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Last Updated on June 9, 2020 by admin
A few years ago, McKinsey published an article about how successful companies turn creativity into business value and growth. In other words, it looked at the business value of creativity. Most people would agree that creativity can help to present a brand as thoughtful or funny or inspirational; however, it seems much harder to assign business value to the trait.
Yet, many businesses that prioritize creativity experience greater revenue growth and outperform competitors in other key areas. So how exactly does a company prioritize creativity, innovation, and forward-thinking in a way that boosts organizational results? Let’s take a look.
What is Creativity, Anyway?
The McKinsey article found that most creative companies do certain things in a unique fashion and actually exhibit four business practices that boost marketing creativity, the ability for innovation, and the capacity to drive business value. Without further ado, those four things are:
- Hardwiring creativity and innovation in daily practices
- Becoming customer fanatics
- Feeding the need for speed
- Having an ‘adapt or die’ mindset
How did they arrive at these traits and also, how did they establish that creativity yields business value? McKinsey analyzed a well-recognized proxy for creativity and developed an Award Creativity Score (ACS) based on the Cannes Lions awards that are bestowed upon those that exhibit advertising and marketing excellence. To arrive at the ACS score, McKinsey looked at the total number of Lions won by a company between 2001 and 2016, awarding more points for the most prestigious awards; the breadth of the categories in which a company was represented; and consistency via the number of years that a company was recognized.
One of the key findings was that creative leaders outperformed their peers on key financial metrics. More specifically, of the companies that earned ACS scores in the top quartile outperformed their peers in:
- Revenue growth. 67% had above-average organic revenue growth.
- Total return to shareholders. 70% had above-average total return to shareholders (TRS).
- Net enterprise value. 74% had above-average net enterprise value or NEV/forward EBITDA2.
Let’s take a more detailed look at each of those traits.
Making Creativity and Innovation a Business Priority
Making creativity and innovation a business priority means discussing those topics at board meetings, which 30% of the firms with ACS scores in the top quartile do. Seventy percent of those top quartile firms also consider marketing an investment instead of an expense. Taking it one step further, roughly one quarter of top-quartile firms prioritize marketing spend. This perspective of marketing as a cost of goods sold rather than a discretionary operating expense impacts decision making in a unique way and influences how money is spent. Top-quartile firms have marketing budgets that exceed those of their peers by a measure of two-and-a-half times, and many allocate a good amount of that spend on data scientists, yielding best in class marketing capabilities.
Devotion to customers
Top ACS-scoring companies tend to reach beyond basic research methods (think surveys and focus groups) and dig into advanced analytics, behavioral analysis, and ethnographic research. Outstandingly creative companies did two things more than their peers: 1) regularly observed customers in the customers’ environments, and 2) understood customers’ problems through the lens of the creative organization’s products and services.
Speed to action
Top-ranking creative firms excelled at turning insights into action via new marketing campaigns or product launches and they did this faster than their rivals. In fact, nearly three-quarters (74%) said they made “sometimes fast” decisions where only 40% of other firms reported the same. Risk-taking was also encouraged internally at these firms.
More than quick decision-making, these firms were rigorous in identifying specific goals and attaching accountability for how and when those objectives should be met. That means clearly defining goals and establishing methods to track and report against them.
Adapting and evolving
Highly creative firms display an ability to adapt and evolve post-launch. They prioritized obtaining market feedback and leveraging those insights to evolve and improve. Almost two-thirds of those in the ACS top quartile reported that their firms tapped into early market signals to learn and adapt.
A Look From the Inside Out
Just this year, inMotionNow and InSource released the 2020 In-House Creative Management Report, which explores how organizations rate creativity’s importance in driving business results. The vast majority (89%) reported that creative work is important for driving business objectives. Creatives are also reporting more recognition, with 87% responding that they are getting the same or more credit for organizational results than in 2019. Not only are creative teams gaining more recognition, but they’re being tasked with more responsibilities, too. Roughly two-thirds say their organization has asked them to take on additional responsibilities.
Here’s where it gets interesting. While greater recognition and responsibility are things to celebrate, it also means that creatives are getting bogged down a bit:
- 72% of creatives say they struggle to keep up with content volume demands
- 73% of in-house creatives say they are challenged by the speed at which their organization expects them to complete work
- 63% report not being able to focus on strategic initiatives due to the demands for volume and speed of work
- 47% are spending one full day every week on administrative tasks
As we move deeper into 2020 and face additional challenges posed by the pandemic, this begs the question of how organizations will pivot to address the need for creativity and innovation — and the bandwidth needed to do it all.
As many workers have moved remote (and may stay that way for the foreseeable future and beyond), it will be interesting to see how in-house creative teams evolve. It may trigger a speedier pivot towards tapping outside collaborators to help with workloads. Depending on a firm’s marketing department and hierarchy, it may make sense to outsource content needs to enable the core team to focus on more strategic initiatives. Not only does this solve for the bandwidth constraints, but it allows marketing departments to be faster, more nimble, and more strategy-focused. As many organizations begin leveraging technology that streamlines remote collaboration, this may be a simpler transition than it would have been in the past.
Regardless of how organizations choose to address the current constraints on creative teams, one thing is clear: creativity does have business value and can contribute to revenue growth and other financial indicators in a big way. Prioritizing creativity — and adjusting marketing budgets to support the push for innovation — will be key for companies looking to thrive in 2020.
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