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GP 6 June 2007: It Pays You Not to Be a Philistine

If It Doesn’t Sell, It’s Not Creative. Back in the 1980s we had a big stark black and white print plastered on one office wall in our Murray Hill brownstone claiming that “it’s not creative, if it doesn’t sell.”  We’d borrowed this aphorism from one of the Madison Avenue advertising shops, gosh knows which one.  It terribly offended various sensitive, creative types who wandered into the room, confirming for them that we had joined the traitors who were turning civilization to dross.

In the years that have passed, we would say that this tart remark has only gained more currency.  More and more, businesspeople, politicians, and middlemen have taken to dithering, fussing around with distractions that have no bottom line.  We don’t ask that every course of action lead to profit, only that there be a payoff of some sort.  Instead, we are building Spruce Gooses that will probably never fly and levees that won’t resist future storms the Caribbean now has on the drawing boards.

In fact, there’s such a torrent of liquidity loose in the world’s financial markets that capital and resources are being rashly misallocated, creating castles in the air that we don’t need and buying us lots of future troubles.  We’re full of false starts and blind alleys.  In healthcare, as we noted in our article on martinis and healthcare, we are spending 15% of our national wherewithal and getting less and less for it each year.  We are engaged in a whole mess of similar things that are doing nothing for us.

Shortchanging Culture.  Lots of money is being wasted.  But, simultaneously, we are committing economic suicide by putting too few nickels into culture where we can get high returns.  Not education, but culture.  Our formal educational system has gotten about as useless as our healthcare albatross:  we’re pouring in the dough and have little to show for it.  The nation, as is apparent to many, is getting dumber.  Culture, on the other hand, still pays off.  Herein lie dramatic lessons for urban and national development.

SoHo.  Just a few short years ago, New York, just south of Houston, was a wreck, the knitting trades and just about everything else having abandoned this loft district.  It once was once known as the Cast Iron District, a more appropriate name when it was a manufacturing center.  What happened then is the artists moved in, illegally converting lofts to living and studio spaces, directly opposing the wishes of the city government.  Now it is gentrified, full of fancy shops, and a destination for tourists from here and abroad.  Artists, doing their thing, remade this desolate part of New York, with a lot of cheerleading from visionaries such as Jane Jacobs, who correctly opposed the city of skyscrapers, expressways, and asphalt embraced by Robert Moses and the like.  The artists brought successful redevelopment to the city in a way that city planners, commercial real estate interests, the Rockefellers, and others could not.  Parenthetically, the City of New York still has not made the minor improvements here (lighting, greenery, sidewalk and street enhancement) that would complete this miraculous renewal.  How, we may ask, can we encourage similar cultural explosions and keep busybodies such as politicians and philanthropists out of it?

Scranton, Pennsylvania.  SoHo is not a one-time case.  There are numerous instances where cultural emissaries without a lot of coin in their pocket but a wealth of ideas have remade this or that corner of the world.  Scranton, a proud old town that’s down on its luck, is just now igniting a fire in its ashes.  Fittingly, magician Dorothy Dietrich has conjured up a Houdini Museum to celebrate the greatest magic man of all time.  It defies belief that Scranton can stage a comeback, but magic is afoot.

Actor Paul Sorvino, abiding there, is trying to create a movie mecca on the Lackawanna (“Hollywood on the Lackawanna?,” New York Times, May 27, 2007):

As he tries to become a mini-movie mogul, Mr. Sorvino—actor, opera singer, sculptor, Italian foods purveyor—has found it necessary to try his hand at raising venture capital and lobbying politicians.  He has already convinced the government of Lackawanna County, home to Scranton, to supply more than half of the $820,000 shooting budget for “The Trouble With Cali.”  But negotiating partnerships with real estate developers and landing state financing for the $12 million to $15 million production facility are proving more difficult, bringing with them complaints of familial favoritism and even a run-in with Pennsylvania’s governor, Edward G. Rendell.

Since making the announcement of his wish to open a production house that would make up to five movies a year, Mr. Sorvino has looked at several possible sites.  After he toured a 125-acre former colliery in the nearby borough of Taylor, The Times-Tribune of Scranton ran an article that began: “Picture it: A former coal town reborn as Tinseltown east.”  This spring Mr. Sorvino began negotiations with Philadelphia-area developers who own an empty 336,500-square-foot factory on 223 acres 15 miles north of Scranton.

Sorvino pushes ahead, much against the wishes of several local interests, and without any help from Governor Rendell.  Rendell, a relatively enlightened politician who did a responsible job as mayor of Philadelphia, has big plans for Pennsylvania, but, typically, cannot get behind the little things that have dramatic consequences.  Bringing life and beauty to Pennsylvania’s battered cities is a challenge of a very high order, not something to be left to conventional planners.  Big-time politicians and businesspeople have no feel for the problem.  It requires an actor, sculptor, opera singer, and jack of all trades like Paul Sorvino—a cultural titan or cultural mongrel who is even something of an outcast.

Cities and Great Nations.  Jacobs and others have understood that cities—often seaports, incidentally—are the drivers of national growth.  You more or less have to get them right if a region or a nation is to prosper.  Even in these United States we can bear witness to states, particularly in the South and Southwest, that are stagnating because their leading citizens have no clue as to how to successfully urbanize.

We would contend that the key to healthy cities is culture.  It’s become a truism amongst economists and gurus of all stripes that the vital ingredient now for growth is ‘knowledge,’ not hard assets.  All sorts of people are trying to figure out how knowledge transfer occurs—inside companies, between companies, and between nations.  Generally they have not solved the puzzle, although information science types at various institutions have devised vast schemes for storing, transmitting, and accessing information.  But computers don’t get the job done.  Culture is the medium for transmitting knowledge, for teaching people on the street something new, for persuading rigid governors to a little show business.  Things get done because we have ‘heard it on the grapevine,’ not because a computer or institution spits it at us.  The face of SoHo or Scranton suddenly changes because somebody makes an eminently local movie, or because trompe d’oeil starts appearing on walls in Sullivan Street.  Knowledge, outside the life-giving medium of culture, simply withers, becoming an unused, unnoticed fossil.

A Costume Party.  In the late 1960s, when thoughts of student revolution still excited young minds, an instructor at New York University held a class on the American Revolution.  To whip things up, he asked the 30 or so attending, “How would you stage a revolution?”  He got the usual assortment of answers—guns, bombs, riots, furtive meetings, take over the college, etc.

But a smartly dressed young lady, off in one corner of the classroom, finally piped up, “Well, I would have a costume party.  People need to get into this thing.  We might as well laugh and look the part.”

As much as anybody, she got it right.  Nothing wrong with a little flair, a party, music that strikes a new note, a dish with Moroccan spices.  To effect change, one must affect all parts of the brain, and appeal to all the senses.  Culture is how it gets done.  This is as true for companies as it is for cities.

P.S.  The business schools used to have all sorts of prophetic types who spouted formulas for change.  For some reason, Rosabeth Moss Kanter’s Change Masters comes to mind.  We’re not hearing so much of her ‘change’ and ‘transformation’ stuff anymore, as almost everybody in big institutions and big companies realize “the more things (supposedly) change, the more they remain the same.”  Big organizations consolidate; small fry upset the apple cart.  “Plus ça change, plus c’est la même chose.”  Change, above all, is a creative act.

P.P.S.  Joseph Schumpter and a host of imitators have talked long and hard about “creative destruction,” where the old is devoured by the new.  Indeed, capitalism does a pretty good job at getting rid of old, antiquated structures.  In the present time, our financial system and private equity are tearing apart the world that was at a mad rate.  What’s less understood is putting new worlds together—how do you really create something new that builds a rounded economy?

P.P.P.S.  In today’s volatile circumstances, we would do well to better understand the Irish Miracle, which is much more astounding that the recovery of the German economy after World War II.  Long a sick man, Ireland sent its best abroad and ensured penury for those who stayed.  But the nation provided a marvelous education to its youngsters.  All at once, its government pulled back from its torturous interference in the economy and subsidies poured in from the European Union.  Its educated, young workforce went to work, and today the country sports the second best GNP in Europe, behind only Luxembourg.

P.P.P.P.S.  High-quality, earthshaking things regularly come to pass in regions and nations that the Masters of the Universe, who go the World Economic Forum, ignore.  For more on this, see our “Agile Countries” as well as “All Those Unfamiliar Places,” Harvard Business Review, November 2004. The big, established countries are rather oafish when it comes to doing something totally new.

P.P.P.P.P.S.  In “Going Upmarket in Stormy Weather,” we make reference to Richard Florida’s The Rise of the Creative Class.  He finds that regions without the right cultural ingredients don’t attract the kind of people who propel economic growth.  Interestingly, we notice that people won’t even migrate to the safer and healthier parts of the country if they seem too dull and sterile.

P.P.P.P.P.P.S.  The best artists we know always have been able to make fun of the creative process.  An award-winning painter never tired of saying, “Arts pecunia gratis.”  A fabulous Chinese-American potter, whom we bumped into regularly at gallery openings, explained that he came to all the shows, “So I can steal ideas.”  No matter how spiritual, successful creators have a terribly earthy side.  They’d pretty much say that creativity better have a big payoff.

P.P.P.P.P.P.P.S.  In “Sticks and Stones,” read about an earlier Philadelphia, where merchant Thomas Willing furthered Philadelphia as both leader and patron.  He commissioned furniture that has posterity.

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