Munich Startup: Mr Kranz, you are the new head of the Competence teams for cultural and creative industries (KuK) of the City of Munich. Before we get into that, please give us an outline of your professional career.
Olaf Kranz: I'm a sociologist by training and came to the cultural and creative industries – KuK for short – via a second educational opportunity, so to speak: My wife, who is a fashion designer, and I founded a fashion label together about 10 years ago. I found the business so excitingly counterintuitive and the fashion industry so irritatingly special that I gradually incorporated these experiences into my teaching and research at the University of Regensburg. There I looked at the international discussion on KuK in order to better understand the fashion business and the fashion industry, but within the broader context of KuK. Most recently, at the University of Regensburg, I provided scientific support and advice to an EU project on the relationship between KuK and urban development in medium-sized cities. So, on the one hand, I have a practical approach to the KuK topic from a corporate perspective and, on the other, a theoretically, conceptually and methodically reflected approach from an academic perspective.
Munich Startup: For all readers who are not already familiar with the work of the KuK: What tasks fall within the responsibility of this department?
Olaf Kranz: In 2014, the KuK team was commissioned by the city council to create a thriving business environment for freelancers and companies from all eleven sub-sectors of the KuK at the municipal level. Incidentally, the resolution was titled "Resource of the Future." Eleven sub-sectors represent a broad field. Our profile is correspondingly broad. It encompasses all the tasks found in general economic development, but specifically related to the KuK sector and its particularities. We advise, train, promote, network, internationalize, raise the profile of the sector, operate a KuK business incubator and Serendipity Place with the Ruffinihaus, support crowdfunding campaigns, promote cross-innovation, and participate in the city's EU projects, such as the current New European Bauhaus project. NEBourhoods and support KuK companies in their search for space. We also handle administrative work. We draft resolutions for the city council, write statements, create funding frameworks, and answer inquiries from interested citizens and district committees.
Cross-departmental cross-sectional team
Munich Startup: What exactly does your work as head of the competence team involve?
Olaf Kranz: Given this complex panorama of my team's diverse fields of activity, my primary task is to develop and maintain a strategic direction together with the team. There is also a wide range of operational and day-to-day issues and decisions. In addition to the above, there are also the tasks of staff and team development and coordination with the departments whose employees are part of our matrix structure. My team, the KT KuK, has the unique feature of being a cross-departmental, cross-sectional team in order to leverage the synergies of our topic. Therefore, I coordinate quite frequently with the Referat für Arbeit und Wirtschaft, the Cultural Department, and the Municipal Department. In addition, speeches must be written, assessments must be compiled, and contact must be maintained with the ministries of the Free State and the federal government, as well as with the Bavarian, German, and European networks of KuK municipal funders. Finally, there is the representation of the team and the City of Munich at events and networking with international stakeholders.
Munich Startup: And which target group is in focus?
Olaf Kranz: The most important target group is urban society as a whole. The KuK fulfills important functions within the fabric of a city. Through its contribution to cultural production, it contributes to the city's attractiveness, makes it livable, helps define the city's identity, and assists in adapting to and managing social transformations at the municipal level.
In a narrower sense, we are accountable to two target groups. Firstly, of course, the city council, from whom we receive our commission. Secondly, our clientele, the KuK, whose economic framework we help improve at the municipal level. When examining the KuK sector, 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 consumptive act. We find this distinction in each of our eleven sub-sectors; each sector is internally differentiated and intertwined along the value chains. Since all value creation in the KuK is ultimately based on the creative act, this is where our greatest focus lies. This has also been the focus throughout the history of the KT KuK to this day. What is new is that in the future, within the scope of our capacities, we also want to take a more pronounced value chain perspective and also examine companies that operate closer to the market and that create value by helping to mediate the aesthetic creativity in the creative act with market requirements.
Munich in second place, ahead of London and Berlin
Munich Startup: What visions do you bring to the KuK in Munich?
Olaf Kranz: I have several visions for the future of Munich and its KuK (cultural and creative city). First of all, I think it would be great if Munich's image as a creative city had greater appeal, thus reflecting the actual strength of the KuK (cultural and creative city) based here. It is still not widely known that, measured in relative terms and numbers, according to the European Commission's Cultural and Creative City Monitor, Munich is second only to Paris in the ranking of European cities with a population of one million, ahead of London and far ahead of Berlin. One way to make Munich more attractive is, for example, to use physical hub structures for individual KuK clusters to make the city's aesthetic creativity visible, as Paris is already doing with its Fashion Hub La Caserne or Berlin with its Games Hub. Another tool for increasing the visibility of Munich's KuK is to hold events or festivals with an impact that make Munich's strengths widely known.
However, making what already exists visible is not yet a vision. Rather, I gain this from successfully mastering current challenges in the future.
The vision is a Munich in which new companies are continually founded or relocated in all submarkets of the KuK sector, because the city of bohemians offers enough affordable experimental spaces to develop exciting new aesthetic positions from subcultural and youth culture as well as from high-cultural developments, which also find their market, i.e. meet an audience open to aesthetic innovation and eager to experiment. It is on this basis that Munich's currently strong position in the European KuK can be reproduced and further strengthened. Ideally, to achieve this, we must, on the one hand, give all social groups in urban society equal opportunity for self-realization through aesthetic expression and for the translation of these aesthetic positions into business models. On the other hand, the city's liberal identity should be even more open to subcultural and youth cultures.
On the path to this vision, we must find solutions to the challenge of very high living and rental costs. There is a looming danger that the creatives involved in producing aesthetic innovation will be forced out of the city because there is hardly any affordable space for them within the city limits. I have heard many anecdotes about members of the younger bohemian generation leaving the city for cheaper cities. The problem behind these anecdotes, however, is a general one: the economic profitability of many business models in the KuK generally requires a relatively long incubation period and, after breaking even, often remains far below the revenues and returns of those companies that thrive on their technical and technological creativity and are increasingly shaping Munich.
“Put more focus on migrant KuK companies”
I'm also concerned with the question of how to promote the establishment of migrant businesses in the KuK region. On the one hand, Munich is a major destination for migrants, and on the other, a disproportionate number of businesses are founded in the KuK sector within the migrant economy. There's also great potential here to develop interesting new aesthetic perspectives through the fusion of multiple cultural influences. Therefore, placing greater emphasis on the dimension of migrant KuK businesses is also an important goal.
Small and medium-sized enterprises require special conditions for success. An important project at KT KuK is to further develop the Ruffinihaus Creative Hub into a flagship project. Here, we are experimenting, on the one hand, with creating framework conditions for small and medium-sized enterprises' business development that contribute to the very special development and growth conditions of small and medium-sized enterprises. Successful business models here are generally based on a recognizable aesthetic signature rather than patents. An aesthetic signature can only be achieved through a very lengthy process. On the other hand, we want to develop a better understanding of the special success metrics in the small and medium-sized enterprise sector. If we look at small and medium-sized enterprises with the expectations of success that were formed in the tech startup sector, we can only dupe these companies: rapid growth, rapid scaling, quick financing rounds, quick exit, etc. In the small and medium-sized enterprise sector, things move more slowly and in a more fragmented manner. If a company at Ruffinihaus transforms from a GbR into a GmbH in order to be able to handle growth to ten employees, then in my opinion that is a very great and valuable entrepreneurial success.
I see a long-term goal for my team as expanding the interfaces and networking between the KuK sector and the tech-oriented startup scene, and making the remaining boundaries between the two ecosystems more permeable for communication and inspiration, in order to make the hoped-for positive effects, such as cross-innovation and interdisciplinary cooperation, more truly a reality than before. The same goal—creating interfaces, networking, and more permeable boundaries—can also be formulated for the relationship between the KuK sector and the more traditional companies in the city.
Munich Startup: In your opinion, how is Munich's cultural and creative industries positioned? In which areas is it already performing well, and in which areas does it need improvement?
Olaf Kranz: Unfortunately, the figures for the KuK in Munich are somewhat dated. The last KuK report at the city level discusses figures from 2016. The picture was prepared here from the aforementioned Cultural and Creative City Reports of the EU Commission from 2017 and 2019. In relative terms, Munich's KuK is very far ahead in both national and international comparisons: high-performing, relatively large companies with greater added value and more revenue per employee than the national average or even in comparison with European metropolitan regions such as Milan or Amsterdam. There is considerable substance in all eleven KuK sub-markets. Perhaps the media cluster belonging to the broadcasting market, the publishing industry, journalism, advertising and marketing, but also the art market deserve special mention as being disproportionately strong. For example, while most publishers in Europe are located in Berlin, Munich is Europe's strongest publishing location measured in terms of revenue, employee numbers and added value.
However, some small and medium-sized enterprises (SMEs) are currently going through a difficult phase. Although there are some small and medium-sized enterprises (SMEs) that have performed well even under the coronavirus pandemic, it's an open secret that the small and medium-sized enterprises (SMEs) sector has been particularly challenged by the coronavirus pandemic. Moreover, we're in the midst of a rather severe storm: Many companies have exhausted their reserves or even incurred debt during the coronavirus pandemic. Coronavirus aid has now expired, some companies are having to repay coronavirus aid. As a result of the coronavirus pandemic, there's a lot of inflation in supply chains. Add to that the energy price crisis, the war in Ukraine, the uncertainty, and the reluctance to buy, which particularly affects cultural goods. Companies are complaining about declining audiences and declining sales. I suspect that under these conditions, there will be a shakeout in almost all submarkets, unfortunately.
Munich Startup: What role do startups play?
Olaf Kranz: It depends on what you understand by the term. Business start-ups in our industry, especially in the area of the so-called creative act, often take the form of freelance self-employment. This often involves individual self-realization in the form of the gradual development of a recognizable new aesthetic signature. Thus, creatives in our industry are faced with the contradiction of, on the one hand, operating in the realm of purposive freedom, to quote Immanuel Kant's romantic concept of art, and, on the other hand, commercially exploiting the aesthetic forms found there, i.e., finding a willingness to buy aesthetic forms that are initially purposeless. In my opinion, business start-ups in the KuK sector cannot be understood, in Schumpeter's view, as "creative destruction," an understanding that, however, has strongly shaped the conventional image of startups, often in connection with the term "disruption," and which dominates above all in the technical and technologically driven economic sectors. An aesthetic signature does not destroy, but rather, against the backdrop of cultural tradition, adds a new possibility to the canon of human aesthetic expression. Accordingly, in the area of cultural production, we also have various financing models, such as patronage, public funding, and commercial models, to monetize an initially "unprofitable art."
Startups focused on rapid scaling, etc., naturally exist in our industry as well, which has spawned phenomena such as hype and trend-based growth and defined them as models. Such dreams of rapid success are also not infrequently the reason for company foundings in our industry. The unfortunately tragic twist is that these hype-based growth ideas of small and medium-sized enterprises often shape expectations of success and growth as the standard model in our industry, too. However, hype tends to be the exception, and the slow, laborious, and detour-filled development of a recognizable aesthetic signature is more the rule for corporate success in the small and medium-sized enterprise sector. Accordingly, industry insiders tend to tell novices that they need 'stamina'. By this, they mean passion, i.e., intrinsic motivation, economic creativity in finding one's own path to not only aesthetic but also entrepreneurial success, and perseverance in the face of setbacks.
Munich Startup: What is the overall importance of the creative industries for Munich? And which sub-sector is currently the most dynamic?
Olaf Kranz: In its last legislative period, the European Parliament recognized the KuK as a separate economic sector. On this basis, the current European Commission has recognized the KuK as a strategic role in managing and shaping the dual societal transformation of digital and green transformation. Consider the New European Bauhaus Initiative, which, not coincidentally, bears the name of a design school – the Bauhaus.
My team is currently experimenting extensively with the New European Bauhaus pilot project NEBourhoods Neuperlach. It's about how to digitally and ecologically rethink and redesign the old, newly built Neuperlach district. The KT KuK is responsible for the cross-innovation component, which means, on the one hand, applying creative problem-solving methods from the KuK sector to the field of traditional urban development and, on the other hand, bringing creative input from KuK professionals into the process. This will ensure greater agility and a higher level of innovation in the solutions, as well as ensuring that the solutions found are closer to the residents and enjoy greater legitimacy and acceptance.
In this respect, the area of cross-innovation and co-creation is perhaps the most dynamic to think about: How can we best include the creative methods and creativity from the KuK sector into the transformation processes of urban society at the municipal level?
In addition, as mentioned above, the KuK is enormously important for the city's attractiveness. We often speak of the magnetic attraction of creative cities for creatives. What this essentially means is the presence of a critical mass of virile bohemians, that is, the fraction of the creative class whose creativity produces cultural goods of all kinds. Wherever there is a cluster of these people with great charisma, other creatives from knowledge-intensive professions and professions with academic training are also drawn there. I tend to speak of 'cultural-cognitive capitalism' in this context to remind myself that the current economic structural change is not solely about the pure increase in knowledge intensity, but also about a progressive culturalization of the economy.
“Space, space, space, and always think of the creatives”
Munich Startup: Scarce and, above all, very expensive workspace is a constant issue in Munich. How does your team support creative professionals here?
Olaf Kranz: Exactly, space, space, space, and always think of the creatives. The enormous economic and profitability of many companies in Munich is driving rents and living costs ever higher in what is, geographically speaking, a relatively small city. Particularly those not yet established in the KuK (Austrian and Austrian arts), freelancers, and small businesses are feeling the cost pressure ever more strongly, while experimental spaces and niches for fresh, young aesthetic value propositions—that is, for new, recognizable aesthetic signatures—are becoming increasingly scarce and narrow. We are responding to this situation by looking for ways to create permanently affordable work and presentation spaces for creatives. We currently have five studio spaces in Neuperlach at Hans-Seidel-Platz up for tender, which we developed together with Gewofag in a pilot project and which we can rent out permanently at below-market rents. So, we are trying to create pilot measures to slow gentrification. Interim uses are, of course, also a perennial favorite.
Munich Startup: Do you think interim uses are a solution to the problem?
Olaf Kranz: Interim uses are a tool to alleviate the space shortage and high costs for creatives in Munich, with a specific profile of advantages and disadvantages. We try to design our interim uses so that they become experimental spaces for creatives, where they can, for example, test their business models in a city center location and test their products and services under conditions of high visibility and high traffic from a paying public, to see if they can subsequently afford higher rents in the city center on a permanent basis. Therefore, whenever we feel that interim uses can open up an experimental space that also benefits our clientele while keeping risks manageable, we welcome and develop interim uses.
Munich Startup: What is your vision for the creative quarter, which is currently undergoing transformation? The idea is to create an urban district where living and working are combined with art, culture, and knowledge. What is your vision for this district, which has been and continues to be very important for Munich's creative scene?
Olaf Kranz: The Creative Quarter is a spatially connected area close to the city center between Lothstraße and Leonrodplatz. The area accommodates a variety of uses, including living, working, research, art, culture, and commerce. This spatial proximity of uses could symbolize the interweaving of technical and aesthetic creativity, which I mentioned earlier. The Creative Lab, one of the four areas of the Creative Quarter, could also symbolize a cultural mix of uses between the culturally supported independent art and culture scene on the one hand and the commercially operating KuK on the other—a cultural mix in which fruitful cooperation between the actors is paramount. All of this could, in sum, symbolize the power of cross-innovation and co-creation in the Creative Quarter—the principles of mutual inspiration and serendipity. I intentionally use the subjunctive: could. In my opinion, these effects, i.e. charisma, cross innovation, serendipity places, do not occur automatically, but require clever context management on the part of the city.
The creative quarter in general, and the creative lab in particular, therefore have the potential to develop a place of interdisciplinary experimentation and serendipity with great international appeal and a high buzz factor. This place also offers the opportunity to experiment with exciting questions of urban development: What could a district look like in terms of layout and architecture that enables cross-innovation in interdisciplinary collaboration, serendipity, experimental spaces, and a mix of uses both functionally and symbolically in its architecture and urban design?
Munich Startup: At which place in Munich or at which Munich event do you feel particularly surrounded by creativity?
Olaf Kranz: I travel to Munich quite often. Privately, I've been to concerts at venues like the Tonhalle and the Isarphilharmonie, the theater, arthouse cinemas, and clubs like the Harry Klein. Professionally, I've attended many events with which we cooperate or which we sponsor, such as the Media Days, Eyes and Ears of Europe, the pop conference 'Listen to Munich', the Book Days, the Backstage anniversary, and also attended the openings of temporary uses, such as Tom Rebl's fashion store in the town hall, the Munich Graffiti Library in the city museum, the jewelry info point at the Munich Jewelry Days, 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 sensed the creativity and positive vibes that so characterize our industry. I think the city's creativity is currently most concentrated in the Ruffinihaus Creative Hub, our business incubator for the KuK.
