What are the biggest challenges for our creative industries?
The outgoing Creative Industries Innovation Centre has done some very valuable work in its six year history. This month it unveils the 2014 Forensic Reports which examine eight creative sectors and reveal some critical trends across the industry.
Trends and challenges
• Globalisation & offshoring: The CIIC’s Forensic Reports show a growing proportion of creative work is moving to more affordable offshore markets – a trend exacerbated by the high Australian dollar.
• Margin squeeze: In many creative sectors, margins are being squeezed, at one end by a new breed of nimble start-ups with low overheads and by multi-service one-stop-shops and multinationals at the other. In the fashion sector, international labels like Zara, Topshop and Uniqlo now claim a large slice of the market. In architecture, engineering and construction firms are competing aggressively on cost.
• Structural change & business modeling: Apps, cloud computing and 3D printing are enabling new revenue models, such as Software-as-a-Service, Freemium or advertising-supported models, with many creative businesses viewing these emerging models as threats rather than opportunities.
• Ferocious competition: Creative businesses are now competing with their kin, their prey and their predators. Need branding? Ask your architect. Need graphic design? Try crowdsourcing, or a DIY web tool. Many creative entrepreneurs fail to understand the total competitive landscape, which means they are forced to compete aggressively on cost.
• DIY operators: The impact of nimble sole traders with little or no start up and overhead costs is being felt more obviously in sectors such as publishing where citizen journalists and not-for-profit substitutes abound.
• User experience design: The importance of user experience design is more prevalent within a range of sectors from software, app and game development to fashion design.
• Weak business development: Many creative business owners are heavily involved in their business, but fail to take enough time to work on their business. The Forensic Reports highlight typical problems that manifest are a lack of strategic planning that is actually strategic, development and retention of key staff, adequate business development and sales planning, poor cash flow and workflow management, profit erosion and low staff morale.
• Sales and marketing: If everybody is saying the same thing, it’s not that special, yet many creative businesses fail to develop a unique value proposition or a robust sales and marketing plan.