Creative Economy’s Naked Truth

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The unceremonious dumping of Dov Charney from American Apparel may seem like a one-off, anomalous event. But get ready for more; from now on we’ll probably see additional blowups like the one that occurred at the downtown L.A. company a couple of weeks ago.

Why? Because of the rise of the creative economy – and the oddballs who come with it.

Charney is, more than anything, a creative guy, even an artist of sorts. And increasingly, imaginative iconoclasts like him (OK, maybe not quite like him) are rising in companies that, more than ever, rely on creative types to design their products and deliver their services.

And as these impetuous, creative types take their seat in what had been the buttoned-down corner office, the more fireworks we’ll see. Imagine “Animal House” overrunning the Wharton School of Business.

This is all fairly new. American companies have always been run by cool-headed professionals. They study hard to get their M.B.A.s, march upward through the management ranks hopefully without rocking too many company boats, and a select few outstanding performers or owners’ children rise to the top. This climb up the company ladder favors the steady, scrupulous rule-followers; it winnows out the oddballs and hot-headed rebels, even if they are creative geniuses.

And it’s a system that worked well – when the world favored a globally efficient system that produced predictable products and services that were constantly improved and cost a little less each year.

But increasingly, we want fewer inexpensive mass-market products and more that are, to use the cliché, disruptive. We want stylish headphones, socially conscious shoes and innovative apps. Today, low cost is less important; innovation, design and entertainment are more important.

One measure of this trend is the so-called creative economy. No doubt it’s been rising. As far back as 1997, the economic value of copyrighted goods in the United States exceeded that of manufactured goods for the first time.

And, of course, Los Angeles is a capital of this trend. According to a report on the creative economy put out by the Otis College of Art and Design in February, one in seven jobs in the L.A. region is tied to creative pursuits. In fact, creative businesses account for more than 10 percent of L.A.’s economic output. Not surprisingly, according to that report, 44 percent of California’s creative jobs are in the L.A. area.

Of course, all this means the bloodlessly efficient manager of the past is being pushed aside by the artistic type who may be a misfit – the one who not only doesn’t always follow the rules but may be congenitally contemptuous of them; the one who may not be polished or even polite but may be undeniably brilliant. Exhibit A: Steve Jobs of Apple – a prickly and impetuous genius who was once exiled by his directors.

On the one hand, Dov Charney is a creative innovator. He started American Apparel from his dorm room and quickly built it into a quirky powerhouse that, for years, set the standard in classic, youth-oriented apparel.

But on the other, Dov Charney had to go. His company lost its way and its financials have swooned alarmingly for years now. And, of course, his reported behavior was so excessive and so routinely groan-inducing that even an indulgent board had to take action. Supposedly you can see video on the Internet of him dancing naked. (As a journalist, I should have verified that. As a human, I had to pass.)

My only point is this: As we get more and more into the creative economy, we’ll see fewer William Whyte-like organization men and women run companies and more artistic geniuses and giggling rule-breakers like Dov Charney.

Well, OK. Maybe not quite like Dov Charney.

Charles Crumpley is editor of the Business Journal. He can be reached at [email protected].

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