Juha Oksanen, Olli Kuusisto, Maria Lima-Toivanen, Maria Mäntylä, Mika Naumanen, Nina Rilla, Anna Sachinopoulou, Katri Valkokari In search of Finnish creative economy ecosystems and their development needs – study based on international benchmarking October 2018 Publication series of the Government’s analysis, assessment and research activities 50/2018 DESCRIPTION Publisher and release date Prime Minister´s Office, 8.10.2018 Authors Oksanen Juha, Kuusisto Olli, Lima-Toivanen Maria, Mäntylä Maria, Naumanen Mika, Rilla Nina, Sachinopoulou Anna, Valkokari Katri Title of publication In search of Finnish creative economy ecosystems and their develop- ment needs – study based on international benchmarking Name of series and number of publication Publications of the Government´s analysis, assessment and research activities 50/2018 Keywords Creative economy, ecosystem, creative skills Other parts of publication/ other produced versions Release date October, 2018 Pages 155 Language English Abstract This report reviews the status of domestic creative economy ecosystem development, benchmarks cre- ative economy focused policies and models in the United Kingdom, the Netherlands and the Republic of Korea (South Korea), and gives recommendations on how to support cross-sectoral use of creative competencies in ecosystem development in Finland. In the review of creative economy in Finland, crea- tive activities are grouped into four categories (creative and cultural products, creative content, creative services, creative environments and platforms) that differ from each other in terms of value creation logic, easiness of scalability and recycling of intangible value, and the role of interaction and communi- ties in the value creation process. This categorisation has been applied in updating the creative sector fact sheets. International benchmarking shows that official recognition, champions and organisations are needed to establish a common voice for creative sector actors. These have had an important enabling role for pro- active policies supporting the creative sectors’ development. Strengthening of creative activities and connecting them firmly to wider regional and national networks across the economy are on policy agenda in all the three benchmarking countries. Supporting cross-sectoral collaboration and wider use of creative competencies calls for a clear national policy recognising pivotal role of regional hubs, atten- tion to fostering practise oriented business skills in initial education, and flexible arrangements for ac- cessing complementary expertise and facilities. To improve the availability and relevance of data on creative activity, we propose to study and pilot the use of textual data and text mining techniques to complement official statistics on economic activities, and systemise data collection on publicly funded projects. For ecosystem development, the public-private partnership model based growth engine initia- tives of Business Finland could offer a platform for cross-sectoral collaboration and for connecting re- gional hubs with national and global ecosystems. This publication is part of the implementation of the Government Plan for Analysis, Assessment and Research for 2018 (tietokayttoon.fi/en). The content is the responsibility of the producers of the information and does not necessarily repre- sent the view of the Government. KUVAILULEHTI Julkaisija ja julkaisuaika Valtioneuvoston kanslia, 8.10.2018 Tekijät Oksanen Juha, Kuusisto Olli, Lima-Toivanen Maria, Mäntylä Maria, Naumanen Mika, Rilla Nina, Sachinopoulou Anna, Valkokari Katri Julkaisun nimi Luovan talouden ekosysteemikehityksen tila ja kehitystarpeet– Kan- sainväliseen vertailuun perustuva selvitys Julkaisusarjan nimi ja numero Valtioneuvoston selvitys- ja tutkimustoiminnan julkaisusarja 50/2018 Asiasanat luova talous, ekosysteemit, luova osaaminen Julkaisun osat/ muut tuotetut versiot Julkaisuaika Lokakuu, 2018 Sivuja 155 Kieli englanti Tiivistelmä Tämän selvityksen tavoitteena on ollut tuottaa uudelleen jäsennelty ja päivitetty versio luovien alojen ekosysteemitiedoista, kartoittaa luovan talouden kehittämismalleja Britanniassa, Hollannissa ja Etelä- Koreassa, ja tehdä ehdotuksia luovan osaamisen monialaisen hyödyntämisen ja ekosysteemikehityk- sen edistämiseksi sekä päätöksenteossa tarvittavan luovaa taloutta koskevan tietopohjan vahvista- miseksi. Luova toiminta on selvityksessä jaettu neljään luokkaan; taide ja kulttuuri, luovat sisällöt, luovat palvelut, sekä luovat ympäristöt ja alustat. Nämä eroavat toisistaan arvonluonnin logiikan, toiminnan skaalautuvuuden ja aineettoman arvon kierrätettävyyden osalta. Myös vuorovaikutuksen ja yhteisöjen rooli arvon luomisessa ja tuottamisessa vaihtelee luovien toimintojen välillä. Luokittelua on sovellettu luovien alojen ekosysteemitietojen päivityksessä. Kansainvälinen vertailu osoittaa, että luovien alojen yhteisen äänen vahvistamisessa on suuri merkitys toiminnan tunnistamisella päätöksenteossa, alan aktiivisilla puolestapuhujilla (champions) ja yhteisillä organisaatioilla. Luovan osaamisen ja luovan toiminnan vahvistaminen ja kytkeminen alueellisiin ja kan- sallisiin verkostoihin toimialoja poikkileikkaavasti on huomioitu osana talouden kehittämistä kaikissa ver- tailumaissa. Luovan osaamisen laaja-alainen hyödyntäminen ja monialaisen yhteistyön kehittyminen edellyttää alueellisten osaamiskeskittymien roolin huomioivaa selkeää kansallisen tason politiikkaa, käy- tännön liiketoimintaosaamista sekä monialaista yhteistyötä tukevan toimintakulttuurin edelleen vahvista- mista perusopinnoissa, ja joustavia malleja täydentävän asiantuntemuksen ja muiden resurssien hyö- dyntämiseksi luovien alojen kehittämistoiminnassa. Business Finlandin kasvumoottori-aloite voisi toimia monialaisen yhteistyön alustana ja kytkeä alueelliset osaamiskeskittymät laajempiin ekosysteemeihin kansallisesti ja globaalisti. Luovien alojen toimintaa koskevan tiedon saatavuuden ja edustavuuden pa- rantamiseksi selvityksessä ehdotetaan, että virallisten tilastoaineistojen täydentämiseksi selvitetään ja pilotoidaan tekstipohjaisten aineistojen ja tekstinlouhinnan mahdollisuudet. Lisäksi suositellaan julkista tukea saaneiden hankkeiden seurantatiedon systematisointia mm. käytettävien luokitusten osalta. Tämä julkaisu on toteutettu osana valtioneuvoston vuoden 2018 selvitys- ja tutkimussuunnitelman toimeenpanoa (www.tietokayttoon.fi). Julkaisun sisällöstä vastaavat tiedon tuottajat, eikä tekstisisältö välttämättä edusta valtioneuvoston näkemystä. PRESENTATIONSBLAD Utgivare & utgivningsdatum Statsrådets kansli, 8.10.2018 Författare Oksanen Juha, Kuusisto Olli, Lima-Toivanen Maria, Mäntylä Maria, Naumanen Mika, Rilla Nina, Sachinopoulou Anna, Valkokari Katri Publikationens namn Ekosystemutvecklingens tillstånd i den kreativa ekonomin och dess ut- vecklingsbehov - en studie baserad på internationell jämförelse Publikationsseriens namn och nummer Publikationsserie för statsrådets utrednings- och forskningsverksamhet 50/2018 Nyckelord Kreativ ekonomi, ekosystem, kreativt kunnande Publikationens delar /andra producerade versioner Utgivningsdatum Oktober, 2018 Sidantal 155 Språk engelska Sammandrag Syftet med denna studie är att kartlägga status av ekosystemutveckling i den kreativa ekonomin och att uppdatera information om kreativa branscher i Finland, samt att utföra en jämförelse av utvecklingsåt- gärder av den kreativa ekonomin i Storbritannien, Nederländerna och Sydkorea och att ge rekommen- dationer om hur man stärker tvärsektoriell användning av kreativ kompetens och ekosystemutveckling i Finland. Den kreativa verksamheten delas in i fyra kategorier: konst och kultur, kreativa innehåll, krea- tiva tjänster, kreativa miljöer och plattformar. Kategorierna skiljer sig åt gällande logik för värdeskap- ande, verksamhetens skalbarhet och möjlighet att cirkulera immateriella värden. Rollen av samspel när det gäller att skapa och producera värde varierar också mellan de kreativa aktiviteterna inom olika kate- gorier. Denna klassificering har använts för att uppdatera de så kallade faktabladen för de kreativa branscherna i Finland. Enligt en internationell jämförelse, behövs officiellt erkännande, förespråkare (champions) och organi- sationer för att skapa en gemensam röst för den kreativa sektorns aktörer. Dessa har haft en viktig, möjliggörande roll för den proaktiva politik som stöder den kreativa sektorns utveckling till exempel i Storbritannien och Holland. Att stärka de kreativa aktiviteterna och ansluta dem till bredare regionala och nationella nätverk finns på agenda i alla tre länder. Ett tvärsektoriellt samarbete och bredare an- vändning av kreativa kompetenser förutsätter 1) en tydlig nationell politik som erkänner de regionala kompetenscentrans viktiga roll, 2) vidare främjande av praxisnära affärskompetenser och färdigheter som krävs för företagande inom grundutbildningen och 3) flexibla modeller för användningen av kom- plementära kompetenser och andra resurser i utveckling och innovation inom de kreativa branscherna. Business Finlands PPP-baserade tillväxtmotorinitiativ kan fungera som en plattform för tvärsektoriellt samarbete och länka regionala kompetenscentra till bredare ekosystem nationellt och globalt. För att förbättra representativiteten av information om verksamheten inom de kreativa branscherna, föreslår rapporten att potentialen för textbaserat material och text mining utforskas och testas. Dessutom rekom- menderas att datainsamlingen om offentligt finansierade projekt systematiseras. Den här publikation är en del i genomförandet av statsrådets utrednings- och forskningsplan för 2018 (tietokayttoon.fi/sv). De som producerar informationen ansvarar för innehållet i publikationen. Textinnehållet återspeglar inte nödvändigtvis statsrådets ståndpunkt CONTENTS 1. Introduction ................................................................................................................... 2 1.1. Background of the study ......................................................................................... 2 1.2. Creativity and economic development .................................................................... 3 1.3. Creative industries, creative economy and intangible value creation in Finland – Fast rewind ............................................................................................................. 4 1.4. Systemic transition framework ................................................................................ 7 2. Creative economy ecosystems and fact sheet updates ........................................... 9 2.1. Introduction ............................................................................................................. 9 2.2. Updated information on creative economy ecosystems in Finland ...................... 14 Creative and cultural products – key figures ................................................................. 20 Creative content – key figures ...................................................................................... 22 Creative services – key figures ..................................................................................... 24 Creative environments and platforms – key figures ...................................................... 26 2.3. Stakeholder insights on creative economy opportunities and challenges ............ 28 2.4. Cross-sectoral collaboration in publicly funded projects....................................... 31 3. International benchmarking ....................................................................................... 35 3.1. Introduction ........................................................................................................... 35 3.2. The United Kingdom ............................................................................................. 36 3.3. The Netherlands ................................................................................................... 63 3.4. South Korea .......................................................................................................... 76 3.5. Lessons learned from the country benchmarks .................................................... 89 4. Recommendations ...................................................................................................... 95 4.1. Recommendations for supporting ecosystem development in a cross-sectoral context .................................................................................................................. 96 4.2. Recommendations for developing information collection on creative areas and activities .............................................................................................................. 103 5. References and Background material .................................................................... 109 APPENDIX 1. Statistical analysis of Finnish creative industries ................................. 114 APPENDIX 2. Stakeholder insights on creative economy opportunities and challenges .................................................................................................................. 147 APPENDIX 3. Participants of the stakeholder workshop organised 16.3.2018........... 153 APPENDIX 4. List of interviewed domestic stakeholders ............................................. 154 APPENDIX 5. List of interviewed experts in the benchmark countries ....................... 155 2 1. INTRODUCTION 1.1. Background of the study This study has three objectives: • Review the status of creative economy ecosystems development in Finland and pre- sent the results in an updated and newly arranged version of the creative sector Fact Sheets (original publication Facts Sheets Luovat alat 2010). • Benchmark models and policies used to advance creative economy development in the United Kingdom (UK), the Netherlands and the Republic of Korea (South Korea) – international forerunners in the design and implementation of proactive policies in favour of creative economy. • Identify and recommend actions supporting ecosystem development and embedding of creative competencies cross-sectorally in Finland1, and make recommendations for the improvement of systematic monitoring and assessment of creative economy development. Implementation and methods used The study consists of three work packages based on the above objectives. First work pack- age (WP1) focuses on updating the creative economy Fact Sheets, the second (WP2) com- prises the benchmark study of cross-sectoral policies and models in creative areas in three countries (United Kingdom, Netherlands and South Korea), and the third (WP3) outlines rec- ommendations supporting ecosystem development in and beyond creative areas in Finland. In reviewing and updating the fact sheets (WP1), the sectors covered were re-grouped based on selected elements and characteristics derived using different data gathering and analysis methods. 1. Review of existing literature and the 2010 Facts Sheets provided the background information for the fact sheet update and preliminary understanding of the constitu- ent elements of creative economy in Finland. Our statistical analysis of creative growth potential replicates the method applied by NESTA2 in the United Kingdom and draws on official industry and occupation statistics. More detailed statistical in- formation is provided in Appendix 1. 2. A brainstorming workshop with key stakeholders was organised to discuss and de- termine definitions of creative economy areas and identify ecosystems and their key players with the most significant growth opportunities. VTT’s online co-development tool Owela (https://owela.fi/) provided a platform for continued discussion with 1 The original objective was to develop a proposal for organisation and coordination of a creative economy ecosystem initiative as part of the activities of the newly established Business Finland and regional growth services under preparation in the context of regional reform. However, it was noticed during the process that creative domains conventionally clustered under the ‘creative industries’ label constitute a heterogeneous group of branches, which should be taken into account in support actions and policies. Therefore, proposals drafted in the report are based on the categorisation of creative sectors presented in Chapter 2 of this report. Furthermore, it seems that the individual branches also need branch-specific actions even if there are some com- monalities under the four main areas. 2 National Endowment for Science, Technology and the Arts http://pienyrityskeskus.aalto.fi/fi/midcom-serveattachmentguid-1e51322e19327ce132211e59e7b238047f535ba35ba/factsheets_luovat_alat_2010_final.pdf https://owela.fi/ 3 stakeholders and for gathering insights on the potential and challenges of cross- sectoral collaboration between creative and other sectors. 3. In-depth interviews were carried out with 22 interviewees well versed in creative economy development in Finland. Appendices 3 and 4 lists the national interview- ees and workshop participants. Key results of the review with analysis of the main strengths and weaknesses of ecosystem development in creative areas in Finland are presented in Chapter 2. Benchmarking of international practises (WP2) in the selected three countries focused on policies and arrangements that promote cross-sectoral collaboration, so-called crosso- vers, in harnessing potential in intangible capital and creative competencies across the economy. The emphasis on crossovers is well-substantiated taking into account that crea- tive competencies can be utilised and contribute to the competitiveness of the economy broadly beyond those sectors conventionally understood as creative. Comparison of interna- tional practices is based on a review of relevant recent literature as well as telephone and skype interviews with identified experts in the benchmark countries (see Appendix 5 for list of international interviewees). In addition, local experts involved as subcontractors have contributed to the analysis in the case of the Netherlands and the UK. Chapter 3 of this re- port consists of country reports and a summary of the main results of the international benchmark. In drafting policy recommendations (WP3), attention was paid to opportunities to advance ecosystem development and crossovers within and beyond creative sectors. The recom- mendations should be interpreted against rearranged categories of creative sectors and dif- ferent stages of ecosystem development. Creative sectors are heterogeneous groups of ac- tors and differ from each other with respect to logic of action, immediate growth potential and opportunities for crossovers with other sectors of the economy. This variety needs to be taken into account in policies aiming to support ecosystem development and wider use of the potential that creative competencies hold for growth and internationalisation – one size does not fit all when it comes to policies targeting creative sectors. The recommendations for systematic monitoring and assessment of creative economy de- velopment are based on a thorough analysis of existing official statistics on sectors and oc- cupations in WP1, insights provided by the international benchmarks, and assessment of cross-sector collaboration at the project level in the case of three domestic funding instru- ments. Cross-sector collaboration and demand for creative competencies are analysed for CreMa funding 2012-2017, the ESF-funded Creative Expertise programme, and the Innova- tion Voucher of Tekes/Business Finland. The recommendations are presented in Chapter 4. 1.2. Creativity and economic development Policy discussions on the importance of creativity for economic growth and development in different territorial frames have proliferated in Finland and abroad since the turn of the mil- lennium. The rise of interest in the relationship between creativity and economy connects with the recent emphasis on innovation and differentiation as sources of competitive ad- vantage in the context of increasing international competition. Indeed, creativity and innova- tion are essentially part of the same process; creativity can be defined as an ability to com- bine meanings and elements in novel ways, whereas innovation refers to the ability and 4 courage to transform creative ideas into new products, services and practices (adopted from the definitions given in the final report of the working group preparing a creativity strategy for Finland; Yksitoista askelta luovaan Suomeen, 2006). Drivers of the ‘creative turn’ listed in literature include on-going changes in industrial mass production and international division of labour, which call for new sources of sustainable growth and added value in (developed) economies. These changes are linked to a long- term shift in economic structure as, in relation to GDP, share of services has continued to grow whereas share of industry producing tangible products has been in decline. Techno- logical development, particularly ICT as a generic technology and the way it enables ever- growing digitalisation of goods and services, is changing society rapidly. Digitalisation chal- lenges existing practices while simultaneously creating new opportunities for immaterial value creation. Changes in lifestyle and values are also important drivers impacting con- sumer perceptions and preferences and accentuating demand for intangible services and experiences. Furthermore, understanding of the concept of creativity has been widening over time. (e.g. Canadian Heritage, 2013) Several interrelated and partly overlapping constructs have been introduced to describe and explain the key role of creativity in economic and territorial development. Approaches focus- ing on the sectoral dimension include, for example, cultural industries (UNESCO/GACD, 2006), creative industries (Creative Industries Task Force, 1998), copyright industries (WIPO, 2003) and content industries. More encompassing constructs circulating in the dis- course include experience economy (Pine and Gilmore, 1998), creative economy (Howkins, 2001), and creative class (Florida, 2002), to name a few. In Finnish policy making, the contribution of creativity to economic development has been framed especially through three terms; creative industries, creative economy and intangible value creation. 1.3. Creative industries, creative economy and intangible value creation in Finland – Fast rewind At the national level, the Ministry of Education and Culture (OKM) and the Ministry of Eco- nomic Affairs and Employment (TEM and its predecessor KTM) are the principal public bod- ies involved in the planning and implementation of policies connected with creativity and the integration of creative competencies in business and society in Finland. Starting from the late 1990s, the ministries have developed policies in close cooperation following a joint agenda. Since the early 2000s, the two ministries have published a number of strategic policy docu- ments, reviews and assessments dealing with the promotion of creativity and wider use of creative competencies in the Finnish economy. As part of its mandate, the Ministry of Edu- cation and Culture has focused on outlining and implementing policies supporting arts and culture and cultural export. Allocation of funding for product and service development in this 5 area is an important element of the support provided.3 National implementation of the Euro- pean Social Fund programme is another policy instrument used to support expertise and in- novation within the cultural and creative sectors and in cooperation with other sectors.4 The Ministry of Education and Culture has also been active in strengthening the knowledge base regarding the development of the cultural industries (development of so-called culture satel- lite accounts in cooperation with Statistics Finland). The Ministry of Economic Affairs and Employment together with the agencies under its ad- ministration have focused on supporting business development and promoting companies in search of new sources of value creation. A part of this support is funding for companies’ re- search and development activities allocated by the Finnish Funding Agency for Innovation - Tekes (now operating as Business Finland after merging with Finpro in 2018). Nationally co- ordinated regional development programmes (e.g. AKO and KOKO programmes) have also provided channels to advance and tap into creative potential in business development and value creation. Figure 1 presents a selection of documents published by the two ministries over the past twelve years. In addition to those listed here, several other reviews and reports with specific recommendations have been prepared at the national level regarding, for example, public funding and its suitability for firms in creative industries, export of creative products and ser- vices, and increasing use of design expertise in business, public sector and society.5 Figure 1. Policy reports published by the Ministry of Education and Culture and the Ministry of Eco- nomic Affairs and Employment 2006-2018. 3 The Ministry of Education and Culture allocates funding for the development of ideas into concepts, pilot projects, prototypes and demos in the form of DigiDemo, CreaDemo and CreMA subsidies, which are operated by the Promotion Centre for Audiovisual Culture AVEK. 4 During the current programming period 2014-2020 the Ministry of Education and Culture and the Ministry of Economic Affairs and Employment are jointly coordinating the implementation of a Creative Expertise programme aimed at advancing the integration and use of creative potential across sec- tors. 5 Funding is in focus for instance in ’Julkinen rahoitus luovien alojen yrityksissä’ by Ramboll Management Consulting in 2013 and ‘Luova raha. Näkökul- mia luovien alojen rahoitukseen’ published in 2011 in context of creative economy strategic initiative administered by the Ministry of Economy and Em- ployment. Reports on export include e.g. the project report of ‘Luova vienti’ (Creative export) project in 2011. Interim review of Design Finland programme assessed progress of the programme in 2017. 6 Our literature review shows that the policy focus in Finland has shifted gradually from more narrowly defined ‘creative industries’ towards the integration and use of creative competen- cies across the economy (‘creative economy’) and the broader context of intangible value creation. Concurrently with this evolution towards intangible value co-creation, new con- cepts have emerged: information society, bioeconomy, cleantech economy, circular econ- omy, doughnut economics, platform and sharing economy are all referring to system-level changes in society and economy and the significant need to understand new competitive advantages (systemic transition is discussed in the next section). The dynamics of change reverberates and have impact on modes of production, distribution and consumption. In the early 2000s, in line with the international discussion, the concepts ‘creative industries’ and ‘creative economy’ were adopted in Finnish policy making to describe, analyse and make actionable the relationship between creativity and economic activities including ex- ports. The emergence of the sector-focused ‘creative industries’ concept was linked with the awareness that the economic importance of sectors deemed creative was growing. In com- parison, the ‘creative economy’ as a more extensive idea emphasised the potential contribu- tion of creativity and creative capabilities to economic development irrespective of sectors. This would take place through a cross-sectoral approach integrating the creative sectors’ of- ferings and competencies with the activities of other public and private sector actors. From this perspective, creative industries and creative economy focused policy making has had a twofold aim: to advance activities within the more narrowly defined creative domain, and to create the conditions for increased interaction and collaboration with actors from other sec- tors using the creative competencies and skills residing in the creative sectors. Regarding creative industries, there has been no universally agreed standard definition of the fields covered by the concept.6 Consequently, especially the older policy documents in- clude lists of sub-sectors included or longer descriptions delineating the domain of creative industries in Finland. For instance: - Koivunen (2004) lists almost 20 sub-sectors in a report dealing with the promotion and creation of favourable conditions for cultural exports. - Kaunisharju (2006) identifies 9 creative sub-sectors known for their commercial op- erations in a study on the development of business activities in creative industries. - A strategy report on the development of entrepreneurship in the creative industries by 2015 presents a list of 14 creative sub-sectors (KTM 2007). The latest report also outlines a matrix model describing the interconnections between busi- ness activities in the creative industries and other industry and service sectors – i.e. the cre- ative economy. The model has since been used and further refined in a number of policy documents.7 6 There is conceptual ambiguity regarding the two concepts, which have been discussed in length especially in the older reviewed documents. In the case of the creative industries questions abound regarding the areas covered by the concept, as well as comparability of sub-sector activities. The sectors usually listed as creative present disparate domains of activity, follow different logic of action and use different business models and earnings logics – making policy-making a challenging task. 7 For example, a report prepared by a joint working group of the Ministry of Economic Affairs and Employment on growth and renewal from creativity (2012), the Government resolution on a development programme for intangible value creation 2014-2020 (2014), and the recent report of the working group on recognising the creative sectors as a driver of Finnish economy and employment (2017). 7 The search for a precise definition of creative industries has shifted to the background as the policy focus has moved away from a sectoral approach to the promotion of cross-sec- toral collaboration. Indeed, the promotion of interaction between actors in an innovation- driven economy has been a common theme of policy documents over the past 15 years. The development strategy for entrepreneurship in the creative industries by 2015 (ibid.) en- visages cross-sectoral collaboration between companies from the creative and other sectors as an important source of development and creation of new offerings and innovation. A document jointly prepared by the Ministry of Employment and the Economy and the Minis- try of Education and Culture (2011) outlines a way from scattered policies towards a crea- tive economy ecosystem. The given understanding of the creative economy in the document denotes the use and application of the creative sectors’ competencies, products and ser- vices widely in society and the economy. Creative competencies have significant potential to contribute and improve the competitiveness of the Finnish economy not only in sectors con- ventionally classified as ‘creative’ but across the economy (TEM, 2011). In the same vein, the Government’s resolution on a development programme for intangible value creation 2014–2020 notes that creative activity – understood as individuals’ ability to create novel ways of working, service concepts, products and brands – characterises not only creative sectors but all kinds of organisations. While intangible value creation (e.g. in forms of R&D and innovation) is internally important in organisations, the resolution high- lights that creativity takes place in different settings and often in collaborative arrangements across organisational and sectoral borders. More recently, the working group led by professor Anne Brunila (2017) did not consider the provision of an exact definition of creative sectors and creative economy as viable, as the boundaries between business sectors are in continuous flux (e.g. due to digitalisation). In the opinion of the working group, the full potential of creativity as a driver of the Finnish economy and competitiveness cannot be realised by promoting only those sectors conven- tionally understood to be the core of creative activity. Rather, the task calls for ‘the efficient utilisation of intellectual capital, which is a driver of current and future economic growth, and creative competence as well as the generation of economic added value across the entire enterprising sector’ (ibid. 16). 1.4. Systemic transition framework Ecosystem change in the creative economy context can be approached from a systemic perspective as a complex interactive process, an approach that has been highlighted in transition management research (e.g. Geels 2002, 2005, 2010). The systemic transition framework provides a tool to identify factors affecting the potential for change in institutional structures and actor networks over time. Figure 2 illustrates the core of the framework in which there are three analytical levels, from bottom up: 1. Niches, 2. Regimes/systems and 3. Landscape. The niche level refers to so-called protected spaces, often spatially delimited, with flexible actor groups and rules, such as experimentation cultures and temporary collab- oration arrangements, which intentionally aim to work as a springboard for variety and the emergence of innovation. The regime or system level describes established “actor networks with well-aligned rules within and between different regimes” (e.g. technological, industrial, market, governmental, and cultural) (Ulli-Beer 2013). The landscape denotes the external 8 environment and trends, which can bring pressure for change at the regime level but also incentivise experimentation. Figure 2. Systemic transition framework for analysing change in the creative field. (Adopted from Geels & Schot, 2007) 9 2. CREATIVE ECONOMY ECOSYSTEMS AND FACT SHEET UPDATES 2.1. Introduction How is creative economy defined? In this study, the term creative economy is understood to include all creative areas of the economy (defined based on the general meaning of creative, i.e. having or showing an abil- ity to make new things or think of new ideas). In essence, creative economy refers both to creative industries and creative work (see the definition provided by Higgs et al, 2008). The creative industries cover a range of economic activity involving the generation or exploitation of different immaterial creative competencies. Thus, it is possible that a creative industry sector has also non-creative jobs and creative work is done also in non-creative sectors. For the purposes of this study, i.e. aiming to explore the current status of the creative sec- tors at Finland as well as to recognise future opportunities for growth, we have highlighted the integration of different creative competencies and cross-sectoral collaboration (Figure 3). Figure 3. Creative competencies in different sectors8. Currently, both the traditional industries and the creative sectors are facing remarkable changes due to global trends such as digitalisation and servitisation (see Figure 2, systemic transition). Due to Finland’s high innovation capability, i.e. creativity and skilled work force, future opportunities can be found through cross-sectoral open-minded collaboration. One interviewee even stated that: 8 Adapted and modified from Higgs et al (2008). See Appendix 1 for the original classification. 10 ‘We should get rid of sectoral thinking and the ‘innovation mantra’. Instead, in Finland we should focus strongly on understanding intangible customer value when seeking future development paths. We should be able to create products, services and brands that provide excellent customer experience through usabil- ity, usefulness, attractiveness, beauty, meaningfulness and responsibility. In other words, we should focus on generating value for customers, users and consumers.’ Finland’s economic growth and employment are highly dependent on the success of its ex- port industry. Policy making must therefore consider the international competitiveness of the creative industries and possibilities to build crossovers that integrate novel bundles of both creative and non-creative competencies. What is an ecosystem? The ecosystem concept has been actively discussed in management research, bridging, for instance, system thinking and evolutionary economics. Several partially overlapping con- cepts such as industrial, business, service, platform, innovation, and knowledge ecosystems have been utilised without clearly determining their interconnections. In addition, entrepre- neurial ecosystems are also discussed, especially in the entrepreneurship policy literature. As an example, Autio and Levie (2017) have presented a model for collective management of entrepreneurial ecosystems in which policy makers can take a leading role by acting as a steward of the ecosystem and by engaging stakeholders to find ways to mutually coordinate their actions. In order to build future competiveness it is important to understand the logic of action in different types of ecosystem. Research has typically focused on one ecosystem at a time. However, in real-world systems the interests of the actors (i.e. organisations or individuals), that is, the ecosystem inhabit- ants, come bundled together with multiple ecosystem parts. In an ecosystem, all actors have their own role to play and, in this way, they view the partially overlapping ecosystems from their own unique perspective. Relationships and interactions between ecosystem types therefore need to be analysed at several levels in order to understand how connections flow between different ecosystems in the real business world. (Valkokari, 2015) Ecosystems are formed from interaction and interlinkages between actors; in a business ecosystem the linkages are based on aligned business models, in a knowledge ecosystem on shared knowledge interests (Figure 4). 11 Figure 4.Three ecosystem types and their focus. The three ecosystem types form a continuous transformation process resembling a multi- level model (see Figure 2, Systemic transition framework). The ecosystem types do not nec- essarily follow each other one-by-one, i.e. by connecting several knowledge ecosystems an innovation ecosystem can emerge that can again transform into several emerging and exist- ing business ecosystems (Figure 5). In section 2.3, therefore, we have not evaluated only business ecosystems related to creative sectors, but also key actors and actions in knowledge and, especially, innovation ecosystems. Renewal and growth of the economy requires interaction between the three ecosystem types: knowledge ecosystems exploring new knowledge and future competencies, innovation ecosystems boosting commercialisation and business ecosystems building growth. 12 Figure 5. Interconnection between ecosystem types. Regarding ecosystem development within the creative industries, the importance of vertical and horizontal coordination as well as a shared vision at the national level was mentioned as a key success factor several times during this study. The creative industries are among the most dynamic sectors of the economy and development activities have often been pro- ject-based. Creative industry actors stated that continuity and long-term commitment has been at least partly missing at the national level. On the other hand, regional hubs have a strong position in organising creative ecosystem development activities. Creative competencies and future growth ecosystems A (creative) ecosystem can be defined as a community of connected, but disparate actors interacting within an environment and between each other. As with any ecosystem, it is a living community of interacting organisms and diversity is key to its health. These interac- tions involve dependency relationships leading to feedback loops of causality and enabling self-organisation. Creative economy ecosystems can operate around a regional hub or a single sector such as the film industry. Thus, no single ecosystem includes all creative in- dustry actors, creative ecosystems overlap with each other and with other sectors (in the next chapter the networked value co-creation between creative actors is described using the example of the dance industry). From the viewpoint of business and future growth, Finnish creative eco- systems have limited resources or capabilities to grow independently. The potential for new growth exists instead in the intersections between creative competencies and other sectors in which Finland has strong know-how. 13 Value creation within the creative industries Similar to other value creation processes, creative industry value chains start from an initial (creative) idea, which then moves through a series of interlinked and often iterative stages to end customers, i.e. users of the value created. Value creation within the creative sectors typically occurs in networks of several actors with different backgrounds which bundle to- gether due to their limited size9. The case example of dance production shown below repre- sents this kind of value co-creation network, i.e. a project-based business ecosystem of ar- tistic dance production, combining the value chain and the related business ecosystem. Figure 6. Value creation process within the creative sector. Nowadays, there is a need for collaboration between different actors, and user-driven inno- vation is strongly emphasised. In other words, value chains are turning into value networks and ecosystems connecting a variety of actors through digital channels. For instance, in the media industry, since the emergence of social media the role of users has changed and end users now play active role in content production and dissemination. Thus, the value chain is undergoing radical restructuring, forcing traditional business models to be reconsidered. Although the Nordic countries have excellent dance sector infrastructure, the sector mainly comprises micro companies or individual freelance artists. Thus, networks could provide new opportunities for cross-sectoral collaboration, with new digital distribution channels uti- lised and social media links built between sectors and with the customer. 9 Siil, Ragnar, Rekola, Sanna & Lindholm, Katariina (Editors); keðja, Sustainability Think Tank Report 2015: Recommendations for a Sustainable Nordic Baltic Dance Field. Erweko Oy. Original picture by Kuvitellen Oy. https://issuu.com/danceinfofinland/docs/recommendations_for_a_sustainable_d 14 Today’s digital distribution channels enable global scalability and connectivity of business models within several categories such as creative and cultural products (music industry), creative content (media) and creative environments (game industries). This scalability ena- bles significant growth through internationalisation of actors and novel networks. However, the competition is also global. In addition, some companies also operating in the third cate- gory in creative services such as design, fashion and lifestyle can use digital channels to find their own consumer market niche, build strong relationships with their customers, and boost interaction and community between their customers. These kinds of distributed com- munities sharing values and interests are an example of changes in consumer behaviour brought about by globalisation and digitalisation. 2.2. Updated information on creative economy ecosystems in Finland An extensive review of Finland’s creative sectors was conducted in 2010 (Fact Sheets Luovat alat), but since its publication significant changes have taken place within the crea- tive fields as well as in the operational environment and market (see section 1.3). Intangible capital and technology enabled trends, particularly digitalisation, have become important drivers of growth and productivity. To support decision-making and policy design for the cre- ative economy, an up-to-date overview of activities, actors and development needs in the creative sectors is required. The growth of the Finnish game industry in recent years pro- vides an illustrative example of the value of intangible capital and creativity for exports and the national economy. Against this background, the objective was to rearrange and update the Fact Sheets covering the creative sectors in Finland. In particular, the aim was to iden- tify the main focus areas of creative competencies that support future competiveness and growth. Evolution of creative sectors To gain an overview of the potential for growth in the use of creative competencies, we grouped the creative industries into four main categories (see Table 1): 1) creative and cul- tural products, 2) creative content, 3) creative services and 4) creative environments and platforms. This categorisation is based on the slightly modified UNCTAD (United Nations Conference on Trade and Development) Creative Economy Network definition of creative sectors with four main areas (heritage, arts, media and functional creations)10. In addition, the categorisation into three sectors - scalable products (monistettavat tuotteet), creative services (palveluliiketoiminta), arts and culture (taide- ja kulttuuri)11- by the Ministry of Eco- nomic Affairs and Employment as well as the framework used by Business Finland12 have been taken into account in our categorisation. 10 Through the Creative Economy Network, UNCTAD has proactively facilitated the sharing of knowledge and best practices, forging strategic alliances and networking among governments, creators, the business community and civil society. 11 Public funding of companies in creative sector (Julkinen rahoitus luovien alojen yrityksissä), downloadable at https://tem.fi/docu- ments/1410877/2864661/Julkinen+rahoitus+luovien+alojen+yrityksiss%C3%A4+17092012.pdf 12 Wevolve & Finpro (2016). Suomen luova loikka 15 Table 1. Categorisation of creative sectors. The first category (see Table 1), creative and cultural products, forms the core of the cre- ative sectors, i.e. heritage and arts highlighting uniqueness. The value of this category lies in strengthening cultural heritage and identity building. In the second category, creative content, intangible value can be recycled repeatedly; the category includes the media, film and publishing sectors. The third category, creative services, integrates different branches of advertising, architecture and design in which intangible value is typically generated through an interactive process. Thus, creative competencies are utilised also in different ar- eas of consulting services. This is a significantly growing area with future growth potential – service design, arts and wellness services are examples of these kinds of services. These are not included in the statistics presented in this study as they are typically categorised un- der management consulting. The fourth sector, creative environments and platforms, fur- ther highlights the importance of communities for building and sharing values. We cross-walked the Finnish creative occupation codes identified by the UK Department for Digital, Culture, Media and Sport – the most referred to international benchmark – with their International Standard Classification of Occupations (ISCO) equivalents. We then compiled estimates of national employment in the creative economy and creative industries, separat- ing out creative and non-creative jobs. Employment microdata from workforce surveys were used to produce the estimates. We then analysed the creative intensity of different indus- tries. Data on key measures of economic performance, such as employment, salaries, turn- over and exports were accessed from official Statistics Finland datasets as follows: • The Finnish Longitudinal Employer–Employee Data (FLEED) merges comprehen- sive taxation and other administrative records of all labour force members as well as all employers/enterprises subject to value added tax (VAT). FLEED has data on both firms and establishments (such as data about public institutions that is missing from the Business Register database). We use the establishment level in order to study the geographical division of creative and supportive employees within a firm and their respective wage levels. Data on public institutions seems to be of importance for certain industries such as film, TV, video, radio and photography as well as mu- seums, galleries and libraries. • The Business Register database at the enterprise level covers the annual enterprise- level statistics of enterprises and private non-profit organisations. The data includes basic information about enterprises’ industry, location, ownership, turnover, number of employees and wages and salaries. 16 • The International Trade Statistics describes the commodity trade between Finland and other European Union (EU) Member States and between Finland and third countries, i.e. internal and external trade. International Trade Statistics is the official information source on the importation, exportation and balance of trade of Finland. • Regarding the several sub-categories of creative economy it should be noted that public sector (municipal) employment is not included. Based on statistics of munici- pal activities it can estimated that this totals approximately 10,000 employees (in- cluding arts education, libraries, museums and galleries, theatres, dance and circus, music and other cultural activities). Where possible, we use these datasets to produce estimates of employment, salaries and creative intensity for both the national and local levels. A detailed statistical analysis of Finn- ish creative sectors and the analysis methods used is provided in Appendix 1. All creative employment in the economy is aimed to be estimated within the method utilised in this study. That is, employment in all creative activities along with creative jobs in non-cre- ative activities. The estimate can be performed by using two classifications (NACE and ISCO) used in the European Labour Force Survey. Once the aforementioned classifications are filled in, an estimate of creative economy from perspective of employment can be calculated: Creative employment = creative occupations (creative specialists) + non-creative occupa- tions in creative activities (support creatives) + creative occupations in non-creative activi- ties (embedded creatives). Creative intensity is specified as the share of creative occupations’ employment in each in- dustry. Table 2 presents the key data of the four categories used in the study. Table 2. Summary of creative sector categories utilised in this study. Category Num- ber of actors Turnover (1000 €) Number of crea- tive em- ployees Creative intensity Number of ex- porting firms Exports (1000 €) Creative and cul- tural products 3 954 583 199 4 983 53%13 15 23 945 Creative content 2 871 3 663 245 11 223 52% 11 10 173 Creative services 10 071 2 562 860 12 666 64% 1 65 Creative environ- ments and plat- forms 7 079 8 733 445 26 236 61% 64 37 111 Other14 1 432 740 554 438 11% 33 35 980 TOTAL 25 407 16 283 303 55 546 56 % 124 107 274 13 The average creative intensity percentage is lower than the percentages presented in the creative and cultural products category. This percentage includes the cultural education category (8552), which employs 2179 persons and has a creative intensity of only 31%. Also, most of the employment takes place in the sub-category of ”Music, performing and visual arts”. In that sub-category, the number of employees in non-creative occupations almost equals the number of employees in creative occupations. 14 The ‘others’ category include printing and retail and wholesale of cultural items. 17 Table 3 represents employment in Finland within the creative industries (including its three main components: specialist, non-specialist and embedded employment) from 2011 to 2015. Table 3. Creative economy employment in Finland, 2011-2015. Year Specialist Support Creative industries Embed- ded Creative occupa- tions Creative economy 2011 55 200 42 500 97 800 65 200 120 400 162 900 2012 50 700 44 400 95 200 68 000 118 700 163 100 2013 49 200 40 600 89 900 65 300 114 500 155 100 2014 51 300 39 400 90 800 66 000 117 300 156 700 2015 54 100 36 800 90 900 67 800 121 900 158 700 Average 52 100 40 700 92 900 66 400 118 500 159 300 Share of workforce 2.5% 1.9% 4.4% 3.2% 5.6% 7.6% Share of creative economy 32.7% 25.5% 58.3% 41.7% 74.4% 100.0% Fact sheets – how to read Summaries of the analysis of each sector are presented in the following sub-sections. The summaries include: 1. Summary of the statistical analysis of the creative category from year 2015 (at the sub-category level). Number of actors (both private and public organisations), turno- ver, number of employees (both creative occupations and non-creative occupa- tions), number of exporting firms and total export volume. 2. Top three Finnish regions ranking based on highest location quotient for the crea- tive industries (Appendix 1, Table 16). In general, the creative economy workforce (in all four categories) is heavily concentrated in the Greater Helsinki area, with the region of Uusimaa accounting for 57 per cent of employment in the creative economy. However, there are regional variations in creative industry concentration. The top three ranking enables comparison of the importance of employment in cer- tain occupations or industries in a region compared with the country as a whole. 3. A case example highlighting emerging areas or special categories. 4. Growth potential based on average annual employment and salary growth rates over the period 2011-2015. The summary shows that the economic recession also hit the creative economy. In many cases, the number of creative industry employ- ees has decreased. However, in general, Creative Specialists managed to do better than Support Creatives. Creative Specialists are those working in creative occupa- tions in creative industries whereas Support Creatives work in a creative industry, but are not themselves employed in a creative occupation. 18 FACT SHEETS 19 20 Creative and cultural products – key figures Number of ac- tors 2015 Turno- ver (1000 €) 2015 Number of em- ployees 2015* Total Number of ex- porting firms Exports (1000 €) Museums and galleries (1) 68 14 868 678/435 1 113 (61%) 1 23 Crafts 342 119 271 323/232 555 (58%) 11 23 489 Music, perform- ing and visual arts (2) 3 544 449 060 3892/2566 (3) 9 514 (60%) 3 432 Total 3 954 583 199 15 (4) 23 945 k€ *creative / non-creative occupations (1) Not all museums and galleries are included as some fall under other categories (e.g. 4299, 9499) or are public institutes such as libraries (i.e. employer is a municipality). (2) Music, performing and visual arts includes Performing arts (9001), Support activities to performing arts (9002) and Artistic creation (9003). Dance, theatre and circus are included to some degree under per- forming arts. Sound recording and music publishing activities are presented in the creative sector cate- gory Creative content. (3) Cultural education (8552) which employs 2,179 persons (intensity 31%) is not included here as it is not in Finland’s official Cultural Statistics. If it is included, the total number of employees is 8,637 (intensity 53%). It is included in the summary figures in Table 2. (4) Almost all exports in the Creative and cultural products category are produced by one firm operating in the Striking of coins industry (3211). The highest number of exporting firms, eight, is in the Manufacture of jewellery and related articles industry (3212). Regional significance Top three regions in creative and cultural products category in terms of location quotient15 15 Creative workforce shares can be analysed using location quotients (LQs). These are defined for the creative economy as the creative workforce share of the region (CER⁄WFR) divided by the creative workforce share of the national workforce (CEFI⁄WFFI). As such, they allow us to compare how the im- portance of employment in particular occupations or industries in a region compares with their importance in the country as a whole. An LQ>1 means the regional workforce is more concentrated than the national one, an LQ=1 means that the concentration is the same and an LQ<1 means that it is less concentrated. The highest location quotients of the creative industries presents the importance of employment in particular occupations or industries in a region compared with their importance in the country as a whole (Appendix 1, Table 16). When analysing the results, one must understand that much of the cultural activities are taken care of municipalities directly and the relating creative workforce does not show up the category results. For example, in Museums and galleries sub-category, there are a number of separate legal entities in Etelä-Savo region: their employments are reported under this sub- category whereas in many other regions in Finland that is not the case. Moreover, creative industry occupation is not high in Etelä-Savo in general, which further highlights Museums and galleries sub-category’s relevance for the region. 21 Case-example of cross-sectoral collaboration Future growth and competencies16 The changes (decrease in personnel and/or salaries in several cases) between 2011 and 2015 have been rather significant. For instance, support personnel (not included in this fig- ure) diminished by 23%. 16 Figure shows the average annual employment and salary growth rates over the period 2011-2015. The Oulu information and communications technology boom is being highlighted at the Printocent exhibition at the Oulu Museum of Arts as part of the Hype in the Arctic Silicon Valley programme. The new exhibition produced by the Museum and Science Centre Luuppi combines research data, fictional narrative, hands-on activities and visuality by telling a fictional story of inventor-engineer Toivo Ruokko and his Raakku device. (https://www.ouka.fi/oulu/luuppi-english/hype) Setting up this exhibition has brought together technology entrepreneurs and creative sector actors. One entrepreneur has driven the idea forward and discussed with the rep- resentative of the City of Oulu opportunities to bring visibility to Oulu, for example by or- ganising an installation at the Oulu Light festival, and stated that such cross-sectoral col- laboration with creative professionals opens up new ways to promote different competen- cies. This is one example of how innovation centres such as Printocent and cities as in- novation platforms can serve as places of innovation for the Creative Industry. https://www.ouka.fi/oulu/luuppi-english/hype 22 Creative content – key figures Number of actors 2015 Turnover (€) 2015 Number of em- ployees 2015* Total number of employees and intensity Number of ex- porting firms Exports (1000 €) Film, TV, video, radio and pho- tography (1) 1 765 1 190 844 5760/2599 8 359 (69%) 6 8 341 Publishing (2) 1 106 2 472 401 5463/7898 13 361 (41%) 5 1 832 Total 2 871 3 663 245 11 223/10 497 21 720 (52%) 11 (3) 10 173 *creative / non-creative occupations (1) Television programming and broadcasting activities (6020) employs altogether 4 300 persons, a public institution employs over 89% of employees of these. (2) Publishing of newspapers employs 7,508 persons (48% of total), but its creative in- tensity is limited at 39%. Translation and interpretation are included in this sector. (3) Exports within the creative content category are widely distributed among eleven firms with no single firm in dominance. Regional significance Top three regions per creative content category in terms of location quotient17 17 The highest location quotients of the creative industries presents the importance of employment in particular occupations or industries in a region com- pared with their importance in the country as a whole (Appendix 1, Table 16). 23 Case-example of digital disruptions challenging the media industry Future growth and competencies18 18 Figure shows the average annual employment and salary growth rates over the period 2011-2015. Digital disruption of the media sector is a broadly discussed example of system-level trans- formation affecting the business models of all of key actors, i.e. advertisers and marketers, publishing companies (content providers), printing and distribution companies and end users (either consumers or business users). All actors have had to re-think their current value flows, as well as their partnerships with customers and suppliers. Furthermore, media convergence reflects the blurring boundaries between the media, telecommunications and information technology sectors – and the emergence of new actors, such as technology and service pro- viders. Within this change, the focus of the media ecosystem should be on end users’ contexts and purposes rather than on channels and sites in order to be able to offer novel value to both end users (consumers, B-to-B media users) as well as to advertisers and marketers. The media ecosystem is transforming towards a platform-centric ecosystem, where digital technologies are connecting content users, providers and advertisers together in a new, more collaborative way. In such platform ecosystems users may also be produc- ers of user-generated content (UGC) as, e.g., the rise of the blogging and vlogging phenom- enon shows. This has affected publishing companies and created the need to provide content for all possible channels. Different possibilities for monetisation are emerging through licensing, selling user data or business intelligence information or offering the platform as a service concept (PaaS). Social media companies have emerged as the main competitors of traditional media companies in both advertising and consumer coverage, as they offer their content (gathered from different sources) for free and offer a vast consumer base. Decisions regarding new monetising mod- els may be difficult to make and require agility and changes in thinking. Creativity is therefore now valued more than ever and media ecosystem actors should be looking to embed creativ- ity into their core strengths such as quality of content and brand. 24 Creative services – key figures Number of ac- tors 2015 Turnover (€) 2015 Number of em- ployees 2015* Total num- ber of em- ployees and inten- sity Number of export- ing firms Exports (1000 €) Architecture 1 407 388 462 2 663/990 3 653 (73%) 0 0 Advertising and marketing 4 142 1 697 411 5270/ 5017 10 287 (51%) 1 65 Design (product, graphic and fash- ion design) (1) 4 522 476 987 4 733/1 144 5 877 (81%) 0 0 Total 10 071 2 562 860 12 666/7 151 19 817 (64%) 1 (2) 65 *creative / non-creative occupations (1) Service design not included. (2) There is almost no export activity within the creative services category. Architecture exports are included to some degree in the construction industry and design in the export of designed products. Regional significance Top three regions per creative services category in terms of location quotient19 19 The highest location quotients of the creative industries presents the importance of employment in particular occupations or industries in a region com- pared with their importance in the country as a whole (Appendix 1, Table 16). 25 Case-example of how service design supports the renewal of an industrial company Future growth and competencies20 Design belongs to the few growing sub-categories showing an increase in average salary of both creative specialists and support creatives between 2011 and 2015. The number of sup- port creatives has also increased indicating a growing demand for creative competencies. 20 Figure shows the average annual employment and salary growth rates over the period 2011-2015. Design is, as its best, a good tool for renewal and building competiveness: with it, pro- found understanding of the operational environment can be gained, and large, complex problems swiftly conceived and concretized. The current new wave of design, such as the service design approach, aims to create meaning and success in the changing world. Leading elevator and escalator manufacturer Kone has historically been known world- wide for its products, although the company’s goal of providing excellent service to cus- tomers has been part of its core mission from the start. What has changed is that Kone’s customers are increasingly looking for a partner who can help them through all stages of their product’s lifecycle. For Kone, this means providing its customers with flexible and attentive maintenance services, and being able to think about how modernisation and upgrades can improve its customers’ lives and the ways in which they can use their equipment. Service design has in this way brought the user to the core of development and emphasised the importance of customer experience. (http://www.kone.com/en/stories-and-references/stories/design-in-its-truest- form.aspx) http://www.kone.com/en/stories-and-references/stories/design-in-its-truest-form.aspx http://www.kone.com/en/stories-and-references/stories/design-in-its-truest-form.aspx 26 Creative environments and platforms – key figures Creative environ- ments and plat- forms Number of actors 2015 Turnover (1000 €) 2015 Number of employ- ees* 2015 Total num- ber of em- ployees and intensity Number of export- ing firms (1) Exports (1000 €) IT, software and computer services 5 845 8 290 325 25 326/14 689 40 051 (63%) 62 37 010 - Computer pro- gramming activi- ties (6201) 3 811 6 388 087 19 654/ 10 121 29 775 (66%) 49 28 100 Creative environ- ments 1 234 443 120 874/2 393 3 267 2 101 Total 7 079 8 733 445 26 236/17 082 43 318 (61%) 64 (2) 37 111 *creative / non-creative occupations (1) It is very difficult to estimate the exports of the gaming industry companies. In most case the players pur- chase services directly in the gaming platform, and these are shown in the company’s turnover. For sta- tistical purposes, it is recommended that this turnover were shown as royalty income but for many com- panies this seems not to be the case. Neogames Finland, Hub of the Finnish Game Industry states there are ca. 260 gaming industry companies in Finland. The combined turnover of these companies was about 2,3 and 2,4 Mrd euros in 2017 and 2016, respectively. One company, Supercell, called for about 80% of this combined turnover. We can expect that over 90% of the industry’s turnover comes from abroad. (2) Within the creative environments and platforms category, the highest number of exporting firms is in Computer programming activities (6201) in which 49 exporting firms account for a total export revenue of EUR 28.1 million. In Computer consultancy activities (6202) 8 exporting firms account for a total export revenue of EUR 6.2 million. It is noteworthy that there were no exporting firms in the Publishing of com- puter games (5821) sector in 2015. Most of the gaming industry companies list themselves under the aforementioned Computer programming activities. Regional significance Top three regions of creative environments and platforms category in terms of location quo- tient21 21 The highest location quotients of the creative industries presents the importance of employment in particular occupations or industries in a region com- pared with their importance in the country as a whole (Appendix 1, Table 16). Note: The highest location quotients do not present all perspectives of re- gional strengths. For instance, Uusimaa is not in the top three in this location quotient comparison, although Helsinki based game company Supercell was the biggest taxpayer (tax year 2014). 27 Case example – game companies are born global Future growth and competencies22 22 Figure shows the average annual employment and salary growth rates over the period 2011-2015. Critical Force is an illustrative example of the growth of a game industry company from start-up to a company employing over 50 people. In 2016 Critical Force received 4 M€ funding from a South Korean company, NHN Entertainment (3500 employees). A small agent company played a central role in finding the partner, although the company’s own office in Thailand (three employees) had strengthened its position in the Asian market. The Thailand office was originally established because three employees wanted to work there after their student exchange period. This illustrates how employee work satisfac- tion is appreciated and responsibility shared in the company. The roots of the company are in the University of Applied Sciences of Kajaani, where the entrepreneur worked as a teacher of coding in the early 2000s and spearheaded the establishment of a gaming education programme in 2005-2006, following a long career of more than 18 years as a software developer in Finland and in Germany. https://kauppapolitiikka.fi/yritykset/critical-force-kun-kajaani-kohtasi-korean/ https://www.oulunkauppakamari.fi/?id=36&news_id=165&archive= https://www.talouselama.fi/uutiset/peliyhtion-rankat-opit-veli-pekka-piirainen-joutui-siir- tamaan-tarkean-tyotoverin-sivuun-olisi-pitanyt-kayttaa-kontrollia-enemman/044f00ff- 14ca-36af-8e00-e639b5899cda https://kauppapolitiikka.fi/yritykset/critical-force-kun-kajaani-kohtasi-korean/ https://www.oulunkauppakamari.fi/?id=36&news_id=165&archive https://www.talouselama.fi/uutiset/peliyhtion-rankat-opit-veli-pekka-piirainen-joutui-siirtamaan-tarkean-tyotoverin-sivuun-olisi-pitanyt-kayttaa-kontrollia-enemman/044f00ff-14ca-36af-8e00-e639b5899cda https://www.talouselama.fi/uutiset/peliyhtion-rankat-opit-veli-pekka-piirainen-joutui-siirtamaan-tarkean-tyotoverin-sivuun-olisi-pitanyt-kayttaa-kontrollia-enemman/044f00ff-14ca-36af-8e00-e639b5899cda https://www.talouselama.fi/uutiset/peliyhtion-rankat-opit-veli-pekka-piirainen-joutui-siirtamaan-tarkean-tyotoverin-sivuun-olisi-pitanyt-kayttaa-kontrollia-enemman/044f00ff-14ca-36af-8e00-e639b5899cda 28 2.3. Stakeholder insights on creative economy opportunities and challenges The insights of creative economy opportunities and challenges in Finland were collected from variety of experts and stakeholders using different interaction channels (workshop, in- depth interviews and VTT’s online co-development tool Owela). The participants and the in- terviewees came from the Ministry of Education and Culture (OKM), the Ministry of Eco- nomic Affairs and Employment (TEM), educational institutions, branch-specific promoter or- ganisations, branch organisations, Business Finland, cities and venture capitalists (listed in Appendixes 3 and 4).. At the category level, the main needs can be summarised as follows: - Creative and cultural products: Need for marketing, sales and business competen- cies and/or mediators for largely domestic markets. - Creative content: Need for distribution channels and marketing content for interna- tional markets. - Creative services & Creative environments and platforms: Contacts, networks and funding for growth and internationalisation. The creative economy opportunities (and challenges) identified are illustrated in Figure 7 be- low and addressed in more detail in Appendix 2. Figure 7. Creative economy opportunities based on stakeholder insights. 29 Key findings on creative sectors in Finland Table 4 summarises the qualitative analyses of the weaknesses and strengths of the four main categories of creative industry. As the export and turnover figures in the previous sec- tion (Fact Sheets) show, growth in recent years is very much limited to the ‘creative environ- ments and platforms’ category (specifically the software and game industry sectors). In the first category, creative and cultural products, digitalisation has changed the distribu- tion channels of the music business. There are also some actors with strong global positions within their own niche market segment or certain value chain positions (such as music pub- lishing/digital production). Most others act mainly nationally with limited resources and po- tential for growth and globalisation. Table 4. Four main categories – weaknesses and strengths. Category Weaknesses Strengths Creative and cultural products Heritage and arts Antique and art deal- ers (Visual) Arts and Gal- leries Crafts Music Dance Theatre and circus Polarised market Limited development of the visual arts market (domestic) Handicraft companies small and entrepreneurial-driven Export of music concerts re- mains Lack of professional producers and managers of dance / lack of networks Financial resources of thea- tres very scarce / little devel- opment / mutual competition Growing interest in antiques / ‘retro’ as a working object New business models / rental & digital channels have increased in- terest / new users / internationally high-quality education in Finland enables use of visual art skills in other areas (games) Handicraft as a part of cultural her- itage / interest in self-making Scalability and digitality of music / strong niche communities / music publishing competence Modern dance as a pioneer in light and sound design / international attention Importance to regional well-being and communality (Visual and per- forming arts) Creative content Media Animation Film Literature Television Publishing Animation narrowly under- stood as a genre for children Small size is a barrier to in- ternationalisation of Finnish film producers Minimal literary exports (mar- keting / brand building) (only a few big publishers and scarce number of authors) Mass communication has been challenged by social media Television watching is in transition, streaming services Strong Finnish know-how in com- puter animation (especially for the games industry) Finnish ‘niche’ film production, with its own international audience is opening up to the wider public (when new distribution channels are utilised) Digital distribution channels create new opportunities for literary dis- semination and co-writing (creative commons licenses, etc.) 30 require a new kind of target group-based marketing / in- teraction Consumers have shifted to the Web and advertisers have followed. Newspaper and many magazine reader- ships are in decline. Tradi- tional revenue streams do not work on the Web Some breakthroughs have been achieved in the international TV format markets Many publishers have started to gain revenues from digital content. Based on experiences with digital music, consumers are willing to ac- cept moderate monthly fees. Re- sponsible journalism is gaining more appreciation Creative services Functional creations Architecture Marketing communi- cations Design Conflicting interests between the construction industry and architecture slows the inter- nationalisation and creation of new concepts Market intelligence and broader media structures have changed with digitalisa- tion / players are looking for new business models / large market share of international market players International orientation and lack of networks limit the de- sign to the domestic market / use of design expertise is not integrated to the strategic level thinking in other indus- tries Architecture is an attractive and in- teresting subject / passionate atti- tude of actors Demand for communication and communication expert services is growing as data volume and distri- bution channels exponentially in- crease, new ways of interacting are required for stakeholder com- munication Design is a recognised component of business competiveness, e.g. service design is considered a key competitive edge builder Individual designers are gaining experience through exporting their own niche productions (for in- stance in fashion) Creative environ- ments and platforms Software/Digital games Businesses remain small; ownership is sold to interna- tional players / credibility and attractiveness is limited, which may lead to slowdown of growth, as witnessed in 2016 when growth fell to 4% (https://www.neo- games.fi/fgir2016/) Technology know-how is top qual- ity and international reputation is good / community and network ef- fects help new companies towards international break through Table 5 summarises the key characteristics of each ecosystem type (knowledge, innovation and business, see Figure 4) and the challenges and strengths of the Finnish creative sector. Table 5. Ecosystem phases, strengths and weaknesses (challenges) of the Finnish creative sectors. Knowledge Innovation Business Characte- ristics Decentralised knowledge nodes, synergies through knowledge exchange Geographically clustered actors, innovation plat- forms, different levels of collaboration and open- ness Global business rela- tionships both com- petitive and coopera- tive https://www.neogames.fi/fgir2016/ https://www.neogames.fi/fgir2016/ 31 Challenges of Finnish crea- tive Industry Education happens in ‘si- los’ and has limited con- tact points with innovation activities Career paths are unclear and/or mixed Project-based funding of regional hubs and integra- tors, limited continuity and national vision missing In some sectors creative actors are working alone (own brand development hinders networking) Funding difficult to secure in the scale-up phase Limited number of core companies and globally small size (insufficient re- sources to boost in- ternationalisation and networking with other companies) Strengths of Finnish crea- tive industry Institutes of Applied Sci- ence (AMKs) have strong regional position as facili- tators of knowledge base and activities They and Universities provide multidisciplinary activities internally and with companies Cities as innovation plat- forms form networks con- necting different actors also at the international (European level): ‘Tested/made with the City’ Creative methods could support transformation also in other sectors (ser- vice design as an example of conceptual thinking uti- lising creativeness) Start-up funding possibili- ties have grown rapidly Game industry as a success story of global competitive- ness Open possibilities also for other compa- nies with digital, scal- able business models (networked born globals) 2.4. Cross-sectoral collaboration in publicly funded projects We conducted a small case assessment of cross-sectoral collaboration patterns within the framework of three policy instruments that either specifically target creative sector actors or are recognised as potential sources of support for them. The following three instruments were selected for analysis: • CreMa funding which is granted for product and service development projects pro- moting the transfer of expertise from creative industries to other industries and vice versa. The funding originates from the national lottery proceeds of the Ministry of Ed- ucation and Culture and is distributed by The Promotion Centre for Audiovisual Cul- ture (AVEK) to applicants from creative industries. • ESF (European Social Fund) 2014-2017 ‘Luovaa osaamista’ (‘Creative expertise’) action programme projects. • Business Finland’s Innovation Voucher which is intended for small and medium sized companies engaged in well-established business that need external expertise in the form of knowledge and skills to further their innovation activities. Our assessment of collaboration in publicly-funded projects sheds light on industries with which creative sector actors team up and the availability of policy-relevant data on collabo- ration. Thus, the findings give some indication of sectors in which there is an identified de- mand for creative skills and expertise. In addition, the results signal in which areas creative sector actors see potential for collaboration and expertise complementing their development efforts. 32 Next, we present the main findings of the assessment of cross-sectoral collaboration in the three publicly-funded instruments. CreMa, coordinated by AVEK, 2012-2017 Methodology: For the years 2012 and 2014 information on collaboration was available in ex- post funding descriptions, whereas for 2015-2017 information was scarce due to access to funding decisions only. Funding information was not consistent for the studied period. Criteria: selection of projects that contained information on collaboration partners, i.e. name of collaboration partner and/or field of collaborator. Results: Total 39 projects (out of 91 project decisions) included the above information. In these projects, information on collaboration was available for 58 partners. The majority of these projects (67%) involved a single collaboration partner. The collaboration partners belonged to the following creative areas and traditional indus- tries: In the CreMa projects, collaboration with the tourism sector (16%) and software (14%) were the prime areas that emerged from the assessment. In traditional areas, collaboration with different kinds of retailers (other services 12%), the construction sector (10%) and the social and health services (9%) were frequent. Links to traditional sectors, such as construction, are due to the inclusion of architecture services and the creative design of construction ma- terials. In public services, creative competencies have been applied especially in art and Creative and cultural products (heritage and arts) Tourism, 16% Productions & events, 12% Performing arts, 3% Creative content (media) Communication, 3% Creative services (functional creations) Design services, 3% Creative environments and platforms (new media, games) Digitalisation, 14% Traditional industries Construction, 10% Metal & manufacturing, 9% Forest sector, 3% Public services Social-health services, 9% Education, 3% Public services, 2% B-to-C services Other services, 12% 33 culture for wellbeing type of activities in social and health sector with aim to promote health and social welfare and strengthen social inclusion by combining for example arts in elderly care and child care. ESF (European Social Fund), 2014-2017. ‘Luovaa osaamista’ (‘Creative exper- tise) action programme23 Methodology: Consistent project descriptions were available for the studied period. The ‘Luovaa osaamista’ (‘Creative expertise’) action programme is largely centralised at univer- sities of applied sciences and in collaboration between them or other education institutions. Criteria: selection of projects that contained information on collaboration partners, i.e. name of collaboration partner and/or field of collaborator. Results: Total 14 projects (out of 19) included information about collaboration partners. In these projects information was available on 55 collaboration partners. Compared to CreMa funding, the ESF-funded projects involve slightly more collaboration as the majority of pro- jects (57%) had established collaboration with two to four partners, and 29% with five or more partners. Furthermore, it is worth noting that many of the projects were ongoing at the time of assessment. The collaboration partners belonged to the following fields (see Figure 8). Figure 8. Collaboration partners' fields. The ESF funding through the ‘Luovaa osaamista’ (‘Creative expertise’) action programme aimed to increase collaboration with education actors, which is reflected in the large number of collaboration partners coming from this sector (47%). Although the projects mainly involve education partners, the educational institutes represent different sectors (such as health, business, bioeconomy, software etc.). For this reason, we cannot talk about a strong cross- sectoral industry but cross-sectoral educational collaboration. Within the EFS projects, it is 23 ESF projects for 2014-2016 have been more thoroughly evaluated in ‘Luovan osaamisen ja nuorten osallisuuden alueellinen vahvistaminen: alueelliset rakennerahastohankkeet 2014–2016’ by Kirsi Siltanen, Taideyliopisto, 2017. 26 5 3 7 5 3 2 4 47% 9% 5% 13% 9% 5% 4% 7% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 0 5 10 15 20 25 30 Number of partners % share 34 more beneficial to assess which areas these projects were concentrated on. The majority of projects (29%) focused on digitalisation (incl., games, software, virtual reality, digital media) and 21% on social and health services. However, as the table above reveals, these projects did not include many industry partners, or the information on industry partners was not ex- plicit in the evaluated project descriptions. Furthermore, several projects (21%) focussed on the development of creative industry competence without a specific industry focus. Business Finland Innovation Voucher24 Methodology: Innovation Voucher data for October 2016 - May 2018 was used in the analy- sis. During the period, a total of 5,447 applications for the innovation voucher were received and 2,875 projects were granted. Criteria: Collaboration in the Innovation Voucher funded projects was analysed by reviewing the sectoral distribution of the projects in which creative sector companies were involved ei- ther as a voucher applicant or a service provider. Results: The data on the granted vouchers shows that companies use the voucher to ac- quire a variety of skills. Thematically, the funded projects spread fairly evenly across intel- lectual property rights (IPR) and patenting (18%), product development (16%), service de- sign and development (15%) market and customer assessment (13%), prototyping and pi- loting (12%), and others (16%). From the creative sectors’ perspective IPR, product devel- opment, service design and development, and industrial design are closely linked with these areas. Companies presenting creative sectors have been involved as service providers in 369 pro- jects, which is 12.8% of all innovation voucher funded projects. The share is twice as high if companies classified in information and communication are included in the creative sectors. Creative sectors companies have also applied the voucher 351 times (6.4% of all the appli- cations) to purchase external expertise.25 Based on feedback from actors in creative sectors, the innovation voucher is a highly im- portant funding instrument for very small companies in enabling them to engage in rapid ex- periments, agile product development and intellectual property protection. The innovation voucher projects have also significantly increased cross-sectoral collaboration and provided an opportunity to display the added value of creative solutions in the development of com- petitive new products and services. The creative sectors’ expertise has been utilised for in- stance in the development of medical products and services, design of services, preparation of visual assembly instructions and visual appendices of patent applications and furthered the design of visual and functional elements, user interfaces and usability as well as the cre- ation of scripts, stories and conceptualisation for games and tourism services. In general, it seems that the innovation voucher has contributed to collaboration between companies and increased use of the knowledge residing in research centres, universities and universities of applied sciences. This has had a positive impact on the business competency of the crea- tive sector companies. 24 Information on the Innovation Voucher is provided by Business Finland. 25 35 percent of all innovation voucher applications are rejected. Functionalities of the project database in use at Business Finland does not make it possi- ble to get precise approval and rejection rate for the innovation voucher applications made by creative sectors companies. Based on his experience of handling applications, Risto Lustila, product manager of the innovation voucher instrument assesses that rejection rate is lower than average for applica- tions involving creative sectors companies as an application or a service provider. 35 3. INTERNATIONAL BENCHMARKING 3.1. Introduction Just as the creative economy stretches beyond the conventional creative sectors, creative competence can be utilised in other sectors to increase their competitiveness. To this end, it is important to come up with arrangements that promote cross-sector collaboration in order to harness the potential of intangible capital and to creative competencies across the econ- omy. For that purpose, we compared and benchmarked a selection of key interna- tional models and arrangements to advance cross-sector development in the creative economy. The UK, the Netherlands and South Korea are considered among the forerunners in design and implementation of creative economy policies. Our aim was to benchmark models and policies used in these three countries to promote creative economy ecosystem develop- ment. The focus was on models and policies that aim to bring together actors from different sectors and to nurture and advance co-creation and cross-sectorial activities, thus support- ing new value creation. The choice of target countries for benchmarking was aimed at max- imising the benefit of international experiences in support of Finnish policy design/making in the area of creative economy and ecosystems. The Netherlands, South Korea and the UK have been successful in exporting creative contents. They have also adopted new ap- proaches and policies that can serve as a lesson for Finland (OKM, 2017). It is important to emphasise that there is no uniform view of how creative industries are de- fined and institutionalised at the country level. For example, Berg and Hassink (2014) identi- fied that creative industries are interpreted differently in Europe and East Asia. In Europe, creative industries are often divided into two categories: ‘core’ creative industries (arts-re- lated activities) and ‘partially’ creative industries (advertising, architecture, design, and me- dia industries), whereas in Asian countries creative industries is defined in a more inclusive manner aggregating, for example, activities such as hairdressing, theme parks and furniture manufacturing, as seen in China. Sweden, whose approach is leaned towards the ‘experi- ence economy’, includes the restaurant industry along with its creative industries, while In- dia includes in its definition lifestyle products and services such as yoga and ayurvedic med- icine. International agencies have also adopted the idea of the creative industries or the cre- ative economy, led by the United Nations Conference on Trade and Development (UNCTAD) (Bop Consulting, 2010). Governance arrangements may also vary depending on the context. For example, in Japan, the Ministry of Education, Culture, Sports, Science, and Technology is in charge of cultural art promotion, and the Ministry of Economy in charge of creative industry policy. In Germa- ny, France, the Netherlands and Italy, the Ministry of Culture provides the main policies on creative industries (Berg & Hassink, 2014). Berg and Hassink (2014:657-8) identified four common mutually related characteristics of creative industries, some of which also refer to creativity in the manufacturing industries: 36 1. Creative industries are deeply involved in the process of new value creation, as their value-added works derive from innovation and they provide various innovation ser- vices direct to the consumer market, therefore having a pivotal role in the socio-eco- nomic process of adoption and retention of new ideas; 2. Most creative products (e.g. film and television drama) require very diverse and spe- cialised skills and knowledge and are therefore highly concentrated in specific loca- tions; 3. Creative industries benefit from both agglomeration economies (a shared specialised labour market, knowledge spillovers, sustained relationships between individuals and firms, and institutional thickness) and urbanisation economies (geographical proxim- ity facilitates the creative recombination of knowledge, ideas and technologies, which is a source of innovation), although the tendency to concentrate differs from sector to sector; 4. Creative industries affect and are affected by the institutional infrastructure and gov- ernance structures at several spatial levels, since they engage with a range of insti- tutional frameworks, such as economic development, local regeneration and social inclusion (a two-way impact). An overview of the creative economy in each of the benchmarking countries is presented below, followed by a summary of the main lessons learned from the cases as good prac- tices for Finland. 3.2. The United Kingdom The UK has a long and indisputably rich history of arts and culture. It is also seen as a major reference for benchmarking due to its recognition of creative industries as an economic sec- tor following a mapping exercise conducted at the end of the 1990s, and the majority of ef- forts towards systematising the sector in other countries refer to the original work of the UK Department for Culture, Media and Sport (DCMS) published in 1998. The term creative industries was popularised in 1997-1998 under the Labour government led by Prime Minister Tony Blair, and with the publication of Creative Britain in 1998 by Chris Smith, then Secretary of State for Culture, Media and Sport, and the first mapping of the creative economies in 1998. The mapping of creative industries in the UK has been since re-evaluated and updated in the works of NESTA, for example. Smith called for the popularisation of access to arts and bringing the creative industries’ contribution to society and the economy to the political agenda (Smith, 2013). Further developments in the estab- lishment of organisational and institutional support for creative industry development have also helped shape the policy process. An overview of the economic growth of creative industries in the UK is shown in Table 6. Statistics from the DCMS (2017) show that between 2010 and 2016, the creative industries sub-sectors grew their economic contribution by 44.8 per cent. Much of the growth thought to be coming from the field of createch, in which technology is used to enable creativity, and vice versa. Within the creative industries, for instance, the category for information technolo- gies, software and computer services grew by 11.4 per cent in 2016, spurring hope that emerging fields, such as virtual/immersive technologies, augmented reality and artificial in- telligence to spur further innovation and growth. 37 Table 6. Gross value added (GVA) expressed in current prices (£ million), for Creative Industries sub- sectors in UK, for 2010-2016. (DCSM, 2017) The number of UK creative economy businesses and their size is shown in Table 7. Table 7. Businesses (thousands) in creative industries sectors, by number of employees in 2016. (DCMS, 2018) Micro Small Medium Large Total Sector 1 to 9 10 to 49 50 to 249 250+ Creative indus- tries (in thousands) 269.7 12.1 2.1 0.4 284.4 Figure 9 illustrates the contribution of creative industries to the UK econ