These are difficult times for arts and cultural organisations (if you hadn’t noticed). We need to generate new income streams reduce costs; to attract, volunteers, funders and staff and audiences in an increasingly competitive marketplace; keep up with technology, keep up with artistic practice – the list is terrifying. No wonder we ask so much of those running organisations – judging the job adverts and role descriptions for Director or CEOs these days.
Increasingly we are seeing more and more visual arts organisations seeking to increase their management capacity (hurrah) by appointing Executive Directors, Business Managers, Deputy Directors. There’s been a number of new posts emerge in recent months – and since I published my report advocating for investing in strategic management I’ve been keeping a close watch on developments.
If as an employee or Trustee of an arts organization you’re thinking about changing your staff structure to bring in, or develop within existing staff, more managerial capacity then this series of 4 posts about what makes a good senior arts manager and how to recruit one is for you. In the first post I ask what kind of people are we looking for in these new roles.
Given these challenging times, it’s tempting to think what we are looking for in a manager is ‘a safe pair of hands’ to guide and support the artistic leadership. But my research suggest otherwise – those ‘arts managers’ who are really making a difference to theatres and galleries are not the back room number-crunchers and managers conjured up by job titles like ‘Head of Admin & Operations’, ‘General Manager’ or ‘Business Manager’. No they are creative, risk-taking, visionary and entrepreneurial.
For my report I asked 34 leading arts managers what made an excellent arts manager. The consensus was that rather than looking for a business administrator, they wanted people who worked more like producers (and language is something I’ll return to in post 2 in this series). One theatre Artistic Director explained the role as follows:
‘What you need is someone who’s extroverted, who likes to get on the phone, get out there… Producers have to be risk-takers and have to have a rashness about them [..] An OK producer just makes it happen, a brilliant producer exploits it; they get international touring, they get people excited about it. The producer is doing the external identity of the company. You need to have someone who’s good at external relations, so that you can do that thing you’re good at which is direct plays.’
An Executive Director in theatre I interviewed emphasized the ability to deal with the unexpected:
‘I once described the role as being like a nursery teacher because you are changing subject every ten minutes […] I think you’ve got to be somebody who likes flying by the seat of their pants – you’ve got to be comfortable waking up everyday not quite knowing the answer to the questions you’re going to face.’
Contrary to popular belief, few senior arts managers have the comprehensive finance, fundraising or other specialist skills many organization set out to find when they advertise for these roles. And it’s worth noting if you are recruiting that over-specifying a job description by insisting this one person needs to single-handedly raise the money, do the accounts, manage IT, HR and building etc and all the other things no-one else can do is unrealistic and unappealing to potential candidates.
The kind of manager you really need may have experience in one of those areas, but more importantly they understand the business of theatre and are comfortable working with experts across a wide range of topics (‘a jack of all trades’ as one put it). Outlook (style and values) matter more than experience or technical skills to one Artistic Director I interviewed who had worked with several individuals with very different experiences.
So, out with arts administrators and in with arts managers who care and know about the business of theatre or the visual arts and can marshal the resources required in an entrepreneurial and creative way. In the next post in this series I’ll consider whether the language we use to describe what arts manager do and how we do it could better convey the purpose and approach required.
If, in the wake of recent announcements of three-year funding levels from the Arts Council, you’re feeling the urge to update your plans then you might find two new resources useful.
Last year, the Turning Point Network and Arts Council England commissioned Susan Royce to produce a guide to how visual arts organisations could develop and review their business models. Her report which has just been published by ACE can be downloaded here and I’d strongly recommend it to anyone involved in running a visual arts organiastion Final_business_models_no_logo.
Susan’s report offers both an analysis of existing business models in the visual arts and a framework for understanding how to develop these models. She concludes with a number of recommendations for those running organisations – including many practical steps from considering joint procurement or shared services to commissionign a review of overhead costs.
Another resource that’s recently been published is Creative and Cultural Skills Business Plan Tool Kit which can guide you step by step through reviewing or developing plans.
 Artists Christo and Jeanne-Claude: a creative partnership After thirty-four interviews with people running theatres and galleries involving days spent on trains travelling from Newcastle to St Ives via Bristol, Birmingham, Liverpool and Walsall, a daytrip from York to Margate, and what seems like weeks at the computer writing and editing the final report, I’ve finally completed my research into joint leadership models.
In the first of a series of four posts drawing on the research, I outline what led me to undertake the research and what the report covers:
Why do we need a new leadership model in the visual arts?
‘The traditional route to senior roles in the visual arts has been curatorial and so that’s the skills-base people start with and value […] So I think there’s a sense within the visual arts that as long as you’re a good curator that’s the most important thing – that’s going to get you profile and that will lead to a senior position.’
The vast majority of art galleries and museums in the UK are run by people who began their careers as curators and this has been the traditional career path for gallery directors since exhibition galleries first emerged after the Second World War.[i] But running an art gallery or museum in 2011 is far more challenging than it was in the 1970s and 1980s. Those seeking to lead galleries and museums today can no longer expect to learn all the fundraising, business, managerial and strategic skills they need in today’s environment while ‘on the job’. Nor – I would argue – can curators single-handedly expect to master all these diverse skills alongside their core expertise of continually developing their knowledge of artistic practice.
Over the past 10-15 years we have begun to see the emergence of Deputy Director and more recently Executive Director roles in the visual arts, often during periods of major growth (such as capital developments) or in response to major change. Executive and Deputy Directors are not the same: Executives tend to report directly to the Board, and play a strategic role, which includes responsibilities for organisation-wide decisions such as business planning and programming; Deputies tend to be more operational and have limited authority.
Career paths for visual arts managers are fragmented. We lose many managers who have developed a working knowledge of the sector to other non-profit and arts organisations for a variety of reasons. These include lack of recognition, poor pay and conditions and lack of career progression opportunities. Validating management as a valuable career route, to attract and retain skilled staff, is critical to the future health of this sector – as is improving the understanding of the benefits of management. The two are interdependent.
For cultural reasons, many visual arts organisations prefer to recruit single leaders (and curators specifically) although interviewees felt that there is a problem with supply of suitably experienced candidates. Research into the university sector shows that for knowledge-rich organisations (such as art galleries) having leaders who understand the core business is important for standards and internal and external credibility. It also has a demonstrable impact on business performance.
Art galleries and museums should be led by those with a deep understanding of our core mission. But the core business of arts organisations is not just the art product – it is equally the way we engage people with the art and yet we very rarely appoint learning or marketing experts to executive leadership roles in visual arts. We might take it for granted that curators have this knowledge of ‘the core business’, but they do not necessarily have expert knowledge (or a vision) about how people engage with art. Curators should lead art galleries and museums, but so should other visual arts professionals with expertise in audience engagement, such as learning and marketing staff. And if we want to develop a wider and stronger pool of future leaders in the visual arts then we need to value management and leadership and encourage curators to develop their competencies in these areas, alongside their curatorial expertise.
Purpose and approach of this research
‘People have been allowed to carry on as ‘king-curators’ devising their programmes in isolation – touring used to be much more common than it is today. We can’t tolerate any longer people who just want to do their own thing and just want to look to their international counterparts for their kudos. Their organisations will sink. The financial basis on which they operate will be so different – so they’ll need to find new sources of income and collaborate more to make best use of resources.’
Leaders of art galleries and museums face undeniably significant challenges in the coming decade. Outside the capital most art galleries and museums are heavily reliant on public subsidy for revenue funding and have not yet developed a range of reliable or sizeable income streams through fundraising or trading. With public funding of galleries now set to fall sharply at local, regional and national levels it is as yet hard to see where alternative income will be found.
More worrying still is the failure of increased public investment in arts facilities and activities to translate into a larger, more diverse and more engaged audience base for the contemporary visual arts nationally. Attendance levels for galleries and art museums as a whole have plateaued during this period of growth so that the average level of subsidy per visitor to an Arts Council-funded gallery has increased by 28%.[ii] There are also systemic problems with workforce development and diversity in the sector leading to ‘a crisis of leadership’.[iii]
Recent research[iv] reveals a sector which is over-extended and under-capitalised – in other words lacking the resilience and capacity to respond to a rapidly changing operating context where major shifts in funding, audience behaviour and technology are disrupting business models across the arts and wider society. All artforms are facing these challenges, but in the visual arts we have the added ‘problem’ of free entry. Just as the newspaper industry struggles to find a new business model in an era of free online content, we too have an existing audience base which is accustomed to free access to our core product.
My research sets out to ask whether new leadership models would be helpful, given this context. It looks at the joint leadership approach in theatre which developed around thirty years ago largely in response to a more complex and uncertain financial model. The report considers theatre’s joint model, characterised by a double-headed structure of Artistic Director and Executive Director and a more collaborative style of leadership, and asks whether it offers any benefits beyond the single Director approach preferred in the visual arts.
Theatre has its own culture and challenges, and the changes we need in the visual arts will not be found through uncritically importing models from other sectors. But by understanding better how theatre is responding to similar pressures and comparing the two sectors we can shed light onto some of the deeply embedded assumptions we hold, which may stand in the way of discovering new strategies that will enable our organisations to thrive in tough times.
The research was undertaken through a series of semi-structured interviews with those involved in leading galleries, art museums and theatres, and a review of management and leadership literature. Thirty-four interviews were completed to capture the full range of leadership models in both sectors. Many in the theatre sector had experienced different permutations of the two main models – single and joint leadership – at different stages in their careers. Others were interviewed for their experience as Trustees or in recruitment of leaders.
The report aims to do three things:
- For Boards and visual arts leaders, the report presents the case for reconsidering our leadership models (structures and approaches) in the visual arts.
- For Boards and those seeking to recruit and develop leaders in the visual arts, the report offers:
- practical advice about the range of leadership options and the context each model suits best;
- findings relating to the competencies and structures required for joint leadership models, and collaborative leaders more widely, to be effective (section five)
- an outline description of the roles and requirements for EDs (section three).
3. Finally, for all those working in the visual arts, I hope this report stimulates further discussion about our wider values in the non-profit sector and the critical need for a step-change in our approach to audiences, enterprise, management capacity and continuing professional development.
You can download the Executive Summary and Full Report here.
[i] With the exception of the Whitechapel Gallery, which was founded in 1903, most of the exhibition galleries that now form the backbone of the contemporary arts infrastructure emerged since the 1960s. For more information of the development of the gallery infrastructure in England see Claire Glossop, 2003. ‘A revolution in the gallery: From the Arts Council to the artist’, in Sculpture in 20thcentury Britain, vol.1, ed. Penelope Curtis, Leeds: Henry Moore Institute.
[ii] Sara Selwood, 2008. Towards developing a strategy for contemporary visual arts collections in the English regions, Arts Council England, London, pp.32-33 and Table 1. Selwood calculates subsidy per attendance rising from £3.40 per visit in 2004/05 to £4.35 per visit in 2006/7 among ACE funded galleries.
[iii] Arts Council England, 2006. Turning Point: a strategy for the contemporary visual arts. London: Arts Council England, p.25.
[iv] For a summary of the evidence around capitalisation of the arts and cultural sector see section 3.1 of Margaret Bolton, Clare Cooper, Claire Antrobus, Joe Ludlow & Holly Tebbutt, 2011. Capital Matters: how to build financial resilience in the UK’s arts and cultural sector, London: Mission, Models and Money. In terms of the visual arts, Susan Royce concludes ‘Most visual arts organisations are under-capitalised’, in Susan Royce, 2010. Business models in the visual arts. Draft published report. Arts Council England: London, p.2.
How can arts and cultural organisations thrive in the current context of cuts to public funding and with many also experiencing a reduction in earned and fundraised income as theatre-goers and gallery visitors alike start feeling the pinch and the endowments that fund grant-giving Trusts and Foundations shrivel on the stock market? It is the 64 million dollar question, and in fairness one which many were asking before the current economic downturn.
This was the central question of MMM’s Capital Matters programme, on which I had the privilege of working last year. We found a sector that is under-capitalised – lacking the financial resources and skills and expertise to develop new income generating activities. Our analysis revealed a lack of both working capital to provide liquidity and development capital to invest in future earning capacity: with very few organisations having any significant reserves on which they could draw (most in our survey had less than 3 months’ operating costs) and a tendency to see these reserves only as contingency funds in any case.
External sources of development capital are very limited: schemes such as ACE’s Sustain have provided one-off support for a small cohort, Esmee Fairbairn has been leading the Trust and Foundations sector in this area for some time and a handful of arts and cultural organisations (ACOs) have accessed finance – mainly from specialist social investors such as Venturesome.
Against this challenging backdrop, the report is peppered with examples (including six case studies) of how organisations have developed new income streams or become more effective in delivering their missions without growing through understanding their impact, working in partnership, smart use of technology etc. I’ve also posted a series about some of the research findings previously here it you’re looking for any background detail.
My post about the research I was doing (along with Holly Tebbutt and Rohan Gunatillake) for MMM’s Capital Matters programme has received over 500 hits, suggesting this is a question that many are concerned about. So, having completed our research and analysis, and launched the report with fanfare and a supportive Minister (you can read his speech here) last Friday I thought it was a good point to reflect on the solutions we came up with which are outlined in greater detail in the final report which is now available free from here.
There is no silver bullet – but then again, is there ever for a complex problem? But we did identify five key things that need to happen to facilitate greater resilience among arts and cultural organisations:
1. a shift in mindset by arts and cultural organisations
Away from thinking about an annual budget which breaks even, to a longer-term approach which emphasises becoming better capitalised – generating unrestricted surpluses for investing in the future capacity. We don’t underestimate that this is a difficult message in a period when income overall is falling – but reducing expenditure on activity to invest in capacity is essential for medium and longer-term growth. That means accepting ACOs need to do less better – in terms of activity. At the conference Joe Ludlow spoke in terms of this meaning ‘an investment mindset’ characterised by a willingness to take risks; capacity to measure and manage those risks (not least in finance skills) and clarity about purpose and what success looks like.
2. a shift in mindset by public and private funders
We need funders who understand that to sustain a vibrant arts and heritage ecology we need to invest in organisations, not simply ‘buy’ their products. At the Culture Change conference, where we launched the report, Andrew Barnett (Director Calouste Gulbenkian Foundation) put this in terms of funders who invests vs funders who shop (paraphrasing Julia Unwin’s influential work on funding).
3. an expansion in the range of capital available to arts and cultural organisations
Ideally ACOs will begin to generate their own reserves which they can use as development capital, but for those without access to reserves then grants and finance options (unsecured loans and quasi-equity or ‘profit-share’) are needed. We know that many ACOs struggle to secure finance because they either lack the financial skills to assess their ability to re-pay (via an investment appraisal), or because High St lenders lack confidence and are unfamiliar with non-profit structures requesting charity directors personally secure loans, for example. Social investors (like Venturesome, Charity Bank and Triodos) can help, but not all ACOs can demonstrate the social impact that these investors look for. Options for grants for organisational development were also sparse -although it was great to hear Andrew Barnett championing the role of private funders in this space – let’s hope that translates into more funds being available for this purpose. But the need for a dedicated development capital fund for arts and cultural sector which could provide R&D grants, loans of quasi-equity tools is sorely needed.
4. Better business and organisational development support for ACOs
Our research showed difficulties accessing advice to develop new ventures, with few mid-scale and smaller organisations able to have all the skills they need in-house. Boards were playing an important role in supplementing skills – as were informal peer support and networks – but a more systematic approach to the business support infrastructure for not-prtofit cultural organisations is needed.
5. a step-change in data and research about capital and performance of ACOs
As I can testify having undertaken the literature review of data about capital in the arts and cultural sector, we have very little robust and comparable information about the capital position and financial (or wider) performance of the arts and cultural sector. Improved comparable data against which organisations can benchmark themselves, and policy-makers and develop evidence-based interventions is essential. Sarah Thelwall’s Mycake is an example of the benchmarking approach required on a far wider basis.
So there we have it – 5 steps which together would make the world of difference. The Culture Change conference last week provoked some fascinating discussions around these recommendations that I’ll blog about in due course.
Some may consider this a serious character flaw, but I’m not a fan of doing the same thing again and again. I like doing new things, or things in new ways – better ways. So I was glad to see that ‘excellence’: the central tenet of the Arts Council’s new strategy for the arts is clearly related, for them, to innovating, taking risks, moving things on – and not some static ideal.
Turning to the criteria ACE will be using to decide which organisations they fund it’s good to see assessors will be asking themselves ‘is there evidence the organisation challenges itself to be excellent?’ and does it ‘stretch boundaries or question assumptions’. I’d be happier still if assessors were also asking ‘do they sometimes get it wrong? Is there evidence that they learn from these mistakes (and their successes)’? Because surely if organisations are truly innovating then they aren’t always going to get it right.
Reading Peter Senge on Learning Organisations recently, I came across a fantastic quote from Somerset Maugham on the subject:
Only mediocre people are always at their best.
Another classic (this time from the founder of Polaroid) was:
A mistake is an event, the full benefit of which has not yet been turned to your advantage.
That might sound like overly simplistic positive-thinking, but time and again in my own career (and life) the lessons I learn most from are when I get things wrong. And I don’t think accepting mistakes happen is about letting yourself off the hook – quite the contrary as the Somerset Maugham quote suggests – it’s a challenge to push yourself further, and try something different, less safe – because playing safe all the time is plain boring.
That’s why the notion of the Learning Organisation holds so much interest for me as a way of working – working out those key areas we need to understand better to improve, approaching work in a way that we can learn from how it goes and constantly improve. I attended a seminar recently about learning within third sector organisations and the question about how to best enable learning in a simple, integrated way for smaller organisations was discussed. Personally – as an independent – I just take 10-15 mins a week to reflect on what’s gone well or not, and think about what’d I’d do differently next time and find this hugely, hugely beneficial. I literally have table with two columns – what I noticed and implications for next time. And if I get the chance for a quick ‘learning conversation’ with anyone I’ve worked with (feedback) then I take it. I’d be really interested to hear if anyone else has some other suggestions about what works on a simple and quick level?
 printing money: a creative solution? Where’s the (new) money coming from?
Given the immediate and pressing need for arts and cultural organisations to look beyond the public purse more than ever before, it’s no surprise that for many the key question around business models is where to develop alternative sources of income. That said, important to reiterate that for many organisations in our study developing new income streams was only was aspect of how they were developing more successful business models – and part 2 in my series of posts on the Capital Matters project explores this in more detail.
Another striking feature of the organisations we talked to was their emphatic focus on mission-related trading – to the degree that some considered themselves to be social enterprises, blending mission and trading completely – such as Museum of East Anglian Life (MEAL). Others, such as Whitechapel Gallery, used a strong sense of brand (more on this in a later post) to ensure trading activity (e.g. café, shop) related to mission.
There were a vast array of approaches to how organisations are generating income: the most common being through exploiting their intellectual property (IP) and consultancy fees; property-based developments; increasing spend per head for visitors and contracting with the public sector to deliver services. Below I’ve outlined a handful examples of each of these approaches:
Consultancy fees and Intellectual Property
Rather than pursue a corporate entertaining style approach, National Theatre of Wales (NTW) are working with the Admiral and Confused.com group on continuous professional development for staff in a way that uses their assets, and fits their group mission. Admiral are known for having a staff choir, so NTW have supported development of a staff drama group to devise a short play that will be performed one lunchtime then filmed and shown on the staff intranet.
Streetwise Opera has reinvented its previous biennial major opera production, which was a three-night live event only, in terms of audio, film and installation components. This results in secondary digital works which can be distributed on a cross platform basis and marketed via the internet e.g. using viral shorts as well as physical components for installation on the festival circuit internationally. By this means Streetwise Opera has been able to both extend awareness of the issues facing people who are homeless and generate income both from PRS fees for composition and tour/screening fees.
For Ished the key question going forward is how much of the value chain should they try to cover and how can they also demonstrate the social value of what they create. Ished has been exploring how to license and deliver products like Media Sandbox (a research and development scheme designed to promote innovation) and latterly Theatre Sandbox by taking an Executive Producer role. To trial this Media Sandbox will roll out with the Manchester Digital Media Agency and Cornerhouse will be the delivery agent on the ground rather than iShed.
Live Theatre is looking to capitalise on their reputation for excellence in new writing through an online version of their existing new writing course. Currently at the stage of detailed testing, it will be launched in Summer 2010 to coincide with the Broadway opening of The Pitmen Painters (which was co-produce by Live with National Theatre).
Shetlands Arts is currently working with production and distribution specialists to identify the most effective models of exploitation of IP that results from performances and events in the Mareel venue that opens next year.
Several other organisations were seeking to monetise their IP as part of their models (e.g. B3 Media, Sound and Music and Arcola Theatre) however income streams from IP were not yet a significant aspect of the financial model of any organisation:
‘We’re thinking about how we can capitalise on what people value about us: that might be about how we are working with communities and technology. These are areas we’ve developed that people what to know more about how we do it – but we’ve not yet worked out a model of how to derive income from this.’ (interviewee)
Increased profitability per visitor
Increasing spend per head, rather than (or in addition to) increasing audience volume is an approach that several organisations are pursuing including Whitechapel Gallery, Leach Pottery and Quad. For example, Quad receive 20,000-25,000 visitors monthly; if each person spent an average of £2 more per head this would make a big difference to their business model.
Property acquisition and development
Acquiring and developing buildings were a prominent feature of many developments with Shetland Arts, Whitechapel Gallery, Battersea Arts Centre (BAC), Ryedale Folk Museum and MEAL all engaged in major building projects. However these projects were being approached cautiously – through phasing (BAC) and efficiency (Whitechapel), for example.
However many organisations were using their buildings, and the skills they’d developed relating to property development and management, to generate income – whether that’s through trading in the building or consultancy. For example, Arcola Theatre is using the expertise it has in building development plus management and development of sustainable technologies, which sit at the heart of its vision to build a carbon neutral theatre, through taking on estate management contracts for third parties and selling sustainable technology solutions. Live Theatre are using skills they’ve developed through a building project to explore a new joint venture with a restaurant group on their estate. Lightbox have utilised their building management expertise by taking on responsibility for a local authority owned warehouse and introducing micro enterprise tenants.
Delivering public services under contract
A number of organisations were receiving significant income from delivering services through contracts with public bodies. Streetwise Opera is contracted by eleven homelessness shelters to deliver activity and Dance United is contracted by youth offending services for its excellent and inspiring Academy project. Organisations in the museums sector (Ryedale, MEAL and Lightbox) were also actively involved in contracting.
What proportion of earned income is mission-related?
A very high proportion of income was mission-related. In several cases this takes the form of contracting with the public sector (for example Dance United and Streetwise Opera). Seven Stories is also contracting with the public sector, for example through its Hooks for Books packages for schools that combine professional development for education practitioners with bespoke projects.
Trading on the ‘open market’ is also important, for example Weald and Downland Museum has created additional income through developing an extensive fee-paying adult education and training programme based around the building collections. Day and short courses are offered on building technologies, building conservation and building history. They offer 3500 teaching days per annum and run two MAs accredited by Bournemouth University.
However – a note of caution; the study shows that there are variations in how organisations define or understand what constitutes ‘mission-related’ activity leaving the term open to interpretation. There was clearly a desire to see earned income as mission-related and some referred to it as ‘social enterprise’. As one contributor noted in an interview:
‘it’s a grey area – we find it difficult to decide whether trading is mission or non-mission, in fact we’re moving from having a separate trading arm to bring all activity into the core as a form of social enterprise.’ (interviewee)
Another contributor provided an example of the blending of mission and income generation:
‘CD releases are part of our income generation strategy – but I wouldn’t say it’s a huge part of our income – it’s great for profile and prestige though.’ (interviewee)
BAC calibrate every activity against a spectrum from pure commercial to pure social value; the aim is to hybridise social, cultural and commercial value. An example is the way BAC uses the building to generate income; weddings take place in the Grand Hall – the space is provided in exchange for a fee. However the building is full of artists who can add cultural value to this transaction through set dressing, a live entertainment offer etc. This conceptual approach to space and assets was initially fostered by the experience of giving over the whole building to Punchdrunk for its production Mask of the Red Death.
The Arches, in Glasgow, contrasted sharply with this picture. The Arches is equally known for its clubbing as for its progressive and experimental theatre programme but it is the commercial success of the former that enables the latter and the organisation directly earns 80-85% of its income.
In my next post on this subject I’ll turn to look at how technology is facilitating changes in business models.
 The japanese ikon the 'manege neko' (beckoning cat) is thought to bring good fortune and trade to businesses. In the current economic context - I thought we could do with a shop-full. I’ve been hearing and having lots of conversations recently about the need for new and evolving business models in the arts and cultural sector, including ACE’s visual arts research project into sustainable business models led by Susan Royce, the research I’ve been doing with Holly Tebbutt and Rohan Gunatillake for Mission Model and Money’s Capital Matters project, and Mark Robinson’s excellent article on adaptive resilience (which if you haven’t read yet I heartily recommend). It was also a hot topic at the Arts Marketing Association (AMA) annual conference which I attended last week in Leeds.
So we appear to have a consensus that new business models would be a good thing, particularly as major cuts in public funding loom, but are we clear about what we’d like from our business models? I was recently challenged to define what I meant by a ‘successful’ business model and I said simply that it’s one where which enables an organisation to deliver its mission effectively. I stand by that, but it might help to be more specific – and at the AMA conference John Holden posed the question to a breakout group I was attending, ‘what do you want from your business model?’ and it generated a lot of debate.
I suspect we all want something slightly different things from our business model, but here’s my starter for ten based on these various conversations I’ve been involved with in the past few months:
1. Fit-for-purpose: ultimately, the business model has to enable you to deliver your mission effectively and efficiently – it doesn’t need to be fancy or clever. The most important thing is that it enables you to do what you want to do, rather than dictates the way in which you have to do it. So I’m looking for a business model that can be to responsive to innovative, high quality, artistic practice and that enables us to engage with audiences to they can enjoy and experience the arts.
2. Flexibility: in this age of austerity it’s tempting to cut resources to the minimum which coupled with our tendency to be over-ambitious with limited resources can often mean we lack capacity to respond – whether that’s to opportunities or challenges. As Mark Robinson makes very clear in his paper on Adaptive Resilience, the ability to respond to change is a critical success factor. There are different ways of creating this flexibility – many ACOs use freelancers and flexible staff models which can expand and contract. Google employees are encouraged to spend 20% of their working hours activity of their own choosing, so long as it’s in line with broad company goals. So, for me, a good business model retains capacity to innovate and adapt in response to external change.
3. Culture: I’m beginning to wonder whether it’s not what you do, but how you do it that’s critical in terms of a successful business model? (And this would tally with what I heard recently that management interventions that have greatest impact are those which focus on how a company works, not what it does). Time and again speaking to those leading successful ACOs I’m struck more by their entrepreneurial approach, than the substance of what they are doing differently. A strong ‘brand’ (and I’m talking about core values, not a visual ID) or organisational culture is also key, enabling everyone involved with the organisation to channel their efforts. So, in a business model, I’m looking for a clear brand and learning culture: by which I mean being willing to take try new things and risks and learn from them.
4. Outward-looking: Being aware of the external environment and how it is changing is fundamental. Speaking at the AMA, Chris Grant spoke of leaders as people ‘who are willing to see clearly’. External perspectives are crucial in forming an accurate picture of where you fit into this wider landscape and having a broad and diverse network of external contacts and collaborators.
5. User-focussed: Audiences, or users, might be part of the external-focus, but I believe audiences are so important that they deserve a special mention. Speaking at the AMA conference, Selena Virrels (Head of Marketing, Southbank Centre) outlined ‘knowing and understanding your audience’ as the number one golden rule for ACOs. Despite this, in the arts (and visual arts in particular) we don’t always invest in understanding our audiences. And ‘understanding’ needs to go far beyond demographics and numbers – we need to get to know our users and understand their motivations and how they feel about our organisations (RedBull revealed they target customers based on their attitudes not their age, in the same way Tate segments visitors by motivation not demographics as a way to understand their needs). When we do make the effort to understand our users this translates not only to increased visitors figures, but also increased income from trading per head – as the Whitechapel Gallery has found to name but one example. But this takes resources – and the first casualty of the belt-tightening we are seeing among ACOs is usually marketing and training budgets. I know it’s tough right now but that’s not where I’m making savings: I’m keeping time and space in my business model to understand my customers better and develop relationships with them.
6. People as the key asset: To quote Imogen Pudduck (Head of Brand, Redbull), ‘our people are our best asset’. To encourage innovation, each year 50% of her team’s activity has to be new – and the ideas for these new activities can come from anyone within the organisation, at any level and in any role. Too often in ACOs we overlook the talent and ideas within our organisations, preferring to focus on a small group of ‘creatives’ or external partners. I like business models that make the most of the ideas, enthusiasm and skills of the whole organisation, as well as our wider networks.
7. Access to capital: ‘capital’ is the assets required to develop further assets – for example, an example of a capital investment would be an R&D grant (or loan) to set-up a new membership scheme which will generate profit in future, or investment in a new IT system which will improve ticketing efficiency and generate audience data which can be used to boost sales in the retail outlets. I’m very keen to ensure all business models actively seek to develop capital and have the resources to develop their assets and invest for the future – whether that’s a training, investment in R&D, buying new software. Ensuring there’s sufficient time and resources to develop this capacity is critical.
8. A range of different and stable income streams: I’m sure that at some stage we’ve all had to deal with the paralysing uncertainty of not knowing what resources are available in the future which can mean it’s hard to take decisions far enough in advance (in fact that pretty much sums up next April for many of us right now). Being able to plan further ahead with confidence can have a major impact on performance so developing a stable core financial base and planning system is critical. The theory is that having a range of income streams means that the impact of trouble with one of them should not destabilise the organisation overall, but we often forget that additional resources are required to raise and manage different income streams. Multiple income streams are not necessarily better than 3-4 reliable ones, so my ideal business model doesn’t chase every income idea going – just a core few (including some I think may grow in future alongside surer bets) – and it’s crucially important to be able to understand the full costs of generating and managing income – there’s big difference between income and profitability.
I put the financial consideration last, not because it’s not important but because when we talk about business models too often people just mean the financial model: and a good business model is far more than about having enough financial resources. Similarly, technology plays a very important role in my world – but to underpin and enable all of these other features. To quote Shelley Bernstein (Chief of Technology, Brooklyn Museum): ‘What we do has very little to do with technology. It’s about creating a good visitor experience.’
How does this list sound to you? Is there anything missing? Or have I included something which you don’t think is necessary or helpful? I’d also be interested to hear how this compares with your current model?
Over the next couple of months, I working on an exciting new project led by MMM called Capital Matters. Working alongside fellow independent consultant Holly Tebbutt, I’m researching how business models are developing in the arts and cultural sector and the capital needs related to this. We’re looking for non-profit arts ands cultural organisation organisations (visual arts, Performing arts, literature or museums) from the UK which are developing innovative business models.
Please get in touch with me if you have any suggestions about individual organisations worth considering or research on this subject.
The outline below is take from the MMM website -
MMM is working on a major new national research project aimed at designing a new policy framework for building financial resilience in the UK arts & cultural sector. Entitled ‘Capital Matters the research will take an asset based development approach and will focus on two areas:
- Expanding understanding and recognition of the diversity of business models supporting creative practice across the arts and cultural sector, how they are evolving and the factors that will enable that diversity to flourish further.
- Identifying the potential for developing a new generation of specialist financial providers funding and investing in creative practice.
Together with a broad range of industry leaders and a programme of consultations with front line creative practitioners and organisations across England and in Scotland, three interdependent issues will be examined
- The potential for expanding the range of different kinds of financial capital available;
- The development of the skills and knowledge needed to use them and
- The revision of policy and infrastructure frameworks to enable the speedy evolution of both the above.
Why is a new policy framework needed?
MMM’s work to date shows that thousands of arts and cultural organisations in the UK, critical to both the historical and contemporary cultural canon, are over-extended and under-capitalised. In particular, weak balance sheets are endemic in the sector. Often with high fixed costs and inflexible business models, many are overly dependent on annual public sector grants to survive. The fallout of the global financial collapse, which is reducing, contributed income from the private sector is exacerbating this scenario and expected reductions in the availability of public sector grant income will increase stress further.
Nevertheless within this turbulence is an unprecedented opportunity to create a forward looking, national long-term policy framework designed to accelerate evolution of working practices and behaviours by arts and cultural organisations and public and private funders and investors. One which
- helps arts organisations shift away from a subsidy mindset to an investment mindset. From “how can we possibly close the gap between income and cost?” to “what are the core assets of our organisation, intangible as well as tangible, and how can they best be nurtured?” and
- helps catalyse an innovative and fundamental transformation in the sources of financial capital available to arts and cultural organisations. Capital which will enable them to evolve into more resilient, adaptive, organisations delivering cultural excellence to an even wider general public.
The research draws on learning from MMM’s previous work on Expanding the Financial Toolbox and is supported by The Calouste Gulbenkian Foundation’s Innovation Fund, The Northern Rock Foundation, The Scottish Arts Council and Arts Council England.The report recommendations will be published in the autumn.
UPDATE – the consultation briefing paper is now available online. I’ve largely finished my involvement in the primary research stage now – over the Summer a final report is being written – look out for this towards end September. It’s going to be great – can’t wait!
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Wed 21st September 2011 8:35
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