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Creativity boosts financial results

News, 20 June 2017
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CANNES: Companies that excel in the area of creativity outperform their rivals in terms of financial results, according to research from McKinsey, the management consultancy.

Jason Heller, Partner/Global Lead Digital Marketing Operations & Technology at McKinsey, discussed this topic at the 2017 Cannes Lions International Festival of Creativity.

More specifically, he reported that businesses which lead the way in the creative arena, as a general rule, witness equally impressive outcomes in organic revenue growth, total return to shareholders and net enterprise value.

"These are three key measures that senior executives [and] boards of directors – the folks that are actually driving the direction of these large organizations – are using to make investment decisions," said Heller. (For more details, read WARC's exclusive report: McKinsey quantifies the business impact of creativity.)

Such conclusions were reached following analysis conducted by McKinsey on 16 years of data drawn from the Cannes Lions awards.

Using criteria including the number and prestige of the Lions a company has won, the breadth of categories where it claimed prizes and consistency over time, McKinsey arrived at an "Award Creativity Score" (ACS) for the featured firms.

And 67% of the organisations in the top quartile of the ACS ratings, the consultancy revealed, recorded above-average organic revenue growth, compared with 59% for mid-tier rivals and 32% for the bottom-ranked segment.

Some 70% of the elite players also logged above-average returns to shareholders – a metric valued in the C-suite and on Wall Street alike. This figure exactly doubled that secured by their lowest-scoring competitors.

Moreover, the proportion of the trailblazing group that posted above-average net enterprise value (NEV) or NEV/EBITDA was 74%, fully 24 percentage points ahead of the middle-ranked ACS cohort.

The results, Heller explained, indicated a correlative rather than causal relationship between creativity and performance – and ultimately reflected creative practices across a wide range of corporate activities, not simply its marketing output.

But the Cannes Lions dataset, he continued, possesses a unique advantage when assessing such linkages. "Defining creativity is actually quite complex," Heller said.

"So what better a proxy of creativity than looking at the way that the peers, the most creative people in the world, have ranked one another in the award ceremony of the Cannes Lions?"

Data sourced from WARC

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