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The Economics of Creative Business Leadership
Stuart Dixon is a senior lecturer in Economics at Maastricht University School of Business and Economics and part of our core Academic Faculty at the Berlin School. Dr. Dixon teaches regularly during our Berlin Modules, introducing participants to the foundations of economic modelling that can be used to break-down core business challenges and develop informed creative solutions in the face of disruptive technologies and market changes. We caught up with him and asked him about how economics is fundamental to creative decision-making, even in the most unpredictable of industries.
Tell us about the importance of economics to creative leaders?
I always start my EMBA classes by admitting, “Hey, you guys are creative, and economists are the least creative people out of any social scientists!” The myth is that we will come in and try to destroy that creativity. But when you breakdown the nature of creativity, just like economics, it’s a lot of hard work and a lot of hard thinking. The importance of economics to creative leaders is to understand what’s going on, and to really break things down to the basics. There’s a lot of complexity, particularly in the creative world, and sometimes it’s hard to see the wood for the trees and to identify what the key processes are that are driving things. Economists are extremely good at breaking things down to the basic elements; looking at the fundamentals that are driving businesses and changing the environment in which we’re working. I think this is important for people working in all sectors, but particularly those who lead creatively because it creates solid foundations for decision-making. Otherwise, we simply end up running our businesses with gut-feeling.
Would you say that economics is applied differently by creative leaders as opposed to in traditional leadership approaches?
Actually, I think the nice thing about economics is that it can be applied to anything. It’s about decision-making and examining why certain decisions are made. No matter what sector you work in, it’s important to be able to reduce your ideas down to key concepts and to ask yourself, “given this environment, what should we do next?” Because of the structural and mathematical nature of economics, you can change the parameters and the value of certain elements. That suddenly gives you a different outcome. For instance, during our class, we talk about simulations. Creative leaders love to learn through simulations, but in fact, at the core of any simulation is an economic model. I try to give the participants very simple economic models that they can understand. This is important because it’s easy to have fun when you do a simulation while not really understanding the core of the decision-process. It’s very important to be able to get down to the nitty gritty, even in a creative scenario. It enables people to make not only informed but creative decisions too. This decision-making power is important across all industries. It’s just as necessary in industries such an manufacturing, where decision-making is more predictable, as it is in design or media, where there isn’t so much predictability. Technology is constantly changing these environments, playing a detrimental role in areas like cinema and music, for example. Channels such as Netflix and Spotify are significant disruptors to these markets. Anyone working in an industry that’s facing this kind of disruption has to start thinking, what next? That’s why in the classroom, we’ve started looking at scenario-building to explore possibilities for the future of their businesses.
We teach creative minds from all over the world and from widely varying industries. How are the Berlin School EMBA participants distinctive from other students you engage with?
They are very different, I have to say, and it’s one of the reasons I love teaching these classes. They tend to come from very dynamic environments, not so much concerned with the same processes as typical MBA students from technical or engineering backgrounds, or who work in large, process-oriented organizations. Many of the participants are working in smaller organizations or are running their own business. They have a huge amount of mixed responsibilities on their hands. It takes a certain type of person to do that job. They are extremely focussed on looking for solutions, and looking for quick solutions. They’re also concerned about the future, new technologies, and new ideas. They’re very open-minded, whereas a standard MBA student, while they may have a technological background, may be more concerned with the problems at hand. Berlin School participants are very open to looking to the future, asking where they will be next year, what new technology is about to disrupt their industry, and most importantly, what they are going to do about it. Uncertainty is a massive challenge, not only in terms of strategy, but also when it comes to working with people. How do you lead people in that kind of uncertain environment? Throughout the EMBA program, the emphasis is on leadership and this is implicit in the way they think about revenue, growth, and change. They are concerned with keeping teams happy, productive, and creative while dealing with this pressure, and this is not something you always find in your typical leader. The world they live in seems almost chaotic sometimes, but they love it. That takes a special type of person.