We are delighted to learn about the recognition of Sir Jonathan Ive’s contribution to the worlds of consumer technology and product design through his knighthood in the New Year honours which we also write about in our newsletter Altitude.
Sir Jony’s contribution to Apple is an example highlighting four observations:
- Excellence in creativity can build assets generating enormous earnings and value;
- Excellence in creativity alone is not enough, but its partnership with excellence in business is both powerful and necessary;
- Britain’s top creative talent often ends up leaking out of this country overseas with the effect that the value created accrues to overseas companies and their investors; and
- Understanding the landscape in the creative industries requires an understanding of the roadmaps in technology and digital media.
These observations are why Ascension came into being and why in 2012 we’re launching Ascension Seed Capital for Creative Enterprise and Digital (ASCEND®) – the UK’s first Seed Enterprise Investment Scheme Fund.
The value of excellence in Creativity
It’s not difficult to see how much value creation Sir Jony has contributed to in the last 14 years at Apple. From 1997 following Sir Jony’s inspired efforts, Apple launched the iMac, MacBook and MacBook Pro, iPod, iPod Touch, iPhone and iPad all with the same attention to detail in hardware and software design that has made the products coveted the world over.
In that time Apple has gone from needing a $150 million bailout from arch rival Microsoft to survive to becoming the world’s second largest company by market capitalization today worth c. $380 billion. After adjusting for stock splits and dividends, the value of Apple shares has gone up over 100 times so the value created has been some $376 billion (or at today’s exchange rates, more than £235 billion).
The question then is how much of that value has accrued to Sir Jony himself and how much to Britain in the hands of British investors? It has been reported that Sir Jony is due to receive £15m in Apple shares in 2012 following the company’s most successful year ever – so we estimate over the 14 years Sir Jony’s compensation has been a fraction of the value created, perhaps 0.05%.
And of the 71% of Apple currently held by institutional and mutual fund owners less than 5% is held by UK funds. We expect a detailed analysis of UK ownership over the 14 years would reveal that the vast majority of the value created in Apple has been captured by US investors.
The value of excellence in Business
Clearly Apple’s success is not just about Sir Jony’s great designs but the recognition of and harnessing of his genius by the late Steve Jobs on his return to the company he founded in 1997. Thereafter Steve Job’s marketing genius, his vision and leadership of the company, his strategic decisions to lead Apple from simply making computers into a consumer technology business marrying hardware and software to build platforms for media consumption has made Apple the great company it is. Apple’s ruthlessness in operations, quality control and driving down supplier costs have built its enduring competitive advantage. This excellence in business has translated into billions of dollars of value. An article by Ndubuisi Ekekwe in the December 2011 Harvard Business Review makes the same point in the technology sector, where Microsoft and Intel both owe their success to a combination of excellence in technological invention and innovation and what he calls “latent factors” – business features outside the scope of the core tech team. But like everything in the creative industries, such as movies where success starts with a great script, creativity is where it all begins.
Britain’s excellence in Creativity
Britain has long punched above its weight in creativity and is seen as a leader around the world. In film, television, music, interactive entertainment, fashion and product design, British creative talents coming out of British schools, colleges and universities have gone on to command top positions in US and European fashion houses, entertainment companies and consumer technology firms.
Of the few British based global successes such as Paul Smith and Vivienne Westwood in fashion, James Dyson in industrial design, Simon Fuller’s 19 and XIX in entertainment, and Michael Acton-Smith’s MindyCandy in social and digital media demonstrate the vast potential in value creation on a global scale accessible by British creative talent.
Sir Jony is sometimes referred to as one of Britain’s greatest “exports” but as I said above, the export of Sir Jony’s talents has done little to the balance of trade for UK plc and the UK economy.
The internet and in particular the mobile internet, app and social media platforms and e-commerce, and their rapid adoption by consumers and resulting changing patterns of behaviour in consumption now provide increasing opportunities for British creative talent to reach global audiences. Building global businesses in the UK generates real export earnings, employment and economic growth.
Why does it matter?
At a time of difficulty in the UK economy the creative industries represent the shining beacon towards the way out for the UK. The creative industries contribute £59.1bn to the UK economy or 6.1% of GDP. That’s the same size as the financial services sector in the UK.
In fact, over the last two decades the creative industries have outgrown the rest of the economy and the trend is forecast to continue (Source: PWC Global Entertainment and Media Outlook, June 2011). At a time when figures from the Centre of Economic and Business Research’s annual world economic league table show Britain as now the seventh richest country in the world having been overtaken by Brazil and predicted to fall back even further to eighth by 2020 (Source: CEBR. 26 December 2011), now it is more important than ever for greater recognition of British excellence in creativity and encouragement for investment in the value creation opportunities in the creative industries.
What is being done about it?
Greater recognition of the value of design given by the knighthood of Sir Jony is a start but in many ways highlights the failings of Britain’s ability to retain top talent. Part of the problem is a serious market failure to provide creative talent with both the skills of entrepreneurship and requisite investment behind their talent. More creative entrepreneurs retaining more of the value generated by their creativity for themselves and their home-grown companies that provide the infrastructure and business skills outside the scope of the core creative can only be good for UK plc. Doug Richard’s social enterprise, School for Startups, has a School for Creative Startups Programme, designed to equip creative talent with at least the realisation that, with help, they can build businesses of value. Past governments have tried to promote investment in segments of the UK creative industries such as film with targeted tax breaks that led to abuse. At last, in response to the difficult economic times, the UK Government is introducing a measure from April 2012 which, although not aimed at the creative industries specifically should, if successful, go some way to addressing market failure, in the form of the new Seed Enterprise Investment Scheme. It’s a scheme almost tailor made for the creative industries, where relatively small amounts of investment in enterprises combining excellence in creativity with excellence in business can deliver spectacular bang for the investment buck.
Arise Sir Design Guru
We are delighted to learn about the recognition of Sir Jonathan Ive’s contribution to the worlds of consumer technology and product design through his knighthood in the New Year honours which we also write about in our newsletter Altitude.
Sir Jony’s contribution to Apple is an example highlighting four observations:
These observations are why Ascension came into being and why in 2012 we’re launching Ascension Seed Capital for Creative Enterprise and Digital (ASCEND®) – the UK’s first Seed Enterprise Investment Scheme Fund.
The value of excellence in Creativity
It’s not difficult to see how much value creation Sir Jony has contributed to in the last 14 years at Apple. From 1997 following Sir Jony’s inspired efforts, Apple launched the iMac, MacBook and MacBook Pro, iPod, iPod Touch, iPhone and iPad all with the same attention to detail in hardware and software design that has made the products coveted the world over.
In that time Apple has gone from needing a $150 million bailout from arch rival Microsoft to survive to becoming the world’s second largest company by market capitalization today worth c. $380 billion. After adjusting for stock splits and dividends, the value of Apple shares has gone up over 100 times so the value created has been some $376 billion (or at today’s exchange rates, more than £235 billion).
The question then is how much of that value has accrued to Sir Jony himself and how much to Britain in the hands of British investors? It has been reported that Sir Jony is due to receive £15m in Apple shares in 2012 following the company’s most successful year ever – so we estimate over the 14 years Sir Jony’s compensation has been a fraction of the value created, perhaps 0.05%.
And of the 71% of Apple currently held by institutional and mutual fund owners less than 5% is held by UK funds. We expect a detailed analysis of UK ownership over the 14 years would reveal that the vast majority of the value created in Apple has been captured by US investors.
The value of excellence in Business
Clearly Apple’s success is not just about Sir Jony’s great designs but the recognition of and harnessing of his genius by the late Steve Jobs on his return to the company he founded in 1997. Thereafter Steve Job’s marketing genius, his vision and leadership of the company, his strategic decisions to lead Apple from simply making computers into a consumer technology business marrying hardware and software to build platforms for media consumption has made Apple the great company it is. Apple’s ruthlessness in operations, quality control and driving down supplier costs have built its enduring competitive advantage. This excellence in business has translated into billions of dollars of value. An article by Ndubuisi Ekekwe in the December 2011 Harvard Business Review makes the same point in the technology sector, where Microsoft and Intel both owe their success to a combination of excellence in technological invention and innovation and what he calls “latent factors” – business features outside the scope of the core tech team. But like everything in the creative industries, such as movies where success starts with a great script, creativity is where it all begins.
Britain’s excellence in Creativity
Britain has long punched above its weight in creativity and is seen as a leader around the world. In film, television, music, interactive entertainment, fashion and product design, British creative talents coming out of British schools, colleges and universities have gone on to command top positions in US and European fashion houses, entertainment companies and consumer technology firms.
Of the few British based global successes such as Paul Smith and Vivienne Westwood in fashion, James Dyson in industrial design, Simon Fuller’s 19 and XIX in entertainment, and Michael Acton-Smith’s MindyCandy in social and digital media demonstrate the vast potential in value creation on a global scale accessible by British creative talent.
Sir Jony is sometimes referred to as one of Britain’s greatest “exports” but as I said above, the export of Sir Jony’s talents has done little to the balance of trade for UK plc and the UK economy.
The internet and in particular the mobile internet, app and social media platforms and e-commerce, and their rapid adoption by consumers and resulting changing patterns of behaviour in consumption now provide increasing opportunities for British creative talent to reach global audiences. Building global businesses in the UK generates real export earnings, employment and economic growth.
Why does it matter?
At a time of difficulty in the UK economy the creative industries represent the shining beacon towards the way out for the UK. The creative industries contribute £59.1bn to the UK economy or 6.1% of GDP. That’s the same size as the financial services sector in the UK.
In fact, over the last two decades the creative industries have outgrown the rest of the economy and the trend is forecast to continue (Source: PWC Global Entertainment and Media Outlook, June 2011). At a time when figures from the Centre of Economic and Business Research’s annual world economic league table show Britain as now the seventh richest country in the world having been overtaken by Brazil and predicted to fall back even further to eighth by 2020 (Source: CEBR. 26 December 2011), now it is more important than ever for greater recognition of British excellence in creativity and encouragement for investment in the value creation opportunities in the creative industries.
What is being done about it?
Greater recognition of the value of design given by the knighthood of Sir Jony is a start but in many ways highlights the failings of Britain’s ability to retain top talent. Part of the problem is a serious market failure to provide creative talent with both the skills of entrepreneurship and requisite investment behind their talent. More creative entrepreneurs retaining more of the value generated by their creativity for themselves and their home-grown companies that provide the infrastructure and business skills outside the scope of the core creative can only be good for UK plc. Doug Richard’s social enterprise, School for Startups, has a School for Creative Startups Programme, designed to equip creative talent with at least the realisation that, with help, they can build businesses of value. Past governments have tried to promote investment in segments of the UK creative industries such as film with targeted tax breaks that led to abuse. At last, in response to the difficult economic times, the UK Government is introducing a measure from April 2012 which, although not aimed at the creative industries specifically should, if successful, go some way to addressing market failure, in the form of the new Seed Enterprise Investment Scheme. It’s a scheme almost tailor made for the creative industries, where relatively small amounts of investment in enterprises combining excellence in creativity with excellence in business can deliver spectacular bang for the investment buck.
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