Thinking about the Orchestra Dispute from a Business Management Perspective

As the Minnesota Orchestra dispute drags on, I’ve been struck with a thought.  For some time now, I’ve been documenting, analyzing and critiquing the MOA leadership’s actions in my blog.  Time and again I’ve pointed out that from my perspective, they are causing serious, long-lasting damage to the organization.

But I’ve never dug into a deeper question… why?

No one in the MOA leadership is evil or stupid—they are in fact intelligent, savvy business people and administrators who have achieved great success in their careers.  And collectively they have given large sums of money to the Orchestra over many years, and supported it in a variety of other ways.

So why would the leadership be so willing to let this destructive pattern play out like this?  Why would they let top talent walk away?  Why would management dig its heels in so thoroughly in support of a strategic plan—especially when that strategic plan is so obviously null and void at this point?

And why are they blind to the reality that even if they have the best of intentions, they’re damaging the organization?

This is a key problem that goes deeper than bad PR plans, shoddy strategic plans, anti-union agendas or any other particulars in this dispute—unless we can identify why they are willing to let all these things happen, there is a high probability that the underlying problems will persist even after the dispute is resolved.

I haven’t interviewed any of the principal players in this ugly affair, and I feel safe saying that at this point they would not likely be willing to sit down with me for a discussion.  So, I’m left to speculate.

Of course, ideological blinders comes to mind as a reason, but let me take a different track and look at this from a business management perspective.  There is a rich body of business management writings that can be helpful here—particularly those works that analyze destructive management techniques.  This literature identifies a variety of “blind spots” that frequently trip business leaders up, leading to all sorts of negative consequences for their respective companies.

So let me take three of the most widely discussed red flags from the business world and see how they apply to the Orchestra’s situation.

* * *

1.   The “Halo Effect.”  This term was coined by Edward Thorndike in his 1920 article “The Constant Error in Psychological Ratings”.  Essentially, Thorndike described it as a situation where the perception of positive qualities in one thing or part gives rise to the perception of similar qualities in related things or in the whole.  For example, if we like a person (“He’s nice!”), we’re more likely to ascribe all kinds of favorable characteristics to that person (“He’s trustworthy, too!”), even if we have no empirical basis to do so.

This is why companies hire celebrities as spokespeople.

Phil Rosenzweig famously applied these principles to management in his 2007 book, The Halo Effect…and the Eight Other Business Delusions that Deceive Managers.  He argues that when a company’s sales and profits are up, people often conclude that it has a brilliant strategy led by a visionary leader.   “In fact, a lot of the things that we say drive business performance are actually attributions based on performance,” he argues. “That’s simply because there’s a lot of things in business—leadership, corporate culture, execution—that are kind of fuzzy concepts. It’s hard to measure them separately from company performance.”   So observers look at one element of success, such as a company’s financial success, and extrapolate from there about the strength of its leadership, governance and strategic planning. As a result, many of the things that we commonly believe are contributions to company performance are in fact attributions. In other words, outcomes can be mistaken for inputs.

Rosenzweig uses the example of Cisco Systems to illustrate his point, a company that achieved astonishing growth during the 1990s to become the largest company in the world in 2000.  In the example of Cisco, observers felt the company was thriving because of the strength of its visionary leadership. In actuality, it was the reverse—the company’s overall performance enhanced the perception of Cisco’s leadership.

This point has a clear parallel with the Minnesota Orchestra’s situation.  In the case of the Orchestra, it feels like the leadership of the MOA has fallen into a trap where they look at the successes of the organization of a whole over the last few years, and ascribe them to the leadership.  This was clearly the thinking behind the $200,000 bonuses given to Michael Henson.  When defending these bonuses in the press, the Orchestra’s Board Chair Jon Campbell made exactly this point—essentially arguing that since the Orchestra successfully amassed the funds for the renovation of Orchestra Hall and concluded a successful Carnegie Hall under Michael Henson’s watch, he should receive the credit.  Unfortunately, this notion overlooks the fact that the campaign to refurbish Orchestra Hall began many years prior to Henson’s arrival, and that Osmo Vänskä’s was instrumental in securing the Carnegie Hall invitation and leading the actual performance.

But there’s an insidious additional layer as well.  Another aspect of the halo effect is that leaders are also more prone to implicitly trust their peers—other “visionary leaders”—and to uncritically accept their assessments, judgments, plans and ideas.  Suggestions that come from people outside this group are inherently discounted because they don’t come from the preferred source.

The MOA leadership has displayed this tendency many times during the ongoing labor dispute.  Simply put, the MOA leadership has been unable to recognize other talents, skills and judgments that are different from their own.  So, when non-profit managers like Alan Fletcher have critiqued the MOA’s actions and strategic planning, they are discounted as people who “just don’t get it.”  When the musicians make suggestions in areas such as governance, marketing and development, they are summarily dismissed as being “unrealistic” and are written off as pawns of a national union.  When the leadership’s chosen mediator, Senator George Mitchell, urged them to accept a compromise plan with the musicians, they demurred and negotiated around him.  When the group Orchestrate Excellence provided a detailed comparison between the Minnesota and Cleveland Orchestras, leadership dismissed it out of hand.  Again and again, the MOA leadership has fallen into an echo chamber where only their own voices are heard… and respected.

2.  “The Peter Principle.”  The Peter Principle was first introduced in an article in Esquire magazine by Dr. Laurence J. Peter in 1967, and has been a staple of business courses ever since.  Stated humorously, the idea is that people tend to be promoted up to their level of incompetence.  In other words, as people continue their path of promotion, they are eventually promoted right out of their field of expertise and into a position where they are utterly and helplessly incompetent.  The most famous example of this comes from the U.S. sitcom, The Office, and particularly office manager Michael Scott.  Michael was a successful salesman, but he is hopelessly unqualified to be a manger.  He flails ineffectively (and hilariously) in his job, spouting off half-understood business buzzwords, badly implementing new initiatives, launching inappropriate team-building exercises, and generally crushing productivity.

Overmatched leaders are a particular danger for a business—when challenged, they tend to try to reduce the organization to reflect their own limited understanding of what’s happening.

Worse, they frequently try to achieve success by latching onto a flashy, trendy business idea.  Without a solid base of critical thinking and experience to guide them, they latch onto a popular business idea as a panacea that will take care of everything.  In doing so, they buy into a dangerous perception that success in business follows predictably from implementing a few key steps.  Unfortunately, many of the “hot new ideas” are based on questionable, usually anecdotal data that can’t be replicated regularly in the real world.

How does this apply to the Orchestra?  First, let me be clear that I have no practical experience of working with Michael Henson or anyone from the board, and I don’t want to casually toss of the oversimplistic view that anyone in the MOA leadership is inherently incompetent.  But there is a reason the Peter Principle is so widely covered in business school—it is far too easy to hire and promote people, based on success in one area, into an area where they are no longer effective.  In 2007 the Minnesota Orchestra was looking for board and administrative leaders with a specific skill set.  It was trying to launch a major renovation of Orchestra Hall, and secure the funds to do so, and assembled a leadership team based on those expectations.  But shortly thereafter, it got clobbered by the Great Recession and was desperately trying to hold its finances together.   The situation that developed after 2008 was beyond anything leadership had prepared for.

And at the same time, I think it’s a fair statement to say that the labor dispute has similarly expanded beyond anything leadership had prepared for.

I wonder if the leadership is up to the task of dealing with these things.  Michael Henson seems to have a fairly thin, highly targeted résumé suggesting he was brought in primarily to deal with a narrow set of issues—primarily as a money manager.  Is he the best person for the job in the new, far more complex environment that requires a very different set of skills?  Is he the best person to preside over a wrenching organizational transformation? To manage a diverse organization with many kinds of constituents?  To solve an unprecedented labor dispute?

3.  “Toxic Leadership.”  There are many parts to this concept but let me focus on the most obvious—leadership that crushes opposition and protects itself at all costs.  Often, leaders in this mold will do a reasonably good job of communicating up to superiors and presenting an amiable public persona.  Unfortunately, they tend get defensive when challenged by facts.  They tend to cover up any negative feedback and camouflage survey results to convince superiors that they’re doing a good job.

But there is worse to come.  As Marcia Lynn Whicker described in her influential book, Toxic Leaders: When Organizations Go Bad, toxic leaders “Succeed by tearing others down. They glory in turf protection, fighting and controlling rather than uplifting followers.”  They are often bullies, and like all bullies are fundamentally weak and insecure. They frequently follow a “divide and conquer” approach to leadership—essentially establishing a culture where people are against each other and engendering a culture of fear and mistrust.

This seems to have a particular resonance for the Orchestra situation.  I think it’s fairly obvious that that the Orchestra leadership has established an “us vs. them” mentality where the musicians have been systematically scapegoated and marginalized from the other principal groups in the organization.  In an interview on Minnesota Public Radio, violinist Peter McGuire confronted Michael Henson on this very issue, saying “There was this kind of ‘the bully’s going to meet you at lunchtime’ feeling for at least a year and a half.”

I’ve noticed this same thing myself.  From the outset of this dispute, there has been a clear campaign directed at the musicians, painting them as greedy, out of touch and vaguely irrational.  I’ve been bewildered at why the MOA’s leaders would smear the musicians this way—while that might secure an advantage in the short-term, it can also inflict long-term damage that lingers long after the dispute is over, making it all the harder to draw audiences or donors.

And from reading the MOA’s report to the city of Minneapolis, it seems clear that management is still trying to put all the onus on the musicians for the impasse.  In the report, Michael Henson states the MOA doesn’t have a willing negotiating partner who is bringing offers to the table… conveniently overlooking the multiple offers the musicians have, in fact, made from the very beginning.

Plus, the MOA’s leadership has engaged in a defensive “circle the wagons” approach.  This was most obviously on display at the Orchestra’s annual meeting, when in the face of repeated challenges from city and state lawmakers, the board reaffirmed Michael Henson, Richard Davis and Jon Campbell in the same positions of power.

But it manifested itself in other ways as well.  As I’ve covered in my blog, when challenged by the audience advocacy group SOS Minnesota on its finances, the Orchestra released a huffy response that didn’t address any of the fundamental concerns.  When the city of Minneapolis demanded a report on the Orchestra’s artistic activities, the leadership complained loudly and submitted a “report” that was a study in deflection and equivocation.  Repeatedly, outside voices that have offered advice or criticism have been dismissed because “we know what we’re doing.”

* * *

Over the past year,  the MOA leadership  has lost financial support, burned bridges with the community, incurred the ire of lawmakers, been vilified in the national press, lost key staff members, watched their famous music director resign in disgust, been called out by other arts leaders from across the country, and more in their determination to “win” the labor dispute.

Such single-minded determination goes far beyond ideology, politics, negotiation tactics, or sheer stubbornness.

So… why do they persist?

I think the above points shed a great deal of light on the situation.  Each of these points is a well-known management problem that plagues businesses across the country, and I don’t think it’s too far a stretch to see that they are influencing the MOA’s destructive behaviors here as well.

But I’m open to other ideas.  I ask this honestly: is there another reason why the MOA leaders are engaging in such destructive activities, long past the point of diminishing returns?

Can they explain their actions in clear terms, or give a compelling rationale for what they’re doing without the scapegoating, easily disprovable statements, or airy dismissals we’ve experienced so far?

 

Xochipilli

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13 thoughts on “Thinking about the Orchestra Dispute from a Business Management Perspective

  1. Excellent post. I think the top board members are incredibly arrogant and think they’re better than the rest of us because they have a lot of money and are management “stars” in the business world. Many people who have or work with a lot of money have a very superior attitude, like naturally they know better and should run everything. The Socialist web site has interesting ideas about this orchestra lockout and how the community’s elite are deciding how much of the arts the rest of us have a right to .

    It’s apparently inconceivable for these guys to consider compromising or not winning. They’re uncreative, hard-nosed, even anal, and have to win — no matter what.

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  2. After watching our neighboring Wisconsin governor try to “break” the unions there, and hearing about similar anti-musician tactics carried out in a much smaller organization but by someone with a national reputation, I also wonder if there isn’t an effort–at least by some–to be the “heroes” to their idealogical buddies across the country by breaking the union for once and for all. Toxic leadership indeed. And the rest of the board and management are stuck in the “Halo Effect,” seemingly unaware that they’ve been duped.

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    • I support this theory. A red flag to me is that board leaders do not attend concerts, and Campbell has even reportedly said he does not like classical music. Then why be on an orchestra board? This is all about belonging to the “club” and advancing a political agenda. Many board members who care about the orchestra have left, allowing the self-selection process to cultivate a board with a uniform way of thinking.

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  3. Good analysis. But there’s another phenomenon, which seems to be particularly true in the orchestra world and perhaps in business, too: people who have failed at one organization keep getting hired by another, since they have “experience.” You mention Michael Henson’s skill at fundraising. Where did anyone get that idea? Is that a major responsibility at the UK orchestras he has managed? That seems a unique requirement of American orchestras. And I’ve certainly heard grousing on the internet about the mess he made of the Bournemouth Symphony and another orchestra in the UK. But I guess in Minnesota they figured they could hire him, since he was and “experienced” executive (never mind actual performance/legacy).

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  4. Is anyone looking at the foundation $$ management and the possibility of conflict of interest? The reluctance of the board to negotiate in any way makes me wonder what might be behind their behavior

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    • This is a big red flag for me. During the recession they sold assets from the endowment at a great loss, then attempted to wring onerous concessions from the musicians. It was entirely reasonable for the musicians to ask to see the books to determine exactly what the situation was. The musicians have been willing to compromise to continue the existence (and excellence) of the orchestra, but they needed to be dealt with honestly and with transparency. The fact that management has steadfastly refused to reveal the true financial record to the musicians, the politicians and the city of Minneapolis is highly suspicious. It makes me wonder what they are so afraid of revealing. Who benefited from the loss from the endowment? What are they so determined to hide? If necessary, the records may need to be subpoenaed, as they do not appear to be willing to voluntarily produce them. If the political pressure from the city of Minneapolis is unsuccessful, perhaps a class-action suit would be productive?

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  5. I just think that they don’t really care about the quality of the Orchestra. There are dozens of competent instrumentalists in town, and we even have a few decent civic orchestras. I bet they just think they can wait out the storm, offer some mid-level fiddlers a middling salary, and voila! They have a house band for their nice new building. “Hey, my niece plays viola! She’d jump at $40k a year!”

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  6. They participate in a business management model that sees an organization as a way for top executives to siphon off huge bonuses while they dupe the public about “bottom lines” (which they make to look pretty in the short term, again for their own career benefits, by firing people and reducing salaries/wages, and breaking up unions and collective bargaining while they’re at it—participating in a larger movement of privatization), then take the money and run off to another organization and do the same thing there. They’re in a race to be in the top 1%, where life is really bling-y these days. They don’t care one iota about the orchestra, the people, the city…never did.

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  7. A person’s values lie not in what they say, but in what they do. If the Board’s primary goal is to break the musician’s union, then all the actions the Board has taken make sense. Starvation is, perhaps, the very strongest negotiation tactic.

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  8. There has been a lot of research done recently finding that corporate executives are much more likely to be sociopaths, and I’m sure that’s even more true in the financial professions. Add the entitlement that comes with being in the 1% and you get – well, remember how Meg Whitman and Carly Fiorina crashed and burned when running for the GOP nomination? They didn’t get it that – at least for now – you can’t run for office and expect to control things and withhold information and be totally clueless as to how to interact with “other” people. This situation is a textbook example

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  9. Another thing that’s important to remember here is that the MOA board and management team are no more monolithic than the Musicians, which means that it’s very likely that more than one set of motivations is in play. Henson, Davis, Campbell, et al may all have agreed on the set of actions they were willing to take, and the extent to which they would be willing to be unmoved from their plan by events or community reaction, but it is unlikely that they all had the same personal motivations and goals in doing so.

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  10. I think your points are well taken. However it might be simpler than that. These guys are actually not very bright. For one thing they refuse informed opinion.
    Basically they are frustrated. They are fed up subsidizing the organization when they don’t like the product: – classical music. So that want to curtail their expenditures whatever the consequences. They like pop music and the patrons don’t and they resent that as well. If they were smart folks, they would be looking at the root cause of the increase in subsidy required. That is technological change. In fact that is the cause of our problems and that goes for the rest. Neither party to the dispute realizes that, and nor do almost all other musical arts organizations in the US.

    The facts are indisputable, that the audience for classical music and opera is at an all time high. The problem is only a small fraction of that audience will ever set foot in a concert hall. So the smart money is on capturing that audience to pay the bills. Worse few in management or the musicians realize how far the technology has advanced right now, let alone what is coming down the pike.
    I will now state a heresy to many of you. I far prefer to watch opera in my home theater. I prefer it by a huge margin, and I’m not alone. In terms of other program the gap is narrower, but I’m now at the point where I give the home theater experience the nod. I’m not alone, I saw an interview with Gustavo Dudamel, and he is a big advocate. This was foreseen by Herbert Von Karajan, and back then I thought he was crazy. In fact he was a true futurist. Simon Rattle and Antonio Papano are also true believers.
    I see the time when the audience gets in free to improve the experience for the Internet viewers!
    This should not be resisted. I will defend this against any of you. This is a huge opportunity to free this art form from the whims of crony capitalists, and make the arts a big driver of the new economy and support lots of healthy incomes.
    It is now time to change the narrative and tune of this dispute, and for Minnesota to lead the way in innovation.

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