Title: "Creative Capital Theory, a new rationale for employee-centric workplace change." Author: Paul Stephensen MCI.

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Abstract This paper provides a broad literature review of creative capital theory by identifying main authors and themes that suggests creative capital theory can be used as a way of making the modern workplace more employee-centric. The review of literature is achieved within this paper by identifying and comparing key themes in the creative capital theory literature, the knowledge economy literature and by an examination of works from authors such Adam Smith, John Maynard Keynes, Charles Leadbeater, Richard Florida and Samuel White. This paper then goes on to explain and discuss what is meant by the term Creative Capital Theory, who the Creative Class are and identifies the preferred working styles of the Creative Class.

Introduction
Many external economic factors have been identified that see a new set of economic phenomena, each having a number of impacts on organisations and their workers. For example, researchers, such as Florida (2002), Choi (2003) and Saxenian (2002), found that the escalation in the growth of cities is built upon the growth of certain creative classes, each able to create new ideas and new businesses (Choi, j. 2003:73). Firstly, the knowledge economy is transforming into the creative economy that is being driven by the creation and sale of creative content, which in turn sees the creative industries rising in economic importance (Florida. 2002). The second phenomena relates to the fact that talented and creative people are concentrating in clusters within Cities that offer them a certain lifestyle and employers who offer them work styles that suit their work-style preferences, which is evidenced in a review of Creative Capital theory.

Literature review of Creative Capital theory.

Workplace change is not new and is often seen as an externality of economic policy and social change. By this I mean that in the past workers had work where the work was and when the employer told them to. Most often though, it has been technology that has driven how we produce things, and economic theory and policy were developed to model these instances.

For example, Adam Smith, a Scottish political economist and moral philosopher, who wrote The Causes of the Wealth of Nations discussed these effects in his examination of the historical development of industry and commerce in Europe during the 17th century (Wikipedia, 2006: Adam Smith). Smiths research helped to create the modern academic discipline of economics, and provided one of the best-known intellectual rationales for free trade and capitalism of its era, as well as predicting the social and workplace changes of the time as Europe moved from being an agricultural society to an industrial one (Wikipedia, 2006: Adam Smith). John Maynard Keynes, published The General Theory of Employment, Interest and Money in 1936 and was a direct response to the Great Depression of the 1930s (Wikipedia contributors, 2006: Keynesian economics). Keynes's argument developed the more generic approach to economic theory which became known as macro-economics, and that economic trends could be measured to assess their effect on individuals which became known as micro-economics (Wikipedia contributors, 2006: Keynesian economics).

The Knowledge Economy

From the mid 1990s a new economic view was forming that argued that we were now living in a society that changed from being an industrial society to a knowledge based society, and this view would have a significant effect on work. Perhaps the most well known champion of this set of beliefs was Charles Leadbeater who wrote Living on Thin Air The New Economy (Leadbeater. 1999). While current at the time of its writing, this was about how we were all

earning a living from our ideas and know-how, rather than making physical things as we once did (Leadbeater, 1999). Leadbeater compared knowledge to the old capitalism, telling us that knowledge was the critical asset and that people and their knowledge are as important as raw materials, land, labour and machinery (Leadbetter.1999). The new assets he argued were know-how, creativity, ingenuity and imagination (Leadbetter.1999). Leadbeater predicated this argument on the theory that there was a new previously unimagined level of knowledge flowing from science and education. Leadbeater built on this premise by arguing that we were even better equipped to share and combine our know-how through communications (Leadbeater.1999:47). Thus, Leadbeater predicted that economic growth would be endless and know no boundaries. However, he also warned that the new economy was perilous as well as powerful (Leadbeater.1999:113). Leadbeater also championed the notion that an economy driven by creativity and knowledge would be more humane as it would bring greater meaning to how we lived and worked (Leadbeater.1999:117). However, what was to unfold was a sense of economic doom and gloom as the new economy collapsed after the NASDAQ and dot.com bust of the in 2001. The effects of this economic collapse were devastating and many people believed that are their lives were out of control, dominated by soulless financial markets and clouded by the insecurities bred by corporate downsizing (Leadbeater.1999:135). The main themes to be found within Living on Thin Air pertain to how organisations and individuals can create environments that are not only innovative but are also non-exclusive. This is why Leadbeater argued that societies could achieve the most out of people if they were moulded to be the vessels of the creation of knowledge capital and social capital which was radically different to the theories generated by the neo-classical, Keynesian and monetary schools of economics. However, it should be noted that there is link to the classical economist such as Adam Smith who argued that well managed economic policy would lead to more social and corporate policies. Lead beaters most significant contribution to the literature is that he actually included a method on how we could create competitive communities that would allow us to work together and compete in the global economy. This is an example of what I wish to

convey by the term new Marxism that sees a turn in organisational change, having the potential to bring back much greater control to the workers, although Leadbeater would probably argue that his view is more about social responsibility than Marxism. We can see this Marxist accent in Leadbeaters thoughts that say there is a new constitution for the new economy as Leadbeater predicates his model of entrepreneurial] economic activity for the broader population and not just a select few. Leadbeater also predicted that companies would restructure themselves to be more like brains and that if financial risk was to be limited, then financial ownership should be spread more broadly. This prediction also foretold of how companies would become networks of companies which would become the main way of organizing the knowledge economy (Leadbeater.1999). Leadbeater also argued for a radical overhaul of corporate and government institutions which he saw as being an inheritance from the industrial economy and that they no longer were in sync with a knowledge economy (Leadbeater.1999). Leadbeater also championed the thought that these new structures should include new ways of measuring economic value, taxation and social entrepreneurship (Leadbeater.1999:141). In summation, Leadbeater argued that the knowledge economy would enable greater knowledge sharing and new ways for us to re-work the distributed networks of organisations which could be achieved via teams of entrepreneurs and independent agents(Leadbeater.1999:195). Leadbeater has published two other books, Up the Down Escalator, The Weightless Society and a dozen or so landmark papers that deal with the Knowledge Economy. These publications help mark him as a significant author whose opinion is well respected and often sought for consultation by government organisations around the world.

What is Creative Capital Theory?

Richard Florida (2002), started formal research into the field known as Creative Capital Theory with the publication of his monograph Rise of the Creative Class and How it is Changing Work, Life Leisure and Everything in 2002 (Florida. 2002). Floridas work is perhaps most famous for his use of the term the Creative Economy and the Creative Class to define the new economy and the people who drive it, (Florida, 2002: ix). Further infamy has

come from his argument that the creative economy has been spurred on by the creative age and that we need a new way of thinking about this new age and economy in order to better understand it, which Florida believes can be achieved by the use of Creative Capital Theory.

Florida argues that the industrial age included the ability to source, extract and process large quantities of natural resources and manufacture them as goods for sale. Firms looked for competitive advantage in easy access to transportation routes, how productive the workforce could be, and how much it cost to do business in city or region (Donald and Morrow. 2003:2). This creates the juxtaposition of Firms that must work in the Creative Economy where the creative economy focuses on both thequality dimension and the innovative dimension (Donald and Douglas. 2003:2).

Economists such as Donald and Morrow support this belief (2003)[, and] tell us that their[s] has been an important shift away from the previous notions of economic competitiveness[,] and that competitive economic advantage is closely linked to the economies of scale that could be only be achieved by large firms and the manufacturing industry locating themselves in large cities and city regions (Donald and Morrow, 2003:2). Thus Donald and Morrow (2003) argue further that competitive economic advantage is driven by those who can innovate and bring new ideas, products and services to market before their competitors do (Donald and Morrow, 2003:2).

Florida, in his definition of who makes up the Creative Economy, tells us that the Creative Class they are made up of a number of creative specialties that include; Research and Development Publishing Television and Radio Design Music Film Toys and Games Advertising Architecture Performing Arts

Crafts Video Games Fashion Art (Florida, 2002:47)

Florida then defines the Creative Class who work in these industries but that there are some that drive the Creative Economy more than others and he call this The Super Creative Core of the Creative Class; The distinguishing characteristic of the Creative Class is that its members engage in work whose function is to create meaningful new forms. I define the Creative Class as consisting of two components. The Super Creative Core of this new class includes scientists and engineers, university professors, poets and novelist, artists, entertainers, actors, designers, architects, as well as the thought leadership of modern society: non-fiction writers, editors, cultural figures, think-tank researchers, analysts and other opinion-makers. Whether they are software programmers or engineers, architects or filmmakers that fully engage in the creative process (Florida, 2002: 69). Whyte penned his best-selling monograph, The Organization Man (1956) which argued that entrepreneurial vigour and daring in business, which we call innovation and creativity today, was being stifled by the cooperative culture of the time (Kaufman, 1999). From the literary point of view, this is one of the earliest references to work styles for post World War Two America. Whyte shares some similarities with Floridas main themes, for example, Whyte wrote that corporate norms based on the pursuit of safety and security and characterized by conformity had spread to academic and scientific institutions and prevailed in the whitecollar suburbs (Kaufman, 1999). The similarities between Whyte and Floridas work can be seen in the following, it shows that Whytes rhetoric is controversial as it takes the opposing view to the norms of the day and he claims that it is something new as well; This book is about the organization man. If the term is vague, it is because I can think of no other way to describe the people I am talking about. They are not the workers, nor are they the white-collar people in the usual, clerk sense of the word. These people only work for The Organization. The ones I am talking about belong to it as well. They are the ones of our middle class who has left home, spiritually as well as physically, to take the vows of

organization life, and it is they who are the mind and soul of our great self-perpetuating institutions (Whyte, 1956: Chapter 1, Introduction, Web Version). Whyte goes on to justify his view of the organization man by defining the terms of his rhetorical argument that Corporations in the 1950s expected total loyalty from their employees, and that you as an employee had to conform to strict dress codes, working hours, where you lived and who you socialized with, and that you had to join the appropriate social institutions of the day to validate your sense of belonging and that your social ties were strongly aligned with the views of those held by the Firm; Let me now define my terms. By social ethic I mean that contemporary body of thought which makes morally legitimate the pressures of society against the individual. Its major propositions are three: a belief in the group as the source of creativity; a belief in "belongingness" as the ultimate need of the individual; and a belief in the application of science to achieve the belongingness. (Whyte, 1956: Chapter 1, Introduction, Web Version). What is apparent in both works is each author has noted that there is always a managing class that controls production element of business, for Whyte it was the Corporate Structure and Culture of his time. Florida uses Whytes work to highlight this difference in corporate culture in the creative age. This is why Florida uses the analogy of two travellers coming to live in the present, one from Victorian England and One from Americas 1950s. It is Floridas belief that it would not be the Victorian visitor that would feel the most difference, but actually the visitor from the 1950s as his view would be so steep in Corporate Man Culture that he would not be able to cope with the change of work styles which would have affected so much of his dayto-day life; in essence, the culture shock would be too much for him; Our second time traveller, however, would be quiet unnerved by the dizzying social and cultural changes that had accumulated between the 1950s and today. At work he would find a new dress code, a new schedule, and new rules. He would see office workers dress like folks relaxing on the weekend in jeans and open-necked shirts, and be shocked to learn they occupy positions of authority. People at the office would seemingly come and go as the pleased. The younger ones might sport bizarre piercings and tattoos. (Florida, 2002:3) Florida uses this analogy to contrast work styles and common perceptions of 1950s America with the present from a conservative view point. This is an example of how Richard Floridas work will help to underpin the pathos of my research project as he is by far the most notable author in relationship to working styles of the creative class in the available literature.

For example, Rise of the Creative Class contains a chapter devoted to these important themes called simply Work. In this chapter Florida discusses the difference between working styles of the industrial economy and the Creative Economy. Florida identifies a change in job preference and argues that people want to have jobs that are more stimulating and creative. This argument is further reinforced when Florida states that: creative people require more than compensation for their time a quid pro quo trade of time and effort for cash and other financial considerations. You cannot motivate the best people with money Money is just a way to keep score; the best people in any field are motivated by passion. (Florida. 2002:87). Therefore, what is most evident from this part of Floridas work is that he has contributed an identification of the major factors that motivate the Creative Class which forms the basis of what their preferred work styles are. Floridas work preferences for the Creative Class have been summed up by him in the following Top 10 List: Challenge and Responsibility - Being able to contribute and have impact; know that ones work makes a difference. Flexibility Flexible schedule and a Flexible work environment; the ability to shape ones work to some degree. A stable work environment and relatively secure job- Not life time security with mind numbing sameness- but not a daily diet of chaos and uncertainty either. Compensation especially base and benefits: money you can count on. Professional development the chance to learn and grow, to expand one horizon for the future. Peer Recognition the chance to win the esteem and recognition of others in the know. Stimulating Colleagues and Managers Creative people like to be around other creative people, and they prefer leaders to neither micromanage or ignore them. Exciting Job Content - The Chance to work on projects and technologies that break new ground or pose interesting intellectual problems

Organizational Culture an elusive term that can include some factors already mentioned plus more; perhaps best put for now simply as a culture in which the person feels at home, valued and supported. Location and Community a big factor on which I will say much more later.

(Florida, 2002:92)

Conclusion This paper presents evidence that a number of work styles can contribute to workplaces by changing organisational culture, and that management styles help to foster a creative working environment which in turn helps the employee to have more control of how, when and who the employers will be. This theory can be evidenced in Richard Floridas top ten work styles of the creative class. Floridas work on Creative Capital Theory should not be dismissed lightly as there are many supporting arguments that the Creative Class prefer work styles that foster a positive, creative and professional environment that empowers the employee with greater career control.

The impact of this view is that as creative workplaces become more employee-centric, will there]be a situation developing that sees like-minded employees and employers agreeing to such conditions which will help develop a new progressive workplace. This new workplace will focus on creativity where individual talents are recognised as a way of encouraging increased employee satisfaction. This, Florida suggests, would lead to increased productivity and increased sales and revenue through the creation of new patents and innovative designs. The answer, I am sure, will be found through more research into this area.

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