Munich Startup: Mr. Kranz, you’re the new head of the Cultural and Creative Industries Team of Excellence of the city of Munich. Before we get to that, please tell us a bit about your professional career.
Olaf Kranz: I’m a sociologist by training and came into contact with the cultural and creative industries – in short CCI – through what you might call a second path of education. My wife, who is a fashion designer, and I founded a fashion label together about ten years ago. I found the business so fascinatingly counterintuitive and the fashion industry so disconcertingly special that I gradually incorporated these experiences into my teaching and research at the University of Regensburg. It was there that I looked at the international discussion on CCI to get a better understanding of the fashion business as well as the fashion industry, but in the wider context of the CCI. Most recently, I provided academic support and guidance in an EU project at the University of Regensburg on the connection between CCI and urban development in medium-sized cities. On the one hand, I can take a practical approach to the CCI topic from a business perspective and, on the other hand, can take a theoretical, conceptual and methodological approach from an academic perspective.
Munich Startup: For all of our readers who aren’t familiar with the work done by the CCI Team of Excellence: What tasks does the department work on?
Olaf Kranz: In 2014, the CCI team was commissioned by the city council to create prosperous economic conditions for freelancers and companies from all eleven CCI subsectors at the municipal level. By the way, the decision is called “Resources of the Future.” Eleven subsectors are a vast field. Which means our profile is also broad. It basically covers all tasks that can also be found in general economic development, just specifically related to the cultural and creative industries and their peculiarities. We advise, qualify, promote, network, internationalize and make the industries visible. We also run a CCI business incubator and Serendipity Place with Ruffinihaus, support crowdfunding campaigns, promote cross innovation, participate in the city’s EU projects, such as the current New European Bauhaus project NEBourhoods and support CCI companies in their search for space. We also take care of administrative work. In other words, we prepare draft resolutions for the city council, write statements, create funding frameworks and answer inquiries from interested citizens and district committees.
Cross-departmental cross-divisional team
Munich Startup: What exactly does your job as the head of the Team of Excellence involve?
Olaf Kranz: Against this complex panorama of my team’s various fields of action, my primary task is to develop and maintain a strategic direction together with the team. Moreover, there’s a wide range of operational and day-to-day topics and decisions. In addition to that, there are also the tasks involved in employee and team development as well as coordination with the departments whose employees are part of our matrix structure. My team, the Cultural and Creative Industries Team of Excellence, is special because it is a cross-departmental, cross-divisional team in order to leverage the synergies of our subject. As a result, I coordinate quite often with the Department of Labor and Economic Affairs, the Department of Culture and the Department of Local Government. In addition, speeches need to be written, assessments need to be written, and contact has to be maintained with the ministries of Bavaria and the federal government as well as with the Bavarian, German and European networks of the CCI municipal sponsors. Finally, there’s the task of representing the team and the city of Munich at events as well as networking with international players.
Munich Startup: And which target group is your focus?
Olaf Kranz: The most important target group is urban society as a whole. The CCI fulfil important functions in the fabric of a city. With their share in cultural production, they contribute to the attractiveness of the city, make it worth living in, help define the city’s identity and help to adapt to and cope with social transformations at the municipal level.
In a narrower sense, we’re accountable to two target groups. On the one hand, to the city council, who gives us our mandate. On the other hand, to our clientele, the CCI, whose economic conditions we help improve at the municipal level. When looking at the CCI, it has become common practice to distinguish between the creative act at the beginning of the value chain and the exploitation of creativity up to the act of consumption. We find this distinction in each of our eleven subsectors, each industry is internally differentiated and intertwined along the value chains. Since every kind of added value in the CCI is ultimately based on the creative act, this is where our greatest focus lies. This has been and remains the focus of the CCI team. What’s new is that in the future, within the scope of our capacities, we also want to place greater emphasis on the value chain and also look at companies that operate closer to the market and that create value by helping to conciliate aesthetic creativity in the creative act with market requirements.
Munich in second place ahead of London and Berlin
Munich Startup: What visions do you have for the CCI in Munich?
Olaf Kranz: I have several visions in mind for the future of Munich and its CCI. First of all, I think it would be great for Munich’s image as a creative city to have greater magnetic appeal and thus reflect the actual strength of the CCI based here. It’s still largely too unknown that, according to the relative terms and figures of the “Cultural and Creative City Monitor of the European Commission,” Munich ranks second only to Paris in the ranking of European megacities, ahead of London and far ahead of Berlin. It could be possible to amplify Munich’s magnetic appeal, for example, by making the aesthetic creativity in the city visible by means of physical hub structures for individual CCI clusters, like Paris has done, for example, with its Fashion Hub La Caserne or Berlin, with the Games Hub. Another instrument for increasing the visibility of Munich’s CCI are events or festivals with magnetic appeal that makes Munich’s strengths widely known.
Raising awareness about what already exists, however, isn’t a vision. Instead, I create a vision from successfully tackling current challenges in the future.
The vision is of a Munich where new companies are constantly being founded or established in all CCI submarkets, because the bohemian city offers enough affordable experimental space for developing exciting new aesthetic positions from sub-, youth- and highly developed cultural developments. They will also find their markets, meaning they’ll encounter audiences that are open to what is new aesthetically and are willing to experiment. It’s on this fertile ground that Munich’s current strong position in the European CCI can be reproduced and strengthened even further. Ideally, we need to give all social groups in urban society the same opportunities for self-realization through aesthetic expression and for translating these aesthetic positions into business models. On the other hand, the city’s liberal identity should open up even more to subcultures and youth cultures.
On the path to this vision, we need to find solutions to the challenge posed by the extremely high cost of living and rent. There’s a danger that the creative people who are involved in the production of aesthetic innovation will be pushed out of the city because there’s hardly any affordable space left for them in the city limits. I’ve heard many anecdotes in which the members of the young generation of bohemians leave the city to go to more affordable cities. The problem behind these anecdotes, however, is a general one: The economic profitability of many business models in CCI usually requires a relatively long incubation period and, after breaking even, often remains far below the revenues and returns of the companies that live on their technical and technological creativity and that are increasingly shaping Munich.
“Increase the focus on migrant CCI companies”
I’m also concerned about the issue of how to promote the founding of migrant companies in CCI. On the one hand, Munich is an important destination city for migration, and on the other hand, a disproportionately large number of companies are founded in CCI in the migrant economy. There’s also great potential here for developing interesting new aesthetic perspectives through the fusion of several cultural influences. In other words, increasing the focus on the dimension of migrant companies in CCI is also an important goal.
CCI companies require special conditions for success. An important project of the CCI team is turning the Ruffinihaus Creative Hub into a beacon project. On the one hand, we’re experimenting with creating a framework for CCI business development that takes into consideration the very special development and growth conditions of CCI companies. Successful business models are usually based on a recognizable aesthetic signature and not on patents. An aesthetic signature, however, is only achieved in a very lengthy process. On the other hand, we want to develop a better understanding of the special success metrics in the CCI. If we look at CCI companies with the expectations of success that have been formed in the tech startup industry, we will only be deceiving these companies: fast growth, fast scaling, fast funding rounds, fast exits, etc. On average, the CCI is slower and more fragmented. If a company is transformed from a GbR into a GmbH here at Ruffinihaus so they can handle growing to ten employees, then in my opinion, that is excellent and valuable entrepreneurial success.
A long-term goal that I envision for my team is increasing the interfaces and networking between CCI and the tech-driven startup scene and making the remaining boundaries between the two ecosystems more permeable for communication and inspiration in order to make the desired positive effects, such as cross-innovation and interdisciplinary cooperation, more of a reality than has been the case. The same goal – interfaces, networking, creating more permeable boundaries – can also be formulated for the relationship between the CCI and the more traditional companies in the city.
Munich Startup: In your opinion, how are Munich’s cultural and creative industries positioned? Which areas are already doing well and where is there a need for improvement?
Olaf Kranz: Unfortunately, the figures for the CCI in Munich are not exactly up to date. The last CCI report at the city level discusses figures from 2016. In this case, the image was prepared from the aforementioned Cultural and Creative City Reports from the EU Commission from 2017 and 2019. In relative terms, the CCI in Munich are very far ahead in relative numbers both nationally and internationally: high-performance, relatively large companies with greater added value and more turnover per employee than the national average and in comparison with European metropolitan regions such as Milan and Amsterdam. There’s a great deal of substance in all eleven CCI submarkets. What could perhaps be emphasized as disproportionately strong is the media cluster that includes the broadcasting market, the publishing industry, journalism, advertising and marketing, as well as the art market. For example, although most publishers in Europe are based in Berlin, Munich is Europe’s strongest publishing location in terms of sales, employees and value added.
At the moment, however, some CCI companies are in a difficult phase. Although there are also CCI companies that performed well even under corona conditions, it’s an open secret that the CCI have faced particularly tough challenges caused by corona. What’s more, we’re in the middle of quite a severe storm: Many companies have used up their reserves or even got into debt during corona, corona aid has now expired, some companies have to repay corona aid, there is a lot of inflation in the supply chains as a result of corona, and then you have the energy price crisis, the war in Ukraine and uncertainty and buying resistance, which affect cultural assets in particular. Companies are complaining about a decline in viewership and sales. I suspect that under these conditions, there will be a shake-out in almost all submarkets, unfortunately.
Munich Startup: What role do startups play?
Olaf Kranz: It depends on what you mean by the term. In our industry, especially in the area of what is called the creative act, startups often take the form of freelance self-employment. In this case, it’s often also about individual self-realization in the form of the gradual development of a recognizable new aesthetic signature. As a result, creative people in our industries are faced with the contradiction, on the one hand, of being in the realm of freedom of purpose, to quote Immanuel Kant’s romantic concept of art, and on the other hand, of economically exploiting the aesthetic forms found in this realm, which means finding a willingness to buy aesthetic forms that are initially free of purpose. In my opinion, startups in the CCI cannot be understood with Schumpeter’s “creative destruction.” This is an understanding, however, that has very much shaped the conventional startup image, often in connection with the word “disruption,” and which most particularly dominates the technically and technologically oriented economic sectors. An aesthetic signature does not destroy, it adds a new possibility to the canon of human aesthetic expression against the background of cultural tradition. Accordingly, we also have different financing models in the field of cultural production, such as patrons, public funding and commercial models in order to monetize an initially “unprofitable art.”
Startups that scale quickly also exist in our industry, and they have produced phenomena such as hypes and trend-based growth in an exemplary manner and defined them as a model. Such dreams of quick success are also often the reason for founding companies in our industries as well. The unfortunately tragic point is that these hype-based concepts of growth of CCI companies often shape the expectations of success and growth as the standard model in our industries as well. However, hypes tend to be the exception and it is rather the slow, laborious and detoured development of a recognizable aesthetic signature that tends to be the rule for corporate success in the CCI. Accordingly, industry insiders tend to tell novices that you need ‘staying power.’ By this they mean passion, i.e. intrinsic motivation, economic creativity in finding your own way to not only aesthetic but also entrepreneurial success, and perseverance in the face of setbacks.
Munich Startup: What is the significance of the creative industries as a whole for Munich? And which subsector is currently the most dynamic?
Olaf Kranz: In its last legislative period, the European Parliament recognized the CCI as an economic sector in its own right. On this basis, the current European Commission has granted CCI a strategic role in managing and shaping dual societal transformation, which includes digital and green transformation. Think of the New European Bauhaus Initiative – it’s no coincidence that it bears the name of a design school – Bauhaus.
At the moment, my team is energetically experimenting as part of the New European Bauhaus pilot project NEBourhoods Neuperlach. It focuses on how to rethink and redesign the old Neuperlach development district digitally and ecologically. The CCI team is responsible for the cross-innovation components. That means, on the one hand, applying creative problem-solving methods from the CCI area in the field of classic urban development. On the other hand, they’re responsible for incorporating creative input from CCI professionals into the process in order to ensure more agility and a higher level of innovation for the solutions and also to ensure that the solutions found are more relevant to the residents and find greater legitimacy and acceptance.
In this respect, it’s perhaps the area of cross-innovation and co-creation that requires the most dynamic thinking: How can we optimally integrate creative methods and creativity from the CCI into the transformation processes of urban society at the municipal level?
In addition and as mentioned above, the CCI are of crucial importance to the attractiveness of the city. We often talk about how creative cities magnetically attract creative individuals. What is essentially meant by this is the presence of a virile bohemia in critical mass, i.e. the part of the creative class that produces cultural goods of all kinds with its creativity. A place with a cluster of these people with great magnetic appeal also attracts other creative individuals from the knowledge-intensive professions and professions with academic training. In this context, I tend to speak of ‘cultural-cognitive capitalism’ in order to keep in mind that the current economic structural change is not unilaterally about the sheer increase in knowledge intensity, but also about a progressive culturalization of the economy.
“Space, space, space, and always keep creative people in mind”
Munich Startup: Scarce and, most particularly, very expensive workspace is a constant issue in Munich. How does your team support creative professionals in this aspect?
Olaf Kranz: Exactly, space, space, space, and always keep creative people in mind. The tremendously high level of economic strength and profitability of many companies in Munich is driving up the cost of rent and living in Munich, which is comparatively small from a geographical point of view. Especially the players in the CCI who aren’t established yet, freelancers and small companies, are feeling the cost pressure more and more. And the experimental spaces and niches for fresh, young aesthetic value propositions, i.e. for new recognizable aesthetic signatures, are seen less and less and are increasingly tight. We’re responding to the situation by looking for ways to create work and presentation spaces for creative people that are inexpensive over the long term. We currently have five studio spaces in Neuperlach on Hans-Seidel-Platz to offer, which we developed together with Gewofag in a pilot project and that we can rent out over the long term at rates lower than the market average. So we’re trying to put the brakes on gentrification on a pilot-project basis. Of course, the interim use of space is also a popular solution.
Munich Startup: In your opinion, is the interim use of space a solution to the problem?
Olaf Kranz: Interim use is an instrument for alleviating the lack of space and the high cost of space for creative people in Munich with a specific profile of advantages, but also disadvantages. We try to design our interim use in such a way that it becomes experimental space for creative people, where, for example, they can try out their business models in a central urban location and try out their products and services with the high visibility and high traffic of a solvent audience to see whether they can afford higher rents over the long term in the city center afterwards. Whenever we have the feeling that we’re opening up space for experimentation with interim use that also benefits our clientele with manageable risks, we welcome and develop interim uses.
Munich Startup: What’s your vision for the Kreativquartier (creative district), which is currently undergoing radical change? The aim is to create an urban district where living and working are linked with art, culture and knowledge. What’s your vision for the district, which was and is also very important for Munich’s creative scene?
Olaf Kranz: The Kreativquartier is a spatially contiguous area close to the city center between Lothstraße and Leonrodplatz. There are various forms of use in the area, such as living, working, research, art, culture and commerce. In the spatial proximity of these uses, the coexistence and intertwining of technical and aesthetic creativity that I mentioned earlier could be symbolized. In the Kreativlabor, one of the four areas of the Kreativquartier, a cultural mix of uses between the culturally funded, independent art and culture scene and the commercial CCI could also be symbolized – a cultural mix of uses that puts the focus on the beneficial cooperation between the players. All of this could symbolize the power of cross-innovation and co-creation in the Kreativquartier, i.e. the principles of mutual inspiration and serendipity. I’m deliberately using the subjunctive: could. In my opinion, these effects, i.e. magnetic appeal, cross innovation, serendipity places, don’t happen by themselves, but require clever context management on the part of the city.
In the Kreativquartier in general and in the Kreativlabor in particular, there is therefore the potential to develop a place of interdisciplinary experimentation and serendipity with great magnetic appeal internationally and a major buzz factor. It would be a place where you can also experiment with exciting issues involving urban development: How can a district look in terms of layout and architecture that functionally enables cross-innovation in interdisciplinary cooperation, serendipity, experimental spaces and a mix of uses while simultaneously expressing the same symbolically in the architecture and urban design?
Munich Startup: Where in Munich or at which Munich event do you feel particularly immersed in creativity?
Olaf Kranz: I’m out and about in Munich quite often. In private life, I’ve been to concerts, for example in the Tonhalle and the Isarphilharmonie, in the theater, in arthouse cinemas and in clubs, such as Harry Klein. In terms of work, I’ve attended many events that we cooperate with or promote, such as Medientage, Eyes and Ears of Europe, the pop conference ‘Listen to Munich,’ Buchtage and the Backstage anniversary. I’ve also attended openings of spaces for interim use, such as the Tom Rebl fashion store in the town hall, the Munich Graffiti Library in the city museum, the jewelry info point for the Munich Schmucktage and the XR Hub on Burgstraße.
I felt very comfortable everywhere even though the events were all very different, and at the same time, I felt the creativity and positive vibes everywhere that so greatly shape our industry. At the moment, I think the city’s creativity is most concentrated in the Ruffinihaus Creative Hub, our corporate incubator for the CCI.