Giving Thanks

Thanksgiving is fast approaching (yikes… far too fast!) and in the spirit of the holiday I thought I’d share some things I’m thankful for.

Of course, I’m happy for another year spent in the company of friends and family—the best group of people I could wish for.  I’m extraordinarily grateful to have an amazing wife who puts up with my many idiosyncrasies.  And I’m thankful that our wonderfully exuberant dog hasn’t ended up in the doggie emergency room yet again.

But a concert over the last weekend reminded me of how much I have to be thankful for as a musician and as a member of our music-loving community.

On Sunday I was privileged to perform Mahler’s Second Symphony, “Resurrection,” as a singer in the Minnesota Chorale.  We shared the stage with The Metropolitan Symphony Orchestra (MSO) led by William Schrickel, along with soloists Clara Osowski and Rachel Daddio.  Overall, the performance was hugely successful (I admit I might be slightly biased on this point) and ecstatically received by the capacity crowd.  It also received an enthusiastic review from the Star Tribune.

I’ve had many performances in my time, and hope to have many more, but let me explain why this concert in particular gave me so much to be thankful for.

As an Artist.  On a personal level, I was grateful to have a chance—any chance—to perform right now.  The Chorale performs all kinds of music, and I’m happy to sing in all kinds of musical projects with the group.  But hands-down, my favorite projects are when we get to sing big, full-blown, techincolor choral works in all their epic glory.  Beethoven’s Ninth Symphony, Berlioz’s Damnation of Faust, Brahms’ Requiem, Adam’s Harmonium… these are our bread and butter.  We are, at heart, a symphonic chorus—and as such we need a symphony orchestra to practice our art.

With the Minnesota Orchestra locked out… well, we’ve been locked out, too.

I don’t want to compare our situation with that of the locked out musicians—their circumstances are obviously far more painful, both personally and professionally.

But the last year and a half has been pretty grim for us as an organization as well, and it was invigorating to have a chance to get together and actually make music.  To overcome some of the wonderful musical challenges Mahler sets out for us.  To refine our art, and try to make ourselves better artists.  To feel the powerful emotions of that great work, and bring them to life for ourselves and our audience.

This last point is important.  I’m sure it’s a tired cliché, but when artists bring art to life… we feel alive ourselves.  Those powerful feelings of hope, fear, longing, love or transcendent joy an audience experiences when listening to a performance are made possible because the artists themselves feel these things, and are able to communicate them to others.  The audience felt joy last weekend at least in part because I felt joy.  And experiencing that joy together magnifies the feeling ten-fold for all of us.

I am deeply thankful  for an opportunity to work in an art form that allows—no, requires me to feel those profound emotions and to share them so directly with others.

As a Partner with the MSO.  The MSO is a community orchestra, made up of volunteers who perform for the love of the music.  And I am both thankful and honored to share the stage with them.  They were fearless in tackling an absolute monster of a symphony, and determined to rise to its many musical and technical demands.  I have nothing but praise for a group that took on this challenge because they wanted to raise their artistic level… to raise their game.  And they gave it their all—what a joy to watch such determined music-making!  Plus, they did an outstanding job with it, plumbing the despair and anger of the first movement and playing radiantly at the end.  And best of all, their hard work never felt like work in the performance—they were able to let go and say what they wanted to say artistically, to deeply and authentically express themselves in music.

On a deeper level, I’ve long been convinced that for great music to truly live in our culture, it needs to live in the hearts and hands of groups like the MSO.  If only a few prestige orchestras play Mahler for a handful of high-paying elites, Mahler will surely vanish.  Great music survives because ordinary people love it and find ways to incorporate it in their day-to-day lives.  And great music thrives because non-professional players want to experience the joy of music-making for themselves.  These non-professional players realize that music still has a powerful message that resonates today, and want to share it with others.  In doing so, they provide a vital service of keeping our musical heritage strong and vital—and accessible to everyone in the community.

And another point.  Sure, it is great to listen to or to study music, but the best way to truly connect with music is to actually perform it yourself, which leads to new levels of understanding and delight.  I’m grateful that the MSO and all our wonderful community orchestras provide this invaluable service as well—giving interested musicians a chance to come together and perform great orchestral music live.  I am so thankful for what you do.

As a Member of this Community.  And of course I am thankful for our community, and its deep and abiding love for the arts.  Minnesota doesn’t just maintain a comfortable respect for the arts, but genuinely celebrates them.  On a chilly day in the heart of football season, 1,800 people packed Central Lutheran Church to hear us perform Mahler’s sprawling Resurrection Symphony.  The church itself hosted a post-concert reception with—seriously—beer and pretzels.  And what a crowd it was!  People brought children dressed in their Sunday finest.  Young people dressed in jeans crowded together with retirees.  Some folks brought their own scores and followed along, while others simply lost themselves in the sound.  People who grew up taking music lessons mingled with those who couldn’t carry a tune to save their lives.  But we were all there, sharing an astonishing moment together.

Why is this important?  Well, the performing arts need an audience to really come to life.  That is the essence of a live concert—experiencing the emotions both individually and collectively.  It is that magical connection between performer and audience, and audience members to each other, that truly makes a performance.  A bad or even indifferent audience can make an otherwise stellar performance feel flat and empty for everyone… onstage and off.

Fortunately, we did not have an indifferent, dutiful audience on Sunday.  They were wonderful, attentive, and clearly swept up in the performance.  I don’t measure that simply by how loudly they clapped at the end, but in how rapt they were in quiet passages.  How excited their murmuring was between movements.  Their faces as they realized that almost imperceptibly, the chorus began singing.  I was so thankful that in today’s world of multiple distractions, they gave us their attention.

One final thought.  I’m also thankful for all the new friends, and renewed friendships, that have come about as a result of this blog.

So… all told, I have much to be thankful for.

Happy Thanksgiving!

 

So, About That New Business Plan…

For several days now, something has been bugging me.

Again and again, the Minnesota Orchestra’s leadership has indicated that it is trying to develop a new business model to successfully run an orchestra in today’s cut-throat world—apparently with the understanding that this model will be so successful that other orchestras around the country will adopt it as well.  There is true-believer zeal in their statements and actions, and I have no doubt that management truly believes this new model will solve the various ills currently plaguing the industry, and lay a solid foundation for future growth.

But the longer this dispute goes on, the more this new business model baffles me, leaving me with many questions for the Orchestra’s management.  On a basic level, what is this plan?  For something so central to the labor dispute, there has been precious little explanation of it or its particulars. If you feel this plan is so vital to the survival or the Minnesota Orchestra (and orchestras in general), then why aren’t you more actively discussing it, and promoting its various components?  And why are you so adamantly pushing it despite clear evidence that no one actually wants it?

The more I think about this new plan, the more questions I have for the Orchestra’s leadership.

An Unclear Business Model

To begin, I have to admit I’m surprised you’ve been so circumspect in the details of your new business model.  It’s odd… you have said repeatedly that it is the basis for your actions, and that its implementation is critical for the long-term health of the Orchestra.  If this is the case, if it is so rationale behind it is so self-evident that anyone can see its importance, then why aren’t you aggressively hawking the details at every opportunity?

Yes, you have a PDF of your “strategic plan” on the Orchestra’s website, but it lacks details and justifications of specific actions.  You don’t lay out your business model, you just provide boilerplate.

And even if the document on your website was thoroughly detailed, it exists in isolation.  There have been almost no other mentions of the plan, nor have there been public discussions about what you’re trying to achieve with it.  Over the course of the last year and a half, why haven’t the Orchestra’s leaders and board members been talking about it in community forums or in the many interviews they’ve given?  Where are the details? Why can’t every board member give an “elevator speech” that explains its key points and the justification for them?  Instead, you simply state there is a new business plan… and that it’s vitally important.

The problem with this is that this gives the appearance of arrogance… that you are so obviously correct in your beliefs that you don’t even need to explain them.  That your ideas must simply be acted upon without question.  This situation also gives the impression that you don’t want too much discussion of your new business model—that you recognize that it will be unpopular or raise opposition, and so you avoid talking about it to avoid any potential pushback until it’s too late.

“Align Supply with Demand”

Wading through your documents and statement, however, I can find two major components of your new business model.  The first is your stated goal to “align supply with demand” for your concerts.  As a result, you have reduced the number of seats in Orchestra Hall, and likewise reduced the number of classical concerts you are presenting, dropping from 85 in 2003 to proposed 55 in 2012.

With respect, this concept seems to fly in the face of basic business practice.  As I mentioned in my previous blog, I’ve been surprised that the management would so firmly commit to a plan that is so self-defeating.  Facing a difficult economic climate where you are struggling for audiences and donors, why would you throw your hands up and simply scale back your product?  Why would you not fight for market share?  What other business—anywhere—would respond in such a way?  By pulling away and further removing your product from the market, you are essentially beginning a suicidal death spiral leading to irrelevance.  By choice.

Let’s look at this from a different perspective—say, from that of a hypothetical soft drink company.  Let’s say that your flagship product, Sparkle Soda has been around for decades, but has been losing ground slowly and steadily to the industry leaders like Pepsi and Coke.  Faced with this deteriorating situation, why wouldn’t you grit your teeth and try to reverse the situation?  Why not re-brand and begin a massive public awareness campaign to make Sparkle Soda more visible again?  Why not strategize new, innovative partnerships to bring your product into new markets?  Why not fight aggressively for product placement?  For example, you could make sure that every major fast food chain or movie theater complex had at least one nozzle dedicated to Sparkle Soda on all of its fountain drink dispensers.

Following the Orchestra’s model, the company would instead cut production of Sparkle Soda and decrease distribution at the national level.  Instead of working diligently to make sure that every fast food chain had a nozzle dedicated to Sparkle Soda, it would sub-lease the nozzle spaces it currently has to a larger competitor like Coke or Pepsi.  Worse, the drink company wouldn’t even use the proceeds of its rented-out nozzle spaces to jump start product development or launch new initiatives… it would just hold onto the money and give out large bonuses to the CEO.

Maybe this is an appropriate action if you’re ultimately trying to pad your nest egg or sell off an under-performing company.  It is not, however, appropriate if you are the leader of a non-profit—and particularly not if you the guardian of a century-old cultural treasure.

“Dynamic Pricing”

The only other aspect of your model that’s been spelled out is the concept of “dynamic pricing” to increase ticket sales.  This concept is most familiar to the public through the airlines, which use it to constantly adjust seat prices based on a whole slew of external factors, such as demand, type of customer, time of day, and competitor’s activities.

With respect, I can’t imagine why you would adopt a marketing technique from this industry. Americans cordially despise the airlines, and dynamic pricing is one of the reasons for this animosity.

For one, regardless of what kind of deal they got, customers always have a gnawing feeling that you’ve paid too much.  Stories abound about those who waited just a few minutes too long before buying their tickets—only to find that the price had increased exponentially.  Or that someone using a different online platform or even a different browser scored a deal on tickets.  This creates a deep sense of frustration; plus, since ticket prices are based on a bewildering array of uncontrollable external factors, the customer has no sense of what the ticket is actually worth.

As a result, customers are forced to spend an inordinate amount of time checking and re-checking prices, trying to game the system and lower the price.  I personally hate this—jumping from website to website over several days simply trying to avoid getting fleeced.  I resent that airlines make me go through all these hassles—why would I want to see that happen with Orchestra tickets?

And let’s play this out to the logical conclusion.  Following the airline model, for example, would the Orchestra no longer offer a last-minute rush tickets at discounted prices, but instead force last minute purchasers to pay three times the face value of the ticket? Pay additional fees for an aisle seat?

There are larger issues to consider as well… issues like data management.  Dynamic pricing only works when there significant segmentation of the consumer base; ticket buyers have to be placed into discrete categories that range from age and income to geographical location.  The events themselves must be segmented as well, with price points based on factors like assumed popularity, day of the week, assumed clientele, and so forth.  This is a vast amount of data that has to sifted, collated, and manipulated to high levels in order to make dynamic pricing work.

So… do you have the technical and personnel resources to gather and manage all this data?

Can this data be handled through the database management system you have now?  Do you need to upgrade, or purchase a new system?  Databases are hugely expensive—what would it cost to ensure the system could implement dynamic pricing?  In addition to the technical needs, what are the staff needs required to gather and collate this data, and monitor it on a daily basis?

In short, do the high costs associated with implementing dynamic pricing justify the extra revenue such a system could theoretically produce?  Maybe you’ve figured this out, but I’d love to see evidence of it.

The problem is that dynamic pricing is a buzzword right now, and it’s not at all clear that it would work for an orchestra.  I recognize that some events have had luck in selling tickets using dynamic pricing, such as the 2012 London Olympics, but its overall record is still spotty.  Amazon tried dynamic pricing on DVD sales in the early 2000s leading to a furious response from consumers regarding the price differentials.  Ultimately, Amazon refunded their customers who had paid more.  Coke tried an experiment in dynamic pricing where vending machines charged different amounts based on location and the weather conditions outside.  Customer backlash forced it to abandon this approach.

My own perspective is that dynamic pricing only works in the following conditions:  customers have a difference in their willingness-to-pay, the market is segmentable, the is a limited potential for arbitrage, the cost of segmenting and policing does not exceed revenue increases due to customization, and it does not raise questions of perceived fairness.

Are these criteria true for the Orchestra?

Who is Embracing this Plan?

Finally, I think it’s particularly interesting to note that despite your great faith in your new model… no one else is rushing to embrace it.  Why would they?  Peer orchestras around the country have been enjoying great success in both the economic and artistic arenas.  Again and again there are news stories of orchestras in cities like Cleveland, San Diego, Kansas City, Los Angeles, Houston, Chicago and Pittsburgh that have been able to balance their books and flourish artistically without resorting to the sweeping changes demanded by your new business model.  The one group that followed the Minnesota Orchestra approach—our near neighbor the Saint Paul Chamber Orchestra—ended up losing a third of its ensemble and suffered dire organizational damage.

Say you were an arts administrator in a good sized orchestra… which model would you chose—the Minnesota Orchestra model, or the Cleveland Orchestra model?  Which model produces the best results and the fewest headaches?

So returning to my opening question— based on the fact that your new business model brings only questionable benefits, the fact that no one seems interested in adopting it, and so many other organizations are enjoying success through a different model… why do you continue to push for it?

When will you concede that this whole experiment has been a colossal failure?

 

Questions that Deserve Answers

Yesterday, the audience advocacy group Save our Symphony (SOS) Minnesota gave a public presentation that’s attracting considerable attention—and focusing new attention on the Minnesota Orchestra’s murky finances.  The group’s stated goal was to do a deep dive into the Orchestra’s financial records, as well as its overall financial strategy, over the past decade.  And more specifically, the presenters conducted a hard-hitting analysis of the Orchestra’s financial statements from the last few years as a way to better understand the context of the ongoing labor dispute.  Powerful stuff, delivered in a clear-headed manner.  (Coverage of the event can be found at the online newspaper, MNPost.)

The short version of the presentation:  the Orchestra’s management has been either incompetent, deceitful, or both.

Using publicly available tax records, board meeting minutes, financial statements, and other published documents, SOS Minnesota demonstrated how the Orchestra manipulated its’ financial numbers, showing good news or bad news depending on the audience.  Co-Chair Jonathan Eisenberg and Treasurer Mariellen Jacobson also made a convincing case that the Orchestra was engaging in all kinds of questionable activities that should have raised more than one red flag by the auditor, by the board, or by government officials.

I think the presentation speaks for itself, and I hardly want to steal their thunder… I urge you to examine the presentation and the supporting materials on their website (I believe there are plans to post a video of the event shortly).

But once again, I was stunned by the Orchestra’s response, as quoted in MNPost and the Star Tribune.

Again and again, I’ve been baffled at the Orchestra’s public relations strategy.  Here was a presentation that asked a series of probing, important questions that get to the very heart of dispute, particularly the Orchestra’s rationale for locking out the musicians.  These questions were very clear and straight forward… and yet the Orchestra lazily batted them aside and tossed off the same bland talking points they have been saying since the lockout began.

Instead of answers, we get statements like these:

“In recent years, the Orchestra has deliberately and strategically reduced its number of classical concerts to better match supply with demand,’’ the MOA said in a statement. “Our aim is to find the right balance of concerts to increase our total capacity sold and overall net returns and we’ve been successful in doing this.’’

I think a deconstruction of this one statement could fill an entire blog.

First of all, let me say that this highlights a danger of applying for-profit thinking too literally onto a non-profit organization.  The overall philosophy underlining the Orchestra’s statement is akin to a company with too much of a product on hand, and the company has to move through this excess inventory by slashing prices, halting additional orders, or some other drastic method.

But an orchestra concert is nothing like an overstocked case of Windex.

Cutting down the number of concerts might appear to make the remaining ones more scarce and valuable on paper. But scarcity isn’t enough—it is still the content and quality of the concert that drives sales.  Each concert is inherently unique, given the many different options for conductors, music selection, style, timing and guest soloists.  Eliminating those superfluous concerts featuring Tchaikovsky doesn’t mean people will automatically flock to hear Schoenberg instead.  Your idea is like having movie theaters close Monday through Thursday, so they can really pack in audiences over the weekend.  Maybe that will work, but what if no one likes what’s playing that weekend?  Or, think about shortening the baseball season.  There might be all sorts of reasons for starting play later in the year, but it would be ridiculous to suggest that that step alone will improve ticket sales for the remaining Twins’ games—the ticket buyer’s personal schedule, the opponent on the field and the Twins’ win-loss record are far, far more important factors.

Plus, I point out—as have many musicians over the last year and a half—that you are still paying the musicians’ salaries, even when they are not performing.  For example, you have moved the season opening later and later until it now takes place in mid-October.  So what are the musicians doing in August and September?  If you were really interested in shortening the season, why didn’t you create a new model for when the Orchestra is considered “in session” and adapt the salary accordingly?  You’re still paying salaries and benefits, the biggest components of the overall budget, but missing chances to earn revenue—a point that was vividly made clear in the SOS Minnesota presentation.

Something else that was made clear in the presentation is how shortening the season puts increased (one might even say disproportionate) importance on selling out the remaining concerts in order to reach your overall ticket revenue goals.  You’ve reduced the seating capacity of Orchestra Hall and reduced the number of concerts.  That means you have to wring out every drop of revenue from every remaining seat—there is no longer any cushion or margin of error.  So what else have you done, apart from making seats more “scarce,” to ensure that every seat is filled, and every ticket payer paid top price for that seat?  You mention a “glow effect” of renewed interest once Orchestra Hall opened, but how would that be sustainable for the future?  What happens now that this “glow effect” won’t occur?  I have seen no marketing strategy sufficient to meet your ambitious goals.

Another thing that troubles me about your above statement is that it suggests you’ve forgotten something incredibly important:  you are a not-for-profit arts organization.  You are a mission-based group that is designed around the idea of performing great classical music.  Simply put, cutting concerts means you are not fulfilling your mission.  This is important.  Certainly there are reasons and rationales for reducing the number of concerts, but doing so is a major step that should be given great thought…  and have wide-spread institutional buy-in.  In other places you’ve argued that cutting classical concerts would provide extra room on the calendar for other, more profitable activities.  Perhaps, but that’s debatable at best (Orchestra Hall is simply too large and expensive for many groups to rent casually).  Plus, renting the Hall to outside groups like the Center for the American Experiment might bring in extra revenue, but that isn’t the purpose of the Minnesota Orchestra.  Sure, one-off events and rentals are fine on dark nights, but again—the Orchestra and Orchestra Hall exist not to make a profit, but to present the best in orchestral music.  That is your core mission, and symphonic music is your core product.  Everything else is a distraction.

One of the most worrying things about this statement, however, is the horribly uninspiring philosophy behind it.  In effect, you’re making an assumption of the perceived value of the concert ticket, and cutting down—and dumbing down—the Orchestra to match that assumed value.  What evidence do you have for this assumption?  How did you arrive at this conclusion?  Something this big—concluding that apparently classical music has no following in the Twin Cities—needs a lot of documentation to support it.  Particularly because there is all kinds of other information to suggest it is not true… doesn’t the fact that during a recession you were still able to secure $100 million for the rebuilding of Orchestra Hall, the Orchestra’s artistic initiatives, and its endowment, show that there is a great deal of support for classical music in the Twin Cities?  If demand is low and declining, why go to the bother of building an expensive facility for it?  One obvious answer is that you wanted a top-end performance venue to rent out for non-classical uses… but I can’t believe that’s what you told donors during the capital campaign.

Why don’t you flip your thinking instead?  How can you increase the perceived value of the performances?  How can you increase interest, and in doing so increase demand?  How do you make yourself relevant again?  Other orchestras around the country have successfully done this—Cleveland, Chicago, San Diego, Kansas City  and others have having record-breaking years in terms of attendance and ticket sales, so please don’t toss up your hand and say it can’t be done.  Los Angeles was in far worse shape a decade ago, but is right now in a golden age.

Take a lesson from the larger world of business.  A basic rule of business is you hit a rough patch, that’s the time to make long-term re-investments in your product.  Re-group, re-think and re-tool your product… don’t just abandon it.  For example, what happens when sales of Apple’s iPhone 5 start to lose steam?  Apple surveys the industry, makes improvements and releases the iPhone 6.  It doesn’t simply cut production of the iPhone 5, saying it has to “match supply with demand.”  Why are you giving up so easily?

One final point here.  You say you’ve been successful in balancing costs and capacity.  I don’t know how you can possibly claim this strategy is a success.  Ticket revenue dropped, leading to lower revenue and financial woes.  You ended up with deficits.  Worse, you made yourself less relevant to the community, thus made it harder to build audiences and your donor base in the future. And, you created a point of friction with your musicians.  How could this be called a success?

“Henson is actually in the process of rebuilding the donor pool.”

I am fascinated to learn more about his techniques, his goals, and his progress to date.  Is the recent fundraising letter an indication of how he’s approaching this crucial task?  I note that your statement uses language that is so… flaccid that I’m not sure how strongly you stand behind it.  “In the process of rebuilding?”  How long and incremental is this process? “Donor pool?”  Do you mean increasing the size of the pool?  Diversifying it?  Will fewer donors give more?  What do you mean? Do you know? Do you care?

“The Board remains the party that is willing to talk and is clearly open to compromise, having already significantly altered its original negotiating position.’’

This statement is a triumph of self-justification over reality.  The MOA leadership has rejected every attempt by every group or individual to engage in negotiations.  It famously rejected the proposal of its hand-chosen mediator, Senator George Mitchell, because doing so would cause it to “lose leverage.”  The leadership’s “negotiation tactics” have been hammered by politicians, elder statesmen, business leaders, and arts administrators from around the county.

But beyond that, in your own fundraising letter—the one you sent to all your donors—you swear you “will never compromise.”

“Not surprisingly, the MOA disputes that theory. Its view: The $50 million capital drive was only part of a $110 million drive: $50 million for the renovation, $30 million for the endowment, another $30 million for “artistic initiatives,’’ money to be used for such reputation-building things as European tours.

I’m sure I’m not the only one bewildered at this statement.  You state that you raised $30 million for artistic initiatives to be used on things that build the artistic reputation of the group.  Fine… but you cancelled the Carnegie Hall tour.  Wasn’t that among the principal reasons for raising the money in the first place? Plus, your actions led to the cancellation of the recording contract with BIS and the residency with the BBC Proms.  And in fact, you cancelled each and every concert since October 2012.

So if all those artistic initiatives have been cancelled, what is that money being used for?

Are the donors who gave that $30 million to you upset that you’ve cancelled anything that could be considered an artistic initiative?

Another thought. Is there no way any of that $30 million could be used to replace the $5 million you’re insisting come out of the musicians’ salaries, rather than have it sit quietly in a bank account?  Especially since there are no other artistic initiatives on the horizon for another year at least?

And from the Star Tribune story covering the event: “ In response to the some of the questions raised in the presentation, the Orchestra said that the state auditor examined many of these allegations last spring and ‘cleared the orchestra on all counts.’ ”

Well, I don’t know if I’d go that far.  Remember, the auditor was specifically tasked to look at a very, very narrow set of issues… particularly in how the state bonding money was used.  The auditor, Jim Nobles, was careful to state that he was not authorized to look at larger issues of strategy, the endowment draws, assumptions, or any of the other financial questions the Orchestra was facing.  And he was clear that Michael Henson was not forthcoming in his testimony, even if he did not demonstratably lie.  This report was hardly the ringing, universal endorsement the Orchestra now claims.

* * *

The interesting thing about SOS Minnesota’s presentation is that the organization clearly admits that it doesn’t have all the answers—it has done due diligence with the information available, but still has a series of important questions for the Orchestra’s leadership.

In listening to those questions, my own opinion is that they are relevant, important, and timely—and that they most certainly deserve actual answers.  What is the real financial situation of the Orchestra?  What are its real problems?  Will the solutions the Orchestra’s management is proposing actually help anything, or have they been making things worse?  Has the Orchestra been honest in the past?  Is it being honest now?  How long has the lockout been planned?  Is this whole ordeal simply an ideological crusade against unions?

The Orchestra, unfortunately, seems to believe it doesn’t need to answer the questions.  Worse, it doesn’t respect the people posing the questions enough to give them a thoughtful reply.

I disagree.  These questions—and the questioners—deserve comprehensive answers that are far more substantial than we’ve anything gotten up to this point.  There may be perfectly legitimate answers to these questions… so why doesn’t the Orchestra articulate them?  If the answers are so obvious and self-evident, it should have no problem providing them.

I call on the Orchestra to sit down and actually respond to the questions put forward by SOS Minnesota.  Not in some media event where each side gets equal time in front of a camera to list its talking points, but in a format where we can ask follow ups and cut off grandstanding.

I want answers.

 

You Have to Love Your Product

Recently, a fundraising letter from the Minnesota Orchestra went out, inviting people to make a donation to the organization.  In normal times, there would have been nothing unusual about this—this is the time of year when all non-profits reach out to the community for just one more gift before the end of the year.

It is sad to report that this simple, innocent letter seems to encapsulate everything that is wrong with the Orchestra’s leadership right now… not just in how it is dealing with the organization’s finances, or how it is behaving in the labor dispute, but how it thinks about the Orchestra itself.

I’ll explain, but first let me say a few things about the letter itself.  And I want to make clear that I’m not trying to slam the individual letter writer—letters of this nature are generally a collaborative effort.  As such, I’m looking at this as less of personal correspondence than a window into the thinking of the organization as a whole.

“Remember why the Minnesota Orchestra is important to you.  That reason applies today.  …Take a moment to write your story on the enclosed insert.  You may also consider telling us:  What does the Orchestra mean to you and why should it be preserved?”

What is so worrisome about this statement is that you the organization don’t put forward a reason to love, value or support the Orchestra.  Bizarrely, you ask us to come up with a reason of our own, and to reflect on it.  Instead of actively convincing us to support the organization through the power of their words and imagery, you are telling us to convince ourselves, which seems to be an oddly passive approach.  But worse, you then ask us to feed these warm fuzzy stories back to you—presumably so they can be added into the next fundraising letter.  Can’t anyone in the back office come up with something of their own that might be compelling?  This doesn’t inspire me, nor does it inspire confidence that you really know your audience.

“One more season of memorable music and memories is not enough.”

Agreed.  But… I’m not sure who is saying one season is enough.  Is anyone proposing there should only be one more season?  Would anyone’s proposal result in only one more season?  Even in your most vehement criticism of the musicians’ proposals (as well as the proposals from your hand-chosen moderator that you later dismissed), you never indicated that the plans were so reckless that the organization would fold in 12 months.  It is standard practice to add a bit of urgency to fundraising appeals, but this seems a bit overstated.

“We cannot compromise on our future.”

Not long ago I posted a hard-hitting blog that argued that the Orchestra’s leadership had no interest in solving the underlying dispute… instead, they were simply fighting to win.  This comment essentially proves my point.  How do you propose to resolve this dispute without a compromise of some kind?  May I remind you that your “no compromise” posture has by all objective standards brought the organization to a crisis point?  Let me be blunt—your future is already compromised.

“You can help ensure, that when the negotiations end, the Orchestra has all the resources it needs to resume playing at the level we all remember.”

Why would donors have to give money now for some nebulous future event that may or may not take place, that may or may not take place in a timely manner, or that may or may not take place in accordance with the spirit in which the contribution was given?  The only way this approach could work is if you put the funds in escrow, but you don’t suggest that that will be the case.  Or, couldn’t people just give later, when they are sure their contribution will used correctly?

But another thing bothers me about this sentence.  You indicate that the Orchestra will have all the resources its needs once the dispute is over.  Well, right now it doesn’t have its music director, a quarter of its musicians, goodwill, a record of keeping its word, fiscal leadership, prudent management, an engaged board, a positive reputation, or allies in the community.  I don’t mean to be glib, but will my $25 contribution bring back any of those things, too?

“I ask you to remember why the Orchestra is important to you.”

I ask you the exact same thing.

This last comment isn’t snark—it gets to the real problem with this letter.  One the one hand, it is smoothly professional, and hits all the essential elements of a textbook solicitation letter.  It has a warm anecdote, it seeks to elicit a personal response from the reader, it offers choices for giving, it makes its points… but ultimately, it misses the entire point.

The thing missing from this professionally-crafted letter is… the Minnesota Orchestra.

Take the opening. The quote from “Joan” brings to mind a warm personal memory of a young girl’s excitement, but the Orchestra itself is tangential.  We have no sense of what the concert was like.  There is no mention of the ensemble, what they played, how it sounded or any of the emotions the music inspired.  Yes, she felt honored to go to the concert, but did she end up feeling elated, excited, agitated, joyous, or awestruck?  Could she feel the loud portions rattle her ribcage?  Did the rhythms make her want to jump out of her seat and dance? Joan’s anecdote could be describing a field trip to the state capitol.  How does this speak to us as readers—who are, presumably, music lovers?  For this letter, the organization has applied a generic fundraising formula, slapped on a new masthead that edits out Osmo as the Music Director, and dropped it in the mail.

Unfortunately, this is not an isolated incident.  Based on my own observations, conversations, and the materials coming out of the Orchestra, I have to say that this same kind of thinking has deeply permeated the Orchestra in all areas.

The orchestra is absent.

From the management’s perspective, there is a sense that the orchestra is a single monolithic entity, and that it either turns on or turns off.  It doesn’t matter who’s playing in it.  It doesn’t matter who’s leading it.  It doesn’t matter what it plays, or how it plays it.  All the management needs to do is shout “Orchestra!” and they expect that we’ll respond as if we’re in a Pavlovian experiment.

This thinking carries over into the marketing strategy as well.  Based on observations, conversations, and a thorough look at the Orchestra’s strategic plan, I’ve noticed a disturbing trend… everything is impersonal, mechanistic and pre-determined.  Don’t get me wrong—the materials are highly professional.  But the overall thinking seems to be that the organization will produce a lovely brochure, and that will drive sales.  The brochure, and not the actual product.  There is a troubling through-line that the product will not—and cannot—sell itself.  Therefore, it needs to be wrapped up in flashy packaging that will somehow minimize all of classical music’s presumed failings.  As a result, it feels like the focus of all the marketing is to drive up metrics, like email open rates or marketing code efficacy, rather than to bring the concert experience vividly to life.  These tactics are not in and of themselves bad, but the overall strategy behind them is severely flawed.

Beyond fundraising and marketing, this “orchestra-less” line of thinking also characterized the reconstruction of Orchestra Hall.  Yes, I know that people gave money specifically to that project.  Yes, I know that there are lots of people will give to a capital project who will not give to general operating expenses.  Yes, I understand that some of the funds were time-sensitive.  But as many people have shown over the last two years, the management engaged in a whole host of actions that destabilized the organization’s finances over the long-term simply to get the building completed now.  This episode has dramatically demonstrated that the Minnesota Orchestra’s leadership prioritized the building over the actual music.

And finally, there is no better example of how little the management values its core product than the fact that it re-wrote the Minnesota Orchestra’s mission statement to remove the words “orchestra” or “orchestral music.”

This is all wrong.  And to use a tired cliché, it means the Orchestra’s leadership is not seeing the forest through the trees.

I have argued many times before that the organization’s first priority should be in securing a great product.  It is a basic business truth that cutting your product’s quality is ultimately self-destructive over the long-term.  Our community is far more savvy than the management believes—it can certainly perceive different levels of quality, and has shown itself more than capable of responding accordingly.  I say with confidence that the community does value what the Orchestra plays and how they play it.

But more importantly, our community values who is performing it.  That haunting clarinet entry in the third movement of Beethoven’s Ninth Symphony—that’s not some disembodied sound coming over the PA system.  Burt Hara made that sound, and we audience members know it.  The ecstatic violin line that soars at the opening of Ralph Vaughan Williams’ Serenade to Music? That was made by Sarah Kwak, and we know that, too.  We’re also well aware that the reason Alex Ross of the The New Yorker called the Minnesota Orchestra one of the finest ensembles in the world was due directly to the leadership of Osmo Vänskä—his artistic vision and his willingness to do the hard work necessary to achieve it.

And we also know that because of management’s actions, all of them have left the ensemble.

The Orchestra needs to put its product back at the center of its mission, its vision, and its strategic plan.  Celebrate the music.  Honor the people who make it.  Don’t apologize or minimize the orchestra—boldly put it front and center.  Shift your thinking so that your fundraising and marketing materials bring the concert experience to life.  Be proud of who you are and what you do.

Unfortunately, the “orchestra-free” thinking that has permeated everything the management has done over the last few years has been a colossal waste.  It has focused the organization’s time, energy and attention on all the wrong areas, creating a structural problem every bit as dangerous to the organization as the fiscal problems that management finds so worrisome.  A basic rule of business is that you have to have a good product in order to sell it… but the administration has flipped its priorities.

Sadly, I have to conclude that the Minnesota Orchestra leadership is more in love with its promotional materials than its actual product.

 

A Response to Nicky Carpenter

Nicky Carpenter—an eminent benefactor of the Minnesota Orchestra, an honored Life Director on the Board of Directors, and a major figure in the ongoing negotiations with the locked out musicians—has weighed in about the ongoing dispute with a detailed opinion piece in the Star Tribune.  Her stated goal is to dispel the notion that the Orchestra’s board lacks vision and clarity.

Allow me to provide a response.

Nicky, your piece is eloquently written and at first glance would seem to possess a good dose of common sense.  Someone reading it right now, with no other information about the dispute, might be persuaded by your words.

But with respect, it comes far, far too late in the game.  Board members have made too many other statements, given too many other interviews, and written too many editorials for this piece to be looked at in isolation.

At the end of the day, the reason people are accusing the board of not having a clear vision is that at no point in this dispute has the board indicated it has a vision.  To be blunt, if you have to pen a lengthy op-ed piece 13 months into a bitter lockout to try and convince the community that you do indeed have a vision… then it’s pretty apparent that you don’t.

For some time, it has appeared that the board’s only “vision” is… ensuring the Orchestra spends no more than a pre-determined amount of money.

At all stages of the dispute, the board’s unwavering position has been, “The budget of the Minnesota Orchestra will not exceed $25 million.”  Questions about how you arrived at that specific number have all been batted away.  Questions about how this number is impacted by the economic recovery have been met with silence.  Questions about how the successes of orchestras around the country might provide models for future growth have been ignored.  Questions about the very obvious holes in your strategic plan (which, in light of recent events, is now defunct anyway) have gone unanswered.

But in the meantime, you have cancelled the last 13 months of programming.  You made only a half-hearted attempt to retain Music Director Osmo Vänskä, and walked out of negotiations hours before his self-imposed deadline arrived.  You cancelled performances at Carnegie Hall, and didn’t raise a finger to hold onto a recording contract with BIS or maintain a prestigious residency with the BBC Proms in London.

So, all of the examples you used in your op-ed piece to that show that you and the board do indeed possess a vision for the future… have been canceled by the board.  Doesn’t that undermine your point? All your actions have been to cut, cancel and eliminate.  What are you working toward?

* * *

But it’s not just in the generalities that your op-ed piece falls short—there are several points you make that are factually suspect.

“None of this is fantasy.  The initiatives outlined above are the fruit of the artistic vision presented in the Minnesota Orchestra’s strategic plan.”  With respect, Nicky, that strategic plan is laughable—the problems were so many and the assumptions so ridiculous that I created a four-part series to debunk it (part 1, part 2, part 3, part 4).  It consists of boilerplate language and a collection of buzzwords.  It is unworthy of such a venerable organization with so many resources.

“The board is seeking a concessionary contract now to preserve the future viability of the orchestra…”  No you aren’t.  If that were the only goal, you would have leapt at an offer the musicians made over a year ago—binding arbitration.  Since you are so sure of your financial statements, all you would have had to do would be to present them to the mediator, and the musicians would have had to accept deep cuts along the lines you have proposed.  So why didn’t you?  If the only thing you wanted was to gain concessions for the future, you would have engaged in play and talk with the musicians while you worked through your proposal.  If a concessionary contract was your goal, you certainly would have agreed to the proposal by Senator George Mitchell—your hand-chosen mediator—who suggested a temporary agreement that would have allowed you to work though issues and kept Osmo, the recording sessions, the Carnegie performances and the Proms residency intact.  But in your own words, you declined because doing so would cause you to “lose leverage.”

Well, you got to keep your leverage, but you lost everything else.  I’m curious… do you consider that a win?

“The players acknowledged that “artistic vision” for them equates directly with the board’s ability to pay musician salaries….”  I’m sorry, but is that really what they said?  I think we all agree on a basic point, that if you want to attract top talent—in any field—you have to pay a competitive salary.  This is hardly news.  But it is just as obvious that salaries alone aren’t the sole factor at play—employee satisfaction, prestige, a great work environment, professional development, chance for advancement, and greater opportunities are also factors.  The musicians might have been willing to trade lower salaries for the other items on the list, but the board has simultaneously eliminated those incentives as well.

“Minnesota foundations that made it possible to offer a $20,000 signing bonus for musicians.”   This is murky.  I have not written about this offer before, as it was hastily made and not fully fleshed out.  Ultimately the musicians rejected it, and in light of other rapid-fire developments that occurred at the same time, it became a moot point.  But I have to say that when that offer first came to light, I was surprised.  I think anyone working in the Twin Cities’ arts community could guess some of foundations that offered to come up with the money.   I have no insider knowledge of which ones were specifically involved, but I have to say right off the bat that I’d be surprised that any of them would make the kind of offer Nicky describes.  Giving out a one-time cash bonus as an incentive to accept a labor contract? A contract that features declining salaries over many years?  That seems out of character.  I’d be more inclined to believe the foundations in question offered help during a transitional phase, or offered bridge money to support the organization while things sorted themselves out.  I’m particularly intrigued that the foundations in question never came forward, either to identify who they were or to make an announcement of their own.   Given the amount of money involved, wouldn’t they have wanted to take credit for deal?  Or at least wanted to add their institutional prestige to the offer?  Or at least said something?  I freely admit I know none of the details or the back story here, but this offer seems… off.

“We cannot resolve the economics of the contract without musician cooperation.”  I agree with you, Nicky.  And I’m fairly sure the musicians agree with you in the abstract.  A question—did you ever seek their cooperation?  The board stated unequivocally that the musicians needed to take a 40% million pay cut, surrender seniority pay, work longer concert days, perform on holidays, and shoulder more of upfront costs for the Orchestra’s education and outreach programs.  And, the President was given greater control over artistic decisions, including the hiring and firing of musicians.  You have said again and again—and again—that these items were non-negotiable;  you would only agree to negotiate the mechanisms by which these conditions were imposed.  Forgive me for being blunt, but this seems to suggest coercion, not cooperation.

* * *

The greatest problem with this piece, however, comes at the end.  You conclude by stating that you do indeed have a shared vision with the musicians; but more importantly, you have an even greater awareness of the financial reality of the situation.

This is debatable, at best.

I am astounded that a group of self-proclaimed financial experts could run the Orchestra’s finances so badly.  By the Orchestra’s own tax records, it is clear that you took a $14 million loss in the stock market after 2008—far, far beyond the losses of other orchestras around the country, and far beyond the salary cuts you are demanding the musicians’ take now in order to “save the orchestra.”  You paid Michael Henson $200,000 in bonuses at the precise time he was cutting staff and imposing a wage freeze on those who remained because of the “dire financial difficulties” the Orchestra faced.  You’ve based all your financial projections for the next three years on the actuals of 2008-2009, without adjusting for the rebound in the stock market, corporate giving, and charitable contributions as a whole.  You manipulated endowment draws with the explicit intent of showing balanced budgets to the state legislators, and deficits to the musicians. By your awn accounts, you spent nearly $14 million during a year where you locked out the musicians and didn’t present any programming.

While the board’s artistic vision has been questionable, its economic vision has been catastrophic.

And lest you accuse me of being too biased an observer, here is a sampling of other outside perspectives on the board’s vision in both these key areas:

Paul Cantrell writes:  “The board couldn’t have f*****d up their negotiating strategy any worse, short of starting drunken brawls with patrons or taking hostages at gunpoint.  And To their financial deficit, they’ve added an extraordinary trust deficit. In 2008, I’d have happily given money to save the orchestra. Now, I wouldn’t give a dollar on the end of a ten foot pole. I have no confidence in the people who would be spending my money. Why should I? They just orchestrated a fiasco. Most of them are still busy blaming others for their own failure.”

Robert Levine writes:  “This is not common-or-garden governance failure; this is failure of world-historical dimensions. It’s the non-profit equivalent of Napoleon invading Russia without winter clothing. If I had been part of a board that produced that kind of failure, I too would desperately want to believe that someone else – anyone else – was to blame.”

Legendary classical writer Alex Ross writes:  “I cannot bring myself to believe — despite mounting evidence — that they actually want a drastically reduced orchestra, its assets stripped, its ambitions narrowed, its activities no longer relevant to the outside world.”

Bill Eddins, who has been a conductor, board member and administrator in various arts groups, writes:  “First, the Board of the Minnesota Orchestra, intentionally or unintentionally, misled the public, the State of Minnesota, and the City of Minneapolis about the fiscal health of the organization. Second, the Board of the Minnesota Orchestra, intentionally or unintentionally, misled the public, the State of Minnesota, and the City of Minneapolis about the impact and timing of the renovation of Orchestra Hall, as well as their commitment to the artistic health of the organization.”

Tom Peters, noting the comparison between the Minnesota Orchestra and the Miami Marlins, writes: “If the Minnesota Orchestra and the Miami Marlins are seen as businesses, the players have to be seen not as employees, but as the actual product. As every successful business owner knows, if you cut the product quality you will lose customers.”

And three former Music Directors of the Minnesota Orchestra (Edo de Wart, Stanislaw Skrowaczewski and Neville Marriner) write:   “This legacy can be swiftly destroyed, a tragedy not only for lovers of great music, but for the cultural soul and significance of the region. An orchestra does not recover easily, from such drastic cuts, if ever. We urge the Minnesota Orchestral Association to do everything in its power to preserve this longstanding jewel.”

Plus, with the exception of Neville Marriner, all living former Music Directors have returned to conduct the musicians in their stand-alone concerts, and Manny Ax donated his time to perform with them for Osmo’s farewell.  Arts leaders including Michael Kaiser and Alan Fletcher have had harsh words for your actions.

Are all these people, from a wide variety of backgrounds, collectively mistaken about the board’s lack of economic or artistic vision?

Does the board have a similar group of outside voices praising their actions, or supporting the board’s vision?

* * *

Let me be frank.  As I said, it is very late in the game.  I don’t know how discussions are going among your follow board members, but in the greater community we have moved far beyond the issues of who is “right.” We’re not debating justifications for this or that line item in one of the proposals floating around.  At the highest levels, the community is exploring ways to wrench control of the Orchestra away from the current board.  The points of discussion are on how to do this with the smallest amount of collateral damage to the organization as a whole.  Former Governor Arne Carlson (a Republican), the Minnesota State Legislature, and even community members such as Lee Henderson are exploring possibilities for what can be done.

Nicky, I know you and your family members have been great supporters of the Orchestra for many, many years, and I thank you for all the ways you have contributed to the Orchestra’s success.   I don’t want to be unduly harsh, but at this point I think the board should abandon its attempts to convince the public that it has “vision,” and spend more time convincing us that it has the basic competency to run the organization.

 

Vision

I am intrigued with a couple of new developments in the ongoing Minnesota Orchestra labor dispute.  A few days ago, a former board member wrote in to the Star Tribune, asking in exasperation: what do the musicians want? At first glance this an odd question to ask—the musicians’ website does a great job of detailing what they’re seeking, and in fact describes a number of proposals they put forward to management.  (I gave a broader response to her here.)

I was happy to see that the musicians responded to this former board member with their own column in the Star Tribune.  This extraordinary piece laid out in clear terms what they were looking for… their vision for the future.  One could quibble with the fact that they didn’t include any concrete action steps or a clear list of demands, but in my mind that made the column all the more powerful—it wasn’t a laundry list of demands but an aspirational goal for the future.  And I’m particularly glad they chose not to negotiate via the media.

In essence, the musicians made a call for artistic excellence and integrity, and stated clearly that they wanted the organization as a whole to strive for greatness.  To not be spooked by challenges, but to strive boldly to overcome them.  And most important, to inspire the community.

But I was particularly stuck by the call that they wanted everyone to join in this vision, and to work collaboratively so they could achieve this vision together.  What a powerful contrast from the statements coming from the Minnesota Orchestra management, which have blamed the musicians for everything that has happened and—most recently—engaged in union-bashing and scare-mongering.

Personally, I much prefer being invited to share a vision of greatness than being told I’m a stooge for union propaganda… and that my superiors have things well in-hand without my help, thank you very much.

As inspirational as it was, the musicians’ column didn’t quite provide a list of specific action items, or concrete ideas for what has to happen next.  I was delighted, therefore, to see just such a proposal come in from Lee Henderson, a lawyer, community member, and classical music lover who boldly put forward his own vision of what he thinks needs to be done.

Lee comes to the same sad conclusion that I did—that as it stands right now, negotiating with the MOA leadership is a study in futility.  Many have tried to broker some sort of accommodation with them, and all have failed.  The management doesn’t appear to be interested in solving the current crisis, but rather to win the fight at all costs.  Lee argues it is not worth trying to work with them; he instead proposes a new model for the Orchestra… one with a different organizational structure, and new roles for the musicians, board and the community.  It’s a fascinating plan that requires careful study, particularly in the how these changes might be achieved.  I’d love to have deeper conversations about it.

With that background, I’d also like to add my own thoughts to this important discussion. What is my vision for a successful Minnesota Orchestra?  Lee already details some specific, concrete actions, so let me step back and take a broader view.  I assume that at some point in the near future, the labor dispute will end.  After the dust settles, how do we rebuild the Minnesota Orchestra?  How do we again achieve greatness, as the musicians call for?

Well.

First, we need a new, shared mission—one that resonates with all the members of the Orchestra’s family.  We are well past the point where the board, the musicians, the staff, or even Osmo himself can simply slap a mission statement on some company stationary and call it a day.  We are well past the point where we can string some industry jargon together (à la Dibert’s “Mission Statement Generator”) and call it done.  All of us need to come together and create one ourselves.  It will be hard work, and it will be messy, but we need to craft a mission that encapsulates who we are and what we do, and has buy-in from across the organization.  We need a mission that will inform everything we do, and be specific to us as an organization.

And then the real work begins.

To thrive, our resurrected orchestra will need to focus its attention on four key areas.

1.  Artistic and Mission Development.  The key question we need to ask ourselves is: “To accomplish our mission, at what artistic and programmatic endeavors must we excel?”  We are an arts group, so we must work constantly to develop and perfect our art.  This is a central point—without it, we might as well open a banana stand.  We need to determine our core activities, those projects that define our art and show how they fit into the mission.  With those in mind, we need to establish clear artistic goals; and along with them, we need to develop mechanisms to evaluating whether or not we are achieving these goals.  Are we improving? Are we improving the art form as a whole?  Yes, it’s hard to measure artistic success—we certainly don’t want to create a goal saying “our concerts will be 20% more inspirational by the end of the year.”  But we can do it.  Survey the audience and convene focus groups.  Monitor reviews from music critics.  And perhaps create an artistic advisory team made up of outside conductors, musicians, and composers and have them evaluate how successful we’re being in achieving artistic excellence.  Or any other mechanism that feels appropriate.  But again, the key point is that the Orchestra must state clearly what its artistic goals are, and then evaluate how successful it is at reaching them—you pay attention to what you measure.

2.   Audience Development.  The question here is: “To successfully achieve our mission, what must we provide for our customers and the community?”  We are well past the point where the organization can exist to present art for art’s sake.  And fortunately, I think everyone is in agreement on this point.  One potential positive of this whole ugly situation is that it has reinforced the importance of the role of the community in supporting the Orchestra.  We need to continue this momentum and work hard to bring in community members as engaged audience members.  This is critical to the Orchestra’s survival—something more than protecting the endowment or securing government aid.  We need a dynamic, responsive plan that leads to increased attendance, greater public awareness, and improved communication.  Fortunately, other orchestras around the country are succeeding at these things, so we should look to our peers for models, while still being true to our own community.

3. Financial Development.  The question here is: “To accomplish our mission, what resources must we steward effectively and carefully?”  The whole ongoing mess has dramatically revealed just how badly we need to reform the Orchestra’s finances.  One obvious need is to create transparency, as this is the only way the organization can rebuild the trust that has been lost over the last two years.  Moreover, the Orchestra will have to take an honest look at its revenue streams and re-evaluate which ones work, and which ones don’t.  Again, we should look to our peer organizations to see what avenues they are pursuing, and perhaps develop new sources of funding.  But we will also need to tend to our traditional sources of support and see how they can be made to work better.  In the end, we need a financial plan that includes benchmarks for measurable growth, balanced financial ratios, and sets goals for diverse, sustainable sources of revenue. This is the only way to tackle the ongoing deficit and secure the long-term health of the organization.

4.  Leadership Development.  Here, we need to ask:  “To achieve our mission, how must our people learn, improve, communicate and work together?”  From my perspective, it feels like the organization has been somewhat on autopilot in this area.  The board has gotten so big that it’s unwieldy.  There is too much power concentrated in too few hands, and not enough points of connection between the board, staff, and musicians.  There needs to be a new model in place with new standards of connection, communication and accountability.  We need top-to-bottom engagement, with a broader base of people within the Orchestra’s family weighing in on organizational concerns.  Key to this is reformulating the governance structure so that it encourages cross-organization sharing of information.  In this way, that everyone will be able to see the same data.  Don’t worry that bringing in more voices will create chaos and conflict… I have written before that it is perfectly okay to have conflict in an organization—in fact, sometimes it is most helpful.  But there must be ways to resolve conflicts in a healthy manner that encourages creative problem solving and mutual respect.  Clearly, we lack such mechanisms now.

Another point I would make here—all four of these areas are mutually supportive and must be developed together.  In a financial crisis, there may be a temptation (as we’ve seen) to stop everything and throw all the organization’s attention on that one area.  This is dangerous.  These four elements must work together if the organization is to thrive over the long term—abandoning the art undermines the entire purpose of the organization, and abandoning ongoing attempts at audience development would mean the organization is irrelevant, with no hope of survival.  But just as obviously, these areas need financial resources, which must be shepherded wisely.  And we’ve seen over the last couple of years just how dangerous a brittle, inflexible leadership model can be in helping an organization survive tough times.

Just as important, we need to do the work collectively.  Board members, donors, audience members, staff and musicians have to come together for this project—it cannot succeed if any one of these groups tries to impose it on the others.

This is just a preliminary sketch, but I think a strong mission, supported by determined artistic, audience, financial and leadership development, will help the Orchestra thrive and reclaim its place as one of the state’s great cultural treasures.

Time to get to work.

A Painful Interview

Well, I guess it’s time for another rebuttal.

Yesterday, Minnesota Public Radio posted an interesting feature on their website regarding the Minnesota Orchestra lockout.   Host Euan Kerr interviewed both sides of the dispute separately, with Tim Zavadil representing the musicians, and Doug Kelley speaking for the management.

It was not an even exchange.

Once again I was surprised by the overall weakness of the management’s presentation.  Again and again, Doug Kelley resorted to arguments that have already been pulled apart by me or a whole host of other observers.  Plus, the points were just so… lazy.  I feel like I could in many ways make a better case for management’s position.

Below is a series of points that are false, misleading or just plain misinformed… I just cannot let them stand.

* * *

“We have a fiduciary responsibility to protect the organization.”  Absolutely, I agree 100% with you on that point.  What I have said numerous times is that you are not offering a plan that will, ultimately, financially sustain the organization.  Your strategic plan for the future was full of holes to begin with, and has not been updated to reflect current projections or realities on the ground.  As I’ve argued in exhaustive detail, arts funding has by and large recovered from the Great Recession, and orchestras around the country are enjoying record levels of ticket sales and donations.  The Minnesota Orchestra, however, has based all future “growth” on the financial realities of 2008.  But even if we accept the management’s numbers as gospel, everything else in that plan has changed. An entire season was cancelled.  There was no grand opening with a “glow effect.”  Osmo has left.  Therefore, whatever plan the management might have had is now lying in the dust.

And… all this was done by management’s design.

So it is somewhat off-putting to hear Doug Kelley suggest that management is somehow uniquely interested in the Orchestra’s financial health, or uniquely able to safeguard it.

“…$6 million deficit, or $500,000 per month…”  I will say—again—that this is an artificial number.  As was reported by the press back in early 2013, the board’s own records show that that specific amount was chosen in consultation with a PR firm.  And it was chosen in part to demonstrate that the Orchestra’s finances were in such bad shape that a new business model was required.  But let’s assume for a moment that the $6 million total is a real, non-manipulated number.  It does not follow that the organization has to cover the full amount of the deficit in one year.  Many professionals and outside observers have made a compelling case that that paying down the deficit gradually is a better strategy because it doesn’t deplete the organization’s resources.  On the contrary, such a gradual strategy would leave more funds in the endowment, for example, to increase as the market continues to improve.  Over the long-term, it’s actually more cost-effective to pay the deficit off in stages.

“The musicians aren’t negotiating.”  Tim Zavadil responds well to this in his counterpoint.  In short, the musicians have made many counteroffers.  As I’ve said before, the fact that management doesn’t like these counterproposals does not negate their existence.  The musicians’ website has more details.

“Demanding an end to the lockout as a precondition to negotiations is an unfair labor practice.”  Doug, with respect, this is an embarrassing comment that does not do the management’s side any credit.  The musicians’ demand that you allow them to return to their jobs is a rational, fair-game demand to make.  At this point, all the hardship is on them… Michael Henson is, for example, continuing to draw his salary.  That is also why your analogy about striking coal miners is not germane—in both cases the leadership is not personally impacted by the labor action.  Plus, it’s hardly unheard of for “cooling off periods” or “talk and play” to happen during an ongoing labor dispute.

* * *

It is at this point where we get to the meatiest portion in the interview—a lengthy section where Doug discusses the $200,000 in bonuses Michael Henson received.  His answers are particularly revealing.

“The CEO is a serious position that has specialized skill sets.”  Apparently you don’t believe the same can be said of the Music Director, the musicians, or many of the employees.

“We need to keep his salary in line with other CEOs to draw the most qualified personnel.”  Do you not find it a touch ironic that you use precisely the opposite argument when speaking about the musicians?  Management has argued again and again that it doesn’t matter what competitive salaries are for orchestra players around the country…  the musicians’ salaries have to be cut, and that management can always find someone else willing to do the work.  So why is the President in a different category all together?

“Michael Henson has told the board he will take a similar pay cut as the musicians.”  I’ve written about this extensively.  If the Orchestra’s finances were as bad as is now claimed, why wasn’t Mr. Henson’s pay cut automatically?  Or at least frozen, like the rest of the staff?  And, Michael Henson telling the board that this is his intention to take a pay cut is not the same as him formally making this offer to the musicians as part of a settlement—which he hasn’t done. Right now, it’s nothing but a PR stunt.

“These happened in 2011, before the lockout even occurred.”  Doug seems to suggest that since these bonuses were given out before the current fiscal year, they’re not relevant to the discussion today.  I cry foul.  As Tim points out in his response, these bonuses were made during this same year that Michael Henson was crying organizational poverty and laying off staff.  Emily Hogstad has a great blog exploring this in more detail.  I’m sorry, Doug, but the bonuses are most certainly relevant.

Doug also tries to suggest that the 990 form in question is reporting on two separate years, and that’s why the bonuses got “doubled up.”  Well, not really.  It’s reporting on two separate fiscal half-years, but still covering one 12-month period.  Assuming Mr. Henson was awarded a bonus every 12 months, there is no reason why two bonuses would show up on one 990, unless the Orchestra chose to distribute them that way—and to report them that way.  Why did management do so?

“This is the money Michael Henson is eligible for under his contract.”  This is a bizarre phrase to throw out.  Doug, are you arguing that in a time of great financial difficulty you simply had to give Michael Henson the maximum allowable bonus? Were there no other options?  Was there no way of using that money to plug other holes in the budget?  Going further, do you suggest that because the President’s bonuses were the most important line item in the entire budget, other things actually had to be cut so that he could get the maximum amount allowed under his contract?  Do you argue that simply because Michael Henson was eligible to receive that money that he actually earned it?  Has his tenure been that successful?

“Michael Henson should get combat pay.”  I understand in such a difficult situation as we have here, that a certain amount of “gallows humor” is par for the course.  But it is highly inappropriate to make this particular comment at this time.  I’m truly sorry Michael Henson feels put upon… that must be a miserable feeling to live with.  But he’s still drawing a salary.  He has gotten bonuses larger than most musicians’ entire salaries, and he has done so while laying off seasoned employees.  He is not the victim here.  And to make such a joke while trying (ineffectively) to explain why he’s getting such outrageous bonuses shows incredibly bad taste.

* * *

Two final points.  First, I was struck by the contrast between how Tim and Doug summed up what happens next, from their respective sides’ point of view.  Tim essentially argued that the mission of the musicians—and the organization as a whole—was to make music.  He detailed the various ways the musicians would continue to engage the community and make world class music, thus keeping the mission of the Orchestra alive.  Doug, on the other hand, countered that the musicians had to accept reality and negotiate with management.

With apologies, the management’s “reality” has nothing to do with the real world’s “reality.”

Management’s assumptions have been proven false.  It has spent money frivolously.  Its demands have been widely derided and its strategic plan leads nowhere.  Management’s only real plan at this point seems to be “save money,” which cannot sustain an organization over the long-term.  More than that, the management has few friends left outside of its own closed circle.  Everyone who has tried to negotiate with the management—Mayor Rybak, Judy Dayton, Governor Dayton, Alan Fletcher, Orchestrate Excellence, Senator Mitchell, and the musicians themselves—has come away burned.  Plus, the state’s legislature is openly hostile, the incoming mayor of Minneapolis publicly sides with the musicians and the public is outraged.

Doug, with respect, I don’t think it is the musicians who need to face reality.

Also, at this late stage of the game, it seems odd that the Orchestra sent Doug Kelley out to be its spokesman.  Doug isn’t, after all, a current board member, and isn’t a senior leader on the administrative staff.  The musicians sent an actual musician to speak to MPR, so why didn’t the management send a board member?  The disadvantage of sending Doug is that his whole presentation had an impersonal feel to it.  It’s like he’s speaking in the passive voice throughout.

A final note.  As part of his introduction, Euan Kerr noted that when MPR elicited feedback from its listeners regarding the lockout, the overwhelming majority of comments supported the musicians.

Based on this exchange, I don’t think Doug did anything to change that dynamic.

And Suddenly, a Media Blitz

The Minnesota Orchestra is in the news again—in a very big way.

This is surprising.  The flurry of coverage following Osmo Vänskä’s resignation has died down, and there have been no new deals, no new revelations, and no real breakthroughs to report.  Yes, a few random letters to the editors and a few blogs, but nothing big.

So it is a bit unexpected to see a couple of major news articles appear in the last 24 hours, including a front-page, over-the-fold story in the state’s largest newspaper.  Despite its prominent position, the Star Tribune story promises more than it ultimately delivers—essentially the various principles intone they are disappointed that events have reached an impasse.    A feature in Minnesota Public Radio’s online news, however, is interesting in that it features more extensive comments from both sides, which help us to better understand the respective positions.

On the one hand, I am genuinely grateful to the Orchestra’s leadership—and particularly  negotiator Doug Kelley—for speaking candidly to the press.  I greatly appreciate learning about the leadership’s thinking because there have been so few chances to delve into their line of reasoning, their aspirations, and their opinions on this ugly affair.

But I am also genuinely astonished by what Doug has to say.

For one, Doug said he believes the musicians’ demand that the board has to lift the lockout before negotiations can resume is simply a delaying tactic.

Doug, the musicians have been without salary or healthcare for over a year.  Can you offer any rational reason as to why they would want to delay this process?  How much longer are their unemployment benefits going to last at this point? Can you not concede (or perceive) that there are other considerations at play here?

But the most stunning statement of the entire piece is here:

Doug Kelley sees something else behind the musicians’ stance. He believes Minnesota is being used by the national union to draw a line.

“I think the reason that Minnesota is such a battleground,” he said, “is because the International union has said they are really trying to change the business model in Minnesota and we can’t let that happen.”

There have been many disturbing statements made over the course of the lockout, but this is one of the most jaw-dropping of all.

First.  Doug, I know you have been a huge supporter of the Orchestra for many, many years.  But in echoing the sentiment of Bill Eddin’s great recent blog, this wonderful past history of support does not excuse you for making this deeply problematic statement.  Forgive the bluntness, but in light of the board’s actions, this statement feels hypocritical to me.  The board has decided—unilaterally—that the former business model of the Minnesota Orchestra is broken and has to be changed.  This is the entire basis of this labor dispute… management is trying to change the business model, and famously, the musicians have been shut out the process.

So why are you furious that the musicians are also trying to change the business model?  As stakeholders, are they not at least as important as the board is in creating a new one?  Won’t they feel the effects far more than the management? And if so, why on earth would you prohibit them from bringing in outside assistance and guidance?

…Hasn’t the board already done just that?

According to the Orchestra’s 990 tax form, in the fiscal year ending just prior to the lockout, the Orchestra expended $184,183 in legal fees.  That’s a sharp increase from the previous year where it expended $49,588, or the year before that when it only expended $11,830.  Without doing a deep dive into all the finances, I don’t have before me precisely what those large legal fees were for—but it strains credulity to think that they weren’t in some way laying the legal groundwork for the lockout strategy that began two months later.

After all, the Orchestra was hardly making its strategy up out of thin air, or as it went along.  Many have noted that Minneapolis law firm of Felhaber, Larson, Fenlon and Vogt represented the Orchestra’s management at the bargaining table.  What is curious about this fact is that this was the identical agency that represented Crystal Sugar when it locked out its workers for nearly two years.  It is also the agency that represented the management of the Saint Paul Chamber Orchestra (SPCO) when it locked out it’s musicians at exactly the same time. And in all cases, these lockouts were nearly identical in justification and execution.

So again, the managements in all three of these very similar lockouts were assisted by the same legal firm, and two of the lockouts happened at precisely at the same time.  To your point, Doug, isn’t this evidence of outside interference?  Are you arguing that bringing in an outside labor union is forbidden, but bringing in an outside law firm is okay?

But the web of outside networks seems to include more than a single law firm.   Doug, are you suggesting that there have been no points of contact between leaders of the Minnesota Orchestra and the SPCO during their nearly identical labor disputes that started at the same time?  Or between the Minnesota Orchestra and the Detroit Symphony Orchestra, which just went through a very similar labor dispute only a short time before? Or that the attempts to buy up domain names including the words “save” and “Minnesota Orchestra” didn’t occur as a response to the work of the audience advocacy group “Save Our Symphony” during the lockout in Detroit?  Or that discussions and information from meetings with League of American Orchestras played no part in the strategic thinking, even though the Orchestra quotes this group extensively in its strategic plan?

And Doug Kelley is worried about outside forces influencing the musicians?

Doug, the management already brought in outsiders when it launched its attack, and tried to make its new business model a shining example for the rest of the country.  You can hardly blame the musicians for marshaling similar forces to stage a defense.

But one final note I must make.  Doug, the role of the board of directors is to safeguard the Minnesota Orchestra.  Not one part of it, not one member of the team, but the entire organization as a whole.

It is not the board’s duty to safeguard Minnesota from the encroachment of union-based business models.

Why does it matter to you if the musicians talk to their union… or any other union? Aren’t there already unions in the state?  If so, why do you seem to be worried about unions somehow corrupting Minnesota? You don’t even bother to explain why you think unionism is such a terrible scourge.  If unionism is a bad model for the Orchestra, convince the musicians that there is a better idea or a better solution.

Don’t destroy the organization simply to make an abstract, ideological point that you can’t seem to even justify.

Please, drop the talking points and end the lockout. It doesn’t matter that you don’t like the musicians’ allies in the negotiations—they’re not fond of management’s friends either.  You have to negotiate with them.  Do so.  Now.

[edit: the first version of this article made reference to Doug Kelley being a board member himself.  I have learned that he is not—he is simply acting as a negotiator on behalf of the board.  The article has been edited to reflect this.]

Let’s Call This Thing What It Really Is

I have to admit—I’m frustrated.  One of the things that has been irritating for me about the ongoing Minnesota Orchestra labor dispute is to see how, after all this time, people are still treating the lockout as a garden-variety labor negotiation (this piece in the Star Tribune is a recent example of this line of thinking) where both sides engage in a balanced game of give-and-take.

In a way, I can understand where this line of reasoning comes from.  I think many of us cling to a deeply-held belief that a labor negotiation is a situation where two sides stake out opposing positions, usually on key issues of pay.  One side says workers should be paid X amount, the other advocates for Y amount.  Usually there is wrangling over ancillary positions which are offered at the same time to either sweeten the pot or tighten the screws.

We are also conditioned to believe that that The Truth—or at least a prudent deal—must obviously be found in between these two stated positions.  We experience these same dynamics in other parts of our lives, including politics, business negotiations, fighting siblings, everything.  Offer followed by counter-offer, followed by further offer… it’s all like watching a tennis match.  As long as the offers and counter-offers keep coming, a deal can be reached.  Everyone ultimately wins because no one completely wins.

We need to stop thinking about the Minnesota Orchestra labor dispute in these terms.

Over the last year many intelligent, well-meaning people have tried this approach, arguing that this situation was a straightforward negotiation involving rational people who could meet in the middle if they just put their minds to it.

They have all been proven wrong.

Minneapolis Mayor R. T. Rybak and legendary Orchestra patron Judy Dayton offered to host a celebration concert where the Orchestra could celebrate its Grammy nomination.  The board refused their invitation.  Orchestrate Excellence, a group founded to bring the sides together, created a report comparing the Minnesota Orchestra with the Cleveland Orchestra to help facilitate dialog and present a useful model for future compromise.  Management dismissed it out of hand.  Respected arts leader Alan Fletcher came to town with talk tough for both sides, and offered his views about surviving difficult negotiations.  Management rebuffed him.  Senator George Mitchell, who famously brought peace to Northern Ireland, was hired to mediate a solution to the crisis.  Management negotiated around him, and ultimately rejected his recommendations because to do so would cause them to “lose leverage.”  Outside observers called for an independent financial analysis of the Orchestra.  Management hired its own firm to do a targeted analysis based only on information it provided.  Concerned community members launched an “SOS Osmo campaign” to raise money specifically so that the Orchestra’s Music Director Osmo Vänskä could stay.  Management blithely suggested it would roll these funds into its own general fundraising operations, and made callous statements that Osmo was free move on.

Again and again, people from all parts of the community have made serious offers to resolve this dispute, or to at least address critical areas of concern.  But the Orchestra’s management has rebuffed each and every one.

So why is the Orchestra’s leadership still considered a serious partner in a labor negotiation?  At what point are we allowed to call a spade a spade and admit that they have no interest in solving this situation?

There are other reasons to drop this pretense.  The musicians have, in fact, tried to play ball with the management and have been rebuffed every time.  Even board member Ken Cutler confirmed this in his recent letter to the Star Tribune.  The musicians’ own webpage details 11 separate attempts to engage with the management and resolve the dispute. (Don’t believe me?  Click here.)

Plus, management’s offer is hardly what one would call an “opening bid.”  The Orchestra’s leaders have said repeatedly that the pay cuts and organizational changes they’re demanding are absolute; they will not negotiate on the specific amounts, but only the mechanisms in which these cuts are implemented.  I’m sorry, but a clerk asking if you want to pay by cash, check, or credit card does not mean the two of you are negotiating about an item’s price.

And more important, the proposal made by the management is not just a simple offer as one would expect to find in a normal labor dispute, touching on issues of pay or the labor contract.  As I’ve written about many times, management’s offer goes far beyond that—it seeks to impose a complete, systematic restructuring of the organization at all levels, with no room for outside input or debate.  If this proposal were to be enacted, the Minnesota Orchestra would become a very different organization.

Let’s think about this statement in a different way.  Since we’re all accustomed to point-and-counterpoint, what would a mirror-opposite counter proposal really look like, if the musicians were to respond identically to the management’s position?

Well, it would probably contain the following:

• A 40% pay increase for the musicians.
• The musicians would enact a 25% reduction of the administrative staff.
• The concertmaster would have final determination of all hiring and firing of administrative staff, along with overseeing disciplinary action and determining compensation levels.
• The concertmaster would receive cash bonuses equal to 60% of his or her salary.
• Musician representatives could mandate Orchestra staff members take on speaking engagements or adjunct faculty positions around the state—as far away as, say, Mankato or Duluth—without paying the staff members’ travel or incidental expenses.  The musicians could also argue that since such outside jobs were possible, the staff members in question could suffer additional pay cuts.
• Management and administrative staff would work longer days and over the holidays.
• Seniority pay and merit raises would be eliminated for management and administrative staff; henceforth all workers throughout the organization would be paid flat fees based on employee classification.
• The musicians could change the mission statement at will, and unilaterally re-write the letters of incorporation to change the governance structure of the organization.

Based on this list, it might be easy to guess why the musicians haven’t put forth such demands—this hypothetical proposal would be laughed at as completely absurd, arbitrary, and financially unsound.  So why do we still treat the management’s proposal as serious and responsible?  Why are we allowing these ridiculous demands to be considered a legitimate opening bid?  Why are some still expecting the musicians to respond rationally to such an irrational proposal?

At the 401^st day of the lockout, I think we’re well past the point where this whole unseemly affair can be treated as a traditional labor negotiation. The management’s side is getting far, far too much deference, and the demand that the musicians just make an offer so both sides can meet somewhere in some “middle ground” is unsupportable.  At this point, to think of the sides as equal and parallel is a false equivalency.  At the same time, I think it is unhelpful to strive for a phantom sense of “balance” by presenting all sides as if they are equal, without additional digging or fact-checking to see if all sides are equally true.

I think it is long past time we call this situation what it is—a hostile takeover action.

 

Stewards of the Endowment?

In today’s edition of the Star Tribune, Minnesota Orchestra board member Ken Cutler has a letter that is quite illuminating (letter can be found here).  In it, he expresses his views on the importance of the protecting the Orchestra’s endowment—making it clear that this is the primary concern of the Orchestra’s board.  He also makes clear that the reason the board cannot accept the musicians’ proposals to end the labor dispute is because these proposals are not financially sustainable over the long-term, and ultimately fail to adequately protect the endowment.  The result of accepting such a proposal, he warns, would be a slow death-spiral of financial troubles that would lead inexorably to bankruptcy.  He is firm in his determination to not let such a thing happen.

First, I am pleased to see the board acknowledging that the musicians have, in fact, made a counterproposal, as this has been a point of some contention.

More to the point.  Mr. Cutler, I respect your viewpoint, and readily concede that the safety of the endowment is a vital concern for the organization.  You are right to insist that it be protected.

But I profoundly disagree with your comments.

Let me back up a moment and point out for my readers that historically the Orchestra has had three major revenue streams:  earned revenue (primarily from ticket sales), donations and draws from the endowment.  For some time, these three areas have been roughly equal, each comprising a third of the organization’s total revenue.  If the total Orchestra budget is $27 million, this would consist of roughly $9 million—a substantial sum.  Obviously this number changes from year to year, but this should suffice for a rough estimate of the size of the draws.

But this brings up a critical point—two-thirds of the Orchestra’s income does not come from the endowment, but from ticket sales and donations.  And these two revenue streams, which again comprise the lion’s share of the budget, are closely tied to the performances that happen day-in, day-out on the stage of Orchestra Hall.  Forgive me for being obvious, but people buy tickets because they want to see that particular performance.  They donate because they were inspired by what they heard, and because they know the Orchestra makes a huge difference in the community.  It is the high quality of the artistic product that directly and indirectly generates most of the Orchestra’s income.

Put another way, 300,000 people pass through the doors of Orchestra Hall not to hear a weekly update on how the Orchestra’s investment portfolio is performing, but how the Orchestra is performing.

Therefore, Mr. Cutler, I’m surprised at how much emphasis you’re placing on the health of the endowment at the expense of all other issues.  Let me be clear:  you and your colleagues on the board are not there to support the Orchestra’s financial endowment, but the Minnesota Orchestra.  As a whole.

The musicians (and those who support them) make an important point that I have not seen the board address—that if you make substantial cuts, replace well-known musicians with cheap replacements, or remove a beloved, supernaturally-talented conductor, the Orchestra as a whole will suffer.  And it’s not just the artistry that will be impacted; people will be less inclined to buy tickets or to make a donation.  The Orchestra will become mediocre and ultimately irrelevant, beginning a death-spiral every bit as fatal as the financial one you envision.  I have argued before that Orchestra musicians aren’t simply staff members, they are your product… and companies that make substantial cuts to their product rarely fare well.

Do you disagree?  Do you believe that the same amount of people will be willing to pay the same amount of money on tickets if you make all these cuts?  Do you believe the community members will offer up an equal amount of contributions if they are uninspired by tepid playing and anemic outreach programs?  I’ve asked this question before but I’ll ask it again—do you have a plan for what success looks like?

Will your determination to protect one-third of your revenue hamper your efforts at raising the other two-thirds?

But let me also address how odd it is for the board make such a definitive stand on the issue of the endowment.

Mr. Cutler, for some time the public has had questions about how the board managed the endowment over the last five years or so.  Right from the start of the current labor dispute, people looking over the Orchestra’s financial statements noticed that while all non-profits—and arts organizations in particular—saw losses in their investments following the 2008 recession, the Minnesota Orchestra took a disproportionately large hit (see this article, for example).  In particular, it appears that $14 million in securities was lost in 2009.  Many have asked why this was the case… did the Orchestra engage in risky asset shifts that led to a huge loss?  To my knowledge this important question has never been answered.

This is important. It serves to undercut a major portion of your rationale—that the safety of the endowment is your paramount concern, and that you are working diligently and responsibly to protect it at all costs.

Well, apparently that wasn’t the case in 2009.   So you will forgive us if we’re skeptical now.

Another point.  The Orchestra’s leaders have repeatedly stated that the huge financial draws they’ve been forced to take from the endowment are unsustainable.  Fair enough.  But as others have pointed out repeatedly, the board chose to take these unsustainable draws in order to artificially balance the budget.  It was a public relations strategy—developed in consultation with a PR firm—for the stated objective of making the Orchestra appear financially sound so it could receive state bonding money.

Again, the huge draws were part of a freely-adopted public relations strategy, and not from financial need.

And the truth is, you’ve been manipulating totals for years, as indicated by your own board meeting minutes.  I’m not saying your actions were illegal or unwarranted; but for many of us, this fact undermines your whole case, and makes it difficult to believe your present-day concern with the state of the endowment.

In effect, your activities indicate that you think it is perfectly permissible to make extraordinary draws from the endowment so that the organization looks good in front of a legislative hearing.  It is not, however, permissible to make extraordinary draws to safeguard salaries, maintain standards, keep a concert season in place, or to generally help the Orchestra to survive.

I’m not sure this reflects well on board’s position as careful stewards of the organization… or its financial investments.

A final question:  what would have happened if instead of artificially balancing the Orchestra’s budget through unsustainable draws off your endowment, you had instead taken smaller draws and allowed the Orchestra to show a small, but perfectly understandable deficit—essentially to spread out the current $6 million deficit over the last four years?  Would that have been less damaging to the endowment?

Mr. Cutler, I thank you for sharing your views on this matter.  But I’m afraid I must profoundly disagree with your positions and priorities.