The new C word: Creativity

Dr. Terry Cutler

Originally published: Business Review Weekly July 2002

I'm currently in the process of moving house. The worst thing with moving is always the question of what to do with the library. It's the time for a stocktake and radical pruning. The easiest section of my collection to deal with is all my books on business and technology. So few of them seem worth keeping for re-reading! My list of "must keep" is quite short.

One book I have just read has already been added to this "must keep" list. It is Richard Florida's book, The Rise of the Creative Class.

Florida's background is in regional economic development, and he gained some notoriety over the past few years with his reports for cities like Pittsburgh on what creates competitive advantage in a high tech era. In a nutshell, Florida's detailed studies showed a compelling correlation between the location of high tech activity and concentrations of skilled knowledge workers, and certain key social and cultural characteristics of these places. Innovative "hot spots" tend to be multicultural, have high levels of immigrants, score highly on a "bohemian index" of artistic activity, possess rich lifestyle amenity and attract significant gay populations.

(As an aside, I remember vividly one briefing I did in a provincial capital where my audience of academics and public servants appeared profoundly shocked when I outlined Florida's findings about some of the essential ingredients for economic regeneration).

Florida's work on the geography of innovation and creativity is important for two reasons.

First, it has important lessons for the way cities and regions think about economic development strategies and investment attraction. In a knowledge economy, investment, firms and high value industrial activity will follow people, not vice versa. The message is that we need to focus on strategies for attracting and retaining smart people. We need to focus on the leading indicator of net people and skill flows, not foreign direct investment as a lagging indicator. (This does not, of itself, mean that we should be paranoid about people exports that create global networks of connections and international linkages. What matters is whether these outflow people will ever have the incentive to return, enriched and empowered by their international experience).

If services and human capital are the focus of future economies (rather than natural resources and land values), then creativity and innovation are core assets, and education, lifestyle amenities and the arts become essential founding investments in that future capital stock. Places rich in social and cultural capital become powerful magnets for valuable knowledge workers. Florida produces compelling empirical evidence that creativity and knowledge flourish in communities which embrace difference and heterogeneity.

Second, Florida's work, particularly this recent book, enlarges our thinking about human capital and the changing nature of labour markets.

It is some thirty years since Peter Drucker first introduced the notion of a knowledge worker. Fast forward to 1991 when Robert Reich, who went on to become Labor Secretary under President Clinton, put this phenomenon of knowledge workers into the context of an overall theory of emerging labour markets. His important book, The Work of Nations, drew attention to the growing divergence between the location-specific employment of routine production workers and personal service workers on the one hand, and on the other, the new elite knowledge workers who are globally mobile and footloose. Reich's descriptor of knowledge workers as "symbolic analysts" was, unfortunately, not very catchy.

Now, a decade later, Richard Florida has expanded Reich's work and talks about knowledge workers as a new "creative class". Florida provides a new and important addition to our understanding of emerging labour market structures, which is why this book is a must read for anyone in the business of marshalling people assets.

We are all starting to pay a lot of attention to the question of how we capture the output of knowledge workers within the frameworks of intellectual property law, but we have paid far less attention to the human capital which produces this output. How do we nurture a growing body of creative workers, the engines of wealth creation within the dominant industries of the 21st century? How do we create innovate enterprises which attract and nurture people with that inner spark that makes the difference? How do we build a critical mass of such people within our Australian cities?

These are the questions that Florida's book helps up think about. It is one thing to talk about Intellectual Property, it is another to understand those people who generate this Intellectual Property.

Creativity is one of those nebulous concepts like innovation or reconciliation which it is easy to get people to endorse in theory; it is quite another matter to put in the hard yards of working out how to do it. Unfortunately Florida has not been able to resist the slick apparatus of the emerging United States formula for the marketing of business management ideas, so we can all consult the web site at and also complete the personal creativity quiz.

Richard Florida, The Rise of the Creative Class, Basic Books, New York 2002