office processes and their relationships
with their clients and consumers? To what
extent is creative industry innovation unnoticed
or under-reported in standard accounts of
innovation in the knowledge-based economy
or in Research & Development (R&D) and
innovation survey statistics?

We begin by exploring how creativity and the

creative industries have been conceptualised
in the business and innovation literature. We
examine what the Department for Innovation,
University and Skills (DIUS) Community
Innovation Survey can tell us about their
innovation. We review the available literature
on innovation in the creative industries, before
moving on to our own original case study work
in the videogames, product design, advertising
and independent broadcast production.
Finally, we ask how and why such hidden
innovation matters; and we make a series of
recommendations for statisticians, policymakers
and creative businesses.

Part 2: Exploring innovation in the creative industries
2. The SIC is the Standard
Industrial Classification, the
statistical framework used to
classify economic sectors.
3. There are actually many
activities here, with industrial
product design being very
different from industrial
process design; then there
is graphic design and many
more activities bearing the
‘design’ label.
4. Many informational goods and
services are readily understood
as carrying content. But the
term does not readily apply
to artefacts such as buildings,
landscaping, fashion clothing,
statues, or well-designed
industrial products. In these
cases, not all of which are
about ‘functional’ products,
the form of the artefact may
convey the meaning – rather
as in McLuhan’s (1964)
dictum “the medium is the 2.1 The creative industries share a Some creative industries do design or produce
message”. The physical number of distinctive features that set physical artefacts. Most often, “the physical
artefact does not just provide
a vehicle for carrying meaning them apart from other sectors work is the vehicle for conveying the idea”
as if it were a separate rather than playing the purely functional role of
informational product.
5. This means that new
The most influential definition of the ‘creative an “ordinary economic good” (Throsby 2001,
information technology industries’ was given by the Department for p.104). The value of the artefacts is usually
is often incorporated into
the processes and products
Culture, Media and Sport’s Creative Industries overwhelmingly based on the ‘content’,4 their
of these industries. Much Taskforce in 1998 (DCMS, 1998). The taskforce cultural meaning, or the experiences they
innovation relates to building
on such opportunities.
defined them as based upon activities which help create. Many creative industries produce
6. Successive consumers can have their origin in individual creativity, skill and ‘information products’, and this means that
consume the information, talent, and as having the potential for wealth they can often be made available in digital
which is liable only to decline
in value if it is time-based creation through the generation and exploitation form.5 Several important issues arise:
(dependent on news or fast- of intellectual property. They identified thirteen
changing fashion) or relies
on exclusive access (prestige creative industry sectors (which can be further Information: goods and services have unusual
products). The meaning of the disaggregated into either part or whole of over properties.6 Most can be consumed repeatedly.
information to consumers is
liable to evolve as successive thirty 4-digit SIC2 industry groups): This provides opportunities for innovation –
use is made of it, especially if digital content may be put together in new
there is value-added in such
forms as, say, critical reviews, • Advertising ways, through music remixes, new DVD box
commentaries, parodies, etc. sets or as internet or mobile phone downloads.
7. We shall use the terminology
‘consumers’ here, because
• Architecture But such opportunities also present economic
alternative terms like ‘user’ challenges – how do you charge for things that
and ‘client’ have their own
problems. But we should
• Arts & Antiques Market can be easily reproduced and communicated at
stress that sometimes the low cost?
creative service is provided
free of charge, and not only
• Crafts
by public services or altruistic This raises issues for intellectual property
creators. For example,
advertisers and broadcasters
• Design3 rights (IPRs). There is in general limited
may wish the public to scope for patenting (except for certain
experience their outputs,
while their paying clients are
• Designer Fashion aspects of software, and some developments
not consuming these outputs of technology in the processes of creative
so much as purchasing the
service of delivering these
• Film firms), but copyright, trademarks and design
outputs to the public whose rights may be invoked. Enforcing IPRs –
experience is shaped by
the act of consumption of
• Music and establishing their reach in an evolving
the products. A number of information environment – is a highly
the creative services in this
report are actually businesses
• Performing Arts contentious topic. Indeed, the debate is both
whose purchasers are other promoting and being reshaped by technological
• Publishing and organisational innovation.
8. There are, as always,
exceptions to this
generalisation: for example, • Software and computer service Experience: many information goods
much software is ‘embedded’
in the equipment it operates, and services require consumers7 that can
and only requires that other • Computer Games (Interactive Leisure understand and process the information
parts of the equipment
respond to its messages. Software) provided;8 and the consumers’ experience
of creative goods and services is highly
• Radio & TV informed by their consumption of related

works, prior knowledge, and changing the Independent successfully became a quality
tastes.9 In this environment, creative products ‘tabloid’, the Times and Guardian quickly
resemble a ‘service experience’. Indeed, some introduced their own redesigns (though in this
commentators argue that the ‘experience case more technological change and market
economy’ is a more appropriate term than the testing was needed than in the pizza example).
‘service economy’.10 A TV programme format or a videogame
concept can be emulated, advertisements often
An experience is ‘co-produced’, by an seem to ‘swarm’ around certain themes or 9. A considerable body of
sociological work on taste,
interaction between the creative good and styles, and so on. Such imitation is endemic in much of it inspired by
its consumer. Even the ‘passive’ audience many creative industries. It may even be overt Bourdieu (1984), examines
the ways in which this
to a TV broadcast is choosing how much and presented as a ‘tribute’, a generic twist, or reflects socialisation into
attention to give to the programme, and a parody. But imitation doesn’t seem to deter different social strata and
efforts to acquire and
interpreting the material presented in terms innovation. Most services report that they are signify status. There is also
of their own knowledge and views. Often less concerned about copying and imitation a rapidly-growing body
of work on consumption,
audiences are actively discussing the broadcast than manufacturers12 (Tether et al., 2002), and some of which asserts that
among themselves, and other media – such we shall see later that creative industries are traditional models of taste
and high and low culture are
as videogames or live performances – may highly innovative, even by standard metrics. being challenged by the rise
demand consumer inputs. of ‘omnivorous consumers’
(for two points of view here
Another feature in common between services see Sullivan and Katz-Gerro,
Sometimes things go further, where the in general and creative industries is that many 2007, Warde et al., 2007).
‘audience’ in effect produces some of the of these share a J-shaped industrial structure 10. Gilmore and Pine II (1999)
and Pine II and Gilmore
content of the creative product, or where – they have a few large, often transnational (1998) argue for a shift
consumers indirectly affect each other’s producers, and a long tail of progressively in the locus of economic
activity from producing
experiences. Gilmore and Pine II (1999) smaller businesses and microbusinesses.13 goods, through delivering
identify four broad categories of experience services, to creating
experiences. Richards (2001,
– entertainment (where consumers typically The literature identifies different classes of p55) – one of a great many
participate more passively, and their connection services. There are business and consumer authors applying these
ideas to the topic of tourism
with the event is one of absorption); education services; knowledge-intensive services – goes so far as to assert
(requiring more active participation, and with high levels of professional work; and “services are dead – long live
again a connection or absorption); escapism more traditional services with high levels of 11. Or even a food and drink
(requiring greater consumer participation and unskilled labour. Within the most innovative manufacturer.
immersion); and aesthetic (typically immersive Knowledge-Intensive Business Services 12. Computer services are a
predictable exception.
but with limited active participation). Many (KIBS) groups, there are technology-oriented 13. Caves (2000) stresses this
events combine several of these features; creative activities (e.g. software, engineering long tail, arguing that
innovation may involve shifting between or design), and those that create more social or creators are often unlike
other workers in that they
adding multiple types of experience. psychological effects (e.g. advertising, fashion have personal investment
design). in their creations, they care
about their products. It is
Services: many creative products are services, suggested that creative
and many that are technically goods are used We can anticipate that the innovation patterns professionals tend to find
considerable intrinsic value
in a service context. Services of many sorts of creative industries will have features in in their work, and are thus
frequently involve performance, where the common with those described for other prepared to work for low
rewards or endure periods
staff help to create the consumer experience information goods, services, and experience of under-employment
– consider for example hotels and restaurants. industries and their products. (perhaps solely to pursue
their vocations, perhaps with
One feature of many services is that production undimmed hopes of a future
and consumption are largely co-terminous: breakthrough).
14. Examples include Cohendet
the service is produced and consumed and Simon, 2007; Grantham
simultaneously, at the same time and in the 2.2 Research studies of innovation in and Kaplinsky, 2005;
Tschang, 2007.
same place. A theatre performance has this in the creative industries have been few
common with a theme park visit. (But note that and far between
there is often a great deal of ‘back stage’ work
and pre-planning underpinning the successful Few researchers have applied the insights of
performance, carried out at an earlier time and innovation studies to the creative industries
often in a variety of other places.) in general. There are several studies of
specific industries – notably videogames
Another feature of services is that many production,14 where a rapidly-growing and
service innovations are easier to copy than technology-intensive industry has attracted
more complex technological innovations. A attention from management and innovation
new idea, such as a restaurant’s new pizza scholars. Studies of film and TV production
topping, can be rapidly imitated by another also sometimes touch on innovation issues
service provider11 if it proves successful. Once (e.g. Bilton (1999) contrasts an innovative

independent production sector with more be interrogated about their production of new
conservative corporate media entities). But content – for example, music companies can
innovation and creative industries studies have be asked about the release of new CDs as well
rarely been brought together in a systematic as about innovation in the production process.
way. One factor behind this, in all probability, However, this does little to assess the extent
is the predominance of aesthetic issues and of innovation. For instance, there may be some
consideration of content in creative industries’ aesthetic novelty in the re-release of an album
products. with a new cover (a minor design change in
conventional innovation analysis), or in a new
There have been few attempts to explore compilation of old tracks, even though these
aesthetic and content innovation using the outputs might be far less significant in cultural
methods of innovation research terms than a completely new piece of work.
One exception is Stoneman (2007). While
noting that the creative industries sometimes Both authors point towards innovations
engage in traditional technological innovation, involving content, aesthetics or experience.
he also notes more unusual features of They see no insuperable obstacles in measuring
their innovation. He characterises their such innovations, though it may be harder
aesthetic innovations as ‘soft innovation’ to measure the extent of such innovation.
and distinguishes two aspects of such soft Stoneman notes that the standard Oslo
innovation: Manual16 definitions, mainly oriented to
technological innovation, largely rely upon
• Innovation in “products that are themselves functionality as a way of identifying the
largely aesthetic in nature (e.g. music, books, significance of innovations. Both he and
film)… to be found particularly in those Handke propose that market impact would be
industries sometimes called the ‘creative a useful readily available metric for measuring
15. Although just what industries’”. This may involve new products the significance of aesthetic innovations.17
constitutes novelty, or how
much novelty there is, are and new ways of producing products.15
not straightforward issues. Economic significance is important, but not
16. OECD (2005), downloadable
from: http://www. • Innovation “in industries the output of which all economically significant things are priced. is not aesthetic per se but functional…. This Some highly significant new ideas or processes
t1=922005111P1 might cover for example new designs of cars, are provided free of charge – such as the
17. The Community Innovation new food products, redesigned electrical ideas behind the World Wide Web, or some of
Survey (based on the Oslo products etc. This has been largely ignored the more creative Web 2.0 content. Market-
Manual) does contain
questions about such topics in the past because the TPP [technological based measures of economic significance may
as the share of turnover product or process] definition has also be a poor guide to cultural impacts – at
contributed by new products
and processes. emphasised functionality…” Such product least to those impacts that provoke shifts in
differentiation has tended not to be regarded cultural products and creative activities. Artistic
as innovation. But Stoneman suggests that pioneers whose ideas triggered new styles or
at least some of this work may fruitfully be genres may reap fewer rewards than those who
viewed as innovative activity. pick up and popularise these ideas (consider
the case of ‘street fashion’). While it is harder
Some of Stoneman’s examples involve creative to assess the diffusion of an idea than that of
and cultural products – the creation and launch a major new technology, an assessment of the
of new books, CDs, theatre productions, uptake of a novel approach may be a better
movies or advertising promotions; others reflect reflection of its cultural impact and creative
aesthetic components of ‘functional’ products significance.
– new clothing lines, ranges of furniture,
designs for motor vehicles, food products. He Another question is how such measurement
also cites as ‘soft innovations’ the development could allow us to develop the sort of
and launch of new financial instruments, which distinctions used for more conventional
may have neither technological nor aesthetic technological innovation – such as the extent
components at their core. to which an innovation is radical or incremental,
or whether it is new to a firm or new to the
Another exception is Handke (2004a, b) market. The few studies of creative sector
who sees creative industries as characterised innovation that have attempted to assess
by ‘content creativity’ – a concept close to artistic impact (for example, Galenson, 2006)
Stoneman’s ‘aesthetic innovation’. Handke have typically dealt with long-established
contrasts this with ‘humdrum innovation’ works (allowing their impact to be assessed
or traditional technological innovation. His through their coverage in standard references
surveys have shown how creative industries can and textbooks.)

Innovation analysts and social researchers • mixing in memorabilia
have understandably shied away from making
aesthetic judgments. No doubt this is in part • engaging all five senses
because of the numerous cases of pioneering
works that were very poorly received on their In a study of creative industries similar to those
debuts; of ‘revolutionary’ artistic movements covered in our report, NESTA (2006a) focuses
that never attracted followers or audiences; and less on ‘product innovation’ than on creative
of fashionable styles and products that were approaches at the strategic and organisational
soon forgotten. Often, it is only with hindsight level of businesses. Five important areas of
that we can make definitive judgements, but innovation are singled out:
we can still explore ways of complementing
measures of market impact with ways of • innovating into new markets (e.g. moving
enquiring about the novelty and influence of from clothing to construction, from
creative products and the ideas behind them. entertainment to education)

Innovation in the creative industries goes • disrupting the value chain through digital
way beyond the aesthetic and content technologies (by cutting out existing
Aesthetic innovation is far from being the only distributors and retailers)
form of innovation in the creative industries.
Our case studies reveal many aspects of • building on diversity (drawing on ethnic
innovation that have less to do with new minorities and global cultures)
creative content than with other features of the
production and delivery processes, and of the • moving from being IP (Intellectual Property)
products themselves. producers to IP owners (generating ongoing
revenues from their creative content, for
Other recent authors have recognised this. example by enabling material to be used in a 18. For example, with a focus
on innovation, See Voss and
Chris Voss,18 for example, suggests that there wider range of commercial formats) Zomerdijk (2007).
are five important design areas in which 19. This is perhaps more truly
‘humdrum’ than Handke’s
innovation may be created in experiential • collaborating to compete (co-production use of the term.
services: of new ideas with customers, enabling the
development of competitive new products)
• physical environment
Green, Miles and Rutter (2007) also focus
• service employees on the types of innovation pursued in
creative industries, drawing on the project’s
• service delivery process preliminary case study work. They draw on
an approach proposed by den Hertog (2000)
• fellow customers for conceptualising service innovation. His
solution is not to classify different types of
• back office support innovation (e.g. service, process). Rather, den
Hertog identifies different dimensions along
Unusually, his studies explore the sources of which innovations can be characterised –
information for innovation in these cases: he service concept, delivery, user interface and
concludes that the collection of customer technologies. While some innovations might
insights forms an important part of the design emphasise just one of the dimensions he
process, and that ‘experiential innovations’ are discusses, many would combine several. Thus
typically driven by the customer rather than a new service concept might require a new
technology. In a complementary approach, technological solution.
Pine II and Gilmore (1998) identify a set of
principles for the design of experiences – which Green et al. add process innovation to den
could equally be strategies for innovation: Hertog’s list. Process innovation may or may
not require new technology – an artist may
• theming the experience adopt a new way of applying paint to canvas,
or a theatre producer a new way of organising
• harmonising impressions with positive cues backstage work in a dramatic production.

• eliminating negative cues Green et al. suggest that in creative activities,

there is much ‘everyday problem solving’,
• ensuring the integrity of the customer leading to a series of small innovations that
experience shape the final creative product.19 Such ‘on

20. The distinction between the
first two categories may be the job’ innovation is also very common in These four dimensions are described as:
blurred, as the distinction many professional services. But it is missed in
between form and content
is particularly problematic innovation surveys and ignored in case studies • Cultural Product – the product that carries
for many creative products. of new products and processes. This may the cultural meanings and information
If form is seen simply as
the physical vehicle of the reflect the fact that new ways of doing things content (a film, videogame, stage
product, which carries the are typically the product of practitioners, rather performance, sculpture, or set of design
informational content, when
the form can be tied to a than the result of innovation activities or R&D specifications). This partly overlaps with the
particular class of artefacts work. idea of technological product innovation,
– CDs or DVDs for example
– then the distinction may though some new elements may have little to
work reasonably well. But Figure 1 presents the ‘diamond’ framework do with new technology.
such artefacts are highly
standardised in technical which Green et al. use to capture the six
terms, so that variations in dimensions they identify as important in their • Cultural Concept – the information
content rarely impinge on
these technical features. case study research. They argue that four of ‘content’ of the product, such as characters,
The same may be less true these six dimensions (those constituting the narratives, representations of tangible
for products in print media,
and even less so where horizontal plane in Figure 1) are particularly objects or less tangible ideas.20
craft and more traditional prominent in the creative industries (although
artistic works are involved.
Innovations in the latter may they might also be important for creative • Delivery – how the product is made
be hard to define as either production in all sectors). The four dimensions accessible to consumers.
form or content innovations.
21. We avoid saying ‘intended
are seen as being where ‘hidden innovation’
outcome’ here, since the is likely to be common within the creative • User Interface – how the consumer interacts
intentions of producers
and consumers may
industries. with the product to gain the experience that
be very different – for is the outcome of the creative activity.21
example where the creator
deliberately sets out to
challenge and provoke an
unsuspecting audience, or
where the consumer treats a
product as kitsch. Outcomes
may be different from what
either party had envisaged
when entering into the Figure 1: The diamond of innovation in the creative industries
process. This is a feature
which creative products
share with many services.
22. However, two different Process of
classes of concept are being production
presented as notionally
similar in the diamond:
the site of innovation –
product, process, delivery,
user interface, etc.; and
the nature of innovation
– whether it involves
technological change, new
work organisation, etc.
23. The CIS4 survey form was
sent to over 28,000 UK
enterprises with ten or more
employees; with 16,446
responses, the response
rate was 58%. The survey
form can be downloaded
Cultural Cultural
page11578.html product concept
24. Although some questions
do ask whether particular
innovations have been
25. The exception among service
sectors is financial services
(see Tether et al., 2002). In
many areas of the economy, User
and for some types of
innovation, the focus on
larger firms may be less of
a problem for innovation
analysis than would seem
to be the case at first sight.
This is because, contrary to a
popular belief, smaller firms
typically report undertaking
innovations less often than
do large firms; Tether et Technology
al. (2002) document this
for services firms across
Europe using CIS2 data Source: Green et al. (2007).

(noting the interesting
The other dimensions of innovation are to (CIS) is conducted every four years by EU exception of certain
do with the technologies employed, and the member states; CIS4, undertaken in 2005, technology-based services).
Furthermore, there is some
organisation of production; these are closer to asked questions about the three years from evidence that technological
aspects of conventional innovation research. 2002-04.23 innovations from large firms
in manufacturing sectors
tend to be the ‘bigger’,
This approach goes beyond the simple The CIS focuses mainly on enterprises and more radical innovations as
compared with those from
contrast of aesthetic or soft innovation with their innovation activities and expenditures. It smaller firms (Tether et al.,
conventional product and process innovation.22 does not examine any specific innovations in 1997). Whether this would
be expected to apply to the
After examining our case studies, we will connection with these innovation activities and sorts of creative product and
suggest an approach that builds on Green et expenditures.24 organisational innovations
produced by firms in creative
al., Voss and NESTA’s ideas, to grasp a wider industries is however, a
range of the elements of innovation. As with Like most other surveys, CIS4 is based on question for investigation.
We should also draw
Green et al.’s and Voss’s approaches, this sectoral classifications – so it is not a good attention to the survey
synthesis should apply to creative products guide to creative activities, as opposed to of small and medium size
enterprises conducted by IFF
from all sectors. But we believe it is particularly creative industries. Advertisers, designers and (2008) for the Department
helpful to examine creative industries to clarify other creative occupations within sectors that for Business Enterprise and
Regulatory Reform (BERR),
what needs to be extended in our accounts of are not dominated by their creative activities which indicates rather high
innovation. Our analysis of ‘hidden innovation’ are effectively invisible – and their innovative levels of innovation being
reported in their large
in the creative industries may then cast light on activities are likely to remain hidden. The sample.
innovation in other parts of the economy. survey does let us focus on those sectors 26. Some ‘creative’ activities
are underway in these, as
whose main products are creative ones such as in practically all, sectors of
The idea of ‘hidden innovation’ has been advertisements or designs. the economy. For instance,
even in very small firms,
elaborated in an eponymous NESTA report on people may create their own
this theme (NESTA, 2007). Four categories of The CIS4 exclusively addresses private sector advertisements, signage,
decorations, slogans,
hidden innovation are suggested: firms with ten or more employees. This means entertainments, etc.
that sectors with large numbers of very small 27. Business and employers
1. Innovation that is the same or similar to and micro-businesses (which may employ two organisations may be
significant sources of
activities that are measured by traditional or three people) are under-represented. Such innovative information for
indicators, but which is excluded from small businesses are common throughout most some firms and sectors.
There may be some
measurement. creative industries and service sectors.25 associations among these
that play roles in diffusing
innovation, setting
2. Innovation without a major scientific/ The economic sectors covered are sections standards, etc. in creative
technological basis, such as innovation in C-K of the Standard Industrial Classification industries.
28. ICM’s (2006) survey asks:
organisational forms or business models. (SIC 2003). The sample excludes extractive “Has your business ever
industries – agriculture, forestry, fisheries, developed a new product or
service in order to generate
3. Innovation created from the novel etc.;26 the public sector (along with private or greater commercial return?”
combination of existing technologies and charitable community, health and education 58% of firms in the film
business answered “yes”
processes. services, etc.); personal services; and some to this question (which is
other activities such as those of business, admittedly vaguer than
CIS’s request for information
4. Locally-developed, small-scale innovations employers and professional organisations.27 about the last three years).
that take place ‘under the radar’ and are A more serious omission for present purposes This percentage is above
that for the creative
therefore unrecognised or accounted for. is SIC division 92, Recreational, Cultural and industries as a whole,
Sporting Activities – within which 92.1 is including those sectors
included in CIS4.
In Chapter 8 we shall discuss how examining motion picture28 and video activities; 92.2 radio
29. A case study work found
the creative industries throws light on these and TV activities; 92.3 other entertainment that one of the top industrial
categories of innovation, and on how they may activities (including artistic and literary design firms examined was
formally located in this part
be studied and measured. creation and interpretation,29 live theatrical of SIC 92.3.
presentations, etc., together with arts facilities, 30. Also featured here, and
missing from CIS4, are 92.4
fairs and amusement parks, and much else).30 (news agency activities);
92.5 (libraries, archives,
museums, etc.) – clearly
2.3 Creative industries in CIS4 CIS results suggest that the creative relevant for a study of the
industries are innovative relative to the rest wider cultural industries;
92.6 (sporting activities);
The Community Innovation Survey is a of the economy and 92.7 (other recreational
valuable source of quantitative information A Department for Trade and Industry analysis activities such as gambling
and betting). Most of these
on innovation in the creative industries (DTI, 2006) suggests that CIS4 samples around sectors are active in terms of
Before embarking on our case studies, we two thirds of the creative industries in the UK applying new technologies.
will consider what information about the as defined by the DCMS. The analysis includes
creative industries can be gleaned from all of the firms sampled in the industry sectors
the main available source of statistics on covered, even though only some firms within
innovation. The Community Innovation Survey these industry groups are likely to be ‘creative’

31. Additionally we would
note that Publishing and in DCMS terms. Despite these problems,31 the creative industries perform well on all the
Reproduction are included, results are indicative: innovation indicators, with some 78 per cent
but not Communications
(though some delivery of firms (in his definition) undertaking regular
of electronic content via • Forty per cent of the enterprises are based innovations – a higher proportion than any of
telecommunications is an
activity very like publishing); in London and the South East, and the the other broad industry categories considered.
Research and Development workforce has a high proportion of graduates He also examines results for ‘wider innovation’,
is excluded (though it does
feature in some DCMS – notably science and engineering graduates. drawing on CIS4 questions about changes to
definitions). (This largely reflects the prevalence of certain corporate strategy, marketing, management
32. This applies to every
category of IP considered:
technology-based sectors in the sample.) and organisational structures. Firms in the
Confidentiality agreements; creative industries emerge as more likely to
Copyright; Trademarks;
Patents; Secrecy;
• These creative industries tend to operate at a undertake such change than those in other
Registration of design; more national (34 per cent) and international industries. The results suggest that creative
Lead-time advantage on
competitors; and Complexity
level (14 per cent Europe, 29 per cent Rest industry firms are more likely to introduce
of design. of World) than the rest of UK industry, with new products and processes34 and to change
33. Unlike the DTI report, only 24 per cent reporting that their largest and adapt their structures and approaches.
Wilkinson weights sector
data according to the share markets are regionally or locally based. This, as Wilkinson notes, may be important for
of these industries that Corresponding figures for other UK industries making the most out of product and process
DCMS considers creative.
34. It has been common practice
are: 30 per cent UK markets, 10 per cent innovations. Other results include:
to refer to the CIS questions Europe, 18 per cent Rest of World, and 44
about product and process
innovation as ‘technological
per cent local/regional markets. • Firms in the creative industries attribute 52
innovation’ (though the per cent of their turnover to new or improved
precise formulation does
not necessarily imply this
• These creative businesses are highly products, compared with 40 per cent for
– for example many service innovative (69 per cent report innovation firms in other industries. ‘New to market’
quality improvements could
easily have been achieved
activity, compared with 56 per cent of other products – as opposed to those innovations
without technological UK enterprises). The proportion is even which are ‘new to the firm’, but already
change), and the ‘wider
innovation’ questions
higher in some regions – over 75 per cent available in the market – account for almost
as about ‘organisational of creative firms in Yorkshire & Humberside, twice as much of creative industry turnover
innovation’. Several authors
have contrasted sectors
Northern Ireland and the South East report than for other industries.
in terms of the reported innovation activity.
incidence of the two broad
categories (e.g. Schmidt &
• Creative industry firms are more likely to view
Rammer, 2006; Miles, 2008), • Creative industry enterprises attribute intellectual property – including copyright
noting a strong relationship
between the two forms of
over half of their turnover to their product and patents – as important for protecting
innovation at a sectoral level innovations. innovation.
(i.e. sectors reporting more
of one type will also report
more of the other type); • Over a fifth of creative businesses report But there are significant differences across
but also reporting that
services sectors in general
having co-operation agreements for types of creative business
tend to place relatively more innovation – nearly twice as many as other One limitation of these two studies is that they
emphasis on the wider,
organisational innovations
industries, where co-operation is much rarer. treat creative industries as a whole, and elide
(technology-based services differences between sub-sectors. It is quite
like computer services are an
• Creative industries report that product- possible that the trends cited are features of
35. See also NESTA (2006a). orientated innovation effects are strongest, specific sub-sectors rather than the whole
36. We propose adding some with improved quality of goods or services industry.
additional industries to
the list in the Toolkit. R&D
being the most important.
services can be located in The DCMS Evidence Toolkit (2004)35 provides
creation, and are in our
analysis; we also include
• These creative businesses are also more one way forward. This classifies creative
Public Relations (which active at protecting their innovations than industries into six groups, depending on
involves both creation
and dissemination of
other firms.32 The DTI Paper suggests that whether they are involved in Creation,
messages); and Market this could partly reflect their greater levels of Making, Dissemination, Exhibition/Reception,
Research (some of its work
resembles R&D, and the
originality. Archiving/Preservation, and Education/
industry creates analyses, Understanding activities.36 Our analysis
concepts and reports).
Telecommunications services
• These creative businesses also face greater suggests that the CIS4 sample includes 1,093
can be experimentally barriers to innovation (not unexpected, since ‘creators’,37 followed by 568 ‘makers’38 and 359
classified as distribution,
though much of their
more innovative organisations in general ‘distributors’.39 There are only five ‘exhibitors’;
activity will have little to do report higher barriers). Qualified personnel and the other two groups are not represented
with creative content (in
contrast, say, to publishing,
are harder to recruit than in other industries; in the sample.40 It is notable that the ‘creators’
printing, and retail of but regulatory impediments are less and ‘makers’ are dominated by engineering,
media). Further work
might also allocate some
frequently encountered. software, and manufacturing activities. This
sub-sectors of industries goes some way toward accounting for the
to different groups – for
example, in SIC 74.4
Wilkinson (2007) also examines creative discovery by the DTI and Wilkinson that
Advertising, 74.40/2 industries in CIS4.33 He concludes that the

(Planning, creation and
patents are considered important in the undertaken at least three out of four of these placement of advertising
creative industries.41 innovations. activities) does involve
creation, while 74.40/1
(Sale or leasing activities
The creative industries emerge from analysis • Most of the creative industry firms which of advertising space or
time), appears to be either
of the CIS4 data as more oriented towards undertake technological innovation consider dissemination or exhibition,
business markets than other firms.42 Analysis that their innovations have positively as is 74.40/9 (Advertising
activities not elsewhere
of data on graduate employment shows affected: the quality of their goods or classified) since it is largely
high proportions of science and engineering services; their value-added; their market exemplified in SIC manuals
in terms of distribution and
graduates in the engineering and software share or entry to new markets; their range display activities.
firms, while other ‘creators’ are liable to feature of goods or services; and their flexibility of 37. Three industries here are
well-represented, each
more ‘other graduates’. Some commentators production or service provision.46 A majority featuring over 200 firms:
suggest that the share of professionals in the of the innovative ‘makers’ consider that Engineering Consultancy
and Design, Other Software
workforce of a sector indicates its innovation their innovations have been moderately Consultancy and Supply,
propensity, and may even be a better indicator or highly important for reducing costs and and R&D in natural sciences.
Other industries in the
of innovation efforts than R&D for services increasing capacity. Given that the creative ‘creator’ category include
sectors. If so, the creative industries are likely industries have higher than average levels Architecture; Advertising,
Photography, Market
to be particularly innovative. of innovation, the implication is that their Research and Public
innovation is having particularly striking Relations, and social science
We also identify some other results from effects.47
38. The only ‘maker’ industry
our analysis of CIS4 for our four creative with over 200 firms
industry groups: There is much more scope for exploring featured is ‘Printing not
elsewhere classified’,
• Overall, all four creative industry groups are CIS4 – the other questions it asks are worthy and the other industries
more likely to have both technological and of analysis, and more detailed industrial featured are mainly involved
in the manufacture of
wider innovations than enterprises in general. classifications can be examined. Our findings media-related goods, and
But ‘distributors’ are less innovative than demonstrate that, despite its obvious publishing and printing.
39. The largest
other creative groups, reflecting very low limitations, it is a useful resource for studying ‘distributor’ industry is
frequencies of innovation in the ‘trade’ and at least those creative industries covered. telecommunications, with
over 175 firms; most other
‘retail’ creative groups (partly offset by high cases are in wholesale or
frequencies in telecommunications). Our results illuminate many aspects of creative retail sectors dealing mainly
with media.
industries’ innovation. They confirm that
40. These figures would change
• Those ‘creators’ involved in technology creative industries are innovative, and that somewhat if we reallocated
development are particularly innovative in their innovations go well beyond technological parts of advertising as
suggested in footnote 38,
most classes of innovation. innovations. They also allow us to anticipate and if telecommunications
that, in our case studies, we will find were not to be included as a
• Almost all creative groups feature higher substantial differences across different types of 41. Our analysis indicates that
shares of combined innovation (both creative industry.48 it is the ‘creators’ that
are particularly keen on
‘technological’ innovation and ‘wider IPR techniques, especially
innovation’)43 than of either technological or confidentiality agreements,
secrecy and copyright;
wider innovation alone.44 ‘Distributors’ most the technology-oriented
closely resemble the rest of the economy in ‘creators’ – unsurprisingly
– emphasise patents more
this respect.45 than other firms.
42. The importance of
• All creative industries report roughly similar business sales for creative
industries has already been
(high) levels of product innovation. highlighted by researchers
such as Freeman (2007)
and Bakhshi, McVittie and
• The creative groups – especially the ‘creators’ Simmie (2008).
– are more prone to undertake wider 43. Strictly speaking, the survey
tells us that both forms of
innovations than firms in general. Across the innovation are underway
economy, changed Marketing Concepts or in the same firm, not that
they are actually combined
Strategies are most common, followed by in the same process of
new Organisational Structures, Corporate change. Those ‘creators’
with a technology focus,
Strategies and Advanced Management incidentally, are the group
Techniques. The creative industries broadly with most emphasis on
combined innovation.
follow this pattern, with somewhat more
44. Technology-only innovation
stress on changing organisational structures. is somewhat more prevalent
The ‘creators’ are most prone to undertake than wider-only innovation
in most groups.
each form of wider innovation. Most of 45. Both in terms of overall
those reporting wider innovation have incidence of innovation,
undertaken two or more of such innovations and in displaying a fairly low
incidence of technology-
– with over 20 per cent of ‘creators’ having only innovation.

46. The question of impacts
is not asked of ‘wider Part 3: Innovation in the videogames industry
47. It would be possible to
explore some impacts of
innovation further using
CIS4, for instance by
exploring the proportion
of sales related to new
products, and whether
there is a relation between
the reported novelty of
the innovation and the
perceived impacts, in the
various creative sectors. On
this theme, Wilkinson (2007)
does report that creative
industry firms attribute more
of their turnover to new or
improved products than do
firms in other industries,
with ‘new to market
products’ being particularly
prominent (accounting for
almost twice as much of
creative industry turnover
than for other industries).
48. We can note here that 3.1 Introduction – innovation practice in • Third-party developers are contracted by a
our case study industries
are all largely ‘creators’, four creative industries publisher to produce games on a title-by-
and also that they are title basis.
not all captured in CIS4.
Broadcasting is excluded, for This section presents the first of four sector
example, together with parts case studies. Each has been constructed by • Self-publishers are studios that develop
of the videogames industry
that are not classified as combining desk research with an extensive games without publisher support. This
software activity; and we programme of interviews (involving industry category includes producers of specialist or
find some design firms
located in industries that practitioners, executives, trade representatives niche games including factual and web-
are not included in CIS4. and commentators) and sector workshops. The based games. Many companies producing
Only advertising seems to be
completely unproblematic. evidence collected is organised around four games exclusively for web-based distribution
49. A more detailed statement separate headings:49 fall into this category.
of the methodology
deployed in construction
of the cases (and in the 1. The context and operating conditions in There are parallels in industrial structure
study more broadly) appears
in Appendix A. A list of
which innovation takes place. between videogames development and the
companies interviewed development of feature films
during the case development
process is included in
2. The drivers for innovation. For independent developers, the production
Appendix B. process is similar to that found in the creation
50. This case study was prepared 3. The different forms of innovation that are of feature films. Development studios will
primarily by Jason Rutter.
51. An extended overview of the
evident. work up an idea for a game which will then
sector can be found in the be pitched to a publisher through a ‘design
Interim Report developed in
connection with this project
4. The management and organisation of the document’ and working prototype. Publishing
(Green et al., 2007). Further innovation process. agreements are often negotiated for specific
details relating to the size
and dynamics of the sector
global regions, though console games often
(and to operating contexts need agreement from each territory before
and challenges) are available
in NESTA (2006a).
they can proceed to development. During early
52. Also known as computer 3.2 Overview of the industry50 stages of the process, the developer takes the
games, and entertainment financial risk (through speculative activity with
software, among other
labels. This first case study focuses on the videogames some resemblance to R&D). When publisher
53. Middleware, in this context, development sector,51 a subset of the broader interest is secured, publishers will negotiate
is software with component-
based architecture
and rapidly developing videogames industry52 terms, milestones, payment and transfer of IP
developed by a third party that includes game publishing, marketing, retail with the development studio. Once terms are
company which offers a set
of tools to streamline the
and ‘middleware’53 companies. finalised, the development company dedicates
game development process. full development teams to work on the game.
Common middleware
packages in the games
There are three types of videogames
industry include RenderWare development company, defined by their Games developers mainly produce games for
(used for creating 3D
environments), Havok (a
relationship to games publishers personal computers (PCs) and games consoles
‘physics engine’ to allow • An in-house developer is part of a (e.g. the Sony PlayStation, Nintendo Wii and
interaction between objects) videogames publishing company, or wholly Microsoft Xbox). Games are also produced for
and FMOD (controlling
audio playback across owned by one. It produces exclusively for mobile phones and personal digital assistants
platforms). Many games that publisher. (PDAs), and for websites and digital TV, as well
development companies also
develop middleware tools of as games arcades.
varying complexity which are
not commercialised outside
the firm.

Games development brings together all the 3.3 Developments, trends and the
elements of games production from the initial innovation context
idea and design through to the final version
of the code (which is usually marketed and The videogames industry underwent a
distributed by a videogames publisher). The period of major structural change in the
industry comprises a range of specialisms 1990s
including games production, games design, Since its origin in the late 1970s, the
games development, level design, audio electronic games value chain has become
design, art and testing. With the exception of global, extended and complex (Readman
the simplest games, the production process and Grantham, 2006). Driven by increasingly
usually involves complex project management. powerful PCs and consoles, a specialised
development sector emerged by the early
The industry relies on a workforce with a 1990s. Major developments during the
wide range of technical skills 1990s included: the growing role of console
Each game project involves producers, games manufacturers in shaping games production;
designers, level designers, sound engineers the growth and development of independent
and composers, actors54 and testers. Despite a publishers; an increasing division of labour in
strong emphasis on computing and technical games development; the emerging power of
skills, music, art and animation are also vital. retailers to control access to consumers; and,
increased crossover with other cultural goods
The industry is young enough that many of its (as in film, TV and book tie-ins).
key figures were previously teenage enthusiast
programmers (‘bedroom coders’) who went There has been a tendency for publishers to
on to establish small companies. However, establish their own development operations
most new professional employees come from – either through organic growth or by
computing or mathematics degree courses acquisitions 54. Actors are needed for video
or speech, or to capture
(though there are over 170 courses at 47 UK Many developers note that the past decade motion in the development
universities dedicated to games design). Only has been one in which considerable flux and of character models.
55. The UK has historically been
12 per cent of the industry’s employees are change has been witnessed in their industry: the third largest producer of
women (Skillset 2006), and their involvement some report that operating conditions videogames (UKTI, 2006),
but there are suggestions
is largely concentrated on art and design and have become difficult and increasingly that this position has slipped
public relations functions (Krotoski, 2004). unpredictable. Publishers have also been to fourth (French, 2007).
increasingly keen to establish their own 56. The European Leisure
Software Publishers’
The UK remains one of the world’s leading development operations (or to acquire Association (ELSPA) finds
centres for videogames development55 development firms). The absence of a strong that eight of the top twenty
games companies in the
Unlike the USA, the UK has retained a strong or strategically robust response from UK UK remain independently
independent sector alongside companies developers has resulted in: (a) greater power owned.

owned by international publishers.56 The UK accruing to publishers; and (b) a majority of

games development industry has a strong larger development firms falling into foreign
heritage of entrepreneurial activity, which has ownership (or at least dependence upon
allowed its companies to place themselves foreign-owned publishing operations).
within niche markets and rapidly exploit new
game ideas. Development costs have skyrocketed
Costs of development have also increased
The UK also has an established record of sharply (especially so as new and more
attracting international publishers and sophisticated generations of consoles
developers such as Sony, Microsoft and have appeared on the market). Access
Linden Lab. While most games hardware is to development funding has become
designed and manufactured outside the UK, increasingly difficult to secure. Moreover,
exceptions like the EyeToy (produced for the the competitiveness of UK developers has
Sony PlayStation 2 and PlayStation Portable) been eroded as Asian and Eastern European
demonstrate the UK’s ability to exploit development houses (often offering very
technical innovation successfully. sophisticated design and programming
capability) have entered the market (NESTA

The operating context and competitive

environment for the games development
industry has also been affected by: the
changing relationship between developers and

publishers; shifts in labour supply and training; and university science researchers is
and a new system of regulation for gaming underdeveloped. Games developers and
content. HEI-based researchers and teachers could
profitably foster better strategic partnerships
Risk-averse publishers and the difficulties with each other. The industry could turn to
of anticipating market demand for games universities for knowledge transfer or as a
makes life difficult for developers source of R&D, though industry professionals
Development studios frequently suggest that currently complain that it is too hard to locate
publishers are risk-averse, taking on games that appropriate research expertise within large
most easily fit into existing markets. Games universities.
that defy existing genres (e.g. First Person
Shooter, God Games, Sports Simulations) are Regulations have helped to fashion the
notably difficult to place successfully within the industry’s development
market. The Pan-European Game Initiative (PEGI) has
provided a self-regulatory rating system for
Demand drives innovation within the games games which supplements the British Board
industry, but difficulties in forecasting demand of Film Classification (BBFC) rating system
can also hinder innovation. This can mean that that is applied to games with significant
innovative games may not be commissioned, or video content. The system provides an age
that games without an established track record rating system (similar to films) which marks
are most likely to be cancelled when revenues the appropriateness of game content for
are tight. Some games have apparently got various age groups (currently 3+, 7+, 12+,
as far as the submission of final code before 16+ and 18+). This system is now recognised
the release was cancelled by the publisher as by Electronic Point of Sale (EPOS) systems in
it was thought that the games would be too supermarkets, although it does not carry the
57. An example of this multi- expensive to market. regulatory weight of film classifications.
stakeholder approach to
games development training
is the new Games Republic A game’s financial success is heavily dependent In the UK, games with significant video content
Academy which supports
three Masters courses (at upon its marketing, and the standardisation of are regulated by the BBFC. This compulsory
the University of Bradford, games genres has affected this significantly. framework makes it illegal to supply younger
University of Hull and
Sheffield Hallam). This Standardisation has enabled easier packaging, consumers with games that are only certified
has been developed with display and sales of games by non-specialist for older age groups. This process could have
funding from the Regional
Screen Agency, Screen retailers. Supermarkets now sell games, for had a significant potential impact on the
Yorkshire, and the Yorkshire example, but will only carry a small selection of UK games industry, as exemplified by the
trade alliance, Game
Republic, with additional popular titles rather than the back catalogue BBFC’s initial decision to refuse a certificate
funding from the Rockstar, available in independent retailers. Games to Manhunt 2 (developed by Rockstar
Team 17 and Sumo Digital
development studios. developers believe that this will reduce the Games). Protection of minors is bound to be
shelf life of games (and the period during an increasingly important issue for games
which high retail prices can be charged), which publishing in the future, especially with the
may increase the attractiveness of innovative linking of games with social networking and
titles for publishers. user-generated content.

Knowledge transfer between universities

and videogames developers tends to be
one-way 3.4 Drivers of innovation
Many games development studios report that
they have developed strong and ongoing User-driven demand for new titles has been
relationships with local universities. However, a stimulus to technological and gameplay
some practitioners feel that knowledge transfer innovation
within these relationships is often one way, The videogames development industry is
with companies increasingly supporting games driven by novelty, rapid turnover of titles
development courses at universities. Key and successive generations of technology.
figures provide guest lectures; companies offer It owes much to the development of new
advice on the relevance of training content and game platforms overseas. And it must reflect
provide placement for students; and developers consumer demand for new titles as well as
advise on the content and shape of the games increased levels of technical sophistication and
design curriculum.57 gameplay innovation.

Nevertheless, the relationship between The release of new generations of gaming

the videogames development community technologies, such as Wii and DS interfaces

and controllers such as EyeToy and Buzz, publishers and copyright owners recognise the
can trigger significant innovation both in commercial potential of tie-ins across platforms
content development, and in the search for and media.60 This is resulting in significant
new applications that utilise the enhanced innovation across media and platforms.
functionality embedded in ‘latest generation’
consoles. Regulatory pressures have stimulated
innovative technical solutions
Equally, the avid videogaming fan and Concerns about the nature of some videogames
consumer base (one that now stretches content and access by children are leading
across several generations and is increasingly to pressure for certification, regulation and
internally segmented)58 provides an access controls. This is prompting innovation.
extraordinary stimulus to innovation: the New ‘technical fixes’ are helping to manage
success of a new title or genre can bring and restrict access, and continuing parental
immense rewards. Indeed, consumer concerns are likely to drive such innovation
demand for increasingly complex games and further. With the growth of online gaming, it
sophisticated interfaces constitutes a major is also likely that there will be new pressures
driver for innovation. Publishers and games to regulate contact between players of online
developers have also increasingly recognised games.
the sophistication, intelligence and potential of
their customers: users are much more involved But it is not just parents who want to regulate 58. The segmentation of
markets has impacted on
in the games and console development process. content. Games industry insiders worry about the activities of developers.
‘Ideas harvesting’ and user-testing programmes piracy and theft of IP. Whilst some protective Fragmentation and
increasing variegation
are an important and embedded element of the legislation is in place, piracy remains a major of the gameplaying
contemporary development environment,59 and threat to profits. Development firms, publishers community implies increased
opportunity for the
developers are starting to permit the insertion and IP owners are likely to seek further development and targeting
of user-generated content into their games. protection of their interests through regulation of games and genres for
specific demographic groups
and innovative technology-based solutions. (female, older and younger
At the same time, technological innovations users etc.)
59. There are important
have spurred wider forms of innovation in resonances with widely
videogames development recognised Web 2.0
characteristics here – as
Much of the impetus for innovation in the 3.5 Types of innovation noted in other cases in this
videogames development industry derives from research, user inputs and
the exploitation of users
developments in technologies – more powerful Innovations in this sector extend well beyond as a source of ideas for
and high-speed chips have made it possible to those that are focused primarily on the creation innovation are an important
driver and support for
enhance the gaming experience significantly, of game content. product innovation.
and have added new features to gaming 60. Multi-platform and cross-
consoles. The rapid penetration of broadband Innovations in hardware technologies media/platform tie-ins
are perceived to permit
and the inclusion of browser/connectivity present opportunities for UK games optimised exploitation of IP
options with contemporary consoles reflect developers and reduction or spreading
of risk. Common games tie-
innovation and constitute important drivers for The games industry continues to operate ins include those with sports
further development. hardware technology cycles of approximately events and personalities,
films, television shows,
five years. While it is often assumed that new music performances, and
Online gaming and the roll-out of online generation consoles quickly kill the market for media celebrities. Whilst
many players in the games
components of gaming (digital distribution the previous version (e.g. Higson et al., 2007), industry are eager to secure
of games and add-ons) offer myriad sales patterns do not support that view. Titles involvement in tie-in
arrangements, pressure from
opportunities for further development for previous generation platforms are usually other sectors is an important
and are thus important innovation drivers. produced – and sell – several years into the factor in promoting
collaborative exploitation
Improvements in technology and software lifecycle of the new console. of IP.
development processes have also facilitated
innovation in the games development process The rapid evolution of platform technologies
by accelerating development times or enabling offers potential for UK developers to innovate,
more sophisticated graphics and gameplay but developers must acquire the skills to
features without the need for major new coding exploit the capabilities (and software libraries)
resources. of successive generations of games machines.
These technical innovations tend to be strongly
Another key driver for innovation resides driven by the new technologies and are linked
in the innovative exploitation of existing to issues such as increased complexity of
Intellectual Property characters and environments (and a continuing
While licensing and the allocation of rights shift towards increased ‘realism’). They also
can sometimes be complex, games developers, provide opportunities to exploit processing

power to develop increasingly sophisticated (or set of components) upon which the
artificial intelligence for non-player characters developers draw. The investment in developing
and for more complex in-game physics (e.g. such software in-house is seen by developers
controlling the movement of a car around a such as Blitz Games Studios to be necessary to
track or handling collisions in a racing game). ensure control over the development process.
In practice, however, most companies use both
The associated rise in development costs in-house and third-party middleware.
has prompted the use of middleware
companies Some UK houses have developed a
Such developments imply associated reputation for gameplay innovation
development costs, as increased complexity The evolution of software and hardware
pushes up development time and resources technology does not easily correlate to
required. Attempts have been made to manage innovation within gameplay. An example of
the increased overheads through the use of such innovation is Bratz – Forever Diamondz
middleware – computer software that connects developed by Blitz Games. Blitz has developed
software components or applications. a strong reputation for games based upon
existing characters (including Barbie, Disney,
There are two sources for middleware within Action Man, Spongebob Squarepants and
the games development industry – in-house Bratz). However, developing a game based on
and third-party – and there are tensions dolls can involve extensive content innovation
with each. Firms such as Rebellion rely as that goes well beyond the original IP contained
little as possible on third party middleware in the Bratz cartoon. Although the Bratz
(representatives believe that as middleware franchise provides characters for the games,
is commonly developed for specific platforms for instance, the games designers must adapt
or technologies, it rarely offers innovative the characters for their audience, with a game
performance). world for the dolls to inhabit, activity themes
and in-game tasks.
But the use of middleware solutions brings
its own problems for developers too Developers are increasingly exploiting the
While middleware may seem to offer a cost opportunities for interactivity through
effective solution, the limited versatility of online gameplay
certain packages can increase costs when The latest consoles all have broadband
attempts are made to apply it to a range of capability. So most major game releases also
projects. Furthermore, as middleware takes have online elements. Players can post scores
control of certain processes – managing physics on online leader boards, buy add-on elements
or certain types of rendering or facial animation to games (such as new cars for a racing game)
– problems can arise when developers cannot download updates or play against other gamers
modify these elements without access to in real time. These elements not only offer
the source code. This can lead – as with one added value for gamers, but also generate extra
Rebellion title – to new games being delayed revenue and enable consumers to input into
by the hardware manufacturers due to bugs in content innovation.
the middleware rather than in-house coding.
Debugging can add to production time cost The games development sector has also
and hinder efficient management of the demonstrated innovation in the marketing and
project. delivery of its products. Such innovation has
been visible in a number of forms, outlined
Third-party middleware also locks development below.
projects into a technology for the duration of
the title’s life, often requiring the purchase Electronic distribution of games is
of middleware licences to develop sequels for beginning to offer an alternative to the
popular game titles. Some development studios developer-publisher model
see this as an unacceptable risk, given that a Although file sizes for games are generally
middleware company may cease trading or be much larger than those for music or text-
purchased by another company (as when EA based products, the growth in broadband
bought Renderware). access makes it less likely that downloads
will be interrupted or take an unacceptably
In consequence, many games development long period. This growth in broadband access
studios also develop their own middleware has been accompanied by new payment
tailored to their specific development profile mechanisms, digital rights management and
and projects. This software acts as a toolbox anti-cheating mechanisms.

Electronic distribution has also opened new other players. This is known as the Massively-
opportunities for developers to publish their Multiplayer Online Game (MMOG) market.
own games. The attraction for developers Whilst the UK lacks a strong indigenous
of self-publishing is that it allows them to presence in this market, some foreign MMOG
retain full control (and value) of their game’s companies have established a UK presence,
intellectual property instead of signing it over and games are being developed indigenously
to the software publisher. for future release.
61. M:Metrics (2008) indicate
that only a few per cent of
Some UK developers have succeeded Models based on revenue generation through phone owners download
in moulding their offer to new games advertising and pay-per-play are also games. This figure does
not seem to be growing
audiences being used. ‘Advergames’ usually promote substantially: increased
Demographically, the ‘hardcore’ market for a particular product, company or political numbers of users and repeat
purchases are needed for
videogames is growing older. The Interactive perspective and tend to feature a company’s the market to take off. While
Software Federation of Europe (ISFE) reports new product prominently. Some are provided more smartphone users
download games, there
that the average age of a gamer is now 29 in with breakfast cereals; others are played online is much free and pirated
Europe compared with 15 just a decade ago. at the company’s website or made available content available for these
for download. They can be linked to viral
62. There is also a growth of
Publishers want to broaden the appeal of marketing campaigns, with the games used online gaming services
games beyond young men. So they are to spread product and company awareness by (which currently fall outside
the working definition of
developing ‘casual’ or ‘lifestyle’ games which word of mouth, email and blogs.62 the games industry offered
are less combat-based, easier to learn and above) which are based
upon a commission/fee
require less time. revenue structure. Websites
such as provide
a service where gamers
In March 2007, Kuju Entertainment re-branded 3.6 Management and organisation of can compete against each
its Brighton studio (employing 100 staff) as innovation other for cash prizes. This
is managed by each player
Zoë Mode, using a logo in the style of a female placing a stake on the game
signature and young female player. The studio The UK remains an attractive location to and the winner taking the
pot minus a fee taken by
has concentrated on developing games using develop videogames, but out-sourcing is
new types of game controllers such as the increasingly common 63. To take one example,
EyeToy and SingStar, as well as mobile games There is some debate regarding costs Dundee-based studio
Realtime Worlds has
for the PlayStation Portable (PSP). associated with games development in the a Korean office which
UK. Whilst the UK was viewed as a cheaper enables development of
its contemporary-themed
New markets for casual games are also being location for development than the US in massively multiplayer games
developed online through and 2005 (according to UKTI, 2007b, American All Points Bulletin (APB)
to connect more closely, where gamers play simple games production workers earned 9 per cent more with Korean culture. This is
against each other (these are often based than their UK counterparts in 2005), it perceived to be important
if the game is to have
on traditional board games such as Scrabble now appears that the UK has the highest appeal in the large Korean
or Monopoly.) Although this is still a new average salaries for developers (GIC, 2007). online gaming market. For
its previous console game
market with relatively low adoption rates,61 Nonetheless, the UK remains an attractive Crackdown, the company
it is expected to grow significantly through location for development, with the sector out-sourced work to two
sites in North America,
the use of mobile phones. However, whilst owing much of its competitiveness to its two studios in Russia and
development costs are low in comparison smaller, more agile development teams. one in England. Such an
approach permits enhanced
with other gaming formats, problems persist management of costs and
with delivery, interoperability across handsets However, out-sourcing of development work skills, but requires the
acquisition of additional
and networks and these act as a barrier to to studios outside the UK, notably India project management and
innovation in this type of games market. UK and Russia, is increasingly commonplace communications capabilities
on the part of the developer
mobile developers also face the problem of in the videogames industry. Out-sourcing (and thus the importation of
adapting to separate markets across Europe. enables UK companies to compete on price a new resource overhead).

by taking advantage of lower cost inputs. It

There are significant instances of business is being used by some companies to manage
model innovation production and project cycles, and to alleviate
Being still heavily based on the developer- problems with over-commitment of company
publisher relationship, the games industry still resources, enabling timely delivery of final and
relies on unit sales. This is especially true for interim milestones. Out-sourcing also allows
the console market. development studios to cut their total costs
while retaining contracts and management
However, new business models are being of games projects within the UK. Off-shoring
adopted. The most visible is where players allows UK games companies to produce
pay a monthly subscription for unlimited specialist games, such as those relying on
game play time in an environment with many Korean artwork.63

But with the obvious cost advantages from training to develop triage skills. The goal
off-shoring comes potential costs of the games development company is to
In the short term, there are two particular develop realistic human avatars which model
concerns for the UK videogames development the physical characteristics of a range of
industry: medical conditions, recreating attributes such
as skin pallor or flushing, realistic breathing
• Control over code: As with music (NESTA, and sweating. Beyond the immediate medical
2006a) piracy is a major economic concern application, Blitz intends to bring this
for the industry. Loudhouse and Macrovision knowledge back into games – for example
(2005) estimate that for every 100 legal creating more believable, emotionally engaging
games sold, 43 are downloaded illegally characters.
on peer-to-peer networks. Broadening the
distribution of cultural products increases But even in these companies there is little
the possibility of the product being copied.64 evidence of rigorous measurement of how
This is a problem for the games industry, not much is being spent on R&D
just because of direct copying of games at None of the companies interviewed during this
various stages of development, but because research had a rigorous method for measuring
access to games code means that digital R&D expenditure or estimating the return
rights management built into the game can from this activity. While the last decade has
be reverse engineered. seen an increasing use of management tools
such as Prince 2 and Agile in the UK games
• Control over process: While development development industry, measuring R&D is not
companies put into place management seen as an economic imperative by most firms.
procedures to work with development Even studios with a dedicated R&D team and
companies overseas in a manner similar to an associated budget feel that R&D cannot
64. This is one reason why those used for managing in-house projects, practically be separated from the inventive
copies of films are
transported in the UK using there is a risk associated with working with and innovative processes which are part of the
only registered couriers, as new companies, especially if they are outside routine practice of problem-led development
part of an industry security
scheme. established networks of national legal and creativity.
frameworks. Interviewees talk of cases where
work has been out-sourced to companies Firms are aware of the R&D tax credit, but
outside Europe and which have either gone don’t understand its reach and how it is
bankrupt or disappeared with code and accessed
advanced payments. Blitz’s TSB-supported R&D was unusual.
HM Treasury’s tax relief on R&D is complex
Only the largest developers have formal to navigate and currently may not support
R&D strategies everything a games company believes is
Larger games development companies often innovative. The scheme focuses on technology,
have their own R&D strategies. They dedicate for example, whereas many companies, such as
resources to them once they have established Blitz, innovate in production workflow, process
themselves within a market and achieved a and animation techniques. However, TIGA, the
relatively stable size. In such cases, employees games development trade organisation, has
are dedicated to R&D projects or work on recently been promoting R&D tax credits to its
them when there are gaps between commercial members.
So, development studios are aware of the R&D
These R&D projects tend to develop new Tax Credit and its potential relevance; however,
generic or multi-purpose tools to support there remains some confusion about how it
future projects. These tools lead to process is administered and any potential benefits.
innovation and streamlined development, thus The smaller companies in particular find the
reducing costs. ‘administrative overhead’ too large to take
advantage of the scheme – many believe that
In some cases that R&D is taking UK the paperwork would either involve taking
developers into less traditional areas a member of staff away from a project or
Blitz is notable in that it has extended this employing someone to take on the role.
form of R&D to involve expertise and potential
markets outside games development. Using
funding from the Technology Strategy Board,
the company has worked with medical
practitioners to develop computer-based

A particular concern is how R&D activities
can be identified separately from other
Larger studios (200+ employees) are unsure
about how individual R&D elements can
be separated from other work and what
activities count as R&D for tax purposes. This
is especially the case where several individuals
are engaged in development activities. Some
studios have begun to exchange experiences
of the scheme, with one studio having
successfully counted a percentage of staff
time as R&D without having to measure
individual activities. In addition to publicising
the availability of tax credits, TIGA is aiming to
build a framework to support best practice for
studios that wish to apply.

The combination of technical, creative

and management factors prominent in the
videogames development industry, along with
its project-based approach, often obscures
innovation. Developers and studio managers
interviewed describe innovation not as an
extraordinary aspect of games development,
but something inherent in the routine process.
It does not sit above standard manufacturing
or production processes; it involves solving
current problems on projects rather than
developing new commercial opportunities in
their own right. Innovation is more commonly
a rational response to continual change in the
industry. It addresses demands that stem from
new hardware or software, and the creative
demands associated with new games projects.
Such content, design, process or artistic
innovation is part of the ‘normal’ process
of developing video games, and so remains
hidden from traditional analysis.

Part 4: Innovation in the product design industry 65

65. The authors wish to express

their gratitude to Simon
Bolton of Central St Martins
College for his valuable
insights concerning the
design industry and helpful
comments on earlier drafts
of this chapter.
66. The terms ‘Product Design’,
‘Product and Industrial
Design’ and ‘Product Design
Consultancy’ are used
interchangeably throughout
this text.
67. There is an ongoing debate
concerning definition of the
term design: Heskett (2002, 4.1 Overview of the industry sciences, and an appreciation of the culture,
p.3) suggests, somewhat values and preferences of business clients and
cryptically but helpfully,
that “Design is to design a The product design industry covers a very consumers of their products.
design to produce a design” broad group of activities
(Heskett, 2002, p. 3). This
can be interpreted to imply Product design66 is a subset of the design When innovation research was focused
that the aim of design is industries, a grouping that includes interior, primarily on manufacturing R&D, ‘design’
to create an intermediate
output (drawing, blueprint product, packaging, furniture, web and digital warranted little more than a footnote. However,
etc.) that is then deployed media, graphic, spatial, apparel and fashion there has been a growing appreciation of the
in the production of a final
artefact/system etc. design.67 Within the sector, independent design importance of design for UK firms. Design is
68. Accurate data relating to consultancies sell their services to design now recognised as an important contributor
relative employment levels in
in-house design teams and buyers in the UK and abroad. They sometimes to business competitiveness, especially in the
design consultancies are not also sell to companies with an in-house team low-technology businesses and SMEs that
readily available. Industry
commentators suggest when the latter require specific competencies dominate the UK economy (Cox Review, 2005;
that more than 50% (and or skills. In-house design teams tend to work DTI, 2005).
possibly up to 90%) of UK
design activity is undertaken solely for a particular company or brand.68
in-house. The UK design sector is fragmented, with
69. Design Council, 2005. These Product designers design the artefacts (the large numbers of SMEs
figures relate to design
consultancy in general, not tangible goods, devices, equipment and The UK design industry comprises over 4,000
just the ‘product’ sector. gadgets etc.) that we use in our daily lives firms, with an annual gross income of £4
70. Ibid. A broader definition
will identify a larger number as consumers and workers. They certainly billion, including £500 million from overseas.69
(for example, if ‘engineering design more than ‘consumer goods’: much of Most recent surveys indicate the existence
design’ consultants are
included in the product their effort concerns the design of industrial, of between 600 and 1,300 Product Design
design category, then this commercial, medical and defence artefacts or consultancies in the UK, with the difference
will swell the recorded
number of product instruments – for example, their work can be in these figures being explained largely by
design firms). A further found in aero engines, commercial printers, non-congruent approaches to defining design
complicating factor concerns
the activities of design firms: EPOS terminals, medical equipment and food activity.70
some are engaged fully in processing machinery.
product design whilst others
are only partially engaged In the early 1980s, the design scene
(and are thus active in either As a result, product designers are often was dominated by a ‘big five’ group of
connected fields of design or
non-design business). required to be multi-skilled consultancies – BIB, AID, Pentagram, Conran
Many product designers are formally trained and DRU. However, by the late eighties, a
in ‘design schools’ where several disciplines, major shake-up had seen the birth of many
notably visual arts, ergonomics, engineering, smaller and medium-sized consultancies as
marketing, management and business are many senior designers left the ‘big five’ to
brought together (Design Council, 2005). practise independently in an expanding market.
Their key skills are in ‘making things that work
reliably, efficiently or as intended’, ‘making Employment in the sector has more than
things with visual appeal for the intended doubled since then. And both the technologies
consumer’, and ‘making things that will sell in and the skills required have changed
target markets’. Designers need to combine dramatically. The inception of 2D, followed
their aesthetic and artistic talent with an by 3D Computer Aided Design (CAD) has
understanding of engineering and physical

transformed the design process and the While such specialisation remains, the recent
interaction between designers and clients. economic slowdown is making generalism
fashionable again, with many design
The sector is supported by four main trade consultancies attempting to enter their
and professional associations competitors’ niche markets.
The design sector is supplied with technologies,
hardware and software by a range of suppliers. The late 1990s also saw the rise of the
It is supported by four main trade and ‘informed client’ – design buyers and design
professional associations – the Design Business managers, who became established as
Association, British Design Innovation, the (client-based) intermediaries in the design
Design Council and the Chartered Institute procurement process.72
of Designers. Government agencies have an
important role in promoting the industry and At the same time, there was a massive
establishing the socio-political, economic and migration of manufacturing to the Far
legal environment in which the companies East. Product designers found themselves
operate. The sector is also served by a fairly increasingly dealing with producers operating
extensive trade press. in remote environments. Some consultancies
re-located or opened Far East branches to
Design activities mix technological and smooth the transition and explore emerging
aesthetic knowledge opportunities. However, many suffered as 71. An extended overview of the
industry and trends therein
The sector is characterised by its blending relatively inexpensive overseas design services appears in Green et al.
of technology and aesthetic knowledge and emerged alongside the Far East manufacturing (2007). Further information
relating to developments
its complex links to industrial clients. Client operations. in the past decade can be
companies often see design as a secondary found in NESTA (2006a).
72. Some interviewees indicate
activity to innovation. But it is arguably As a result the importance of smaller but that this had some negative
a sector that has facilitated and driven leaner design businesses has increased impacts on their business
– ‘informed clients’ can
innovation for many client organisations, sharply allegedly be ‘difficult and
and experienced and generated significant Many UK design firms are now considerably demanding’ clients.
internal innovation in the face of technological smaller than they were five or ten years ago 73. A clear and important trend
is visible here: as incumbents
development and globalisation. (certainly in terms of the numbers that they have shed employees, some
employ). At the same time, more design firms of those former employees
have established their own
The UK continues to be seen as a global hub have entered the market.73 Many companies companies or have swelled
for design, but that position is viewed as have traded hierarchical for ‘flatter’ structures; the ranks of freelance
vulnerable to increasing competition from and there is a clearer focus on ‘core activities’.74 74. Though there are some
overseas notable exceptions to this
general trend – PDD and
Industry insiders believe that the UK remains Almost three-fifths of product design Kinneir Dufort constitute
a major global hub for industrial design, only consultancies are very small businesses with important cases in point.
matched by New York for its importance. no more than five employees; a medium-sized
However, this position is threatened by the design company may have between six and
migration of manufacturing and support ten employees; and the larger companies will
industries to the Far East. Though innovation typically have fewer than 50 workers. More
is helping to maintain the UK industry’s than 70 per cent of firms have ten or fewer
position, there are little public data about the employees and only the largest product design
innovativeness and innovation investment of companies employ more than 50 people.
product design businesses. The small size of Among the few large companies are IDEO,
many agencies means their activity is rarely Sagentia, PDT, PDD, DCA and Seymour Powell.
captured in surveys such as the Community
Innovation Survey. One consequence has been to boost the
pool of freelancers providing specialist
design services
Most design consultancies rely heavily on
4.2 Developments, trends and the the services of freelance designers and
innovation context 71 complementary service providers, particularly in
London and the South East. Few contemporary
The product design sector experienced agencies can afford the overheads associated
major structural changes in the 1990s with retaining a pool of designers, CAD
Throughout the 1990s, a number of agencies technicians, model makers, researchers and
aligned themselves with specific sectors and ergonomists etc.
niches (for example, medical instruments,
transportation and telecommunications).

There is a widespread perception that the develop concurrent engineering arrangements
supply of design graduates exceeds the and generate new business.
number of jobs available
Labour supply to the UK design industry – at Where this strategy has been adopted, some
least in terms of quantity – is not seen as a design companies report significant success.
problem. UK universities and colleges operate A substantial minority indicates a rolling
hundreds of design courses and produce reduction in their UK/European operations to
thousands of design graduates annually: the focus more on business in Asia and beyond.
Higher Education Statistics Agency (HESA)
recorded 60,000 students enrolled on over Globalisation has also been associated
150 design courses at undergraduate or with an internationalisation of the product
postgraduate level in 2005-6.75 Unfortunately, design client base
there are few career opportunities for such The contraction and tightening of domestic
graduates and only a small proportion will enter markets is a widely reported trend in the
the design profession.76 design industry.77 In an effort to overcome the
domestic squeeze, a number of agencies have
Design industry practitioners suggest that sought business opportunities in a wider range
there are four key trends that are shaping their of territories. Many have expended significant
industry and the context for innovation: effort on attracting new business overseas –
75. See http://www.hesa. either with or without an overseas base.
studentsAndQualifiers/ • migration and re-location of manufacturing
download/subject0506.xls industry Those agencies that have adopted a strategy
76. Whilst there is little
statistical evidence to
of internationalisation report positive results.
substantiate this claim, it is • intensification of competition and the entry They frequently connect their success with
one that is made frequently
(almost unanimously) by
of competitors from parallel disciplines and the strong reputation and kudos associated
senior practitioners in the new territories with UK design. Many overseas clients are also
design industry. Direct entry
to the design industry is
reportedly eager to sell into relatively affluent
possible for only a small • changes in the nature of relationships with European markets and are thus keen to recruit
number of elite design
graduates; however, more
clients UK designers. They see the designers as well-
graduates reportedly find attuned to Western consumer preferences
roles in design-buying or
design-related functions in
• shifts in consumer demand and buyer and well-acquainted with Western regulatory
UK industry and retail. preferences requirements.
77. This trend should not
be overstated however
– many agencies report Each of these factors is addressed in much Product designers are being increasingly
that business in the UK greater detail in the sections below. However, it called by their clients to provide intelligence
remains generally strong
and that some niches have is worth briefly considering each of these issues on future market trends
demonstrated encouraging in turn. A major reported trend since the late nineties
has been a growing focus on future trends –
The continued migration of manufacturing designers increasingly seek intelligence about
towards lower cost countries is shaping the emerging needs and the shape and dynamics of
product design industry future markets.
The migration of manufacturing industry from
the UK – a process that has been underway Much greater resource has reportedly been
and accelerating throughout the past three applied in an effort to identify and plot
decades – has impacted dramatically on the innovation drivers, and to understand how
UK design sector. As noted above, for many intelligence derived from driver scanning
designers it has implied interaction with activities can be deployed in the product and
clients and production facilities located many brand development process.
thousands of miles away.
As a result, front-end research is seen
It has also intensified competition as new increasingly as a staple activity for
design industries have emerged to service designers
emerging manufacturing hot-spots. Though it ‘Front-end’ research into technological and
represents an expensive high-risk strategy for materials development, market evolution, and
design consultancies – and has been pursued consumer preferences is now a staple of the
mainly by larger firms – establishing a presence design industry operation. It helps to inform
in these hotspots can offer firms the chance to innovation processes and activities, and their
exploit new opportunities in indigenous and timing, within client organisations.
export markets, and to get closer to the point
of manufacture. This can also allow them to

Some designers also indicate that more has Many product designers perceive the
been done to understand consumers from an ‘commoditisation’ of design as an important
‘emotional’ perspective throughout the past threat
decade. Before the late nineties, user research Many agencies report that the value of design
was confined largely to issues of functional has long been under-estimated by some design
ergonomics; more recently it has focused on clients (senior managers often see design as
user lifestyles and aspirations. New research a cost rather than an input with potentially
programmes have been designed to yield significant strategic value). Many also report
insights into client motivations, attitudes and that product design is now perceived widely as
purchasing preferences. a ‘commodity’ input – an input of limited value
that can be accessed easily and inexpensively
In the past five years, this research has been from an expanding range of suppliers in a
broadened to encompass client responses and crowded and highly competitive market. Some
reactions to new materials, and there are moves designers argue that their industry’s slowness
to understand how materials (and their various in ‘professionalising’ has amplified this
properties) might be used in the creation and perception.
strengthening of brands.78
The most successful design businesses are
those that stress the strategic benefits of
design to their clients
4.3 Drivers of innovation Devising an appropriate response to the
challenge of commoditisation may not be
Product designers have responded to easy, but some designers argue that the trend
the challenges that they confront with requires greater confidence and stronger
significant and widespread innovation articulation of the strategic benefits of design
While shifts in the structure, size and for client organisations. Moreover, they argue 78. The white plastic and
aluminium that is associated
distribution of the industry have taken place for a fundamental re-positioning of design with the Apple brand is an
over the last decade, much innovation has services at a higher level in the value chain. interesting case in point
been taking place within consultancies as
designers have responded to new opportunities Clients are reported to be increasingly
and the new trends described above. ‘savvy’
Designer practitioners say that clients have
Some of the major factors driving and shaping become far more demanding and more ‘savvy’
innovation reflect internal changes within the purchasers of design services. Professional
design sector; others reflect changes in the design buyers are aware of increased
wider business, commercial and competitive competition and some reportedly use this to
environment. This is reflected in our case study keep fees down and to demand the speedier
work, as we shall now illustrate. delivery of a broader range of alternative
designs for each brief.
Product design consultancies have had
to adapt their relationships with UK Some designers attribute these changes to the
manufacturing clients who are increasingly availability of CAD and internet technologies,
shifting their own operations to low cost as they have heightened expectations of
centres overseas the rapid generation and transmission of
drawings. There is broad agreement that
The re-location of manufacturing to the Far more sophisticated and more demanding
East has had a big impact. Some agencies design consumers are triggering innovation,
report shifts in the nature of relationships particularly in deploying internet technologies
with UK-based clients as the latter move their and improving client relationships.
operations east and begin to source services
– including design – in these territories. The domestic market has become more
The advantages of co-locating design and crowded as universities and colleges
manufacturing have long been recognised and continue to churn out large numbers of
design clients are now benefiting from reduced design graduates
design costs in low-wage economies. Whilst the UK remains a global hub for design,
domestic competition appears to be increasing
markedly. Hundreds of design graduates enter
the labour market and design sector annually
from 150+ product design courses at UK
universities and colleges. Whilst only a few will

enter an established design consultancy, many 4.4 Types of innovation
will establish themselves as ‘designer-makers’
or ‘sole traders’ adding to the industry’s very As discussed above, much academic work and
‘long tail’ of micro businesses. industrial commentary concerning innovation
focuses on a binary distinction between its
Easy access to the internet gives new entrants ‘product’ and ‘process’ forms. However, this
greater visibility. However, established firms distinction conceals much interplay; broad
believe it also crowds the market and confuses categories and characterisations can mask a
clients in an already competitive environment. very complex picture. Our case study work
Moreover, several universities – eager to revealed the existence and evolution of many
generate cash and to provide a visible career forms of innovation in the sector.
route for graduates – have established their
own commercial design consultancies (often The UK’s product design sector undertakes
79. This assertion, based operating on advantageous terms with ‘free’ a wide range of innovation activities that
on analysis of interview
material, appears to premises and high levels of business support). are not captured by the usual product and
contradict some recent Such consultancies promote themselves process innovation taxonomies
macro-economic evidence
that UK business cycles aggressively and have been reported to have Many new forms and ways of working are
have become less volatile undercut incumbents in some regional and evident. There appears to be a major trend
over time. One possibility
is that volatility in business niche design markets. towards ‘networking’, where agencies no longer
cycles may impact on the rely on in-house expertise for a full range
product design sector more
dramatically than on others. Beyond the domestic scene, global competition of functions (prototyping, model-making,
The extent to which this for product design business has never ergonomics, research) but contract out such
applies is an issue for further
exploration. Recent work been more acute. The emergence and rapid work when necessary.
on the creative sectors in growth of increasingly high-quality design
London (Freeman, 2007)
does suggest a connection sectors in China, Korea, Taiwan and India The contracting of freelancers has increased
between served markets – key manufacturing locations for UK and sharply as teams incorporating the requisite
and levels of output and
employment volatility. The international firms – are providing a strong skills are built around specific projects. Indeed,
sectors that report strong challenge to British designers. many consultancies seem to have swapped
links appear to experience large, in-house teams for a ‘lean’ and ‘fleet’
greater volatility than There is a noticeable feeling of approach, where strategic partnering provides
those that primarily serve
the domestic/household/ ‘vulnerability’ across large parts of the them with the necessary competencies and
business-to-consumer sector capacity.80
Established designers also feel that increased
80. Despite this generalised
trend towards downsizing, competition is leading to volatility and As with many instances of organisational
there is some evidence vacillation in demand for design services. An innovation, some of the shifts in the product
that larger agencies in
particular have recruited unpredictable inflow of new entrants and a design sector have been driven by, and depend
specialist strategists and fairly high failure rate has made it more difficult on, new technologies. Opportunities for
‘human factors’ researchers
including ethnographers and for design agencies to plan future activity. remote working and electronically-mediated
anthropologists. co-working have certainly contributed to the
Whilst a uniform flow of business has never re-structuring of workflow. More importantly,
been guaranteed for UK designers, some report they have made out-sourcing to freelancers
that business cycles have become significantly much easier.
less predictable and that more dramatic
‘ebbs and flows’ have required an innovative New technologies promote novel systems
approach to business structuring and strategy.79 for establishing electronic, ‘real time’
In particular, alignment of capability and relationships with clients
capacity with unpredictable demand has forced The creative deployment of new technologies is
the adoption of more flexible practices and permitting designers to establish electronically-
employment patterns (including, for some, mediated relationships with partners and
the pursuit of business beyond conventional clients (often played out in online ‘client
geographical or ‘served segment’ boundaries). zones’). It is also facilitating greater levels of
co-evolution and co-production of design.
Some agencies have also attempted to reduce
their dependence on client commissions, and Furthermore, technology appears to be
thus on the vagaries of a volatile market, assisting designers in overcoming barriers
by diversifying in the development and associated with time and distance as drawings
distribution of their own products. and designs can be transmitted instantaneously
across the globe at any time of day or night.

The internet also provides an electronic ‘shop and products, as varied as espresso makers and
window’ and many designers put significant toilet brushes.
effort into having a high profile – and
frequently highly sophisticated – web presence. Classifying the different types of innovation
Where style, fashion, creativity and usability are presents challenges as they are inter-
important hooks for potential clients, a well- related
designed website provides designers with an Whilst the list above is not exhaustive, it does
opportunity to establish their credentials and capture the main types of innovation that are
demonstrate their track-record and capability. reported to be underway in the product design
sector. It is also clear that the categories of
However, innovation in interfacing, marketing innovation outlined above are not mutually
and delivery is not solely connected with new exclusive. There are many overlaps and there
technologies and electronic networks. Pressure is a complex relationship between the various
from clients to produce a greater number of types: for example, new business models
alternative ‘versions’ for each brief (at ever predicated on the inception of licensing
increasing speed) is leading to ever-more arrangements connect closely with the shift in
innovative means of managing and organising some agencies towards the development of ‘in-
workload. house’ brands and products.

Many design businesses are attempting to

reposition themselves higher up the value
chain 4.5 Management and organisation of
As design is viewed increasingly as a innovation
‘commodity’, many UK agencies are engaged
in business model innovation: whilst ‘design’ It is striking how little of this innovative
remains a core activity for most UK agencies, activity is recognised as such by designers 81. It can be argued that
diversification is not
higher value activities such as brokering, Surprisingly little of the innovation activity connected solely with
strategy, brand and identity consulting are sketched above would be recognised or competitive positioning
– some commentators
emerging as an attractive focus for some reported as such by design practitioners. For suggest that diversification
businesses or as a lucrative premium service for many, organisational innovation is seen as and the targeting of higher
value activities constitutes
others. either routine or a response to environmental a response to increasing
change. It is part of ‘normal business’. Interface sophistication in the design
process and client-side
Most agencies are seeking to increase the and delivery innovation is frequently portrayed integration of marketing
value of their business activities and many as service improvement (a feature of work and new product design
are innovating to establish differentiation, in the design business that is unavoidable if
enhance profitability and ensure survival competitiveness is to be maintained).
in an increasingly competitive market.81
Innovation is also evident in the evolution of However, deliberate and strategy-driven
licensing, royalty, IP and shared risk and reward shifts in business and revenue models are
strategies. more readily recognised as innovation, as
is the development of new products. The
Some product designers are engaging in work of designers is inherently bound up
significant product innovation, expanding with problem-solving: where such problem-
their product offer into new areas solving is undertaken on behalf of a client, it
Whilst design agencies are widely believed is associated with innovation. However, where
to support their client’s innovation activities it relates to a consultancy’s own business
by realising their product ideas, some UK positioning or service delivery problems, it
designers are applying their expertise and is more likely to be perceived as business
knowledge of consumer preferences to develop development activity.
their own range of products.
Although in some cases the changes are
Given the brokerage role of many consultancies more or less deliberate than in other cases
– where they source and coordinate the people Innovation within the product design sector
needed to take a product from conception can be characterised broadly as evolutionary,
to manufacture – some are identifying clear though it is not always reactive. Many
opportunities to market their own products. design agencies are actively engaged in
Some agencies are creating spin-out companies horizon scanning and in the identification
to manage the manufacture and distribution of of opportunities for innovation that will
their own novel (sometimes branded) designs benefit themselves and their clients. They
reportedly devote at least some of their time to

developing innovative solutions to both clients’ Some report an effort to capitalise on
problems and their own challenges.82 expertise, connections and accrued
capabilities to: (a) create a distinctive
Product development and product innovation identity; (b) establish themselves as niche
(often undertaken as part of a client’s brief) or specialist suppliers; or (c) evolve a high-
tend to have the character of formal R&D. value or unique offering that is of strategic
Where innovation is organisational or process importance to potential clients (for example,
oriented, it tends to be ad hoc and managed network brokering, consumer research, or
by agency principals: such innovation is often brand consulting).
directed at dealing with perceived threats
in the domestic and broader business and • Primary research – some (often larger)
economic environment. agencies have engaged in self-funded
primary research (for example, relating to
Product designers have managed these forward needs in the healthcare sector) and
changes in myriad ways foresight and scenario development work
The management of innovation is closely as a means of: (a) raising their profile and
tied up with more general strategic responses visibility; (b) enhancing credibility in target
of the design industry to the pressures and markets; and (c) underpinning future design
forces sketched above – particularly those and product development activity. Research
82. For example, many agency associated with globalisation and re-location of outputs may also have a commercial value
principals report that whilst
much the larger part of their manufacturing activity. in niche markets and are a useful tool for
everyday work consists in ‘proving need’.
responding to the needs
of clients, some portion Our conversations with designers indicate
of effort is regularly given several key approaches to dealing with these • Niche focus and development – some
over to trend analysis and
formulation of business changes,83 sometimes involving innovation designers note that specialisation can provide
development strategy. themselves, and often bearing on the a degree of protection against increased
83. It should be noted here
that there is much overlap
innovation process more generally. These competition: it is not unusual to see smaller
and interplay between include, briefly: agencies focusing effort on a specific client
types of response. Readers
should also note that
sector (for example, medical instruments,
several approaches can be • Downsizing – many agencies have divested catering equipment or agricultural and
blended at any given time
(depending upon location,
expensive in-house capability in favour off-road vehicles). However, this strategy
conditions, capabilities and of out-sourcing for certain functions and is not without risk as niche markets often
capacity, and availability
of resources): many of the
specialisms, and contracting-in freelance become vulnerable to encroachment from
UK agencies contacted expertise as required. As we have seen, many competitors.
in the course of our work
indicate that they have
active agencies are now considerably smaller
pursued many or all of the than five or ten years ago. • Targeting higher-value business – a
listed pathways – in various
combinations – over the past
strategy of value-chain re-positioning
5-10 years. • Networking – the extent of the shift to a is clearly favoured by some of the more
84. Commercial confidentiality network form of organisation in UK product well-established agencies (though is not
means that it is not possible
to cite specific examples design is dramatic. Only a few of the largest unique to these groups). Fearing increasing
here. agencies have retained a multi-capability and commoditisation of design, some agencies
multi-function operation; the vast majority are eager to position themselves at a
participate in partnering and contracting higher level in their clients’ value chain
arrangements to secure requisite capacity (by providing knowledge-based strategic
and capability. services rather than commodity inputs).
Many indicate that their work has become
• Development of ‘own brands’ and products, more strategic, with branding and identity
and of new business and revenue models – development a growing part of the sector’s
several consultancies report a move away work.
from complete dependence upon client
contracts:84 in-house development of shelf- • Accessing support – support initiatives
ready products is perceived to represent from DTI, Regional Development Agencies
a useful means of using spare capacity, and the Design Council etc. (e.g. SMART
providing protection against intensive awards) have been broadly well-received
competition, and levelling-out peaks and in the design sector. When times are tough
troughs in business. or where re-positioning is sought, support
from official agencies is welcome and
• Differentiation – as a result of intensified often highly valuable. While none of the
competition, many UK consultancies are design companies we spoke to relies on
striving to achieve enhanced differentiation. state or agency support, some suggested

that support initiatives can be useful where
business development or change processes
are in play, or during a market downturn.

There is some awareness of the R&D tax credit

among practitioners – more so than in some
of the other creative sectors studied – but
there is little knowledge about what formally
constitutes R&D for tax purposes and how
it is demarcated from other development
activities. There is also the general perception
that the application process for the tax credit is
unwieldy and burdensome.

Many of the strategies outlined above – and

in the section relating to developments and
trends – can be connected to some degree
with the types of innovation discussed (though
there is clearly some overlap across categories).
Internationalisation and multi-territory location
strategies are connected strongly with business
model innovation, as are the development
of niche focus, the targeting of higher-value
business, and the roll-out of ‘own brand’

The reported shifts towards downsizing (focus

on core capability) and networked forms of
organisation provide evidence of significant
organisational innovation. Moves towards
the development of ‘own brands’ and ‘own
products’, engagement in primary research, and
re-orientation of services around higher-value
business reveal a substantial degree of product
innovation (though primary research activity
is also connected with interface innovation
and the desire to ‘get closer’ to clients by
understanding their future business and

Part 5: Innovation in the advertising and communications

5.1 Overview of the industry and consumer research, strategy development

85. Exports account for for brand and products, and the creation of
approximately 12% of
turnover for the UK The UK’s advertising industry is the largest adverts for transmission or placement across a
advertising industry and in Europe by some way variety of media); and, second, media buying,
are split reasonably evenly
between EU and non-EU Advertising and Communications is a relatively (contracting, negotiating and leasing of
purchasers. large and well-established industry in the UK, advertising time and space).86 Our case study
86. We should note that the
largest share of advertising
and many UK-based advertising agencies enjoy focuses mainly on organisations involved in the
industry turnover is an international reputation with some having first set of activities, though some larger ‘full
connected with ‘sale or
leasing of advertising
a global client base.85 In its turnover and service advertisers’ both create campaigns and
space or time’. Statistical value-added, the UK’s advertising industry is place advertisements.
sources vary, but Eurostat
(SBS, 2003) indicates that
far more significant than any other in Europe.
around 65% of advertising Advertising is also the third largest of the The main actors in the advertising industry
turnover in the UK is
generated in connection
UK’s creative industries (behind ‘Software and include commissioning bodies, creative
with such activities. Only Computer Services’ and ‘Television and Radio agencies, media buyers and media owners.
around 7% of turnover is
generated in connection
Broadcasting’). The purchaser of advertising services (the
with ‘advertising design’, commissioning client or an agent acting on
though another 13% is
generated in connection
The UK advertising industry has approximately its behalf) usually contracts with a creative
with ‘full service advertising’ 12,000 firms (Frontier Economics, 2006) with agency. Such agencies frequently offer a
(and a further 3% by
‘direct marketing’ activity).
a total turnover of £18bn. Gross value added is menu including research, content creation,
These proportions accord calculated at a little over £5.1bn, while 95,000 copy writing, brand development, campaign
reasonably closely with the
views of communications
people are employed directly by UK-based planning and media buying.
practitioners, most of whom advertising companies. The industry is fairly
suggest that about 10-15%
of turnover is generated
concentrated, with the largest 4 per cent of While the advertising contractor focuses solely
at the ‘creative end’ of firms accounting for around 80 per cent of on ‘creative’ components of the process, a
the advertising industry
(i.e. campaign and content
turnover; the leading four and eight firms ‘media buyer’ will find appropriate space in
development). contribute 18 per cent and 28 per cent of the the print or broadcast media, outdoor display,
total respectively. transport, cinema, direct mail or internet for
the adverts. The buyer negotiates with media
Medium-sized firms are also important in the owners (or direct mail operators) to secure
advertising sector in terms of both employment advertising time and space at an acceptable
and turnover. Such firms accounted for more cost.
than 40 per cent of employment in 2005 and
almost 50 per cent of turnover (proportions
well above the creative industries’ average).
5.2 Developments, trends and the
Its main activities are the creation of innovation context
advertising content, the management of
advertising campaigns and media buying The advertising sector is also undergoing
The sector’s main activities are: first, the major structural changes
creation of advertising content and the As with most UK creative industries, the
planning and management of advertising advertising and communications industry
campaigns (sub-activities here include market has witnessed significant structural changes

throughout the past decade. Some have been Company size is also positively associated
generated within the sector as managers and with reputation, solidity and credibility, and
advertising practitioners have jockeyed to with a perceived ability to: deliver full-service
enhance the competitive positioning of their packages; leverage skills and capabilities; and,
companies; others by industry responses most significantly for our study, undertake
to shifts in the business, regulatory and innovation and product development. Larger
operating environment; and yet more by UK advertising agencies claim that their smaller
social and cultural trends and technological counterparts are frequently forced to operate
developments. in ‘reactive mode’, with limited access to the
resources that support innovation.
These shifts are complex in their overlaps
and interactions, and far-reaching in their This process of consolidation has at the
implications and the responses that they have same time been accompanied by off-shoring
elicited from stakeholders in the advertising of non-core functions 87. Consolidation has been
particularly evident in the
community. We offer a reasonably detailed Interestingly, the trend towards consolidation is ‘media buying’ segment
sketch of key developments and trends to focused firmly on the acquisition of core assets of the industry – reports
suggest that large media
provide some background to the discussion of (particularly digital capability). There has also buyers are able to secure
innovation drivers, types and management that been a counter-trend towards the out-sourcing more advantageous deals
from media operators/
follows. and off-shoring of non-core functions. UK owners than their smaller
advertising operators of all sizes report that counterparts. However,
it is also true that much
A marked trend has been industry they have been able to exploit a large and consolidation has been
consolidation inexpensive pool of labour outside the UK witnessed in media
ownership: a diminishing
Consolidation within the UK industry has and that this has assisted in cutting costs and number of owners
been a marked feature of the advertising improving value for clients. (including US-based global
corporations such as Time
landscape.87 Significant merger activity Warner, News Corp, GE,
has followed attempts by traditional Out-sourcing of non-core activities (such as CBS and Disney) control
the larger part of the media
communications companies to acquire the routine research and campaign monitoring) industry.
assets and capabilities that permit them to do to UK specialist operators is widespread; 88. The distinction between
business in digital environments. some agencies actively prefer UK suppliers. ‘below the line’ (BTL)
and ‘above the line’ (ATL)
This preference is said to reflect nervousness advertising is not always
Shifts in demand towards multi-media about the efficiency and reliability of overseas clear-cut. However, ATL
is usually taken to refer
campaigns have favoured agencies with providers. to advertising that is
scale channelled via media such as
television, radio, magazines
Whilst ‘pure digital’ represents an important Digitisation has had profound consequences and newspapers, decorated
sector of the advertising market, a generalised for the way that consumers access content vehicles and street
hoardings. The term BTL is
shift in favour of multi-media campaigns Rapid diffusion of digital technologies and used to refer to advertising
implies that competitive agencies must be the internet have impacted massively on the that is more directly targeted
at specific individuals (i.e.
equipped to launch campaigns across both advertising industry and on the behaviour via direct mailshots, email,
traditional and digital channels. Beyond the (and communications expenditure) of clients. face-to-face distribution
of in-store literature and
push for digital capability, some merger activity Funding is increasingly being diverted from brochures etc.) ATL is held
has reportedly resulted from the integration ‘conventional’ channels to digital media. to be more appropriate
where intended audiences
of ‘above the line’ and ‘below the line’ are diffuse, large and only
agencies.88 Current evidence supports the view Web-based advertising, email, mobile partially defined. BTL is
commonly understood to
that integrated agencies will be better able telephony and digital television have become be more efficient where
to prosper in the evolving communications the media of choice for many clients and target audiences are tightly-
defined, bounded and finite.
environment. campaigns. Targeted website messages,
direct email and SMS texts allow fine-grained
The need to achieve geographical spread targeting of potential consumers and ready
has also increased consolidation access to the attractive professional and
The need to achieve geographical spread teenager customer groups. Such advertising
is driving many mergers and acquisitions. is often seen as relatively inexpensive and
Many UK agencies are eager to secure the effective compared with print media or direct
advantages of network capability: the ability mail.
to run a business across local hubs and to
co-ordinate and ‘localise’ multi-region and The proliferation of television channels
international campaigns is of increasing has been associated with audience
importance (especially where global brands are fragmentation
concerned). The proliferation of TV channels over the past
decade has also delivered major new challenges
and opportunities for advertising and

communications agencies. An explosion in the 1. The construction, tenor and packaging of
number of available channels has fragmented messages.
television audiences.
2. The core characteristics, preferences, and
A parallel expansion in the number of behaviours of target consumers.
delivery platforms has created both
challenges and opportunities for the sector 3. Identification of the most appropriate mix
This explosion has been accompanied by a of channels for transmitting such messages
parallel expansion in delivery platforms and to their intended recipients.
novel ways of accessing broadcast content.
Time-shift viewing through TiVo or Sky+ has So, if intended message recipients are more
allowed viewers more easily to skip adverts. But likely to consume content online, for example,
advertisers can also direct viewers to additional then this reality – and its implications for the
material on their websites. construction of messages and campaigns
– should be uppermost in the minds of
The evolution of Web 2.0 has also presented advertisers.
a challenge to advertisers. Whilst many regard
it as a resource (a source of information
on cultural trends and emerging product
preferences), it is also a problem insofar as it 5.3 Drivers of innovation
diverts users from more conventional broadcast
technologies and forms of advertising Drivers for innovation in the advertising and
consumption. communications industry are linked closely
with the trends described above. The changing
Together, channel and platform proliferation face of technology is a major, perhaps critical,
have triggered much thinking within the innovation push factor. However, industry
advertising industry about appropriate modes insiders believe that shifts in the competitive
of communication and message delivery. Many and demand environment and changes in the
senior advertising practitioners argue that UK’s economic, social and demographic profile
integrated, multi-platform campaigns are the are also helping to stimulate innovation.
only way forward for their clients.
Technological change, and IT in particular,
There is a feeling that the advertising has been a major driver for innovation
industry is returning to core public relations The ascendance of digital media is highlighted
principles unanimously in practitioner interviews as a
Closely related to the issues raised above, some force for innovation. (However, the ‘shift to
within the advertising industry believe their digital’ is just one component of a complex
sector has returned to its roots. Since modern mix of technology-related trends and should
advertising emerged from the Public Relations not obscure the importance of parallel and
(PR) movement (the latter an industry connected developments).
organised around the delivery of finely-tuned
messages concerning the products, activities, The internet has become a part of business,
brands and image of firms and organisations), social and cultural life: for many people
they suggest that there is a pressing need to (especially the young), the internet is the key
return to the principles of PR and focus on medium for seeking and gathering information,
the communication of tailored messages to interacting with friends and peers, buying,
individuals. selling and sharing, social networking, and
engaging in leisure and cultural pursuits.
They note that the various recent changes have
greatly increased ‘system noise’ which means The evolution of Web 2.0 networks and
that advertising messages, brand identities and applications in the last three years has
product characteristics are easily disregarded. deepened and extended the range of such
At the same time, potential consumers are far activities and introduced myriad opportunities
more sophisticated and sceptical in the way for the uploading and sharing of user-
that they relate to advertising content. generated content (e.g. YouTube, MySpace and
Thus, if advertisers are to deliver for their
clients, they must give more consideration to: Digital television and the roll-out of multi-
channel systems have had major implications
for broadcasting. In particular, they have

changed the consumption of broadcast content increasingly being incorporated into campaigns
and have fragmented television audiences. and are a focus for significant innovation.
Together with timeshift technology, they have
re-defined viewing behaviours among large Regulation has, again, motivated innovation
sections of the public. in some areas as well as constraining it in
New online platforms for accessing content Although privacy regulation in digital
have taken off environments has limited the scope of
Beyond television, further important shifts advertisers to some extent89 – especially
have been witnessed as new platforms for in ‘below the line’ operations – it has also
transmission and consumption of cultural provided fertile ground for innovation.
content (e.g. mobile television, online access to Advertisers have innovated to work around
broadcast content) have come on-stream. both policy-inspired restrictions and the filters
and spam controls that are frequently applied
Taken together these factors have triggered by institutional and individual web users.
a substantial degree of innovation in the
advertising industry. Perhaps most importantly, Much innovation activity has also reportedly
advertisers have been eager – or obliged – to been applied by marketers and advertisers
develop novel mechanisms and strategies to in efforts to harvest the contact details of
address increasingly diffuse audiences. potential consumers.

However, technological development is not Digitisation has also stimulated

simply a ‘push’ factor: digital media present organisational innovation as businesses
their own opportunities for innovation. Almost reconfigure their practices to take
all practitioners are trying to exploit the advantage of the new opportunities
potential of digital markets and environments. Beyond innovation relating to generation and 89. The imposition of heavy
penalties for ‘spamming’
For example, innovation connected with delivery of advertising content, many agencies etc. has severely restricted
enhanced and more finely-tuned targeting also report involvement in organisational opportunities for email-
based direct marketing.
of potential consumers is reported widely. So innovation as they reconfigure operations to
too is allocation of resources to improve the establish or integrate digital divisions, activities
richness of the consumer experience on digital and offerings within their firms.
media, and the delivery of tailored and context-
dependent advertising content. The effort to develop sophisticated
databases and associated management
Many, frequently larger, communications tools has been at the heart of much
companies are also evolving and using tools innovation in the advertising industry
to assist them in Web 2.0-oriented research According to practitioners, the ‘right
activities (notably, recognising signals database’ is a crucial resource and source of
that point to emerging cultural trends and competitive advantage in the contemporary
consumption behaviours), and in generating communications market.
feedback about the reception and performance
of promotional campaigns. Considerable investments have been made in
the design of database software and systems.
Digitisation has made direct marketing to This is especially true of profiling and data
consumers easier interrogation tools, and software that tracks
Direct marketing has been another important responses to live campaigns. Such development
area for innovation. Such advertising has work is sometimes undertaken in-house, but
moved from direct mail shots (which remain more often involves external IT consultancies
important) to digital environments, with developing bespoke applications.
clear advantages in cost, speed, focus and
coverage. Email can also offer greater technical As with other creative sectors, technological
sophistication: messages can elicit instant development has implied that remote
responses or provide links to websites. co-working has become a feasible and
attractive mode of operation
Several agencies have tried to enhance Advertisers increasingly develop and display
advertising messages with novel and rich their ideas within private, web-based client
multi-media experiences for customers. zones. More importantly, they are able to
Games, downloads, trials, ‘walk-throughs’, 3D provide real-time feedback and analysis of
models and Virtual Reality presentations are campaign performance and audience reaction
data via electronic networks. They can

then adjust campaigns in the light of early Clients are more discriminating in the
responses. quality of the service they receive and the
nature of the relationship they have with
Indeed, enhanced communication between advertising suppliers
advertiser and client and the development A further spur to innovation has been the
of more intimate working relationships is changing relationship between advertising
claimed as a major benefit of web-based suppliers and purchasers. Whilst most agencies
communications and represents an area in report that they have enjoyed close and
which further innovation activity is forecast. It long-term relationships with their clients,
is another area of considerable investment. such relationships are increasingly seen as
highly valuable links that should be extended
Equally important to advertisers as a wherever possible. After all, retention is less
stimulus to innovation has been the impact resource-intensive than competing for new
that structural changes have had on their business.
The transformations in the business, Innovative use of IT has been important in
technological and socio-cultural environments addressing their needs
that have impacted on advertising agencies Innovative use of new IT is one means of
have impacted on their clients too. As clients cementing such relationships. Hence the
90. Conventional campaigns have accommodated changes in their operating growth of online client zones, where clients
have frequently required
integration across different environments and markets, the nature and help develop and reinvigorate campaigns.
forms of media (street extent of their demand for advertising and
hoardings, radio, magazines,
direct mail, television etc.). communications services has also changed. Some advertising agencies are pushing
91. Strong parallels with the boundaries by offering themselves as
developments in the
product design industry are
Some key facets of this change and their role ‘innovation partners’
evident here, and point to as a driver for innovation in the advertising Agencies that assist strategy development
efforts within both sectors
to: (a) diversify activities;
sector are examined below. in client and partner organisations promote
and (b) exploit perceived themselves as ‘innovation partners’ and market
Clients’ advertising budgets have shifted their ability to ‘read’ demand signals, lead new
away from terrestrial TV to digital media product development, and integrate the latter
With the growth of digital media, a growing with marketing and advertising functions.91
proportion of businesses’ advertising budgets
has shifted from terrestrial television channels This re-positioning appears to have been fairly
towards digital channels and other digital successful and some industry commentators
media. suggest that advertising agencies are now
taken very seriously as key strategic partners
Some advertisers report that they have been by their clients. The emergence and increasing
able to anticipate and ride the crest of this importance of the ‘advertising planner-
new wave, innovating to develop appropriate strategist’ function within advertising has seen
services and packages to reflect shifts in some agencies assert increasing influence on
demand. However, others have found the shift brand strategy development, new product
to be a steep (and ongoing) learning curve design, packaging and channel-to-market
with investments in ‘cultural renewal’, digital strategy within their client organisations.
capability and internal reorganisation.
The pressures from more demanding
Multi-platform campaigns have become clients to reduce costs have been
more desirable as a result another important driver for product and
The increasingly capricious nature of consumers organisation innovation
and their less predictable viewing behaviours One of the most commonly reported demand-
have made multi-channel and multi-platform related drivers for innovation is a client-inspired
campaigns more desirable. Such campaigns push to minimise costs. Many practitioners say
(an innovation in their own right) require both that ‘cost minimisation’ has become crucial
sophisticated coordination and the packaging for clients impacting both on agency revenues
of content to ensure that it is right for the and the advertising production process. Where
platform or channel concerned. While such clients have maintained their advertising
medium-sensitivity is not a novel concept,90 it budgets over recent years, they reportedly
has required substantial re-consideration (and expect greater returns and enhanced value
investment in innovation). from their investments in communications.

In any case, most clients are said to be actively A search to differentiate themselves from
seeking to reduce advertising expenditure competitors has also driven advertisers’
(whilst expecting the same quality of service), innovation activities
often as a result of more intense competition in Whilst few practitioners say they are worried
the retail market. about new entrants or the internationalisation
of markets – some even see the latter
For advertisers, pressure on budgets requires as an opportunity rather than a threat –
more efficient delivery of results. This has led consolidation in the sector means that larger
to the innovations we have described both in agencies have similar full-service, multi-region
the advertising product and in the organisation and multi-channel capabilities.
of the creative and delivery process, including
electronically-mediated direct mail messages. Given this, and the claim of smaller and
Tighter funding has also led to diversification medium-sized agencies that they too are
and integrated packages. equipped for major and demanding campaigns,
a differentiation strategy has become a
The fragmentation of audiences has placed pressing concern across the industry.
a premium on advertising agencies tracking
and understanding the implications of A reputation for innovation features in
socio-demographic change the differentiation strategies of some
As noted elsewhere, the changing profile of advertising agencies
the UK population, with associated shifts in Agencies have different views about the value
preferences, aspirations and lifestyles, has of a reputation for innovation when attracting
impacted heavily on the commercial activities clients. Some see reputation and brand as
of firms and service provision in both the public more important than ‘innovation pedigree’ for
and private sectors. generating business. However, others believe
that a reputation for innovative campaigns
Increased segmentation of markets by gender, and an innovative approach to the delivery of
age, ethnicity, region, culture, income and high-value and cost-effective product can be
class have driven innovation in advertising attractive to potential clients.
as industry practitioners have striven to keep
abreast of change and exploit the opportunities But this can be problematic where clients
for niche marketing and more finely-tuned are perceived to be risk-averse
consumer targeting. Communications practitioners who try
to raise their profile through innovative
Such innovation has helped to map change methodologies and approaches often, however,
(understanding, recording, plotting and find themselves up against conservative and
analysing segmentation patterns), profile risk-averse clients who prefer tried and tested
consumers, and develop new products to approaches to more experimental campaigns.
reflect fragmenting demand. It has also helped
to fine-tune the messages for these different Nonetheless some of the largest agencies
markets. are in effect positioning themselves as
‘innovation labs’ for their clients
The digital revolution has also brought new Beyond the deployment of a reputation
online clients with advertising needs for innovation capacity as a component in
A final but not insignificant demand factor is competitive strategy, one or two of the largest
connected with the expansion of the digital UK communications agencies are starting
economy and the entry of new players into to develop their innovation capability in a
the digital environment. The ‘shift to digital’ very direct sense. As part of the effort to
sketched elsewhere has not simply provided broaden their service offering to clients, they
new opportunities for advertisers to exploit have established ‘innovation laboratories’.
new channels and platforms. It has also These laboratories – essentially a form of
heralded new businesses, many of which co-innovation facility – assist clients in
require advertising services. These companies exploring business and product development
are often highly innovative and demand a opportunities. They then link such exploration
brand image and marketing campaign to with marketing and advertising programmes.

5.4 Types of innovation auditing’ systems); (b) planning marketing and
channel strategies; (c) evaluating the success
In common with product design, much of campaigns and advertising investments; and
innovation activity is not perceived as such (d) configuring product development activities.
by advertising professionals
Our interviews with advertising practitioners Broad-based consultancy services have in
showed that the industry is characterised by some cases become an important part of
high levels of innovation activity. It is also the advertising agencies’ offer
evident that such activity can be found in Beyond the evolution of such tools, we have
many forms, locations and guises. Perhaps as seen how practitioners are developing broad-
a result of this diversity – or perhaps reflecting based consultancy packages. Examples include
an industry mindset common to other creative advice on ‘360 degree’ or media-neutral
sectors – the effort and expenditure dedicated advertising strategies (predicated on enhanced
to innovation is rarely regarded as investment consumer targeting rather than platform/
in innovation per se. Instead, many industry channel selection).
professionals describe their innovation activity
as product or organisational development, Technological advances have permitted
or characterise it as creativity undertaken on substantial and important innovations in
behalf of clients in the course of campaigns. market research and scanning
92. It should be noted here that This is a field where progress has been
much of the innovation
relating to product and Despite this definitional confusion, we believe supported massively by technological advances.
content is heavily reliant on that such activities can be conceptualised and As noted earlier, Web 2.0 systems are perceived
technological developments.
93. A number of organisations
classified as innovation along the lines that are to provide fertile ground for the harvesting of:
(including the BBC and frequently applied in parallel service (and for (a) signals with respect to market development;
Procter & Gamble) have
established websites
that matter industrial manufacturing) sectors. and (b) clues to the evolution of consumer
that invite consumers to aspirations, preferences and demand patterns.
experiment with product
and content development
Much innovation in advertising is focused
tools, and to ‘get inside’ on the development of novel content The generation of up-to-date intelligence
and manipulate ‘brand
DNA’. These organisations
and the creation of new client-oriented and sophisticated analyses of consumer
are eager to learn from products92 preferences and behaviours is a crucial
experimentation with
user-generated innovation,
An important area of activity is the creation activity for advertisers. Many report that they
and to include consumers’ of ‘contextual content’. When consumers have invested heavily in the creation and
ideas in the R&D process,
developing these into
click through advertising-oriented web pages, development of database technologies.
marketable products where the content displayed will be personalised
this is feasible.
to their perceived preferences and assumed Profiling of consumers through complex
characteristics. Some practitioners say that data-mining techniques and technologies
such content can be configured to optimise is another important field of endeavour,
message impact (and even induce a ‘purchase offering opportunities for innovative
impulse’). matching of brands and products with life-
styles and aspirations. Profiling also provides
Another key area for content innovation opportunities to develop innovative products
is the delivery of a multi-media and ‘rich’ based on the recognition (and creation) of
experience for the advertising consumer desire.
Web technologies and digital platforms mean
that it is now possible to create highly rich Technological innovation more generally
content packages that can be channelled has supported the effective migration of
across a variety of devices and media. Some large chunks of advertising activity into the
advertisers are inviting consumers to ‘explore digital domain
and play with brands’ in online environments A large part of advertising activity has migrated
to stimulate and exploit user-generated into the digital domain. Indeed, electronic
innovations.93 marketing is now the dominant form in many
market and product segments. Rich content
Advertisers have developed tools to and multi-media, cross-platform experience
assist clients to better understand their has become standard for campaigns in several
customers’ behaviour product classes, and innovation continues as
Creation of novel products has also received advertisers seek increasingly subtle means of
much attention – advertisers report that they influencing behaviour and communicating ever
have been generating tools to assist clients more compelling messages.
in: (a) developing a better understanding
of consumers (for example, through ‘client

There have been marked process and Whilst client (and industry) conservatism has
organisational innovations in recent years, limited the extent and form of such activity,
particularly at the client interface some practitioners point to increasing use of
Email and collaborative electronic working ‘smart-shoring’ techniques. Smart-shoring
spaces have made it easier to keep clients – the UK-based development, testing,
updated. Beyond routine communications, modularisation and preparation of processes
some agencies also offer to assist clients in prior to export and subsequent off-shore
activities such as business development and operation – is an evolving phenomenon that
product-line planning. Where agencies have enables UK advertisers to overcome the
secured deeper relationships (and client buy- resistance of clients to novel approaches.
in) at the strategic planning level, significant
benefits are claimed: shared understandings For many UK advertisers, out-sourcing or off-
and expectations (with respect to the ‘possible shoring of some components of the campaign
and desirable’) are achieved from the outset, development process is essential, in maximising
and agencies are frequently able to avoid the value-added.
resource-intensive process of competitive
pitching. Moreover, longer-term relationships The integration of the digital and
are often forged and a platform for co- conventional sides of the advertising
innovation work can be established. business constitutes one of the most
significant examples of organisational 94. Core areas for skills
development include:
Some practitioners also report that they innovation in the sector database design,
are afforded a more profound opportunity Many agencies expect to launch campaigns management and
interrogation; rich content
to engage with a client’s brand and values, across all relevant media, and some suggest development; download
and with its R&D and marketing functions. that digital media – internally fragmented systems management; and
cross-media linking.
This engagement is said to facilitate greater as they are – will be the key environment 95. Training appears to be
understanding of the client’s future business for a growing proportion of communications designed to assist agencies
with three key aspirations:
prospects and options for beneficial market programmes. first, facilitating competitive
positioning. It can also prepare the ground for positioning in evolving
and attractive fields;
mutually beneficial co-development work. Most large communications companies and second, enabling effective
an increasing number of smaller agencies deployment of database,
data-mining and tracking
Technological change has also facilitated have recruited or appointed a head of digital technologies; and third,
the delivery and management of advertising campaigns within the past few years. improving retention of key
campaigns through innovative project
management tools Further organisational innovation has seen
In addition to enhancing everyday supplier- the integration of ‘below’ and ‘above the line’
client interactions, developments in technology divisions. This trend has allegedly hardened as
have supported both process innovation increasing numbers of agencies recognise the
within advertising practices, and innovation in necessity of designing cross-format campaigns
the delivery and management of advertising for environments where a large proportion of
campaigns. Sophisticated project management target consumers are increasingly difficult to
tools have ensured that the coordination access via traditional media.
of time-critical campaigns has become
less exposed to risk, and that (frequently Training in support of process and product
geographically distributed) partners are able innovation constitutes a further area of
to monitor and shape project trajectories with organisational development in advertising
limited impediment, friction and delay. Some senior advertising executives have
recognised the need for upskilling in the digital
Further innovation has been witnessed with professions:94 indeed, the acquisition of digital
the introduction of real-time project tracking assets and innovation-facilitating capabilities
and evaluation technologies. As indicated constitutes a priority for many agencies.
elsewhere, these technologies permit
detailed monitoring of customer responses to However, some within the advertising
advertising projects and offer the possibility industry believe that their professional body,
of timely intervention where campaign the Institute of Practitioners in Advertising
performance is judged to be sub-optimal. (IPA), has not provided sufficient relevant
and contemporary professional qualifications
As is the case with many industries, programmes. Individual agencies have had to
advertising has witnessed a strong trend arrange their own skills programmes,95 leading
towards experimentation with out-sourcing to a piecemeal approach across the sector.
and off-shoring of activities and functions

Smaller agencies certainly appear to recognise generation involving agency leaders – is what
the value of training, but some report that its matters most.
cost can be prohibitively expensive. Where
this is the case, innovative solutions have Though many agencies claim to regard their
involved the recruitment of skilled individuals personnel as a key source of innovative
from outside the communications sector, or thinking (and some say that innovation-
the organisation of self-training and ‘skills oriented thinking is a ‘required’ characteristic),
cascading’ schemes. few incentivise innovation beyond small
‘prizes’. Critics argue that an offer of partial IP
rights might be more productive.

5.5 Management and organisation of Mechanisms for innovation are rarely

innovation formalised – a common theme in all the
sector case studies
It is possible to identify both diversity and Processing of ideas for innovation appears
commonality in approaches to the organisation to be relatively casual and ad hoc, and
of the innovation and product development mechanisms for the selection of new ideas
process in the advertising sector. Whilst are rarely formalised – a common theme in all
diversity partly reflects differences in firm size, the sector case studies. Some agencies report
it also points to real differences in orientation that senior members of management teams
with respect to the management of various are expected to filter ideas, but there seems
elements of the innovation process. rarely to be any formal process or ‘criteria set’
to guide this work (other than reasonable
Our interviews with practitioners and expectation of ‘bottom-line’ benefits).
executives have indicated that innovation
management in the advertising sector is In larger agencies, the identification of a
concerned mainly with: promising idea is usually followed by the
construction of a business case and its
1. Sourcing and processing ideas presentation at board level. With software
and hardware investments – often stimulated
2. Allocation of resources by innovation or a cue for it – decisions
on budgets and specification are usually
3. Project leadership and management the responsibility of senior managers (in
consultation with technology suppliers and IT
4. Project evaluation and knowledge capture personnel).

An overview of each is provided below, Most agencies claim emphatically that they
alongside a discussion of the main approaches do not operate with a dedicated budget for
to management reportedly adopted in relation innovation
to each. Nearly all agencies indicate that innovation
activity is funded solely from specific project
The sources of ideas for the different forms budgets (and that innovation – where this
of innovation in advertising are many and occurs – is usually undertaken on behalf of
varied a particular client). For some agencies, this
Most sources for new ideas mirror those found presents a problem as few clients are willing
in other service industries. They are reported to to support experimentation and trialling of
include: interaction with clients, suppliers and new methods during the course of campaign
competitors; board level visioning; media and development (thus resources for innovation are
horizon scanning; market research and trend heavily circumscribed).
tracking; data-mining and consumer profiling;
agency-internal brainstorming; attendance However, the absence of dedicated budgets
at industry conferences, exhibitions and is not always the problem. Larger agencies
‘awards’ events; and, importing personnel from frequently report the allocation of funding
competitor agencies. to support research and development
programmes, and the commissioning (or
Whilst most agencies reportedly derive authoring) of software to support market
innovation principally through interaction research, data-mining, profiling and project
and co-development work with clients, a delivery activities. The failure to recognise
significant proportion say that internal sourcing allocation of development funding as
– especially that connected with ideas- ‘investment in innovation’ probably reflects

a general reluctance within the sector to Few advertising agencies claim to
define development-oriented work in terms of evaluate their innovation effort or capture
innovation activity. associated learning on a systematic basis
Alhough most advertising practitioners
Responsibility for development of ideas is and agency managers appear to recognise
almost invariably placed in the hands of a that innovation takes place within their
project ‘champion’ who assembles project organisations – and that at least some resource
teams, often on an ad hoc basis is allocated to development work (however it 96. A small number of
companies contacted in
The champion is usually a head of the business is labelled) – few indicate that the outcomes connection with this study
group or a senior manager with an interest in of development projects are evaluated in any indicate that team members
are matched with projects
the field and links with partners who might be systematic way. via a process of ‘CV auditing’
required to supply complementary assets. – such companies profess
to a proactive approach to
Moreover, few allude to any efforts to capture innovation and a desire to
Usually, the champion will assemble a the knowledge generated in connection with ensure that the ‘right’ team
members (i.e. those with
development team with an appropriate the pursuit of innovation.98 Some find the appropriate interests, client
skill set. Its size and constitution will vary notion of evaluation attractive but say that connections and knowledge)
are allocated to individual
according to the nature of the project but ‘getting on with business’ must come first. development projects.
can include clients, creatives, art directors, 97. There are a few notable
business development managers, researchers, This appears to be recognised by a number exceptions here. One
major agency reports the
technicians, campaign planners, client of advertising professionals, and is seen as publication of a book
handlers, consultants, media buyers/placers, a source of concern for the industry concerning shifts in UK
culture and their impacts on
and administrators.96 Teams are almost Despite the widespread failure to recognise the consumption trends. The
always assembled on an ad hoc basis with benefits of evaluation, some agencies report book is aimed at raising the
profile of the agency and
representation from project-relevant functions, an interest in project-related learning, and a demonstrating its credentials
and R&D divisions appear to be almost entirely small number have invested seriously in the and knowledge of markets
to prospective clients. The
absent in the advertising business.97 establishment of an evaluation system. exercise of planning and
conceptualising the work,
researching and collating
Few agencies report any problems with an ad For those that profess an interest in evaluation, material and organising
hoc team-based approach to the execution attention and profile in the press and trade is for production of the
publication is likened to an
of innovation projects, though one indicates a useful proxy indicator of success. Similarly, R&D process.
that a ‘disruption-based’ approach to team industry awards signify success and confer very 98. The failure to systematise
construction can be fruitful. Its representatives valuable kudos and profile. efforts to capture knowledge
from project development
believe that fixed teams – even in a creative is somewhat strange: many
industry such as advertising – can breed However, some within the industry want these advertising agencies indicate
that they have ‘review
‘comfort’ and ‘bounded thinking’: removing awards to move beyond rewarding creativity systems’ in place with
individuals from the familiar surroundings alone: they argue that the effect of a campaign respect to their campaigns
and that learning with
of their regular team and placing them in an on a client’s ‘bottom line’ is crucial and that respect to ‘what works’ is
‘innovation team’ can be a challenge to those creative inputs should be linked to project considered highly valuable.
99. Some commentators
concerned, but one that frequently stimulates objectives and outcomes (i.e. outcomes in suggest that it is possible to
creative thinking (and can even rejuvenate terms of awareness generation, market share, ‘monetise’ the contribution
of communications (and
faltering careers!). profitability, sales and margins).99 that this highly positive
step is one that has been
encouraged by the IPA’s
In another allusion to the problems and Indeed, agencies that place a high value on ‘Advertising Effectiveness’
benefits associated with ‘innovation team’ evaluation – whether in relation to campaigns Awards). Indeed, it is clear
that in communications – as
working, one agency reports that creatives or innovation projects – strongly agree that in the design sector – there
can sometimes be limited by their concept of clear objectives should be in place and that is growing support for the
inception of some form
‘the achievable’: where there is a failure to related metrics should be agreed by all parties. of evaluation system that
understand the levers and tools of innovation, prioritises the contribution
of advertising inputs to a
a project’s progress can be slowed significantly. A representative of one major agency client’s bottom line.
suggested that the establishment of relevant
The agency in question found that when it success, performance, profile and impact
tried to integrate its digital and conventional metrics would be a positive development for
operations, misaligned perspectives and the industry (both in improved reputation
differences in modes of operation led to and increased client confidence) and that this
considerable pain and a highly protracted might stimulate further innovation.
process. Though the organisation is generally
highly successful and clearly innovation active,
thoroughgoing organisational innovation was
experienced as a very difficult process with
some undesirable knock-on effects.

Part 6: Innovation in the independent broadcast
production industry

6.1 Overview of the industry of this growth can be traced back to the
100. An accurate figure for promotion of ‘viewer sovereignty’ in the
the number of active UK
production firms is not The broadcasting sector is the second Peacock Report (1986) and subsequent
currently available. The largest of the UK’s 13 creative industries efforts to introduce greater competition and
Producers Alliance for
Cinema and Television, The UK television and radio broadcasting flexibility of production into the sector (though
PACT (the trade body for industry includes some 4,700 businesses and this process of liberalisation has been quite
the production sector)
has a membership of employs more than 73,000 people. With a gradual).
approximately 700. combined turnover of more than £18bn and a
However, PACT does
not claim to represent contribution of £7.1bn gross value-added, the The regulatory environment has played a
all UK independent industry constitutes the second largest creative particularly important role in the evolution
producers. Kemps,
an online production sector in the economy (Frontier Economics, of the industry
services directory, lists 2006). Three important measures have impacted on
approximately 2,000
independent companies the rise of the independent content production
in the UK: this figure is Broadcasting embraces a vast range of sector: first, the creation of an internal
probably a reasonably
accurate reflection of the activities, the most significant of which market within the BBC; second, the inception
true size of the sector. are programme commissioning, content of an auction process for the allocation of
production, broadcasting (and scheduling), and Independent Television (ITV) franchises; and,
signal transmission. third (and most notably), the requirement
placed on major terrestrial broadcasters to
We concentrate our case study on the purchase one quarter of their programming
independent production sector from external sources (Deakin and Pratten,
As we are most interested in the creative 2000).
end of the broadcasting spectrum, we focus
our study on the independent broadcast The industry is experiencing a large number
production sector. The sector is concerned of coincident structural changes
with the development of broadcasting content A climate of intensifying competition drives
for TV and radio broadcasters in the UK innovation in the industry. However, this
and abroad. It has been a fast-growing and climate is itself shaped by other factors,
successful sector over the last two decades. some familiar from our study of advertising,
There are approximately 2,000 firms in the including new technologies and digitisation
industry. While many of them are small or very of broadcasting, a movement towards multi-
small enterprises,100 the industry has its share channel television formats, the inception of
of larger organisations with a global reputation new channels and platforms, new ways of
for the quality of their programmes. ‘consuming’ broadcast content and new forms
of consumption behaviour. The sector also
faces a changing regulatory environment;
it must respond to the manoeuvring and
6.2 Developments, trends and the strategising of advertisers, and the positioning
innovation context of broadcasters and infrastructure providers.

The broadcasting sector has grown markedly Clearly then, there is a complex mix of factors
over the last 20 years. The source of much that have the potential to impact on the

environment in which independent production the BBC’s proprietary software ‘iPlayer’. Some
companies work, and many opportunities for niche digital radio operators, such as Emap’s
interplay between them. The Jazz, migrated their programming from
DAB to web-based radio.
Digital broadcasting has been an important
trigger for innovation ‘Podcasts’ have grown in popularity markedly
Preparations for the analogue switch-off of since their mass market arrival some five
broadcast signals in the UK (scheduled for years ago: these allow users to download
completion in 2012) are moving ahead rapidly. radio content onto personal music players (for
85 per cent of UK homes already had digital example, iPods and MP3 devices).
television receiving equipment by mid-2008,101
a shift accelerated by reductions in the retail Delivery of television via the internet (Internet
price of flat screen and plasma televisions and Protocol Television or ‘IPTV’) is forecast by
consumer eagerness to replace ‘dated’ Cathode some commentators to constitute the ‘next
Ray Tube-based receivers. big thing’ in the evolution of broadcasting.
Several IPTV services are already in play and
The arrival and rapid take-up of digital the idea here is that broadcasters are able
television (following a faltering start) has to deliver content ‘on demand’ to service
brought widespread access to multi-channel subscribers/users via either television
viewing. Perhaps the most important factor receiving or (broadband-enabled) computing
here is the availability of Freeview (more equipment. Virgin Media, BT Vision, Channel
recently complemented by Freesat), a free-to- 4 and Tiscali are already well-established in
air service that has delivered a multi-channel the IPTV market and now provide on-demand
viewing experience to many households at little services across most of the UK. The presence
cost. of these providers – most with extensive
business interests outside the broadcasting 101. ‘The Nations and Regions
Communications Market’
Whilst the ‘major’ terrestrial channels are sphere – points to significant convergence in (Ofcom, 2008).
available via Freeview, much of the appeal of the broadcasting, media, communications and 102. Ibid.
the new system resides in its ability to provide leisure services space. 103. The BBC’s service is known
as ‘Listen Again’.
variety and choice – many new ‘digital only’
radio and television channels are available via Taken together these developments are
the BBC, and other broadcast providers have putting pressure on traditional broadcasting
moved to populate Freeview with both mass models – they highlight the importance of
appeal and relatively niche content. multi-platform and multi-media delivery of
In the radio broadcasting sphere, take-up of Beyond the arrival (and apparent early success)
Digital Audio Broadcasting (DAB) has been less of independent providers, there is a general
impressive, though it has grown significantly feeling within the sector that the traditional
over the last year – 22 per cent of homes broadcasting model has reached the end of
had invested in dedicated DAB equipment its life. The focus for many is multi-platform
by mid-2008102 – while consumption of operation and much effort is now invested in
digital radio broadcasts via digital television the generation and configuration of content
equipment appears to be rising steadily (with that will have appeal and relevance across all
an estimated 35 per cent of adults accessing key delivery channels. In the words of one
radio in this way). senior broadcasting insider: “the traditional
broadcast model is going out of the window
In recent years there has been a major [what is important is…] being able to work
expansion in the availability of web-based out how content being produced will work on
radio different media”.
The availability of internet-based music and
radio services is not a new phenomenon, but Accompanying the growth in digital
the past five years have witnessed a major broadcasting has been a reassessment of
expansion in web-based radio broadcasting. advertising models
The BBC’s extensive and content-rich web As we have already seen in the previous
operation, for example, offers listeners the chapter, the rise of digital broadcasting and
opportunity to access radio material broadcast internet take-up is forcing the advertising
on its main channels for up to seven days industry and its clients to reassess where
following original transmission103 (an availability they run their campaigns. The proliferation
window that is sometimes extended): listeners of television channels is fragmenting viewing
are able to use the service in conjunction with audiences, and internet use and other leisure

pursuits could dilute TV viewing figures in the ‘stark’ for certain programmes – including some
UK significantly.104 dramas – and further investment is required at
post-production stage to ‘tidy’ or normalise a
Of course, this development worries advertisers completed edit to meet viewer expectations.
who fear that television-based advertising
could reach a diminishing audience. Whilst Out-sourcing – many practitioners say that a
allocation of funding to television-based broad pool of highly skilled technical workers
advertising campaigns has held up well in the is available in emerging and technologically
decade up to 2005 (according to Advertising advanced economies. Many such economies
Association data from 2006, total advertising have strong, often subsidised, indigenous
expenditure in televisual media rose from film and broadcast industries with spare,
£3.2bn to £4.4bn from 1995-2005), there are and relatively inexpensive, capacity (for
clear indications that significant re-allocation is example, Brazil has a large pool of expert CGI
104. This does not appear to be underway. technicians). Beyond advantages associated
the case at present – data
from BARB indicate that with direct reduction of costs, some UK
average weekly viewing The internet provides myriad opportunities producers have started to use overseas
hours have increased
by approximately 10% for direct contact with advertising targets providers as a way of limiting risks contingent
over the past decade and web-based direct mailing has received a on currency fluctuations (for example, out-
(see http://www.barb. significant boost in funding. Whilst expenditure sourcing contracts are now often awarded
weekreports.cfm?RequestT on television-based advertising is expected to operators in dollar-pegged locations and
to grow in the coming five years, almost all payments are made in the currency used by the
105. It is important to note
here that broadcasting in growth is expected to be directed to multi- final client).
the UK is one of the most channel rather than traditional operations
regulated of the creative
industries (in terms of (PricewaterhouseCoopers, 2004). Audience fragmentation – this is commonly
which organisations can reflected in a general reduction of budgets
broadcast what content,
when, from what sources, Alongside shifts in the allocation of funding for individual programmes. However, channel
under what conditions and for advertising, some practitioners have proliferation does not always imply reduced
via what platforms, media
and parts of the spectrum). seen impacts on their business as a result audiences – according to some independent
Content production is of the regulation of food advertising during producers, strong brands like Deal or No Deal
certainly affected by the
general parameters of programming aimed at younger audiences.105 and X Factor will always achieve strong ratings.
broadcasting regulation Some channels have exited the children’s Whilst producers view fragmentation as an
(both favourably and
negatively – moves to entertainment market entirely and others important opportunity for more varied content
ensure that major public have significantly reduced their children’s – and many are trying to create the next ‘big
broadcasters source at
least a proportion of their programming. concept’ – others suggest that blockbuster
content from independent brands reduce opportunities for the placement
providers has given a major
boost to the industry), Industry practitioners point to a number of of novel content in the schedules of major
however, some forms of other structural developments impinging on channels (especially where large numbers of
regulation are designed
to apply more specifically independent production slots are dedicated to ‘winning’ shows).
to the independent Whilst channel proliferation, shifts in
production sector and
these have frequently advertising practice and growing use of the Audience research – although audience
stimulated and shaped internet are central themes, there are many research has always mattered to broadcasters,
innovation in the sector.
other factors and trends that increasingly content producers and advertisers, increasing
impinge on the activities of independent fragmentation has added greater urgency to
broadcast content producers. efforts to generate more sophisticated and
detailed understandings of audience segments
HDTV – there is a growing demand for High and their preferences and consumption
Definition Television (HDTV) content (one behaviours. Indeed, increasing resource is
that is driven by consumer demand and the being dedicated to the mapping of current and
increasing availability and affordability of future audience attitudes and needs, and the
HDTV-ready receivers). This shift is requiring intelligence generated by such work is being
increased investment in hardware and software plugged-in directly to the content creation
required for high definition (HD) content. and production process. As competition for
Investments can be very costly – especially audiences and the effort to engage and retain
in the case of Computer Generated Imagery viewers intensifies, a profound and nuanced
(CGI) technologies – and rapid technological understanding of their needs, expectations
obsolescence is a growing problem. Moreover, and viewing habits is becoming ever more
whilst there is generalised demand for HD necessary.
product, some independent producers claim
that HD is not appropriate for all genres. It Accelerated production – whilst digitisation of
is claimed that HD material can appear too the content production process has delivered

universal benefits, it has also presented new have experienced significant churn among
challenges: some independent producers senior staff. These factors have created major
complain that demand for rapid delivery has problems for independent producers, reducing
reached barely tolerable levels and planning for their ability to forecast demand.
through-flow of work has become increasingly

Regional issues – the partial re-location of the 6.3 Drivers of innovation

BBC is expected to have a major impact on
the organisation of content production in the The drivers for innovation in the independent
UK. Some independent producers expect more production sector – as reported by industry
opportunity and influence for Northern-based practitioners – are fairly diverse. Many
broadcasting-sector firms. However, others informants pointed to the complex interplay of
expect there to be limits to such shifts – if real stimuli for innovation activity and innovative
change is to be achieved, provincial producers products.
must secure improved access to commissioning
broadcasters, and an end to the ‘London club’ The importance of a clear differentiation
that allegedly dominates the broadcasting strategy in a marketplace that is
industry. Some Northern-based producers characterised by intensifying competition
argue for further legislation to ensure that both is highlighted by many broadcasting
ITV and the BBC procure a certain proportion practitioners
of content from outside London, and that such Three key factors – frequently combined in the
work is delivered by independent producers. development of such strategies – are singled
Regulation and risk – according to independent
practitioners, broadcast content development First, cost is a major concern for most content
is a high-risk venture, and this is one reason producers (and their clients). Pressure
why so many broadcasters have out-sourced on programme budgets has contracted
to independent producers. It has allowed cash-flows within the sector and many
broadcasting organisations to reduce their own independent agencies have innovated to
exposure and simultaneously apply pressure on cut costs. Technology has helped, enabling
costs. However, recent developments over the some producers to deliver high-quality
rights to broadcast content have led to some content without the need to outsource
re-consideration of this arrangement. In 2005, important (and expensive) components of the
PACT secured reversion of ownership rights to production process. Where such delivery is
the content producer within five years (rather possible, producers report that they are able
than fifteen years under the previous regime). to differentiate themselves on the basis of
As a perverse consequence, some broadcasters price (and that this can be attractive to cash-
are starting to return production to in-house strapped clients).
facilities as this affords enhanced control of
medium-term income streams. Second, some independent producers report
that ‘capability and talent’ are important
Industrial consolidation – there is evidence that differentiating factors. Many have invested in
larger independent producers are acquiring the development of niche capability and talent
their smaller counterparts to exploit the (for example, application of CGI in small-screen
latter’s talent and stock of ideas. Consolidation documentary-making). This has contributed
also offers greater purchase, visibility and to their unique profile in the production
competitive edge in an increasingly competitive community.
Third, a number of regionally-based producers
Reorganisation at major channels – see geographical location as a positive
broadcasting industry insiders say the past year differentiating factor. Location outside the
has been one of great flux and nervousness capital makes them more approachable and
for the sector as a whole, and the major accessible to regionally-based clients. It also
broadcasting channels in particular. Channel 4 reportedly assists producers in attracting and
has sought to secure its funding base through retaining key personnel and minimises the
increased contributions from the public ‘poaching’ of staff that is more common in
purse, the BBC has reduced commissioning in London. Whilst location is not on its own an
the face of reorganisation and redundancy, obvious driver for innovation, some producers
and some channels (especially Channel 5) report that their niche focus or regional

expertise can be attractive to commissioning As with other creative sectors, technological
broadcasters. changes (both hardware and software) have
heavily impacted on both the propensity to
As in all the creative industries analysed in the innovate and innovation trajectories in the
current study, competitiveness more generally broadcasting sector
is identified as a crucially important driver for As broadcast production-related technologies
innovation. Unique expertise and experience is have improved in their performance and
valued most highly with a capability to ‘deliver become much more affordable, sophisticated
beyond the client’s expectations’ prized as a broadcast content has been produced more
means of raising profile and reputation and rapidly, and fallen within the province of a
securing future business. The aspiration to broader range of suppliers.
achieve enhanced competitiveness is cited
by most independent producers as a driver Many independent producers now undertake
for innovation and product development. a more comprehensive range of production
Some invest heavily to bolster niche expertise tasks ‘in-house’ (with major savings), and are
and technical capability (as facilitators of becoming increasingly self-sufficient in filming,
innovation), whilst others focus more closely editing and completing some stages of the
on the generation of innovative concepts and post-production process.
While such self-sufficiency is a trigger for
Opportunities to co-develop content with process and organisational innovation within
the broadcasters are seen by independent the sector, it can also lead to the development
producers as an important driver for of novel products as independent producers
innovation bring their distinctive approaches and
Practitioners report that opportunities to get methodologies to bear on a larger segment
involved in the co-development of content of the content development and realisation
with major broadcasters, producers or directors process.
are highly attractive (as successful collaboration
can lead to extended relationships and the The notion of ‘technology trickle-up’ is
chance of future business). According to some mentioned as another interesting driver for
in the industry, the prospect of collaboration innovation in the sector. Some practitioners
spurs innovation in independent production suggest that the evolution of user-generated
houses – especially smaller and less well- content such as blogs or podcasts has alerted
established operators – as they are keen to content producers to what can be achieved
demonstrate their capability and potential with limited budgets. They suggest that ideas
value as longer-term partners. borrowed from the ‘user-generation’ domain
will appear increasingly in mainstream media
The nature of working relationships and channels.
contracting and production arrangements
means that producers and their clients tend Revenue and payment systems within
to work in very close proximity. This proximity the broadcasting industry are changing
exposes independent producers on an ongoing dramatically (with important implications
basis to the changes that are experienced by for innovation)
their broadcaster partners. As noted above, the success of PACT in
re-negotiating broadcast content rights
Indeed, such innovation gives much impetus has changed the balance of rights between
to development activity as producers strive to producers and broadcasters, ostensibly
create content that is suitable for contemporary reducing the power of the latter. While some
and evolving multi-channel and multi-device broadcasters have returned content production
environments. Thus, some commentators in-house, others have sought to derive
suggest that whilst a significant level of optimum value from their licensed assets in the
innovation in independent production is limited time available to them. And while the
triggered by ideas that are indigenous to the change initially caused some disquiet among
sector, much development is a response to independent producers, it has subsequently
innovations introduced or undertaken by their been a trigger for innovation, particularly with
broadcaster clients. respect to the development of new business
and revenue models, and the re-configuring of
partnering arrangements (see below).

6.4 Types of innovation Some producers report that they have
been forced to pare costs to an absolute
Whilst the types of innovation in minimum to win and maintain business
independent production mirror those in This is especially the case with respect to US
other creative sectors, they are more likely clients. Whilst not an innovative business
to be recognised as innovation model in itself, cost paring is allied with other
The forms of innovation that can be found approaches as a survival strategy, one that can
in the independent production sector mirror be sustained until greater fluidity and improved
those that are found in many other creative cash flow returns to a troubled market.
industries fairly closely. However, the concept
of innovation is recognised and deployed Many producers report innovative
more widely in the sector than in many parallel approaches to the generation of
creative domains. development finance
New approaches to financing development
Whether because of the technological basis of are reportedly crucial in the face of significant
much of the work that underpins the broadcast competitive pressures. Given the reduced
content development process – or the BBC time period in which broadcasters as licensers
background and connections of many of the of content are now able to recoup their
practitioners that operate within the sector – investment, such operators are allegedly
‘innovation’ is likely to be known and labelled exerting substantial downward pressure on
as such rather than as business renewal or licensing fees. This has impacted negatively
product development activity. on independent producers, reducing incomes
substantially and cutting capital for new
Four main classes of innovation are identified programming.
by practitioners – each is explored briefly
below, with some allusion to variants and As a consequence, some producers have looked
examples of development activities. to distributors to make up funding deficits
by supporting the development of content
Most practitioners note that business suitable for pre-selling in overseas territories.
models are being redeveloped in the face of This has created a complex funding and rights
structural changes triangle involving producers, broadcasters
This is an important area of innovation for and distributors; however, this complex nexus
many production companies, and reflects of relationships and arrangements is seen as
the stressed nature of the industry and levels necessary if new programmes are to be made.
of change that have been experienced in
recent years. Most informants report that Essentially, under evolving arrangements,
some attention has been afforded to the distributors contribute to the development of
development of business models appropriate to new programmes by independent production
the changing climate within the broadcasting houses. The producers license their product
industry. Some suggest that the creation of to UK broadcasters who then own UK rights
new business models and re-positioning their to broadcast for five years. Distributors can
business are key areas of innovation activity. sell the product immediately following its
first UK transmission – and thus recoup their
Production companies are making increased investment – in overseas markets, and the
use of novel risk sharing and reward independent producer can recoup investment
contracts following revocation of rights under the five-
Given the difficulties that have been year rule. According to some producers, such
experienced by many broadcasters (especially distribution deals are essential to the survival of
smaller and minor overseas operators), some smaller production companies and assist them
production companies have entered into shared in bringing product to market, and developing
risk and reward arrangements. The producer a longer-term and sustainable revenue stream.
charges a minimal fee – perhaps 50-60 per cent
of the market rate – and recoups the remainder Some production companies are choosing
from a share of royalties. This approach ensures to locate at least some of their filming in
that programmes that otherwise would not cheaper locations overseas
reach production stage can be supported from Though not in itself a new business model,
their early stages of development through some producers innovate in their production
to completion – the expense of doing so processes by locating some of their filming
independently is becoming too high for some outside the UK. As content budgets have been

stable for a decade, they must find new ways Each individual CGI technician is trained as
of reducing production costs. a specialist in one component of CGI work
(rendering fluids, shadows or smoke, or human
The internationalisation of location shooting or animal animation) and projects requiring
helps to rein in overheads. In some countries – multiple forms of intervention are passed from
including the Czech Republic, Ireland and New one expert to the next along the line.
Zealand – there are also tax incentives in place.
According to some practitioners, this new
Some industry representatives believe that the arrangement (arguably a knowledge-economy
UK is losing out as a result of this relocation: update of Taylorist and Fordist practices)
they argue that tax breaks in the UK would privileges specialism and permits the
generate benefits in terms of employment, exploitation of bounded skills to ensure the
tourism and the expenditure that is associated highest possible quality of work and efficiency.
with film production (benefits that would far
outweigh any reduction in tax revenues). Many producers report investment in
software and hardware to facilitate ‘in-
Organisational innovation is evident in the housing’ of some functions
independent production sector in many In more conventional production agencies, an
forms important focus for innovation is the use of
One of the most significant of such innovations technology to save money and control more of
is the growing out-sourcing of routine the content production process. As discussed
operations and functions. Many companies above, many producers invest in software
report that they now exploit a global pool of and hardware to facilitate ‘in-housing’ of
expert labour (for example, CGI technicians in some shooting, editorial and post-production
Latin America, and web designers in Hungary functions. This has reduced expenditure on
and Romania), and through sub-contracting out-sourcing and generated an enhanced
work they are able to realise substantial skills-base among employees (as the latter are
operational savings. trained to perform a wider range of technical
and creative functions).
Some concerns with respect to management
of processes and quality are reported, but However, some practitioners suggest that
developing economies are generally perceived less use of out-sourcing can reduce creativity
as excellent suppliers of high-level craft and by narrowing the range of individuals that
technical skills. Off-shoring can also reduce are involved in the production process. As
problems associated with currency fluctuations. contacts with external suppliers are reduced,
so opportunities for collaboration and
In some areas there has been a shift in co-innovation are lost, and the ‘creative-
demand for skills – demand for technical or innovative’ spark that is associated with
crafts skills is outstripping that for creative dispersed team working is diminished.
In some specialist areas of content production, Broader technological developments are
there is a perceived shift in focus away from central to the production process, and
creative skills (often characterised as the to the re-organisation of functions and
mainstay and artistic core of the production working practices
industry) in favour of technical and craft skills. Technology is an important part of the
This is particularly evident with CGI and HD- renewal of communications, interfacing and
oriented production companies, and reflects delivery mechanisms. Email and web-based
increased demand among commissioners and communications tools are used extensively in
consumers for visually ‘realistic’ programming the broadcasting industry (indeed, co-working
(wherein creative content and quality of on shared whiteboards and in shared web-
storylines may be less important). spaces is reported commonly) and finished
products are almost invariably electronically
With CGI in particular, specialist producers transmitted, a process that increases rapidity of
report that increasing specialisation is key delivery and provides ‘ready to go’ content to
to the production process. So, there is great post-production services and broadcasters.
innovation in the production process. CGI
used to be seen as a craft skill and each
project would be handled by an individual
or integrated team from start to completion.
Now, the trend is towards ‘production lines’.

Product and content development But the barriers to such content innovation
constitutes another major locus for are many, including alleged risk aversion on
innovation activity in the independent the part of commissioners
production sector Despite such optimism surrounding content,
Again, much product and content innovation some practitioners foresee problems and
is facilitated by advances in broadcast and bottlenecks. Commissioning bodies are often
production technologies; however, the risk-averse, and this can lead to a glut of
application of creativity is at the forefront of ‘hospital’ and ‘police’ dramas, soap operas
developments in a number of product areas: and ‘young celebrity’ programming. This is
said to be preventing the production of more
• Additional content – much effort is now innovative content.
applied to the bundling of ‘extras’ or
additional content with programming
packages (especially where multi-platform
distribution is envisaged). Thus, in the 6.5 Management and organisation of
process of shooting, it is common to organise innovation
interviews with actors, stills photography,
scripting and casting of additional clips and Although difficult to quantify with any
scenes, filming of alternative endings or the precision, industry perceptions are that
capture of outtakes. It is also increasingly independent production is an innovative
common to see some content developed for sector
mobile phone or internet-only distribution. It is clear that significant levels of innovation
The creation of additional content requires are present in the production industry:
investment and allocation of effort in however, levels of investment are less
logistics, however it is perceived as an easily quantified. Some producers on the
increasingly important means of generating technological side of the industry suggest
extra revenue within the industry. that innovation can account for approximately
10-15 per cent of expenditure, whilst those in
• Internet-specific content – There is growing creative and concept development businesses
interest in the production of internet-only believe that innovation can account for as
short dramas and other forms of content. much as 60 per cent of expenditure. Either
Ten-minute self-contained programmes or way, these are big numbers.
short serial episodes are perceived to be
attractive to younger internet users (and Despite wider recognition of innovation
to the advertisers eager to access them). activities as such in the sector, most
However, some practitioners recognise innovation is still viewed as ad hoc and
that the internet experience is qualitatively organic
different from traditional formats, presenting According to some commentators, innovation
new challenges to the sector including an can be deliberate (where there is strong
expectation of interactivity. According to one recognition of opportunities, or the prospect
practitioner, new media producers are just that an idea can be developed into the ‘next
‘feeling their way’ – the rules of the game big thing’). On the other hand, innovation can
are not yet established. be ‘accidental’, occuring as it frequently does
in the process of delivering a client project.
• Repurposing for multi-platform distribution Most practitioners say that innovation is
(‘content is king!’) – according to many in rarely planned and deliberate, and many claim
the industry, repurposing and adaptation that organisation is broadly ad hoc and often
of broadcast content for distribution across ‘organic’. The need to invest in innovation is
multiple channels and platforms is a key recognised widely. However, few companies
area for innovation activity. Moreover, have formal methods and systems to evaluate
producers are eager to experiment with the their innovation-related expenditure.
development of high-quality content that
can be delivered across multiple formats This may partly reflect the resource
and devices: whilst some modification and constraints that most independent
re-wrapping or packaging may be required, producers face
some production companies believe that a Some firms claim that they have many ideas
digital, analogue, mobile phone, and internet for innovative concepts, products and forms of
presence is possible for most forms of delivery. However, there is too little resource or
programming. time to bring such ideas to fruition. Although
formal resource constraints are cited as the

main barrier to innovation, regulatory bodies
are for example, sometimes perceived as
a brake on innovation (a programme with
a gambling format might attract attention
from regulators). It can also be argued that
regulation can constitute a disincentive to
production companies that might wish to try to
experiment with more controversial topics and

Co-production and network-based

development of programming is very
The broadcast production industry consists of
a network of individuals and small, specialist
(and some larger) companies with a range of
complementary skills and expertise. Team-
based working is seen as essential to the
realisation of new and innovative products.
Development practitioners believe that one
of the most important development functions
resides in the assembly of expert groups for the
progression of content projects.

Given the high level of proximal working

and interaction in the industry, the
development process requires very good
personal relationships and buy-in from
various stakeholders. The inception of ‘360
degree’ approaches and methodologies will
require even closer strategic relationships.
While much innovative work can be achieved,
industry commentators caution that sourcing
and managing relevant expertise will be a
real challenge: the creation and purposing of
material for multiple formats requires many
layers of expertise and the growth of such
activity implies significant further organised
and process innovation.

Part 7: Overview and analysis of industry case studies

This chapter weaves together insights from the types; and new channels for delivery or use of
four separate sector case studies, in terms of content.
drivers of innovation, the types of innovation
involved, and the more general issues of These developments create opportunities
innovation management and innovation for familiar products to be designed,
systems. These categories inevitably have produced, delivered and used in new ways;
many overlaps, but splitting the discussion for new combinations of familiar products;
in this way should help us to identify major and for brand new products. They also
common themes and points of difference. raise the prospect of new competition
as a result of ‘digital convergence’ (the
blurring of boundaries between creative
industries, and between such industries and
7.1 Drivers of innovation telecommunications and computer industries.)

Across the case study industries, a number These technology drivers are experienced in
of drivers repeatedly create pressures for all of the creative industries, but nowhere
innovation, shape the innovation process more strongly perhaps than in videogames
directly, or change the context for innovation development. The industry has to adapt
efforts. Most drivers are experienced directly by to the succession of consoles, with their
the industries studied here. However, some are more powerful and faster chips offering
encountered less directly, for example, when opportunities for enhanced experience,
the business clients with whom advertisers, new features, functionality and connectivity
designers or independent producers are dealing options. Broadband communications allow
are themselves strongly influenced by structural online games, while mobile phones present not
changes in consumer demand. just new platforms but also new concepts for
A. New information technologies are
having deep implications for the business The other industries also feel the pressure
environment and supply chains of creative of a changing technology environment,
businesses with advertising, for example, not just being
New information technologies continue to be provided with new marketing channels, but
applied increasingly extensively and intensively having to deal with fragmentation of audiences
in the consumer and business markets, and across multiple media.
the supply chains and business environments
of creative firms. Particularly important here When we consider the types of innovation
are: digitisation of content (including historical undertaken, and more general issues of
content); expectations around the digital innovation management, we shall continue to
delivery of content; expansion of broadband see the pervasive influence of new information
and computer facilities (and capabilities on technology. It affects the nature of the product
the part of customers and business partners); (by enhancing the richness of experience or
development of applications software of many permitting delivery of tailored content). It
allows more sophisticated market research

and marketing of innovations (data-mining health, safety and environmental standards. (In
to assist in locating targets, direct marketing addition to formal regulations, there may also
through email and Web environments). And it be standards imposed by powerful clients.) The
changes how innovation activity is conducted independent television producers are strongly
(use of content generated through Web 2.0, influenced by the evolution of media regulation
co-development through client zones). And, of (including rules about broadcasting licences
course, practically all information-processing and sourcing of content). Rules restricting
activities associated with innovation activity advertising during children’s programming
are ones where the new technologies can be affect both advertising and broadcasting
applied. industries.

B. Partly reflecting these technological D. Consumers of creative goods and services

trends, but also other developments, we are becoming more sophisticated, more
have seen a proliferation of new content networked, more discriminating and more
delivery mechanisms which have driven active
wider innovation in all the sectors Four developments taking place on the demand
Technological advances are also leading to side for creative industries are substantially
new media, new channels and new delivery realigning the nature and expression of
mechanisms. We present this as a distinct demand.
driver because the proliferation of platforms
also reflects regulatory trends (allowing Consumers (and clients) are becoming more
more competition in broadcast media and sophisticated. They are more experienced in
telecommunications) and changes in the ‘reading’ and assessing the products of the
domestic and global competitive environment. industries.
106. We are here rather loosely
using a term introduced by
Linder (1970). Digital broadcasting, mobile communications Consumers are more networked. They exchange
107. Toffler (1984) predicted and internet delivery of content are particularly views – criticisms, recommendations – and may
and named this
development. important developments in this context. As distribute content among themselves, as well as
we have seen, the videogames development providing feedback to suppliers.
sector is highly influenced by the succession
of competing games consoles. Even in the Consumers are more discriminating, able to
product design sector – where the proliferation exercise more choice – attention spans are
of platforms is not such an important driver supposedly more limited, with remote controls
– we encounter designers who are working enabling channel surfing and timeshift devices
on the features of devices such as mobile offering alternative schedules. Consumers have
telephones. many alternative services offering other ways
of spending leisure time (‘the harried leisure
C. Ongoing and complex changes in the class’).106 Advertisers have had to confront
regulatory environment have pervasive the issue that young people are increasingly
implications for innovation in the creative switching from broadcast TV to the Web and
sectors mobile phones.
There is an ongoing and complex evolution of
regulatory environments: this is associated with Consumers are more active; they may be
market liberalisation, digital convergence and ‘prosumers’,107 creating their own content; or
the application of new technologies, and new more often actively co-producing content and
social and environmental concerns. creative experiences together with suppliers.
The various industries examined vary in
This makes regulatory influences pervasive, how they experience these factors, not least
but they affect different industries in different according to whether their immediate markets
ways. For instance, concerns about privacy, are businesses or individual end consumers.
pornography and violence particularly affect
the advertising and videogames industries. In terms of final consumers as drivers,
Videogames must meet certification the videogames development experts we
requirements (differing across countries), and interviewed reported facing demand for novel
online gaming raises questions about control titles (games significantly different from
of access to under-age players, and those existing offerings); greater sophistication/
who fail to abide by rules of the game. The realism in gameplay; and improved interfaces
product design industry confronts technical (to enhance gameplay experience). Advertisers
compliance requirements, and needs to address in our study repeatedly remark that audiences

are more fragmented: this permits more precise low cost overseas – and while this labour may
targeting of content where more precise not always be attuned to the requirements
location of audiences is possible. of many Western consumers, it may be in
touch with the tastes of ethnic minorities and
Business clients are also seen by creative ‘omnivorous consumers’ (see Section 2) in the
businesses as being more demanding. Thus West.
product designers claim to have experienced
increased pressure and questioning of their Wider economic changes associated with
expert view from ‘more educated’ clients. One globalisation and structural change also impact
feature of this is growing pressure from clients on some of the creative industries. Product
to produce a greater number of ‘alternative design firms that are currently focused on
versions’ of designs in relation to each brief. serving manufacturing clients, for example,
In advertising, there is a reported increase in may need to reorient their business to service
the intensity of agency-client relations, with sector clients or to reorganise so as to follow
increasingly close interaction being sought. At their markets overseas or capture new overseas
the same time, clients (many under competitive clients. Even industries like those parts of
pressure) have a cost focus, being eager to broadcasting that cater mainly to ‘local’
minimise costs whilst maintaining quality. audiences may find that they see consumers
increasingly scattered around the world as
Business clients themselves are changing, people’s living and working patterns become
reflecting broader economic changes (for more dispersed.
example, the declining role of manufacturing
and increasing role of services in the UK). The A generalised intensification of competition
emergence of new businesses associated with from various sources is driving innovation at
new channels and platforms – each with new the firm level
needs and perspectives – can spark innovative While the drivers discussed above affect
approaches in the creative industries that serve creative industries as a whole, the experiences
them. of individual firms in these industries are
greatly influenced by the strategies of their
E. The creative industries are functioning in competitors and collaborators in response to
increasingly international markets wider trends. Innovation on the part of others
This can provide opportunities for exports of is itself an important driver of change.
their products or for setting up outlets in new
overseas markets. Online export of creative It is also an essential source of ideas for
products in digital form may allow even creative producers and informed consumers.
small firms (and ‘prosumers’) to reach global Firms need to stay abreast of these innovative
audiences. developments to remain competitive and
Similarly, some creative businesses face
competition from overseas entrants into This is important in labour markets – especially
domestic markets. While increased competition for the ability of creative firms to attract
associated with globalisation is common, the right staff – as well as in business and
there are niches where local provision for consumer markets. Thus advertising industry
local demand remains particularly effective, interviewees note that a reputation for
providing some shelter for localised creative innovation (along with one for producing
industries and restricting export opportunities cost-effective products) is highly valued in a
(for example because of language differences, crowded market, with awards for innovation
varying tastes, close links between the creative and success being taken very seriously.
product and other elements of the local milieu
or cultural context.) Intensified competition is very widely
experienced, with established firms facing
Globalisation also brings with it international new entrants not just from overseas territories
financing, as well as cross-border mergers and but from UK universities: in design, such
acquisitions. While labour is far from perfectly entrants might include graduates from UK
mobile, international travel has become much design colleges working as freelancers, and in
easier and new IT offers scope for collaborative broadcast production, professionals who have
and distant working of many kinds. The heated exited established broadcasting companies
discussions about off-shoring in many of our in favour of independent status. Another
case study sectors reflects the fact that many trend is for at least some producers to in
firms now access skilled (and other) labour at effect ‘commoditise’ their products, making

them more standardised; in some industries in new ways by creative businesses. It may
this may lead to a separation between those be reorganised, repackaged, combined with
offering cheaper mass-produced products and other material in new ways, so as to create
those offering more bespoke ones including new products, to reach new markets, to
associated business services (consultancies in extend product lifetime, or to achieve other
product design and videogames development, commercial and/or creative goals.
for example.)
At one extreme this may involve little more
Partly as a result, IP issues are viewed as than a relatively gestural invocation of a
increasingly important in many creative brand or iconic image in new contexts, as
sectors and as a driver for innovation when a fictional character is used to endorse a
Finally, intellectual property (IP) manoeuvring consumer product.
by competitors, the need to organise IP
agreements with collaborators, and perceived More substantial change may be effected
threats of piracy and unauthorised copying, when texts and narratives are reworked for new
imply that IP issues in innovation are media: it is possible simply to make broadcasts
increasingly important to many creative available for streaming or downloading via the
industries. And IP can act as a driver for Web (or mobile platforms), but there is also a
technological innovation (copy-protection), move to creating value-added content.
or for other types of innovation (for example,
creating attractive non-digital components of In independent television production this
products like packaging, or shifting to licensing can include ‘additional content’ such as cast
arrangements). interviews, outtakes or alternative scenes.
(There are some suggestions from producers
themselves that content innovation here
is being restricted by the risk aversion of
7.2 Types of innovation commissioning bodies and broadcasters.)

Our case studies have identified many Videogames based around characters or
innovations and innovation trajectories in the narratives developed in other media require
creative industries. We classify these under extensive content innovation, with the
a set of headings below, though innovation development of a more complete games world,
activities actually span several categories. tasks and activities for the player, and so on.
It is not surprising that many of these
developments are very much responses to Tie-ins are sought across platforms and media,
the drivers discussed above. But, again, many notably in the games industry. Technical
of the specific examples of innovation are skills are required to ensure suitability in
responses to more than one driver. Thus viral multiple formats, together with skills in editing
marketing is driven by changes in consumption and creation of content. As the scope for
and the new technologies for distribution of extracting further value from creative content
content, while also seizing the opportunities is recognised, so IP issues become more salient;
they provide. firms seek to control how their content is re-
used, and gain awareness of the changing IP
We begin with the two ‘classic’ categories of landscape.
innovation – product and process innovation
– among which several types of innovation B. Product Innovation II – New products,
can be highlighted. We then move on to some new markets, improved quality
types of innovation that do not fit neatly into Improvement in the quality of existing
these categories. In later sub-sections we move products is a feature of practically all
on to consider changes in organisations and industries in an increasingly competitive
business models that may also be considered to world. Creative industries are confronted by
be types of ‘wider innovation’ (as it is reported the particular opportunities and demands
in the Community Innovation Survey – see provided by continual change in media and
Section 2). delivery platforms. A prime example of this
is the increased complexity and realism in
A. Product Innovation I – Repackaging and videogames.
repurposing content
It is common to find that material – especially They also face opportunities and demands
creative content – that has originally been flowing from the greater sophistication of
produced for one specific product is exploited consumers – many products will not be

consumed repeatedly; instead consumers source of tools and techniques for working up
expect a succession of novel or more-or-less creative ideas. (The elaboration of new basic
linked products. Videogames, again, need ideas is often a trigger for the generation of
to supply more complex and multi-faceted new ideas, or extension of the original ones
characters, and to create novel situations and into new products.)
activities for consumers.
New technologies also enable the sharing of
Markets are in any case changing, with an ideas and drafts with colleagues and clients.
ageing population and the maturation of Creative industries are still often reliant on
consumer markets wherein some consumers traditional ways of meeting and sharing ideas
first encountered the creative products in – brainstorming and project meetings using
question when much younger than they are whiteboards, or flipcharts etc. – but collective
now. Many creative businesses are responding workspaces supported by new IT are employed
to the drivers discussed earlier by applying increasingly, especially on large and complex
their capabilities to creation of products for projects.
completely new markets (games for educational
purposes), or for new segments of existing Thus our product design interviewees report
markets (games aimed more at female or very rapid and substantial changes involving
elderly audiences). the introduction of electronic whiteboards and
shared web spaces to support collaboration in
Innovation will reflect changing social and teams. New IT also accelerates and simplifies
economic structures, and this may involve many of the tasks that are required; this
targeting a given product, or a particular makes it possible even for small firms to
product family, at particular segments of a handle more steps in the production chain
heterogeneous and, in many cases, increasingly in-house. (This, in turn, can trigger other
fragmented market. The advertising industry process and organisational innovations; it may 108. Adam Smith famously
discussed ways in which
focuses much of its innovation on the affect product innovation, too. For example, increased specialisation can
development of novel content, for example, designers and independent producers can promote innovation, but
the argument here is that
and on ‘mass customised’ content (tailored achieve greater oversight of larger parts of decreased specialisation
to particular consumers and contexts). The the development and realisation process; thus can do so, too.

consumer experience is targeted, with they may be able to bring their distinctive
much emphasis on developing rich or multi- approaches and creativity to bear on more of
media experiences in its campaigns. For its the creative product.)108
business clients, the industry creates new
tools and services for campaign tracking and Sophisticated project management tools are
consumer targeting etc. that assist clients also being deployed in many creative industries
in understanding consumer behaviours, to support the coordination of time-critical
planning product development and marketing campaigns (in advertising, for example), and
strategies, and evaluating campaigns. (This complex projects (in design, for example).
blends into organisational innovation, as when These tools are believed to result in reduced
the advertising firm moves towards becoming risk of failure, and to permit closer monitoring
a developer and provider of consultancy of projects allowing for more adjustment of
packages/services connected with advertising operations in real-time – thus, in advertising,
strategy.) real-time campaign tracking and evaluation
systems are increasingly common.
C. Process innovation
Contrary to the focus of much of the D. Using users
innovation literature, not all process innovation While concepts such as ‘open innovation’ and
is a matter of technological innovation. But it ‘user-driven innovation’ are often exaggerated
is inescapable that new information technology – after all, who wants to be closed and
is pervasively used in creative industries, unresponsive to users? – changes in the role of
even in those industries where – unlike, say, users in the innovation process are mentioned
videogames – it has not always been a major frequently by creative industry practitioners.
element of their products and processes. It They see this as more than improved process
may not in general be able to generate creative innovation or innovation management; in fact,
ideas – these tend to come from experienced the engagement of users is reshaping consumer
creative professionals or, in some cases, experience, marketing, and other elements of
‘young upstarts’ – but it is used for ‘capturing’ innovation.
information (like video images) that can be
exploited in the creative process, and as a

Moves in this direction are reported in all the again involving different ways of interacting
industries studied, though in product design, with consumers – warrant being seen as a
such engagement is more with business clients specific class of innovation. The internet
than end-consumers (both groups are involved is especially important: an interactive Web
in the case of advertising). presence is vital for most firms.

There are widespread efforts to involve users The advertising industry is profoundly shaped
in various activities – generating new content, by these developments, with the migration
generating ideas for content and other features of advertising into the digital domain being
of products (e.g. interfaces), distributing so pervasive that electronic marketing is now
content (through P2P systems, email, blogs, dominant. Much innovation activity concerns
social networking sites), and promoting moving direct marketing from mail shots to
products (e.g. viral marketing, user groups). email and other online environments (beyond
new content, innovation here can include
The videogames development industry has identifying and characterising target audiences
been sourcing ideas for innovation from more or evading spam filters.). Digital TV may
sophisticated users for some time, and is also require innovative and novel packaging
deeply involved in user and usability testing. of content from the broadcast production
Online games are increasingly being opened up industry.
to user-generated content.
These media developments provide
Broadcasting has moved beyond phone-ins opportunities to reach more diverse and
and letters from listeners, to running message fragmented audiences; they also require
boards where audiences can exchange innovation in the construction of multi-channel
reactions, recommendations and news. and multi-platform campaigns. The videogames
Advertisers use similar interaction to explore industry is a different case, as the delivery of
what brands mean to consumers. traditional games or updates on the internet
is overshadowed by the emergence of online
In their dealings with business clients, the gaming, with scoreboards and real-time
product design industry talks of ‘e-mediated competition features. It is clear that interaction
partnerships’ and ‘client zones’, where there among users has become an important element
can be discussion and co-production of of the games experience.
designs. (One implication noted above, is
that this may mean that clients become more
demanding, requesting more versions and
modifications of designs. It could also allow 7.3 Organisational and business model
partly-formed ideas to be ‘borrowed’ by clients innovation
and used in other ways without attribution.)
Organisational innovation may be hard to
The Web can also be an electronic shop distinguish from the wider evolution of
window – an innovative and rich website businesses, but new models and approaches are
attracts clients in an environment where emerging. In some of the sector case studies,
style, fashion and creativity matters. In the notably product design, the term ‘innovation’
advertising industry, we see parallel trends is connected as much with strategy-driven
such as ‘innovation laboratories’ fostering shifts in business and revenue models as it
co-innovation with business partners. This is with development of new products (even
may mean ‘getting inside a client’s brand though such organisational changes are usually
and values’, but more mundanely, it could portrayed as being highly spontaneous.)
mean engaging more closely with their R&D
and marketing functions. In these industries, A. Out-sourcing and off-shoring
one focus for innovation, then, is upgrading Out-sourcing is particularly common in the
the client interface (and this is linked to more technology-based industries, where
other trajectories of improving relationship codified tasks need to be distributed around
management systems so as to foster closer links the world. In the videogames development
and longer-term relationships with clients.) industry, for instance, out-sourcing to Russia
and India is being driven by cost control and a
E. Delivery innovation and new interfaces requirement to manage production and project
While the delivery of digital products by new cycles more flexibly. Routine operations and
media has elements of product and process functions are thus out-sourced to a global pool
innovation, changes in mode of delivery – of expert labour and specialist companies.

This is made more possible because some But other firms may seize the opportunity to
former ‘craft skills’ have become de-skilled – reduce their dependence on intermediaries,
with increasing specialisation of workers and with videogames developers hoping to rely less
fragmentation of tasks, giving rise to ‘assembly on publishers by moving to self-publishing,
line’ organisation. something made increasingly feasible by
broadband communications, electronic
But with the cost of technology continuing payment mechanisms and digital rights
the fall – and its use becoming easier – some management systems.
aspects of production are being brought
in-house. Independent broadcast producers C. Strategic partnering and leadership
are training staff to use relevant technologies Many business services are reportedly moving
and other elements of the production process. from being arm’s length sub-contractors to a
This can be cost-effective and safer where more proactive role which may even involve
outsourcing is seen as insecure and hard to leadership. Thus advertisers talk of ‘innovation
manage and control. partnering’ and even of leading new product
development for clients, by integrating this
In product design firms, price competition with marketing and advertising functions.
is especially intense. Out-sourcing is part Product design firms similarly aim to engage
of cost-saving, and is associated with some in higher value activities such as brokering
reorganisation of workflows in this industry. (It and strategy, brand and identity consulting.
is hoped by many practitioners that fluidity will Some product designers are also experimenting
eventually return to the depressed market, and with development, marketing and distribution
more creative strategies can then be pursued.) of ‘own products’: this may lead to their
management and orchestration of the set
The advertising industry reports moves towards of businesses involved in creating the final
off-shoring too, but interviewees suggest that product.
this will be limited by client conservativism.
D. Risk, reward, and business models
TV production now involves much location Associated with developments in supply chains
shooting outside the UK to save money and and project leadership are new financial and
exploit tax incentives. These off-shoring profit-sharing arrangements. In the case of
strategies are not usually seen as opportunities large projects, specialised creative firms are
for innovation. But they do highlight the typically paid standard fees. But in other
increasing interdependence of firms as cases, there is an element of risk-sharing.
‘network organisations’, operating as part Independent television producers, for example,
of a constellation of producers involved in expect to recoup their outlay through a share
accomplishing complex projects, sometimes of royalties. Here the risk and reward are
across borders. shared with broadcasters and distributors.
Sharing of risk and reward is also experienced
B. Supply chain repositioning by product design firms.
Successful firms in the creative industries are
liable to reposition themselves in supply chains The volatile environments of many creative
as competition grows and markets change: industries – indeed, the stressed nature of
attempts to lead projects or offer consultancy such industries as product design – naturally
services associated with the work of their encourage different business models. New ways
industry are fairly common. Some advertisers of achieving payback for creative products are
are seeking ‘to climb up the value chain’ and sought. Advertising revenues support broadcast
offer market analysis, brand consultancy and and online content, and are a significant
product line management. element in videogames development. Licensing
fees – including overseas rights – and
Innovation can also be supported where royalties are important for product designers.
freelances and sub-contractors are employed. Subscriptions are increasingly important for
Their management can involve new project videogames, especially in online markets.
management tools. The creative firm may focus
on core capabilities, networking with a set of
strategic partners. This may be a stimulus to
innovation, as among independent producers
who report that they innovate partly to
establish their value as long-term partners to

7.4 Innovation management and projects being undertaken – or it may simply be
innovation systems a case of professionals seeking to retain some
Innovations and their associated pressures
bring substantial challenges to management. B. Formal systems of innovation
While these challenges are widely recognised, management are rare
there is less agreement about how they are There is little evidence of much use of formal
best met. Best practice is still emerging – R&D, even in the more technology-based
though that may be an alien concept in such a industries. Little formal R&D is reported by
diverse and volatile environment. videogames developers, for example, who
may apply the term to work in connection
A. Innovation-related market and business with generic or multi-purpose tools to support
environment research is common in some games development, but not to creative
sectors, but outside advertising is not large- development of specific new products. (Such
scale innovation is perceived as part of problem-led
What creative industries often refer to as development processes, not as flowing from
‘research’ is their semi-organised scanning of more fundamental rethinking of the nature of
their markets. In this they are like most other their products.)
innovative industries, with senior professionals
expected to keep up to date with evolving There is next to no measurement, recording or
trends in the consumer or business markets, evaluation of the expenditure associated with
examining the innovations and strategic what R&D there is. Practitioners are able to
positioning of competitors and similar firms in estimate innovation expenditures, but do so
other industries or countries. without any systematic monitoring. Thus, in
independent production, interviewees suggest
Large firms in some sectors – such as financial that anything between 10 per cent and 60
and retail services – have invested considerably per cent of expenditure is accounted for by
in data-mining systems that enable them to innovation activities – both quite considerable
profile customers and track market trends. Such figures!
an approach appears to be quite uncommon
in the creative industries we studied though, The lower figure represents the technical
perhaps because the firms may be too small end of the business (e.g. preparation of
to afford such exercises, or the complex computer generated imagery – our producers
nature of their products make it difficult to are presumably not responsible for much of
compile standardised data on sales trends. In the new hardware and software here); the
any case, such exercises may be less useful in higher figure more closely corresponds to the
sectors where creative firms are mainly dealing creative end. But such estimates, it should be
directly with business clients rather than final stressed, are not based on formal methods
consumers. for monitoring or evaluating of investment –
and one reason for this is that while there are
A major exception is the advertising industry. deliberate decisions made about innovation,
Here new technology is being employed to often major developments are not a result of
support established approaches to market planning, but of practitioners ‘getting carried
research and environmental scanning. Thus away on projects’.
Web 2.0 and the online interfaces mentioned
earlier are rising to prominence as sources of Most practitioners claim that innovation here
signals. is mainly ad hoc and ‘organic’ and is rarely
planned: though at a strategic level most
Database and data-mining systems provide firms are involved in positioning themselves
tools for identifying and analysing signals for new development (and this affects their
relating to market development and changing recruitment, marketing, and collaborations, for
consumer tastes, profiling types of consumers, example).
and matching brands and products with
lifestyles. But outside advertising, the Interestingly, while the advertising industry
processing of new ideas is largely casual and invests considerable effort in campaign review,
ad hoc. Senior staff filter promising ideas and it too reportedly undertakes little innovation or
present the most promising ones at Board level. R&D evaluation. The only measures of success
This filtering appears to be largely based on appear to be attention in the trade press
tacit knowledge rather than any generic set of and industry awards (though the latter tend
criteria. This may reflect the great diversity of

to reward creativity rather than a financially important. They are also typically responsible
successful campaign). for more organisational forms of innovation,
including exploring new business models.
Some advertisers argue that all campaigns
should have clear objectives from the start, In sectors like independent production,
with metrics agreed by both advertiser and team-based and inter-firm collaborative work
client. They suggest that relevant success, is almost universal, with co-production and
performance, profile and impact metrics would network-based development of programming
be positive for the industry’s confidence and very common. The broadcasting landscape is
credibility. characterised by networks of individuals and
specialist firms possessing complementary skills
Tax relief could drive more formal assessment and expertise.
of innovation activities. There is some
awareness of the R&D tax credit scheme Production of content for multi-platform,
among product designers (less in other multi-channel and multi-device environments
industries) and its relevance to these activities. is expected to lead to an ever greater focus
But few are clear about what counts as R&D on close strategic relationships, and thus the
and how such activity might be demarcated sourcing and management of relevant expertise
from other parts of the development process. will be a major issue.
And there is little understanding of how
the scheme is administered, with a general The social skills and personal relationships
perception that the administrative overheads needed to assemble expert groups and teams
would be too large to contemplate. are key assets for senior professionals in the
industry. They have to achieve buy-in from
The product design sector undertakes some relevant stakeholders and motivation from
R&D-like development of products on behalf employees to undertake new projects.
of clients (and indeed in some respects it
is very close to the R&D services sector). Similar issues arise in other industries. In
Problem-solving and development on behalf advertising, innovation activity is typically
of clients may attract the innovation tag. led by a ‘project champion’ (usually a head
Where such activity is undertaken on behalf of Business Group or a manager with relevant
of a designer’s own business, it is unlikely to interest and contacts with suppliers of
be perceived as innovation. Creative industries complementary assets or skills). He or she is
may paradoxically be inclined to see innovation responsible for assembling a team with relevant
as unremarkable, and thus not always worth capabilities and skills for a given project.
Few agencies appear to operate permanent
Perhaps this is why there are few creative innovation teams; the experience of being
businesses with dedicated R&D or innovation recruited into new project teams and being
budgets. Innovation is funded mainly removed from regular duties can benefit
from specific projects for clients; and few the individuals involved. Their established
business clients are willing to support much approaches and thinking may be challenged,
experimentation. Advertising agencies and they must integrate their individual
invest in software development for market creativity with the tools and disciplines
research, data-mining, profiling and project involved in innovation projects. (There
management/delivery – but this is rarely are few immediate incentives provided for
perceived as innovation investment either. being innovative, though there are obvious
career benefits if the individual is credited
Accordingly, innovation management itself adequately.)
is rarely identified as a discrete role. Instead
it is a part of the job description of all senior More formal knowledge management systems
professionals: they are expected to be the are being introduced in some quarters. One
source of creative ideas, or at least their common feature of such systems is their
conduit into the business. They generate ideas, role as repositories of past accomplishment
co-develop projects and innovative solutions (making them very useful for repurposing,
with clients and business partners, and scan the as discussed above). They are not generally
environment for ideas to borrow. They establish used to monitor the competition and they
and manage project teams; in some sectors currently have limited use in the production of
with complex projects and many partners, new creative ideas, though this may change if
project management skills become very knowledge management systems are integrated

more closely with ‘client zone’ and ‘innovation
laboratory’ systems (assuming intellectual
property issues can be resolved). More informal
mechanisms such as brainstorming, and
interchange within product teams, remain vital.
Apprenticeship within these teams is relatively
informal: explicit mentoring schemes are
relatively rare in the creative industries studied

Practitioners often complain that there are

insufficient resources to bring many of their
creative ideas to fruition (or even to explore
their feasibility in more depth). There is no
shortage of creative ideas, but there are
constraints – regulatory ones, conservative
clients, pressure of time and resource issues.

Intellectual property management is

increasingly recognised as a key element of
strategy, across all four creative industries
studied. Formal approaches are adopted
here, as opposed to most other aspects of
innovation management. One reason for
the new awareness is the emergence of new
aspects of IP concerned with new technology
developments in particular. Such issues as the
repurposing and use of content from other
property right holders, the delivery of content
through new, non-geography-based media,
and the growing importance of branding,
require new approaches. The videogames
development industry (like the software,
film and music sectors) is among those most
concerned with intellectual property issues,
because of the ease of copying not just the
underlying ideas, but the creative product

Part 8: Re-examining innovation in the creative industries
in the light of the sector case studies

The case studies reveal considerable variety real-time as they are making the game moves).
in the challenges faced by different creative Such a version of a game may also offer scope
industries, but there is also a great deal of for new forms of organisation of innovation, as
commonality. One striking factor is the wide user inputs are welcomed into creating aspects
range of opportunities and demands associated of the game world.
with new IT and digitisation in all sectors,
including the emergence of new collaborators
and competitors, and new modes of
collaboration and competition. Other common 8.1 A framework for understanding
factors include the increasing sophistication innovations
of consumers and demands from business
clients and the growing size and complexity of We can develop a new conceptual
projects (even with product design, where firms framework for understanding innovation in
have on average become smaller). the creative industries, linking innovations
to specific business processes
All industries are affected by ongoing The range of innovations we have identified
transformations in markets and business forces us to look beyond the diamond model
environments, and the creative industries are of Figure 1. One way in which they vary,
no exception. Indeed, the creative industries’ of course, is in their technology content,
emphasis on knowledge-intensive work and the which Figure 1 captures. But another
‘experience’ dimensions of products may make important differentiating feature relates
them exemplary. to the specific business processes that the
innovations concern. Indeed, innovations can
Many of the innovation activities of creative be categorised in terms of the various areas
businesses are likely to remain hidden from of the firm’s business processes where they
innovation researchers and policymakers are located – though in the case of creative
Our sector case study evidence suggests industries (and many other industries with a
that the range of innovations encountered heavy service content) we need to extend the
in creative industries goes well beyond the conventional set of business processes, so as to
types, and the processes, of innovation that include those involving consumer experience
are emphasised in most innovation studies, and co-production activities.
statistics, and policy approaches. Often the
innovations encountered span multiple areas, Such a listing of sites relating innovation to
and organisational, process, technological different business processes includes the
and consumer experience innovations may following categories (grouped into a set of
be combined (and perhaps even be in overlapping areas of innovation practice, in the
collision in some cases). An online version Olympian model presented in Figure 2):
of a game, for instance, may involve new
technology (broadband communications), 1. General administrative activities and
processes (required to manage multiplayer financial management. The innovations
environments), and user experiences (players in featured here – office automation and
different locations communicating by voice in financial control systems – are likely

to be very similar across firms in many areas. Innovations may also involve less
sectors, with differences among firms technological novelty, such as various types
being influenced by issues of firm size, the of season ticket and membership scheme.
range of branches or sites at which work is
undertaken. 8. Marketing and customer relationship
management. There are likely to be
2. Business model. Innovations may involve many innovations common across creative
how finance and profits are derived. For industries and many other service industries
instance, publications and websites may in this area. But specialised innovation
be funded through advertising revenues as approaches may reflect consumer or
opposed to payment from readers. business client requirements, and the
interactive nature of many creative
3. Value chain location and positioning. products: few other industries feature ‘fan
What parts of the creative product are clubs’, for instance.
being produced and processed by the
firm; and what role is taken in terms of 9. Content of product. The content is
leadership or other role in the chain. For the core material which is consumed to
instance, innovation may relate to strategies produce the desired experience: the text,
for ‘moving up the value chain’ or taking imagery, and other symbolic substance
responsibility for fewer or lesser elements of that usually constitutes the main object of
production. consumption. Innovations can range from
the creation of completely new genres of
4. Communications. With suppliers, content through to reframing of familiar
collaborators, supply chain partners, etc. content within a new context (e.g. a new
While this will relate closely to value chain production of a drama or piece of music).
109. In the diamond model position, tools and techniques for relating
this was presented in
terms of the ‘cultural to partners, and for managing these 10. Performance and production processes.
concept’ behind a new relationships, can be sites for innovation of The product is generated through creative
creative product. Neither
this terminology nor that various kinds. work, often in the form of a performance
of ‘content’ (or even by artists, actors, musicians, etc. – though
‘symbolic content’) is
completely satisfactory. 5. Internal communications. And the this performance may be recorded and/
management of human resources and or consumed immediately (in which case
work organisation within the enterprise. process and product overlap considerably).
Approaches ranging from knowledge In the case of material artefacts, the
management systems to ways of production process may involve craft work
maintaining contact with staff in the field or some more manufacturing-like activity.
and new training systems are examples of Innovations in the supporting technology
innovation here. and in the organisation of creative work are
6. Back-office/backstage production
processes. These are processes in 11. Product format. The creative product has
which the product is designed, scripted, a particular format and character depending
rehearsed, prototyped, etc.; they vary on the sorts of media and performance that
considerably according to the type of it involves. Innovations can involve new
industry: the activities can be heavily types of product (such as new media like
dependent on skilled or unskilled labour, DVDs) and improved features of existing
or on technology of various kinds. The products.
processes may even be rendered visible
as part of the consumer experience. 12. Delivery of product. How information
Innovation can involve the application of content, or the physical medium for such
new technologies or procedures to such content, reaches the consumer (or how
preparatory work. the venue for performance and display is
constituted). Much service innovation has
7. Transactions. Innovation may centre concerned delivery, with electronic delivery
on the process of payment for access to of information services and technological
product. E-commerce and systems for support for conventional performances
online bookings and reservations, and being particularly important. The creation
loyalty cards, for example, are innovations of new venues, the repurposing of existing
in this area, and may be more or less venues (perhaps by introducing live music
closely tied to marketing and related to a restaurant), the restructuring of venues

to provide new dimensions to the consumer this. Moreover, the consumer experience
experience, are all options for innovation. may be determined by interactions among
consumers. Co-production is an important
13. User interface with product. How the feature of many creative (and other
consumer engages with the product, knowledge-intensive) services, and much
their points of access to content and attention has been attracted by recent
functionality. For some creative industries, innovations collectively labelled Web 2.0,
the interface may be electronic (cf. Point where users supply much of the content to
14 below), but may also involve creative websites. Such models may be developed
facilities and premises such as cinemas, well beyond ‘social networking’ websites, as
theatres or galleries. Innovation can evidenced by the popular facilities offered
involve decisions about which facilities by Amazon or the BBC for their users to add
are created and used, as well as how they their own reviews or comment to the views
are configured and rendered appropriate and information provided by other users.
settings for the experience in question.
Where we deal with physical media such 15. User capabilities. The area in the
as TVs, PCs, phones, or even print media, ‘User Experience’ circle is also a site of
there is a more restricted sense of interface innovation, for instance in mobile phones
reflecting the types of control and entry that show live TV, and perhaps in the
points presented. development of consumer skills and
tastes required to secure full benefit from
14. User interaction. In part the scope for creative products. Typically innovations
user interaction is determined by interfaces here lie beyond the creative firm’s business
(Point 13 above). But creative products processes, and are undertaken by users
can also reflect consumer inputs beyond themselves (however, they can involve

Figure 2: Sites of innovation in the creative industries

Creative firm Production & Product


6. Back-office/ 9. Content of
back stage product
5. Internal
production (cultural 11. Product format
1. General communications,
processes, concept etc.) (’cultural product’,
administration management
& financial of HR & work design process performance
management organization 10. Performance and features of product)
production processes

2. Business 14. User interaction, including supply

7. Transactions & configuration of content
lease etc.) 13. User interface
3. Value chain 12. Delivery with product
location of product

8. Marketing and
4. Communications with customer
15. User capabilities &
suppliers, collaborators, relationship
media (e.g.
supply chain partners etc. management
consumer electronics)

Communications User experience

suppliers of consumer technologies, rather providing more pleasant, sophisticated, or
than players from the creative industries). simplified interactions and symbolic material.

This list is presented with specific relevance Each of these categories is associated with its
to creative industries. But the categories are own types of professional skill and knowledge,
relevant to a wide range of industries (though and many innovations require the innovator to
terminology may need to vary across sectors). be able to combine distinctive skill sets.
It will be apparent that some of the areas
for innovation are ones where a creative firm Technological innovation has been
would have to rely upon other industries to pervasively important in the creative
help set standards, and to make their own industries, and if anything is becoming
complementary innovations, if the new product more so
is to find a market. Other areas are ones where Technological innovation has traditionally been
there is much more scope to go it alone with a at the centre of most innovation thinking.
new idea. Such innovation is certainly pervasive across
the creative industries studied. If anything it is
Major innovations may well involve action becoming more important, with the ongoing
and novelty across several of these sites developments in the diffusion, capacity and
Indeed, major innovation undertakings will usability of IT, creating both opportunities
often include the introduction of a whole and challenges for firms. Key technological
series of individual creative products, as developments across our case study sectors
when we see tie-ins between a film, a book, a include new tools to: simulate and represent
videogame, a set of toys, a website – or even designs; control the production of radio and TV
a series of such tie-ins. Creative sub-sectors programmes; develop and assess information
like cinema are increasingly dominated by such on consumers to be targeted by advertising
110. This also appears as a multi-media products, with their own supply campaigns; or create and archive content for
challenge to firms that are
not necessarily regarded chains, business models, creative product videogames.
as part of the creative development, and user experiences. This
industries. For example,
mobile telephone network adds a level of complexity to the analysis of The ‘creators’ respond to changes in
operators have struggled (commercially) major creative products.110 consumer media and platforms with new
to manage the complexities
associated with the products and product elements. They also
introduction of music and Innovation at any of these sites may take respond to new user practices – such as social
video downloads.
various forms, as has already been suggested. networking websites – by recognising the
Returning to our earlier discussion of new opportunities they provide for interaction
innovation theories, we note that an innovation with – and information about – clients and
at any of these sites is liable to involve a competitors.
mixture of radical or incremental:
Social and organisational change is also
• Technological development – where the frequently – though not always – associated
innovation is associated with the creation or with technological change
adoption of new or improved technologies New ways of consuming products, and evolving
public or client concerns and motivations can
• Organisational change – where the impel content-related innovation, which can
innovation is associated with the creation or also be inspired by industry factors (evolution
adoption of new organisational forms and of genres, for example) and experience in other
practices of work (including the ‘work’ of media and other parts of the world.
consumers and business clients)
The changes are also often associated with
Furthermore, though the most evident site new organisational strategies. In some cases
at which this will be encountered is the user firms have downsized, so that their lead staff
experience associated with the creative can concentrate on creative activities rather
product, more radical or incremental innovation than having to manage large teams; in other
may also involve: cases new technology has permitted some
disintermediation so that the creative firm
• New creative content and/or aesthetic can undertake more of the production activity
design – where the innovation is associated itself.
with efforts to shape the experience of users
(who may be business partners or employers, The general drift has been toward specialisation
in addition to consumers and clients) by – for example, specialised contributors
of sound, artwork, even plot concepts to

videogames production. But there is also set these out, together with the challenges
some integration of previously specialised they might present to improving mapping and
activities – for instance, as marketing, market measurement of innovation:
communications, and customer relations
are brought together in some new media 1. Innovation that is the same or similar to
advertising activities, with extensive use of activities that are measured by traditional
databases and information-gathering tools. indicators, but which is excluded from
measurement. Much R&D-like activity is
There is considerable ferment in business underway in creative industries, but is not
strategies and organisational arrangements. described as such. It is often organised in
Economic uncertainty and concerns about different ways from those familiar in high-
globalisation (off-shoring of professional work, tech industries – dedicated departments or
establishing bases near emerging markets) professionals are uncommon; the activity
contribute to this further. is usually built into product or project
development, or carried out in the course
Increasing emphasis on the experience of work that is underway. The exclusion of
economy means that changes in symbolic market research, for example, from R&D
content will be increasingly recognised as surveys and tax credit systems necessarily
an important source of innovation pushes this activity into the category of
Change in symbolic content, and the associated hidden innovation. Innovation surveys have 111. One of the biggest
headaches may actually be
experiences created for users, has been given failed to cover many creative industries. one of the improvements
much less attention as an issue for innovation Improving measurement systems to that requires least
thinking and research than have technological deal with these shortcomings should be of instruments – the
and organisational developments. However, relatively straightforward.111 extension of surveys to
cover more small firms.
the appearance in management discourse of Statisticians are reluctant
terminology such as ‘experience economy’ 2. Innovation without a major scientific/ to take this on, because of
the burden on the firms,
and ‘customer service focus’ indicates that technological basis, such as innovation in and the relatively low
industrial practitioners are sensing the organisational forms or business models. incidence of substantial
innovation activity on the
importance of such forms of innovation. Our We have noted many cases of such part of many traditional
study can be seen as a further recognition of innovations. For instance, shifting to an small firms. With high
innovation levels in many
its importance. Innovation studies need to advertising-financed model as opposed creative industries, the
grapple with these topics, even if they are less to directly paying for creative content is latter argument has less
force, but the problems
tangible than technological innovations. novel in many creative industries – even of burdening industry are
if it has been used by commercial radio real ones that may require
creative solutions.
and television and free newspapers for
some time. For such innovation to be
8.2 What does this say about ‘hidden encompassed by innovation studies, we
innovation’? need satisfactory ways to differentiate ‘new’
activities (whether new to the firm, the
‘Hidden innovation’ was originally introduced industry, or the world at large) from those
as a description of types of innovation and that are simply replicating or ‘rolling out’
innovation process that were not being given activities already instituted in other markets
sufficient credit in established innovation (e.g. extending the geographical reach of
studies, policies and indicators. Studies the market, without introducing changes
of service industries had recognised that in products or using novel distribution or
service innovation rarely involves formal R&D marketing tools).
expenditure and management, and was rarely
reflected in such measures of innovative 3. Innovation created from the novel
outputs as number of patents. combination of existing technologies and
processes. ‘Repurposing’ of content is a
Where the focus is the creative industries, central feature of many creative industries.
the issue is especially acute, but in its This can involve new combinations of
Hidden Innovation report, NESTA (2007) technologies and processes, with the
also demonstrates that hidden innovations content itself designed, produced,
are apparent in activities as wide-ranging as organised, stored, and delivered through
oil and gas exploration and prison services. technological systems and social processes
Four different sorts of hidden innovation (such as those associated with rights
are identified by NESTA and each of these management).
resonates with the case studies examined in our
research on the creative industries. We briefly

The delivery of creative content via the or inspiring imitators and successors, would
internet or mobile phones is a good require us to go beyond examining the types
example. Embedding one’s advertisements of innovation. As well as understanding
in a videogame – perhaps, displaying virtual innovation management, we would need
posters in the backdrop of car races – is to explore what these innovations mean for
an innovation that not only spans two of the creative businesses and their consumers.
our industries, but involves reworking the Further work is undoubtedly needed on such
advertising content to fit seamlessly into case study material. But already it is possible to
the virtual environment, and to convey the draw some conclusions from the results of this
required messages. study.

Such innovation could be addressed

in innovation surveys by appropriate
questions; the demarcation of novel
practices from more limited customisation
will require careful guidance and
formulation of questions.

4. Locally-developed, small-scale innovations

that take place ‘under the radar’ and are
therefore unrecognised or accounted for.
Practitioners in the creative industries
recognise that most of their new projects
demand innovative problem-solving. They
also accept that many of their innovative
solutions are not formally recognised,
‘captured’ or reproduced.

Of course, some major innovations

developed on-the-job are recognised
as important ones. And some types of
technical development (for example useful
lines of code in videogames) may be
systematically archived for re-use.

But many other new developments are

never revisited. Since this is problematic for
the firms that might be able to profit from
them – ‘knowledge management’ systems
to support innovation are reportedly not
yet very successful – these are likely to
be hidden innovations that will be hard
systematically to measure by conventional
means. Perhaps the most effective
approach would be to ask the professional
workers themselves how far they are
engaged in non-routine problem solving.

The scale of hidden innovation in the creative

industries seems to be great, and the forms
it takes appear to be extraordinarily diverse.
The framework we have sketched out above
provides one way of thinking through the
issues raised in our case studies, though
it cannot do complete justice to the rich
descriptions that these have provided us with.

For instance, assessing the value of innovations

– the extent to which they are transforming
experiences and behaviours, creating revenue,

Part 9: Conclusions and recommendations
112. This will be managed by
NESTA in partnership with
the Office for National
Statistics (ONS), the
Design Council, the CBI
and others. See DIUS
(2008) White Paper
‘Innovation Nation’
published in March 2008
and online (with much
other relevant material) at
113. Many important
technological innovations
have been examined by
such surveys – for instance
there were numerous
studies in the 1980s
examining the diffusion of
microelectronics, PCs and
robotics. Less common,
but equally feasible, are
studies of diffusion of
organisational practices
such as just-in-time and
This report has explored hidden innovation in assessment of innovation activities within quality control procedures.
One approach to survey
a set of creative industries. It has identified individual firms (and, perhaps, within business studies might involve:
a great deal of innovative activity that is networks); and for survey work looking at the (1) identifying what are
more or less emergent
poorly represented in statistics and metrics, diffusion and elaboration of specific types of and familiar innovations
in policy discussions, and in the management innovation.113 in technological,
organisational, and
literature. In these conclusions we address content areas; and (2)
the implications of our work for innovation 9.1.1 The sampling frame of CIS-type enquiring as to whether
and for how long a period
measurement and policy more generally. surveys needs to be extended to capture the organisation has
more creative sectors been employing such
innovations, and how
We particularly emphasise measurement The sample of firms covered should be routine they are in their
issues because our study is about finding expanded to include more creative industries. products and processes.
ways to bring hidden innovation to the In particular, SIC division 92 is liable to include 114. Less likely to include
creative industries, but still
surface to better understand its nature. several innovation-active creative industries. liable to be innovation-
This understanding should help underpin This should be a priority for further extension active, are SIC division
90 (Sewage and Refuse
development of policy and management of CIS.114 Disposal, Sanitation and
practice. We can also learn a great deal from Similar Activities), SIS
division 91 (Activities of
examining such evolving practice, since it Many creative firms are microbusinesses; a Membership Organisations
is responding to – and sometimes helping complete understanding of the innovation n.e.c.), and SIC division 93
(Other Service Activities,
to create – the transformations that are performance of the creative industries including hairdressing,
reshaping the nature of innovation, innovation requires information about these smaller funeral activities, physical
well-being activities,
management, and innovation policy. firms to be collected astrology, pet care and
Survey questions would need to be revised to escort services).
115. Surveys of small business
be rendered more appropriate for smaller firms, such as IFF (2008),
and the concern about overloading small firms which do enquire about
innovation (along with
9.1 Innovation surveys and with official requests still needs to be taken other topics), should
measurement seriously: smaller firms need shorter forms.115 be encouraged to use
questions that are more
comparable with CIS
We have seen that the creative industries, and Given that relatively few firms in creative formulations.
the types of innovation they undertake, remain industries have yet been captured in the 116. Again, this is relevant
in the context of the
under-represented in statistics and conceptual sampling frames of CIS surveys, one solution Innovation Index proposed
analyses. The evidence base for policy and might be to organise specialised surveys to in DIUS (2008).
117. As noted, it is common
practice in the field is thus impoverished. That examine creative firms and sectors – especially to interpret these two
this is recognised in the UK is demonstrated the ‘creators’ – rather than extending CIS to questions as having a
technology focus; in all
by DIUS’s recent announcement that it will a large sample of small firms, or to weight likelihood many – though
pilot a new Innovation Index in 2009, aiming its sampling toward creative industries. Such probably not all –
respondents will also make
to include more hidden innovation (including surveys could be a test bed for new questions this assumption.
creative industries) activity, and to put a fuller aimed to capture more of the essence of
system in place by 2010.112 creative industry innovation.116

Our focus here is mainly on improvements that 9.1.2 Questions on types of innovation
can be introduced in the framework of CIS- The CIS4 questions cover a wide range of
type instruments. There is also scope for better innovations, but at the outset the survey asks

about product and process innovations. Several ‘Olympian’ model of business process sites
issues arise with these questions, and several for innovation.
ways of extending them can be envisaged:
CIS4 asks about ‘implementation’ of new or
• The first is the likely exclusion of much significantly changed:
non-technological product and process
innovation, when respondents interpret • Corporate strategies: changes in Business
118. Another approach these questions as ruling this out.117 For Model may be captured here, though
would be to ask how
far the most important
instance, new service encounters and creative this could equally be eliciting answers
innovations undertaken experiences, or improved user-friendliness, about, for example, changes in value chain
by the firm involve new
technology and how
might reflect new work practices – such as location.
far new organisational how visitors to a theatre are welcomed. One
practices and structures
(for instance, scale
partial solution would be to ask respondents • Advanced management techniques within
ranging from ‘not at all’ to whether these innovations are: (a) mainly the enterprise: does this rule out supply
technological; (b) mainly a matter of chain management? Communications
119. Another issue is the
exclusion of changes of organisational practices and routines; or (c) a with suppliers, collaborators and supply
a purely cosmetic nature. mixture of the two.118 chain partners are important opportunities
As implied by Stoneman’s
(2007) comments about for innovation which may be missed
design and product • In the creative industries, these questions here. Internal communications may be
differentiation, there
may be more or less may well fail to elicit responses where captured, though they might feature
important creative the innovation reflects Stoneman’s ‘soft’ under another heading. Knowledge
innovations excluded by
this specification, because innovations – those involving creative management is specified as an example of
the distinction between content, aesthetic design features and advanced management techniques, and
cosmetic change and
aesthetic content will need packaging of products.119 A solution here this could include innovation management
to be spelled out more would be to explicitly differentiate within approaches.
120. Here and elsewhere,
product innovations between those primarily
work would be needed affecting the cultural content or user • Organisational structure: this may capture
to establish a clear experience, and those affecting product changes in the management of human
terminology that can be
interpreted in consistent functionality, reliability, quality, prices etc.120 resources and the organisation of work
ways across the range within the enterprise, along with those
of creative and other
sectors. This will require • Innovations concerning delivery and user in general administrative activities and
pilot studies, of course. interactions may be excluded, even when financial management, and in the spatial or
In such piloting, an effort
should be made to obtain they have a high technology component. business practice organisation of the firm.
information as to exactly At present we have no way of knowing
what innovations are
being referred to. This how far they are regarded as product or • Marketing concepts or strategies: this is
will assist in developing process innovations, and how far they are fairly precise, though a range of contacts
effective questions and
understanding the nature simply hidden. The definitions of product with customers and clients (e.g. ‘after-
of the changes being and process innovation could be extended sales’ service, and issues to do with co-
121. A slightly different to make it clear where these aspects of production of the creative experience) may
approach would be to innovation are to be included. Better still, not be seen as relevant here.
ask about innovation in
‘product services’, those though imposing more of a burden on
services that support respondents, specific questions could be The only way to be sure that a survey
acquisition or use of the
main product of the firm. added asking about innovations concerning is sampling the wider range of types of
122. Again a question could the delivery of goods and services, innovation that have been discussed above is
ask about the extent to transactional activities, and relations with explicitly to ask about these different types of
which the most important
of these innovations users.121 innovation. Additional questions addressing
involve new technology the various sites of innovation could be
and/or new organisational
practices and structures • With process innovations, the question introduced, following closely the format of
(using a rating scale is liable to evoke responses about the the existing CIS questions (“in the last 3 years
ranging from ‘not at all’ to
‘extensively’). immediate production of the good or have you introduced…?”).122 Questions as to
service, obscuring back-office and backstage how far these innovations are technological or
innovations such as those involving otherwise could be appended to these.
communications, administrative, marketing
and financial processes. The questions on Asking more questions would increase the size
‘wider innovation’ do address some of these of the survey form, but it is difficult to see
topics (marketing in particular is singled how this could be avoided in a CIS examining a
out). But these questions are isolated from wider range of types of innovation.
the more general innovation questions in
CIS4, and do not clearly address the whole A major shift in survey approach might be one
range of activities described earlier in our solution, for example by shifting more of the

focus to the innovations rather than keeping it uncovering many creative industry (or services)
on the firm. For instance, respondents might innovations. Consumer co-production is hard to
be asked to identify their top three innovations detect; the sourcing of creative ideas in artistic
(which could be defined as those that have and cultural communities or in-practice is hard
been most important in terms of turnover, to determine. These are important topics if
market share, profitability, or some similar we are to have a fuller understanding of the
criterion – even cultural impact). Then, a set evolving role of experience-based industries
of questions in the survey would explore these and services in the economy.
innovations – what their nature is, how they
were managed, what sources of information
were used and collaborations undertaken, and
so on. Other questions, for example, those 9.2 Innovation policy and management
about innovation activities and expenditures,
could remain as more general questions NESTA has produced many studies on hidden 123. The survey shifts from
early concern about
concerning the orientation of the enterprise as innovation.124 On the basis of the present whether any product/
a whole. study, we would argue that there is a strong process innovation has
been undertaken, to
case for the generation of more (and more asking about more general
9.1.3 Other questions detailed) evidence about the role of policy innovation activities and
relationships. It is likely,
In the present CIS survey, the questions about in fostering, impeding, or changing the but far from inevitable,
novelty and origins of the innovations, sources trajectories of innovation in the creative that the latter questions
should be answered in
of information or collaboration are likely to industries. Accordingly, we suggest that this terms of the specific
be answered with the ‘technological’ product is a key area for further research: it would innovation(s) discussed
at the outset. It is less
and process innovations considered at the be useful to undertake such research on a likely that they will be
outset.123 References to R&D, acquisition of comparative basis, exploring the topic by answered in terms of ‘wider
equipment and software, and the like, do seem examining what influences the policies in
124. See for example the
to be aimed at more technological innovations; different countries and regions are having. ‘Hidden Innovation’ report
though some of those dealing with sources at: http://www.nesta.
of information and collaboration could serve Our case study research has found that and_research/highlights/
fairly well for non-technological innovation some creative professionals believe that hidden_innovation.aspx
125. These programmes may
too. One solution would be to ask similar government support programmes have been not have had a specific
sets of questions about technological and helpful for at least some creative industries. focus on innovation.
organisational innovations. We also encounter complaints about the 126. This is discussed more
in Miles (2007). If tax
difficulties encountered when such support is credits were effective,
It would certainly be useful to explore run down or terminated abruptly.125 Targeted we might find that firms
put more innovation-
the activities undertaken and sources of programmes – such as those that support related investment into
information used for the less technological digital content sectors in regional clusters, or R&D and less into other
forms of activity. If there
ideas and innovations. The precise questions promote increased use of industrial design – is a real problem of
employed in this part of the survey are are generally viewed positively. But the R&D the creative industries
failing to take sufficient
frequently worded in a fashion inappropriate tax credit scheme is not sufficiently open or account of technological
for creative industries (for example, discussing accessible to the creative industries.126 opportunities, this would
be welcome; if it leads
‘knowledge’ rather than ‘ideas’). to a diversion of effort
The creative industries are highly innovative away from potentially
more effective forms of
Likewise, questions about the impacts of and they are at the forefront of major creative innovation, it is
innovation do not provide much insight into technological changes, which are spurring new problematic.

consumer experience (this may be wrapped creative content, consumer experiences and
up into ‘improved quality’) or ways in which organisational change. The big challenge for
consumers are involved in its creation. both policymakers and managers is to keep
abreast of emerging practices here.
New questions should be developed concerning
the different impacts that the innovations may Managers also need to know what strategies
have on consumers and on the innovating are being adopted by other creative firms
firm itself. Such questions should explore how (and in other relevant sectors) to discover
firms themselves understand the impact of opportunities for new approaches in their own
their innovations (for instance, assessing their firms and networks.
cultural importance, by looking at the extent to
which ideas are being imitated or built upon). But more widely, there is a body of work
emerging in the Knowledge-Intensive Business
More generally, we are concerned that the Service (KIBS) arena that focuses on the co-
question about sources of information (and production of services between service firms
that concerning collaboration) is inadequate for and their clients. This is particularly relevant to

creative firms with business clients, since the innovation (frequently requiring new hybrid
studies in this literature propose that firms can skill combinations), and for various efforts to
improve co-production by management of their promote them through, for example:
relationships with clients.
• Alignment of R&D and existing innovation
Thus Bettencourt et al. (2002) note that programmes
making sure that deadlines are met, and that
problems are diagnosed early on, demands • Supporting consultancy and benchmarking
traditional project management skills. But co- for creative firms, sectors and industry and
production relationships also require project professional associations
leadership skills in areas such as conflict
resolution, team building, and effective and • Organising studentships (e.g. CASE
honest communication. By encouraging and collaborative studentship awards),
rewarding client behaviours there can be more placements and joint seminars to support
effective and innovative co-production, more mutual learning across creative industries
open communication with shared problem (and more widely)
solving and greater personal dedication of staff
members. Top managers are responsible for • Tax credits for innovation support activity
selection and adequate resourcing of leaders (beyond conventional R&D)
with such abilities.
Some of these suggestions will clearly require
For policymakers, the task is even more considerable effort to persuade relevant
demanding: to understand these new or hidden stakeholders that these are appropriate areas
practices; to ensure that existing policies for policy intervention. More research is
are not putting unnecessary barriers in their certainly needed, as always. But we hope that
127. Not all forms of innovation way,127 and to design policies that can more the material presented in this report will itself
are welcome, of course,
for reasons of safety actively foster creative practices and modes provide persuasive evidence concerning the
and security, intellectual of organisation characteristic of the creative nature and importance of creative industry
property protection and
free markets, and so on. industries. innovation.

Policymakers may thus need to undertake their

own benchmarking of policies that have been
adopted across different countries and regions
to support creative industry innovation (and
to support similar innovation across industry
generally). Some of these policies may be
targeted at specific creative industries. Our
case studies and survey analysis suggest that
innovation patterns vary across industries
– and thus that instruments may also need
to be adapted to industrial specificities (and
those associated with firm size and value chain
location). One valuable way of understanding
the implications of these specificities for
innovation policy would be to review the
impact of current R&D and innovation policies
on various creative industries and types of firm.

More generally, recognition of the different

types of innovation that are underway in
the creative industries, and in production of
creative goods and services in all sectors, would
be an important step towards raising awareness
of these varied activities and products. This
could be supported by highlighting best
practice and better targeted awards schemes.

Beyond this, there may be scope for

enhancing training and competence-building
measures related to the variety of types of

Appendix A: Revealing the hidden: orientation to the

Introduction – fresh evidence studies – the rationale for selection of cases

appears in Table 1 below.
One of the key aims of this study has been to
generate new, focused and detailed evidence
to assist in the process of developing a better
understanding of the dimensions (types), Case development
sites, management and extent of innovation
in the creative industries. Whilst secondary Construction of cases progressed throughout
materials can assist in the generation of useful the first ten months of the project and was
overviews and insights – and such materials undertaken primarily via deskwork, interviews
were used extensively in building industry and workshops. The videogames development
‘maps’ and sector descriptions – it was believed and product design industries received most
important from the outset that the Hidden attention in the early months of the study,
Innovation research should build from the and the broadcast production and advertising
bottom up, generating a solid base of primary sectors in the later part of the research.
evidence from which to derive answers to Deskwork and literature review was undertaken
questions that have received little previous to facilitate mapping of the history, trajectory,
attention. A second important goal has been structure and economy of the industries, and
to build a detailed picture of innovation in the focused interviews were used to generate
creative industries that accurately reflects the detailed insights into the innovation activities
experiences and perspectives of practitioners in (and orientation to innovation) of selected
the domain. firms in the target sectors.

A case-based approach Approach to innovation

Given the breadth of activities that are included Noting that the term ‘innovation’ is used to
in the creative industries – and the exploratory cover activities (the innovation processes) and
nature of the study – it was determined at products (the novel things or activities), our
an early stage that the research would be interim report (Green, Miles and Rutter, 2007)
undertaken via the development of detailed distinguishes between three broad facets of
case studies in a sample of creative industries. innovation phenomena:
Rather than aiming to provide a comprehensive
overview of the creative industries, it was 1. The Type of Innovation being undertaken –
recognised that the purposes of the study the focus of the novelty.
would be served best by the development of
rich insights into the specifics of approaches 2. The Management of Innovation – the
to innovation and innovation activities in a process whereby new ideas are generated,
circumscribed range of fields. Four sectors were selected, and materialised into new
selected as targets for the construction of case practices and products, which may then

Table 1: Selection of creative industry cases

Case sector Rationale for selection

Advertising Largest of the UK’s creative industries in terms of employment and income. ICT- and
technology-dependent – characterised by a need to marry creativity with technological
capabilities and knowledge of markets and socio-cultural trends.

Broadcasting Second largest UK creative sector. Strong presence of a public service provider (thus
offering potential for illumination of public sector innovation). Shift to digital TV is an
exceptional development, on top of the generic ‘challenge of the internet’. A major
and complex industry, so innovation of many forms can be expected (technological &
infrastructural, content, organisational, delivery, concept etc.). Interaction of various
classes of innovation (and triggers and consequences of innovation across forms) are of
particular interest.

Videogame Games development is a recognised UK strength (though UK performance in games

Development publishing and hardware development is weak). A cyclical industry with inherent risk
and massive front-end investment in product/content development. Some innovation
shaped by developments in consoles/hardware.

128. Given the aim of examining Product Design The UK remains the major (but challenged) global hub for industrial design. Product
the ‘hiddenness’ of
innovation in the creative Design is characterised by its blending of technology and aesthetic knowledge and
industries, the project team its complex links to industrial clients. Design is often perceived as a core support to
was eager to ensure that innovation in client companies. A few large and medium sized companies but a ‘long
companies with a strong tail’ of small and micro businesses.
record of innovation were
included in the study.
The rationale here is that
if the innovation activity
and investment of a highly
innovative firm is hidden,
then we can have some
confidence that similar
activities in less innovative be tested, diffused, implemented and support agencies. These encounters were useful
counterparts will also be configured, and so on. in developing a general picture of innovation
concealed. Innovative
companies were identified environments, activities and drivers in each
via canvassing of expert 3. The Innovation Context – the wider industry and for generating data on (and
opinion, snowball sampling
and tracking of recipients organisation of innovation in the systemic contacts with) the more innovative companies
of industry awards for framework within which the firm-level in each domain. Interview programmes were
novelty and performance
management processes take place. then broadened to include discussions with
senior executives and practitioners in firms with
These three facets are related to a fourth a strong innovation pedigree.128 See Appendix
category: B for a full list of the firms and organisations
that took part in the interview programme.
4. The Agent of Innovation: the organisation
or individual(s) responsible for the new idea
and its translation into practice.
Sector workshops
The facets of innovation are interrelated: the
nature of the innovating organisation is liable The sector workshops for product design and
to determine (and in turn be influenced by) videogames development were designed to
the type of innovations undertaken, the way allow the research team to present its initial
these are managed, and the wider systemic findings – based on desk and interview work –
context(s) in which it is located, for instance. and to invite reflection and commentary from
Figure 3 depicts the linkages between these a small group of industry commentators and
four elements, which are discussed at more practitioners (and relevant academics). These
length in the interim report. workshops – each attracting around twelve
participants – proved valuable in generating
additional insights and in nuancing early
outputs. They were also particularly useful in
Interview programme generating ideas with respect to how it might
be possible to account for and raise the profile
Interviewing in each industry commenced with of the innovation that takes place in the
meetings with industry experts, journalists creative industries under study.
and representatives of Trade Associations and

Figure 3: Facets of innovation

1. Type of
– innovation

4. Innovating
agent – innovative

2. Process of 3. Context of
innovation innovation
– innovation – innovation
management system
characteristics characteristics

Analysis of statistical datasets Conceptualising and theorising creative

Analysis of available statistics was perceived to
offer a valuable complement to the qualitative Review of creativity and creative industries
case work. The research team engaged in a literatures was undertaken at two levels: first,
survey of available innovation metrics, surveys as noted above, to assist in the development of
and relevant statistical sources in order to an overview of activities, trends and key issues
evaluate their usefulness in recording and in each of the case sectors (and thus underpin
reflecting the innovation effort and investment collection, marshalling and presentation
that is present in the creative industries. The of primary evidence); second, to facilitate
review included an analysis of the Creative development of a thorough understanding of
Businesses Research Report (ICM/NESTA), UK the ways in which the creative industries (and
Innovation Scoreboard (BERR), sector-specific activities therein) have been conceptualised
studies (undertaken for example, by Design and theorised. Though the focus in this second
Council and Screen Digest), data contained in strand was clearly targeted at unpacking
commercial company databases (for example the portrayal of innovation in the creative
FAME), and crucially, the Department for industries and understanding the ways in
Innovation, Universities and Skills’ Community which such innovation has been modelled, the
Innovation Survey. review also aimed to grapple with wider issues
relating to the creation and consumption of
cultural products, and with the steps, phases
and relationships through which such products
come into being.

Appendix B: Case study interviews129

Advertising and Broadcasting (Independent Video Game Development

Communications Production Sector)

Access/Access Digital 4:2:2 Rebellion Games

Good Technology/Naked Comms Baby Cow ELSPA

129. The authors wish to Gyro International Diplomat Films BERR

express their gratitude
to all of the individuals
and firms that gave Hartley Stone Hat Trick North Blitz Games
so generously of their
time in agreeing to Madhouse Kudos Develop
provide information
and commentary in
connection with this McCann Erickson Libra Television Evolution
Hidden Innovation study.
The organisations that MV Media/MV Solutions RED DESQ
requested anonymity are
excluded from this list: all
others are included in the Proximity (The Dreamery) Wall to Wall Games Audit
The Communications Practice IBM

Vertex NWDA


Whizz Games


Panchromos Satherley Design Prospect Design

JAB Design Consultancy Ltd Alto-Design Factory Design

Raft Consultancy Sublime Design Group Smallfry

Frazer Designers Ltd Product First Pearson Matthews

Birkbeck College Bolton Associates ASA Designers

Kinneir Dufort The Product Group PDD

Alloy Total Product Design Tangerine Therefore

David Morgan Associates Lucid Innovation Design Connect

British Design Innovation/ Form Foundry DBA

Design 2020

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Published: July 2008