Why brands need creative strategy

Creativity has to be at the center of business transformation

Welcome to the Sociology of Business. In my last analysis, The creative economy, I analyzed how brands exploit time to make money. Buy my book The Business of Aspiration and find me on Instagram, Twitter, and Threads. With one of the paid subscription options, join The Sociology of Business WhatsApp Community.

A McKinsey study found that companies that prioritize creativity have 67 percent above-average organic revenue growth and 74 percent above-average net enterprise value. 

Creativity has a superior business value, yet it is too often siloed in “creative” departments, like design or marketing. This is understandable: traditional companies organizationally separate idea generation from idea commercialization. 

It also doesn’t work anymore. 

A lot of creative industries have been forced to accelerate their creative output, in the always-on cadence. Pressure for immediate productivity leads to unremarkable work, and is a reason for endless sequels, reissues, archive reboots and self-referencing across creative industries. Productivity pressure also leads to creative directors’ short tenures. For the time they are given, creative directors can, at best, offer their interpretation of the brand codes and archives. The newness imperative and the compressed business calendars don’t really let them come up with original ideas, much less allow those ideas to grow and mature. 

Paired with this creative acceleration is a business pressure to execute and to hit quarterly financial targets. Business performance is designed to be short-term, together with accompanying metrics and expectations of commercial results.

When Pierpaolo Piccoli left Valentino, the fashion industry reacted with a cry for “a need for the intangible, for that magic alchemy that creates and delivers dreams.” Tell that to a CFO.

The disconnect is growing between creative industries’ need for time to develop and unfold an original idea, which is unpredictable, and a rigid financial calendar that demands predictable financial outcomes. Long-brewing brand desirability goes against the quest for immediate returns. Calvin Klein’s Jeremy Allen White campaign from January generated 40M views on CK’s Instagram and drove 85 percent YoY brand engagement increase. At the same time, Calvin Klein’s stock fell 20 percent and sales in North America dropped 8 percent YoY. 

“The dismal sales figures are a reminder that turning around a brand as big as Calvin Klein takes time — and more than just one campaign,” concluded the Business of Fashion.

Companies’s response to the disconnect has been to keep trying to fit their creative output into the business models that have not changed for decades. In fashion, that means seasonal collections, shows, capsules and special projects. Since improving execution yields an immediate payoff, and creativity doesn’t, the focus is on the ever-increasing investments in the existing business models. In fashion, this means the more and more expensive fashion shows. 

Demand to deliver great ideas that yield immediate results puts pressure on creative departments, most notably on creative directors. A recent Financial Times article, discussing Kering’s profit warning, was titled “Sabato de Sarno, the designer who must turn around Gucci.”

It is deceivingly simple to look at a newly appointed designer as a brand savior. Designers are part of a complex web of operational, logistical, commercial and strategic decisions. In the past decade, Gucci’s strategy has been to target younger, aspirational shoppers at the expense of the older, more price elastic, luxury ones. As a result, Gucci built strong fashion-forward credentials, which were a wind in its sails until the fashion currents changed. This all happened before Sarno’s appointment, and the results of both de Sarno’s efforts and the efforts of the entire Gucci organization will take a considerable investment of time, money, and expertise.

A brand turnaround also requires a creative approach to the organizational transformation. The solution to having the original creative output is to set the business for it. 

This does not, mercifully, mean that everyone in the organization needs to be creative (it’s ok that financial controllers, for example, are not). It means adopting a creative approach to business opportunities across functions of marketing, merchandising, PR, retail experience, customer service, commercial planning and market growth. It also means having a clear business and brand vision and aligned functional incentives to achieving it; a strong cross-functional leadership that remains their teams of the common brand and business goals; and realistic return on investment and timelines across corporate activities. 

Creativity is an approach, rather than just the output. As an approach, creativity focuses on business opportunities across corporate functions. As a strategy, creativity marries the process of idea generation and idea commercialization into organizational “middleware.”

This middleware combines the role of disorder in the creative industry and strategic rigor of running a business. Creative markets are inherently unpredictable, and this unpredictability has only accelerated. They have a lot less time to come up with, and test, these new ideas. The rules of selling creative products have dramatically changed, as well. Time to market is compressed and companies are often forced to test and try ideas in the world, where they live or die. This forces companies to adopt a portfolio approach: to have a lot of ideas versus just one “big” idea, and to capture a lot of cultural moments versus just one “big moment.”

The creative industry doesn’t need a more efficient execution; it needs more creative responses, processes, and business models. 

In particular, this means: