Innovate and Disrupt: new challenges and opportunities in the Creative Industries — by Robert DeFillippi

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The explosion of technology in the last few decades has caused fundamental disruptions within the creative industries, leading to both excitement and fear for their future. Professor Robert DeFillippi argues that it is vitally important that creative organizations understand the drivers of disruption and devise strategies for coping with these so that threats may be turned into opportunities.

No set of industries has experienced more disruptive change than the so-called creative industries (e.g. publishing, television, film making, design, video games) whose basic technologies and methods of creating and distributing their products and services and monetizing their investments have been disrupted by the revolution in digital technology and the rise of a net savvy generation of culture consumers who demand more choice, more access and a lower price (free is preferable) than any previous generation.

Disruption as commonly understood refers to a transformation in an industry or sector often linked to technology-based innovation in products, services and/or business models. These disruptive innovations typically create business threats and opportunities not nominally predictable from past historical experience and thus require incumbent participants to engage in strategic behavior and organizational practices that represent a departure from past successful and familiar strategies and practices. The academic study of disruption has roots in the academic research and theory of disruption promulgated by Harvard Business School professor Clayton Christensen. The notion of disruption, however, has attracted a wider community of both scholars and practitioners who have recognized the emergence of disruptive phenomena in a widening range of industries and institutional sectors.

A number of factors are driving disruption in industries. These pose both great challenges and potential opportunities for organizations seeking to thrive in this age of disruption.

 

Hardware and software for digital content creation and editing

During the past thirty years digital content hardware have evolved from analog (physical film media) based to digital (electronic image sensor) devices which has fostered an innovation trajectory of smaller, lighter, more mobile and easier to use devices. Associated with these hardware technology developments has been the improved visual quality and lower costs associated with employing software to edit digital content. These trends have also increased the participation of amateurs in the creative content production arena since there are fewer cost based barriers to entry and individual creative artists can self-manage the content production and editing processes.

 

Digital platforms for content aggregation and distribution

The Internet and its associated Web 2.0 tools for communications, connectivity (community) and commerce are putting the aggregator (e.g. Google, Amazon) at the center of content distribution. Moreover, the most web savvy aggregators are developing digital platforms that can collect and distribute a wide range of digital content from a variety of sources, both internal and external. These platforms are developing APIs (Application Programming Interfaces) that allow both digital content suppliers and buyers to conduct their respective transactions with the aggregator with ease.

 

Participatory culture

A major development in a growing number of creative industries is the rise of a participatory culture in which media content consumers are engaging with media products and services as content evaluators, content producers and content co-creators. A key consideration in participatory culture is the altered sensibilities of a new generation of media consumers who are digital natives and accustomed since childhood to actively participate in both the consumption and creation of their media experiences. Moreover, this is a generation that is accustomed to sharing their media creations and media experiences with others online.

fillippi book

‘International Perspectives on Business Innovation and Disruption in the Creative Industries’ – ed. Robert DeFillippi and Patrik Wikström

Crowd sourcing content production and content funding

Technology advances in digital communication and web-based connectivity have made it possible for any organization or individual to broadcast a call for content and to receive this content and assess, select and aggregate that content for subsequent dissemination to prospective users of the content. Crowdsourcing has been employed in a range of creative industries to both access content and to edit that content. Examples include fashion design, filmmaking, photography, television content and video advertising. Crowd sourced content widens the search for content beyond well known and established content contributors within creative industries and thus creates opportunities for new entrants seeking recognition in a crowded and often elite dominated field of creative endeavor.

Crowd funding is a new form of venture financing by creative industry entrepreneurs. Typically, the cultural entrepreneur posts an internet based call for voluntary financial contribution on a crowd funding web platform which in turn links that entrepreneur funding seeker with potentially interested parties willing to pledge relatively small individual cash contribution to the crowd funded project within the stipulated time period of the campaign. The fund seeker indicates in the call an overall financial fund raising goal for the period of the campaign. Crowd funding contributors typically receive some small gift or recognition but not equity ownership in the projects they fund. The crowd funding market has grown extremely quickly with hundreds of websites offering platforms for crowd funding projects. Two high-profile crowd funding websites Kickstarter and IndieGoGo are illustrative.

 

 

Collapsing industry boundaries

As the boundaries previously separating various creative industry sectors collapse, it becomes challenging for creative firms to decide against whom to compete and with whom to collaborate. Evidence from the Japanese film industry suggests the increasing use of film production consortia consisting of participating companies spanning multiple industries. Some observers suggest that the value chain of independent creative content production is evolving toward an ecosystem in which previous substitute content providers and competitors collaborate, including TV, film and video, the music industry, Internet Service Providers (like Orange, BT and Virgin), investors, computer games and other sectors. The prevalence and role of such strategic alliances and partnerships to collectively cope with the competitive challenges of diffuse creative industry boundaries is illustrative of a transformational industry disruption.

 

Globalization

As digital creative content production technology becomes smaller, less expensive and more mobile, the reliance on centralized fixed production facilities (e.g. Hollywood film and TV production studios) decreases. This creates opportunities for a dispersed, global production of creative content. Moreover, media consumers are increasingly a global audience with niche interests that are not limited by geographic boundaries. Lastly, the increasing costs of so called “blockbuster strategy” in a wide range of creative content industries have heightened the search for globally appealing creative offerings that can reach the large audiences not confined to a single country.

 

Towards the Future

The creative industries are some of most dynamic and the fastest growing sectors in many economies, and the study of these industries affords insights for how we understand the current economic transformation towards knowledge-based economies more broadly. The transformation toward knowledge-based economies has been foreshadowed by the transformation of creative industries such as publishing, film, video, photography, music, etc. Certain sectors of the creative industries have evolved into experimenting sites for involving users and consumers in the development of new products, services and even new markets.

Disruptive innovations are reshaping industry boundaries and challenging conventional business models and business practices of organizations within a wide range of industries and institutional sectors worldwide. The technology of the Internet, social forces driven by social media, globalization shifts in market demand and innovation supply capabilities, the development of new portable digital devices with greater capabilities and smaller size, and the decreasing costs of new information technology: all these are coming together and creating a tsunami that is changing the way we live and work.

 

defillippi_rdax_101x135Robert DeFillippi is Professor of Strategy and International Business at Sawyer Business School, University of Suffolk and Co-Director of the Center for Innovation and Change Leadership. His research interests include the role of knowledge in projects and project organization of innovation in high technology, traditional manufacturing and creative services industries.  He is an editor of the new book International Perspectives on Business Innovation and Disruption in the Creative Industries, published by Edward Elgar.

 

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  1. Creative Industries in the News | Iva's CI Portfolio - October 28, 2015

    […] DeFillippi, R. (2014). Innovate and Disrupt: new challenges and opportunities in the Creative Industries — by Robert DeFillippi. Edward Elgar Publishing BLOG. Retrieved 27 October 2015, from http://elgarblog.com/2014/09/18/innovate-and-disrupt-new-challenges-and-opportunities-in-the-creativ… […]

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