Upcoming Eric Whitacre: Deep Field, Godzilla, and More

I experienced a profound, deeply moving moment at rehearsal last night.

We in the Minnesota Chorale are preparing for a big concert week with the Minnesota Orchestra, conducted by choral music superstar Eric Whitacre. As part of the program, we’re giving the world premiere of Eric Whitacre’s new work, Deep Field. This piece was inspired by the “deep field” photo taken by the Hubble Telescope—a photo created when NASA trained the telescope on what was previously thought to be an empty area of the night sky, and left the recorders running for several days. The resulting photo was remarkable; the sky wasn’t empty, but filled with nearly 3,000 celestial objects. It wasn’t just a picture of stars being born, but whole galaxies being born, moving across the universe, and colliding. There were sweeping nebulae that spanned incomprehensible distances. Cosmic life, cosmic death that stretched back nearly to the moment of creation. “Emptiness” was revealed to be fullness.

Through his new composition, Eric has tried to capture this incomprehensible cosmic glory in sound. The music slides slowly and gently into focus, as if the human mind isn’t able to take it all in at once. The shimmering, otherworldliness of the vocal part is gorgeous, and I think most of us were profoundly moved by the experience of preparing this new work.

But then….

A New Season with the Minnesota Orchestra!

Earlier today, the Minnesota Orchestra announced the lineup for its 2015-2016 season. In truth, “announced” seems far too prosaic a word for such an incredible, bursting-at-the-seams extravaganza.

Perhaps “unleashed” is a better description.

Well, I’m falling all over myself with excitement, but let me take a few minutes to share my highlights, and explain why you will simply have to see each and every concert. (For reference, the season calendar is here.)

A Starry, Starry Night at Orchestra Hall

Something amazing happened lat night at Orchestra Hall in Minneapolis.  Was it a kick-off to a new season? The start of a new era? A fundraiser? Party?

Yes.

Renée Fleming, Osmo Vänskä, and the Minnesota Orchestra

Renée Fleming is coming to Orchestra Hall! She’s an absolute superstar—I mean, did you see her performance of the Star-Spangled Banner at last year’s Super Bowl?— and the chance to see a singer of her talent live and in-person makes this an absolute must-see event.

Some (well… Many) Thoughts about the New Orchestra Hall

This month marked a milestone for me—my first time back in Orchestra Hall since June 15, 2012, when the building closed for renovation. 

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.

 

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.

No, We Don’t Have a “Few Months”

At a news conference on Tuesday afternoon at Orchestra Hall, Jon Campbell, the chairman of the orchestra’s board, said that attempts to reach a settlement on a new contract will continue but not anytime soon.

“The time pressures we were under are now removed,” Mr. Campbell said. “We’re probably in a pause for the next few months.” –New York Times

Well, nothing brings you back to reality faster than reading a statement like this.

Mr. Campbell, with respect, you are wrong.

I understand your frustration.  I understand that having Osmo and Aaron Jay Kernis leave the organization has created an uproar.  I totally understand the natural impulse to take a moment and try to take stock of things, particularly as the organization careens into uncharted territory.  I also recognize that this isn’t your day job—you are a volunteer board member.

But Mr. Campbell, we don’t have a few months.

I realize that as a tactic in a labor dispute, delaying might give you increased leverage, and I’m sure you’re loath to give up that power.  But there are larger issues at play here.

A delay will only extend the organizational chaos the Orchestra is in now.  Until the dispute with the musicians is settled, a search for a new conductor is folly—you won’t know even the basics about what kind of leader you want, what this person’s role will be, how much you can afford to pay… or anything else.  These questions won’t become easier to answer simply with time and reflection; they can only be answered in the wake of a resolution.

Moreover, a delay of a few months will directly lead to the cancellation of one of the busiest times on your performance calendar—the holidays.  It won’t just be the Orchestra cancelling performances, sympathetic groups will cancel as well.  And the optics of a lockout at this time of year would be terrible, particularly if it is resulting from an effort to simply collect your thoughts.  Or if it appears you are collecting your thoughts while you starve out the musicians.  The comparisons to Ebenezer Scrooge write themselves.  Plus, what good will it be to have the Holidazzle parade pass right outside your building, which will be standing dark and lonely amidst the Christmas lights?

There is also the collateral damage to other organizations.  News stories have documented the pain that downtown businesses have faced over the last year, such as the restaurants lining Nicollet Mall.  What does an extra delay mean to them?  Or to parking garages?  Or other partnering organizations that are left high and dry?  Yes I know that as Board Chair for the Minnesota Orchestra you have a primary duty to your own organization, but your actions have implications far beyond the walls of Orchestra Hall.  Waiting “a few months” will create greater harm, and serve to burn bridges with groups that you will most certainly need once the dispute is over.  Why make enemies out of allies?

And finally, what about the musicians?  You may “win” the labor dispute, but at the cost of further enraging the musicians.  Of course they will see this as a delaying tactic to starve them out—that you’re deliberately withholding health insurance, for example, for a few more months to make sure they’re really suffering.  That may not be your stated intent, but at this point how else would they read these actions? What will that mean once the dispute is over and you enter a time of rebuilding when you will desperately need their help?  Also this will most certainly convince many more musicians to leave.  You already have many openings on stage, how will it work to encourage even more?  The examples from places like Detroit and Louisville would suggest that replacing the musicians will be a long slog—why make a bad situation worse?

So why delay?  Particularly since these the events of the last few days were not entirely unexpected; Osmo, at least, made his intentions clear some time ago.  Why do you need to regroup?  Are there no provisional plans in play?

Yes, we all have wounds to nurse, but this is a time for bold action.

The departure of Osmo and Aaron are serious, crippling blows to the organization.  They are not fatal—not yet.  But the Orchestra is now in a very precarious position, and time for turning things around is in short supply.  What happens in the next few weeks will be of paramount importance for the organization as a whole.

More than ever, the Orchestra needs a leader to rally the troops—all of the them—to rise to the challenges of the next few months.  The grave situation the Orchestra is in affects all stakeholders at all levels. I don’t doubt the skills and abilities of the individual board members, but this is too big a problem to face alone.  As Chair, you can end this and start the rebuilding.  You can cut through the negotiating committee, you can cut through the lawyers, and any other clutter.

Instead of waiting, try doing the following four things:

1) Stop the lockout.  Immediately.  You need everyone back and working together to address this serious situation.  This isn’t about “winning” anymore.  This isn’t about fears of musicians smugly laughing behind your back or other orchestra managers out there fretting that the union is still too strong.  Everything else is secondary; the organization is in peril and you need to do what’s right to save it.  I’m sure in your heart of hearts you think the lockout will save the Orchestra, but it won’t—certainly not anymore.  It will only cause financial hardship for both sides, contribute to hostility between both sides, and create organizational havoc.  End the lockout with a ceasefire along the lines that Senator Mitchell proposed.

It will be tense working together, but working together is the best way to push through the tension.  Get everyone in the practice of being together again, working toward a shared end.  With time and practice at it, you will start to work together.  You have to.

2) Negotiate.  Negotiate long and hard and keep going at it.  Bring in whatever voices will be helpful.  Keep talking, and keep listening.  You don’t even have to finalize a resolution right away—just start talking.

3) Reach out.  Remember you are not alone.  There are many individuals and organizations that care deeply about the Orchestra and its future.  You may not agree with all their positions, but at the end of the day they are your allies.

4) And perhaps most important, let go of the old strategic plan and those planned-for numbers.  It won’t do you any good anymore, as too many of the variables have changed, along with most of the assumptions.  Look to the creation of a new one as you work things through.

You can get the ball rolling on all these things right now—they are critical, and do not need a substantial lead-in time to get started.  Rather than wait a few months to get started, why not bite the bullet and start now?  That way in several months we won’t be starting to plan for how we can begin moving forward—we’ll already be moving forward.

Please don’t delay when there is so much we need to do.

An Un-Strategic Plan Part 4: And Finally, You List your Artistic Goals

Previous:  An Un-Strategic Plan Part 3: Unclear Goals, Uncertain Paths to Success

My ongoing analysis of the Orchestra’s strategic plan concludes here with part 4.  My previous posts examined the Mission Statement and Executive Summary, Overview of the Current Situation, Achieving Financial Sustainability, and concludes with the “Vision for a Sound Future” section (does a “vision” make a sound?) on pages 24-33.  And I’m sure many readers will be thrilled to note that this section is a bit more concise than the last one!

This section begins with a telling transition… once you make all the cuts promised (yet left unexplained) in the previous section, you will be able to do all the activities listed on the next few pages.

It is odd that you see these things so disconnected.  It is, after all, the artistry that brings in the money that makes your financial goals possible.  Cuts to the music—your product—will certainly have implications for your bottom line.

Let me put it another way.  Making music isn’t the reward you get for balancing your books, it is the reason for your existence.

Prioritizing profits over your product sounds attractive, but it has repeatedly led to a death spiral for companies that have tried it—in an earlier post I looked at the sad fate of once-mighty Howard Johnson’s that bought into this mind-set.  I think it provides an important cautionary tale for you.

This section is particularly disconcerting.  Again, you are an arts organization, but as I pointed out, the art is relegated to pages 25 and 27 of a 33-page document.  And when it does appear, it’s in a weak format that suggests—even more than its obscure placement—that you don’t have any idea what to do about it.

Let’s start with the title, “Artistic Programming.” You have chosen these words deliberately, but I’m struck by what you’re implying—that the planning is what’s important, not the actual performance or the final artistic product.  The greatness of the Orchestra’s planning isn’t in question; the staff at Orchestra Hall designs thoughtful, creative seasons that do an admirable job of bringing in new works and beloved orchestral standards.  But I’m curious that you don’t frame this section as “Artistic Excellence.”  Right off the bat I’m struck that this choice of words allows you “succeed” simply by putting together a concert season that looks good on paper—and sells tickets—rather than performing great music…  greatly.

It also suggests that a world-class conductor and world-class musicians are not, strictly speaking, critical to your success.

A few comments about the “strategies” that constitute the rest of this page.  As with the other sections, you’ve scattered vague buzzwords around that allude to quality, but never make an effort to declare what you believe “quality” will look like.  Or the steps you plan to achieve it.  What does a “symphony orchestra of the highest artistic quality” mean?  Who decides?  How will you know when you have one?  What’s your starting point, benchmarks, and ultimate goal?

Or, “initiate national and international touring strategies.”  What does this mean?  Are you going to convene a focus group? Compare airline fares?  Brainstorm a way you could raise cash?  Do you simply initiate a strategy… or do you successfully complete an actual tour?

“New concert formats” could mean anything from hour-long programs, streaming online, or a return to those infamous “carpet concerts” of the 1970s.

Again I urge you to look at SMART goals (specific, measurable, achievable, relevant and time-based, as explained in my previous post) to help frame your strategies.

Look at your “action items” on this page.  One key metric is (as it reads in its entirety) “touring.”   Okay, but to where and to what result?  How will you know if you’ve succeeded in touring, simply by arriving home safely?   And for a document that puts such emphasis on finances, how do you propose to pay for these tours and what kind of return on investment do you hope to achieve?

Broadcasting—fine, but to what end?  How many stations?  How many households will you reach?  How will this promote great artistry?

Let’s explore that last idea further.  Another key goal is that you will “mark your first full season back in a renovated Orchestra Hall.”   Great.  How does that have anything to do with artistic excellence?  You could put on a stinker of a concert that turns off audiences for the rest of the season.

Moreover, this activity does not, strictly speaking, have to have anything to do with artistic anything.  You could throw a gala ball and give guided tours of the new facility.  Such activities would mark the first full season back in the Hall, and fulfill your strategic goal without involving one note of music.

I think it is telling, and worrisome, that throughout this section, you don’t specifically refer to the Orchestra, your Music Director, or the musicians—the key components of your artistry who have to be engaged to put on a successful artistic product.  Wouldn’t putting on a concert by a junior high jazz band fulfill your artistic goal? There is grave concern that you’re trying to push for more non-classical music at Orchestra Hall, because you perceive it will be more profitable.  The fact that the Minnesota Orchestra is not, strictly speaking, necessary to complete your artistic goals only aggravates this concern.

And so it goes.

From years of working on strategic plans for arts organizations, I know how hard it is to create concrete goals around art.  And I’m certainly not advocating you put down something like “Our concerts will be 20% more inspirational.”  But there are ways to gauge this; qualitative analysis is nothing new.

But think deeper for a moment—what do you want the artistry to do?  Why is it important?  What will greater artistic quality lead to?  There are questions that should be at the heart of every arts organization that wants to engage the community.  Please put greater care into how you can measure it.

In summary, because you are so vague in this section, you miss a powerful opportunity to really explain your art here.  This is your strategic plan, isn’t it?  Great!  What kind of music do you want to perform, or which will receive your greatest emphasis?  Why have you chosen this particular form?  What is your competitive advantage in a crowded marketplace?  What are the roles in the process—who does what, when and how? What do you strive for in doing this kind of music…

…what is your artistic goal, and how will you know you’ve achieved it?

Again, this section seems to suffer from the fact that that you don’t really know what the goal community service truly is.  Why are you doing these activities?  What do you hope to achieve?  How will the specific actions you list bring about your ultimate goal?

In honesty, looking at this spread leaves me with the distinct impression that community and educational outreach are about good publicity, rather than achieving a clearly-defined goal that will strengthen the organization.

I think it’s great to partner with local school districts… but why are you doing it?  Is it to build an awareness of the process of music making?  Develop good music listening habits? Demystify the concert experience?  Which students, where?  Will you work at the school district level, or individual schools? Or classrooms?  With limited time and resources, how will you focus your efforts?

These are not idle questions.  You have made it clear that a significant reason for changing the labor contract with your musicians is being done to make education and community outreach easier.  So here’s a chance to explain why you are pushing so hard for these changes.  How will the organization be stronger?  How are the benefits going to outweigh the added burdens to staff and musicians?  How many students will you reach, how many adults?  How does this align with finances—is it a net gain in that it increases the number of ticket buyers?  Is this a long-term investment, or do you hope to see immediate gains?

I applaud your efforts to emphasize community outreach—the fact that this is included in your multi-year strategic plan shows admirable foresight.  Unfortunately, this foresight is undermined by the fact that there are no tangible details, clear goals, or any kind of metrics.  There is great danger that you’ll just start doing a whole bunch of well-meaning projects that are fun, but don’t advance the organization in any meaningful way.

And I can’t help but notice that community service gets equal space to artistry in your strategic plan.  Does that mean that community and educational outreach are by definition going to be given equal time, attention and resources as your core artistic endeavors?

I hate to keep repeating myself, but… well, it bears repeating.  This section again perfectly encapsulates the problem with this strategic plan.

First, let me point out that you rely on a bunch of “exciting” key words without giving an indication of what you mean.  What is an “interactive” interior?  How is an interior “dynamic?”  In honesty, this suggests futuristic building materials that somehow change shape and color, or otherwise respond to human stimulus.

But leaving wordsmithing aside, you’ve listed several laudable items as part of your “Vision for an Expanded Orchestra Hall.”  But once again, they are vague and unrelated to your ultimate vision, and the ultimate purpose for refurbishing the building.

Simply put, why did you renovate?  This is a strategic plan… so, what’s the strategy here?

For example, you list “iconic design” as a part of your vision.  Great, it will have an iconic design.  Why is that important?  What will that result in? How does it get you closer to where you want to be? What does an iconic design get you that a non-iconic design won’t?

How will the building design provide a better customer experience?  I don’t doubt that it can, but talk about these things in concrete terms, and how they help.  Specifically.  Will this enable personnel to move the audience members through in a more efficient manner, allowing for a smaller staff?  Will it allow more people to patronize the bars, leading to increased revenue?

With this page, your strategic plan comes to a close.  I want to reiterate that all of these things are important, but I have grave concerns that you can achieve them.

* * *

A final word about your strategic plan.  I recognize that it might be unfair to subject strategic plans to this level of scrutiny—they are often for internal consumption only, and are meant to be the start of an ongoing conversation.  But I remind you that it is posted on the front page of your website, and you have invited the public to review it to learn about your hopes and aspirations for the future; you have also indicated it gives a rationale for why the lockout of the musicians is necessary.

Well, I have answered your invitation to look at your plan, and have found that beyond any problems I may have about incomplete data or unfounded assumptions, I am troubled by the thinking behind it.

I find that it raises more questions than it answers.