4 Keys for a Successful Arts Organization

As I’ve been commenting on the recent plague of labor disputes that have engulfed the classical music world (most recently the Atlanta Symphony Orchestra, but also the Metropolitan Opera and Minnesota Orchestra), I’ve made references to artistic strategic plans and artistic bottom lines. Some criticized the very idea of these concepts, remarking that they are superfluous—suggesting, apparently, that an arts organization should just get on with the business of “doing” art without wasting too much time thinking about it.

I disagree. In today’s competitive environment, an arts organization that wants to survive has to do more than just going around “arting.”

I would argue that a successful arts organization needs to tend four key areas if it is to thrive: artistic development, financial development, audience development, and administrative development. Moreover, these four areas need to be developed in tandem with each other—they fit together like interlocking puzzle pieces. If one is underdeveloped, the structure as a whole won’t work.

Let me explain. Continue reading

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!

Page 25

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.

Page 26

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.

Page 27

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?

Page 28Page 29

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?

Page 30Page 31

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?

Page 32

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.

Xochipilli

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

Previous:  Assumptions that Assume Quite a Bit

My ongoing analysis of the Orchestra’s strategic plan continues.  My previous posts examined the Mission Statement and Executive Summary and Overview of the Current Situation.  Here we get into the “Achieving financial Sustainability” section (page 16-23) that provides nuts and bolts about what you hope to achieve, and how you will go about doing it.

Page 16

You start with a set of fairly straightforward goals, which hit most of the big points; you promise more ambitious efforts in the usual areas: contributed income and earned income.  You also express a goal to capitalize on the luster of the newly-refurbished Orchestra Hall.

Well and good.

But I do have some potential red flags.  On the one hand, you’re trying to hit all the key areas, but it feels to me like “more of the same, but with greater feeling.”  How will this be different?  Weren’t your previous efforts ambitious?  Where is the line between ambitious and realistic?  And since on earlier pages of this document you painted such a grim picture of the state of classical music, classical audiences and an outlook for orchestras specifically… I’m surprised you plan to be more ambitious.  I don’t follow your internal logic—or maybe you don’t believe your own dire scenario that you lay out on page 7 of your strategic plan?  I’m curious as to what you have in mind.

Another word about the refurbishing of Orchestra Hall.   Having worked there for many years, I fully—fully—understand its limitations as a venue and applaud the work you are doing.  But as I mentioned above, in this very document, you painted a picture of ever-declining audiences.  You argue that audiences at Orchestra Hall have mirrored this national trend, and ticket sales are down.  (As I mentioned in my previous post, I don’t necessarily agree with you, but that is your argument.)

I’m curious as to why, if you believe this to be true, your solution is to emphasize the building.  Isn’t that counterintuitive? Yes, there will be a burst of interest when it first opens (the so-called “glow effect” you mention), but will that be sustainable if, in your own words, the music’s audience is declining?  Following your own argument, isn’t the $50 million refurbishment of Orchestra Hall just a very expensive, temporary solution to a long-term structural problem?  Using your own word, is this sustainable?

While we’re on the subject of the renovation of Orchestra Hall, writer Tom Peters has written about the real-world results of the problems of prioritizing a building over the activity that takes place inside it.  In a column “Baseball and Beethoven: The Minnesota Orchestra, the Marlins and the Perils of Market Correction,” he explores the similarities between strategies of the Orchestra and baseball’s Florida Marlins.  Like the Orchestra, the Marlins built a shiny new stadium while implanting massive payroll cuts that gutted the team.  The result?  Attendance tanked.  It didn’t matter how nice the new facility was, because with a forgettable team on the field there was no reason to visit it.

He is not alone.  Michael Kaiser, head of the Kennedy Center in Washington, has also written an interesting article on this theme, and been forced to ask, “How many more arts institutions must face financial woes, labor unrest, reduced performing schedules and even closure because they commit to capital projects that are beyond their means?” Plus, does the recent news from Nashville at all give you pause?  Their attempt at a “build it and they will come” solution to declining audiences has been a well-publicized disaster.

I point these things out not because I think you shouldn’t have refurbished Orchestra Hall, but to point out that doing so at the expense of the activities that take place inside it is a recipe for disaster.  At least as much consideration should have been given to keeping the Orchestra playing at the top of its game.

Page 17

Earned revenue.  I was hoping that the after the various teasers and introductions, this part of the plan would move more specifically into the details of what you wanted to achieve and the concrete steps you were going to take to make them happen.

Unfortunately, it doesn’t appear to be the case.

Right from the get-to, there are problems.  On page 17 you list your strategies to increase earned revenue; but in looking over the list many of your strategies are, with respect, buzzwords without clear meaning, fairly obvious, and lacking any kind of detail.  For example, you plan to align supply and demand of concerts.  Align with what? How will this be determined?  Who will determine it?  What are the values that shape this alignment?  You could present nothing but way-out, avant-garde concerts every week to 200 people.  That would align your supply with demand.  Would it be good for the organization?  Would that help your revenue goals?

There are a few things listed that I find it hard to believe you’re not doing already, such as positioning Orchestra Hall as a comprehensive performing arts center or conducting market research into audience interests.  What will be different from what you do now?  What will these new efforts lead to?

You explain that you plan to increase corporate sponsorships.  With respect, how do you plan to do this?  I know several members of your development team and they are masters of their craft.  I have nothing but admiration for them and their abilities, and I know that most arts organization look at your list of corporate sponsors with raw envy.  So what do you propose to have them do differently?  Do you suggest that your staff hasn’t been working diligently trying to attract the attention of every good sized company in the state? Are there businesses they have overlooked?

But mostly, when I look at your strategies, I don’t see… well, an overarching strategy.

For example, this section deals mostly with marketing, which ultimately seeks to raise money from your audience members.  So let’s back up one second to talk about audiences and the strategies to engage them.

Are you trying to broaden your audience base?  Diversify it?  Deepen it?  These often get lumped together, but they are very different ideas and the strategies to achieve them do not overlap.

Broadening means attracting more audience members like those cur­rently attending (and usually, are already inclined to attend).  It is essentially an effort to cast the nets as widely as possible to get more people in the seats.  The whole focus is to continually and rapidly find new patrons, and tends to be somewhat of an indiscriminate strategy.  Mailing a flyer to all addresses in the city of Minneapolis, for example. Because the emphasis is on attracting new people, and not necessarily on keeping them, this strategy can have a relatively high rate of attrition as some people will casually give you a try and move on.  The hope is that with enough people coming through your doors, some are bound to stay around.

To deepen your audience base, however, you have to get fewer numbers of people who already support you somehow to engage with you at a higher level.  In short, you try to turn your existing friends into your best friends.   You may ask them to go from casual ticket buyers to season subscribers, or move them from casual contributors to major donors.  This strategy relies heavily on targeting people, segmenting them into discrete populations and applying very specific strategies to get them to take specific actions that move them in a specific direction.   In many ways, the ways you work to deepen your audience are directly at odds with the strategies need to broaden it.

Diversifying an audience means you are implementing strategies to specifically attract people who do not normally attend your performances… say, bringing in more youth aged 18 to 30.  It requires a comprehensive view of your audience base as it is now, as well as a clear idea of who you want to attract, for what reason.  You need an understanding of what barriers this new population faces, plus a clear sense of what methods would convince these folks to attend—in short you need a very, very specific pool of research and a clear strategy before you even begin.

Not only are the strategies different for each, but the revenue generated will be different, too.  What do you plan to do?

With that as a preamble, we can apply those the same questions for revenue: do you want to broaden, deepen, or diversify your revenue streams?

There isn’t a right answer; but you can’t do all three at the same time, at least in equal proportion.  How many resources are you going to allocate to these different approaches? What are your expected rates of return?

I don’t see any indication that you’ve given these questions much thought.  Instead, this feels like you’ve thrown a whole bunch of ideas together that will hopefully make money.

Page 18

Turning the page, I am initially struck by relief that the vague catchphrases tossed out previous have given way to more tangible objectives.

But initial hope gives way again to frustration.  Interestingly, the “key targets” page raises a completely different set of issues.  Others have already documented the problems on this page. Essentially, you throw a barrage of numbers (this is, I might add, one of the very few places in the document that has specific metrics) that makes it feel like you have a clear idea of what you want to achieve.

The problem is that the numbers don’t stand up to scrutiny.  For example, Emily Hogstad has examined your data and come up with some disturbing finds.  You state you are striving for 80 percent paid capacity at Orchestra Hall post-renovation, up from a previous capacity of 69 percent. Sounds good. But as part of the renovation, several hundred seats were removed from the Hall, dropping the overall seating capacity. Sixty-nine percent of a 2,450-seat hall is 1,691 tickets sold, while 80 percent of a 2,092-seat hall is 1,674 tickets sold.

So apparently your goal is to sell 17 fewer tickets per concert than you do now—even as you proudly point out you hit your capacity targets.

Another point.  You suggest that between FY2014 and FY2015 you plan to increase concert revenue from $8.7 million to $8.8 million and rental fees from $0.9 million to $1.0 million.  Okay, sounds good.  But how?  Your deliverable reads, in its entirety, “2% revenue increase.”  How so?  Inflation?  I concede that later you do include the words “continue to optimize revenue through dynamic pricing, ticket fees and other pricing strategies,” but that appears to be an ongoing task that occurs in all other seasons as well.  Is your plan, therefore, to achieve those revenue goals solely by making ticket prices more ever more sensitive to demand—even though you’ve been doing so, in your own words, since 2011?

And again, how does this fly with your earlier statements that audiences will continue to decline?  By your own reasoning, won’t you have to work significantly harder simply to hit existing benchmarks?

One thought.  I can’t shake the feeling that you have chosen the worst year of the recession as your baseline so that you can take credit for any growth that occurs naturally as the economy recovers.  Indeed, you’ve given no other indication of how you will achieve this projected growth.

* * *

While we’re in this section, let me take a moment to discuss something that would help your plan immensely, especially here:  SMART goals.

I know, I know… the last thing the world needs is another consultant forcing some industry buzzspeak on you, but I do think this concept will help.

SMART is an acronym for the five crucial qualities an effective goal should have:  they should be specific, measurable, achievable, relevant, and time-based. It’s a simple tool used by businesses, governments, and non-profits to go beyond the realm of fuzzy goal-setting into an actionable plan for results.

Specific: Great goals are well-defined and focused. “Sell 300,000 tickets to events at Orchestra Hall” focuses attention far more than “Increase ticket sales.”

Measurable: A goal without a measurable outcome is like a sports competition without a scoreboard or scorekeeper. Numbers are an essential part of any plan, so put concrete numbers in your goals to know if you’re on track.

Attainable: Far too often, organizations set goals beyond reach. Dream big and aim for the stars, but keep one foot firmly based in reality. Reviewing past history is a good start, but not enough—check with your peers or industry statistics insure you’re being realistic.

Relevant: Achievable goals are based on the current conditions and realities of the overall climate. You may desire to have your best year in ticket sales or increase revenue by 50%, but if a recession is looming or new competitors have arrived on the scene, then your goals aren’t relevant to the realities of the market.

Time-Based: Organizational goals and objectives just don’t get done when there’s no time frame tied to them. Make sure you give yourself a realistic deadline, and stick to it.

Bad example of a SMART goal: “I want to lose weight”.

Good example of a SMART goal:  “I want to lose 20 lbs by April 15th 2014. I will perform a half hour of cardio and half hour of strength training per day, 5 times a week and I will only eat starchy carbohydrates 3 times a week.”

One final note about SMART goals—one potential downside to them is that they focus attention on activities, not larger goals.  Make sure that you have firm, universally agreed upon organizational goals, and then use SMART goals to achieve them.

With all this in mind, look back on your strategic plan.  Not everything here is bad, but how does, say, “Maximize concert revenue” stack up as a goal?

Page 19

This analysis is already getting too long, and I don’t know if it helps to pile on here, but nearly all of my earlier comments hold true of this page as well.  To be brief—aren’t you already doing each and every one of these things?  More than that, isn’t every orchestra, arts organization and non-profit doing each and every one of these things?  Lacking any specifics, how will you know you’ve succeeded in “increasing board giving” or “considering new programs”?  You don’t necessarily have to use the SMART model I mentioned above, but please get some specifics here.

One of these strategies does require a more specific call-out—increasing board giving.  Isn’t one of the driving features of the new business model that the board members are tired of bailing out the organization with large gifts each and every year?  So why—and how—do you propose to induce them to give more?  Unless they are going to increase their giving permanently, instead of agreeing to short-term increases to get the new business model up and running, this strategy raises serious questions of long-term sustainability.

Page 20

Page 21

Again, much of what I can say about these pages has already been said.  You are free to set your own metrics of success, and unlike other sections of this plan you do assign numbers and specifics—I hope that from your experience they are realistic and attainable.

But that brings up a couple of questions.  The first one is to note that for the numbers here to be realistic and attainable, they must be based on data that reflects your organization’s history, your peer organizations locally and orchestras nationally.  As I said earlier, I don’t have confidence that you have such data—or at least that it is current.  Presumably you have done a recent capacity study (I believe such a document was mentioned in your “independent” financial analysis).  So what does it say?  How does it inform these figures and goals?

In short, how do you arrive at these numbers?

A second question is perhaps outside the scope of this plan, but it has to be asked.  It is clear through the minutes from your board meetings, your public statements, and the fact that you bought up all kinds of Internet domain names that you anticipated a rough labor negotiation as far back as 2009, if not possibly earlier.  Many have speculated, in fact, that you had planned to cancel the season well in advance.  How does that impact the goals you lay out here?  Clearly some donors have been put off by the dispute—as you no doubt expected.  Have you adjusted your numbers accordingly?

Page 22

And finally with this chart, you attempt to summarize all the previous data of the document and lay forth your argument for what has to happen next.  In brief, all the revenue you’ve discussed, including the new revenue mentioned in the last few pages, will lead to an “annual imbalance” of $6.3 million.

There is no way to sugar coat this—this statement is specious, speculative, incomplete… and just plain embarrassing.

First of all, you don’t use specific years on this chart, but your use of the word “annual” suggests that this year’s financial shortfall will be a constant every year going forward.  Apparently the weakness of the endowment, diminished contributions and reduced ticket sales of 2008 are hard-wired into the Orchestra’s programming, and will be with the Orchestra forever as a new normal.  In my earlier posts, I discussed how national trends from arts groups locally and orchestras around the country reveal your assumption to be inaccurate.  Maybe the Orchestra hasn’t specifically seen a recovery, but all indicators suggest that there is a recovery taking place out there that’s ready to be taken advantage of.  And, your peer organizations are doing so already.  Labeling your current fiscal problem as “annual” is sloppy and downright misleading.  Far better would be to add projections for two or three additional years; this would present more concrete evidence that the gap will persist as you claim, and show how it would shrink or grow over time.  Otherwise, this looks like a single-year problem.

Along those lines it is important to remember this is a projection, not an Absolute Truth.  As such, you should be much more thorough in explaining the assumptions that go into your numbers.  Is this a worst-case scenario?  Fine, state that.  Then give a best-case scenario.  What you have looks like a clear attempt to scare stakeholders into compliance.

And let’s talk about the annual operating expense number itself.  What greatly disturbs me is, again, this number doesn’t take into account the full scale of Orchestra’s expenditures.  Again, your “independent” financial analysis made note of underfunded pensions and debt financing that add millions to your bottom line–$9.3 million in bond repayments alone.  Comparing this total to the one given on page 11 (essentially the same total, but with greater detail), it is clear that that these big ticket items aren’t included in this number.  What else have you left off?

On the flip side, how are you accounting for revenue of the $100 capital campaign?  Is that on here?  Part of the stated purpose for your Building for the Future campaign was to support artistic initiatives, so shouldn’t some of that money be here?  On page 21 you specifically list a goal of bringing in $12 to $18 million in fulfilled pledges each year.  If nothing else, wouldn’t that exponentially increase the size of the endowment draw, even if the endowment weren’t to grow naturally with the market?  A 5% draw on $100 million is $5 million.  If you fulfill your goals and add $45 million to the endowment, a 5% draw would bring in $7.25 million, which would put a dent in that annual imbalance.

This is why the musicians, the state legislature, the state’s largest paper, and nearly every independent person observing this dispute has urged you to produce a real independent analysis—your “facts” simply raise too many questions to be accepted on face value.

Page 23

And here we hit the crux of your argument.  This one page says it all—new revenue is insufficient, all expenses must be restructured, and long-term obligations will be examined.

Let me say that I don’t inherently disagree with you on these points.

But.

First, as I mentioned, there is no indication that you cannot raise new revenue other than… well, that you asserted it to be true.  Finances are complicated and you undoubtedly have more information than I do, but I point out again that you’ve based all your assumptions and benchmarks on the realities of 2008.  As I’ve pointed out, many sources have mentioned that ticket sales, fundraising, and investments have come back to pre-recession levels.  All around the country.  You were, in fact, able to raise $100 million of the Building for the Future campaign over the last few years. Therefore I will need a much, much more detailed financial analysis and capacity study before I believe you cannot increase your revenue now.  I’m sorry, but your “independent financial analysis” that you recently produced was funded by you, was restricted to exploring those questions you wanted answered, and conducted using data you provided.

Second.  Sure, expenses can be cut—but not solely at your discretion.  You have to negotiate with the union for cuts to the musicians’ salary… the extent of which will, by definition, be determined as part of the negotiations.  Thus, it is foolhardy to presuppose specific cuts for this plan—at this point they’re all still hypothetical.

I would also assume that if the entire purpose of the new contract is to save money, that each of the 200 or so changes you propose to make to the contract have a specific savings attached to them, and that is the only reason they are being proposed, correct?  Therefore, I think it would be valuable to see a list of the specific dollar amounts saved on each proposed change, such as mandatory participation in outreach activities.  Plus, since it is clear that many of the activities covered by the contract still incur real-world expenses (i.e. a musician still has to get to a community outreach event, even if the Orchestra no longer picks up the tab), I’d like to see who does assume the costs the organization saves.

I also note that executive compensation is conspicuously absent from your list of expenses to be restructured.

Finally, you will address long-term expense obligations.  That makes it into your strategic plan? That you will “address” how you will pay your bills?   Why haven’t you addressed this before, in your daily operations?  Instead of addressing these expenses, why don’t you just pay them?

One point I will concede here—you may be implying that you will change the way you will pay them (I hope you don’t mean “start” to pay them).   I agree this has many implications—you could conceivably pay them off in full right now, but that would leave a gigantic hole in your budget.  Or you could restructure the debt and pay it off over 5 years, 10 years….  As the board leaders also run financial institutions, you know better than I what the options are; but I point out that each option has widely varied ramifications for the Orchestra’s finances, and would result in graphs and charts that look very different in your strategic plan.

And one final thought.  Let us suppose that I were to agree with you entirely and concede the need for each and every one of these items.  Do you not find it odd that there is no indication of how they will be implemented?  Do they go into effect immediately?  Over time?  Are any of these items contingent on the others? Which are the top priorities?  How will you communicate these things?  These are big changes—how will you build consensus around them, or manage dissent?

Next:  And Finally, You List your Artistic Goals

Xochipilli

An Un-Strategic Plan Part 2: Assumptions that Assume Quite a Bit

Previous: An Un-strategic Plan

[Disclosure.  As I mentioned in an earlier post, after I started posting this series, the Minnesota Orchestra management finally released the “independent financial review” they had commissioned several months ago.  I commented on some of the many problems with the analysis—particularly the absurd notion that a document paid for by the management, examining the specific questions pre-determined by management and specifically using data furnished by management could in any way be considered “independent”—but held off posting the subsequent installments of the series in case something relevant was released.

I think that was the right thing to do, and I continue to believe that was a good decision.

But in retrospect, I don’t think I should have worried.

Others have pounced on the document from a variety of angles, including Robert Levine who thoroughly shreds it here.  Of all the problems associated with it, the one most relevant for my deep dive into the Orchestra’s strategic plan is the fact that it exists in a closed loop of information.  Yes it paints a terrible view of the Orchestra’s finances—because it’s using the same information the Orchestra management has been using. 

It’s the equivalent of writing your own entry on Wikipedia, then asking reviewers to “independently verify” the information by having them fact check the article against  your own notes… the ones that you used to write it in the first place.

I may delve into this aspect of the dispute later, but in the meantime I want to continue my series on the Orchestra’s strategic plan.  Although I’ve made a few edits, the bulk of my analysis remains the same.]

 * * *

The labor dispute between the Minnesota Orchestra and its locked-out musicians continues.  I have mentioned that, from my perspective, this dispute is less about the nuts and bolts of the labor contract itself, and more a clash about competing visions of what the Orchestra should look like as an organization—what its priorities are, who it serves, the nature of its product and its role in the community.  The management has put forth its strategic plan on its website, helping to establish what it wants the organization to look like.  In honor of Labor Day, I began a deep dive into this plan, which for me raises some serious red flags.  I began with general thoughts and a look at the mission statement and executive summary; today I’m turning my attention to the section marked “Overview of the Current Situation” that runs from page 7 to page 14.

Management is clearly trying to make a strong statement of The Problem, the dire current situation that justifies and requires the solutions that follow on subsequent pages.  As such, this section provides, at least in theory, the intellectual underpinnings of the rest of the plan—everything that follows is somehow related to the information on the next few pages.

To my mind, this section has some serious deficiencies.  The main problem is that the assumptions that underlie nearly all the graphs, charts and statements assume way too much, and are both lazy and vague.  Platitudes and generalities are stated as fact with little evidence or concrete support.  Because of this, it is difficult to verify whether the assumptions are accurate, if the evidence proves anything, or if the solutions that make up the remainder of the plan will be in any way effective.

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Page 7

On this page, you begin to flesh out some of your ideas and explain the assumptions and the figures that support them.

But, to be frank, you do so in a peculiar way that ultimately feels self-serving.

To begin, let’s look at the figures showing a decline in both audience members and donations.  First, I am willing to believe that ticket sales are down from the orchestral heyday of the 1990s, but what about other trends during that long sweep of time?  Has ticket revenue declined when adjusted for inflation?  Are profit margins per ticket up since then?  Is the Orchestra less dependent on ticket revenue as a percentage of its overall income than it was 20 years ago?  Has the rest of the budget been adjusted to account for this trend?  Are some concert series doing well?  Is fundraising down uniformly in all areas evenly? Are there new and developing income streams that can help make up the difference?  What about overall users of your product, not just concert attendees?  Maybe these specific questions are irrelevant, maybe there are other questions that are more pressing—but I find it odd that a board filled with CEOs and financial leaders would peg everything on  one or two macro indicators without delving into some of the micro trends that would provide a fuller understanding of what’s happening with the Orchestra’s revenue streams.

It feels like there could be some points of good news to report, but you chose to bury them within a broader framework of gloom.  That’s too bad… these points of light might be good indicators of what specific steps you need to take to right the ship.  Not including them suggests that they don’t support your chosen narrative, and thus you’ve ignored them.

More troubling is timeline.  Interestingly, you chose as your end date to coincide with the Great Recession.  This seems so obvious to say out loud, but you’ve chosen for your benchmark the economically disastrous 24-month period in since the 1930s.

Really?

Do you feel that specific two-year cycle is a good indicator of future trends?   While economic times are still tough, the market has returned in full force.  National studies have shown that contributions are returning to pre-recession levels, and contributions to the arts have seen high rates of growth.  For example, Giving USA— the very source you cite to show a collapse in arts funding—has shown that by last year, giving had already returned to pre-recession numbers and has been the fastest-growing charitable cause over the last 12 months.  In their annual report released in June, they write:  “Previous Giving USA reports had noted that donations to arts and culture sank 8.2% during the two-year recession of 2008 and 2009. The $14.44 billion given in 2012 vaulted the sector back above the pre-recession peak of $13.7 billion in 2007.”

Arts funding at the local level is also on the rise. In the new budget for Minneapolis, there is extra funding available to arts projects.  Crowdfunding for specific projects has taken off, providing another avenue for supporting the arts.  Ticket sales have seen improvements, as well; one recent article in the Star Tribune demonstrated that many local theaters were experiencing a rise in audience size, with the Jungle Theater doing particularly well.

But it’s just not the arts in general that have thrived—orchestras specifically have thrived.  They have done so all over the country, in places that continue to feel the effects of the recession.

The Cleveland Orchestra has seen surges in attendance, driven in part by increased demand by young listeners.

The Houston Symphony is celebrating its centennial this year on the heels of two years of record-breaking fundraising.

The San Diego Symphony has been chalking up record ticket sales; its budget has doubled in the last decade and its leadership is celebrating 14 straight years of balanced budgets.

The Buffalo Philharmonic has sold more subscriptions this season than any time in its 75-year history.

The Kansas City Symphony appears to be entering a golden age of high attendance, strong fundraising and good governance.

There are, of course, still caveats and challenges ahead for funding the arts, but I believe a longer-term analysis, more carefully argued, would make your point better.

So why are we basing a business model or an economic forecast on the pain and fear of the Great Recession?  Aren’t massive cuts a permanent solution to a temporary problem—one that is on its way to being resolved, and has already been resolved elsewhere?

Interestingly, at this point you set out to prove your point by casually tossing off two examples of orchestras facing difficult times.  This is curious.  The orchestras you mention are, by and large, the worst-case scenarios that feel cherry-picked to show classical music as a whole is on the brink of collapse.  What about the other orchestra I mentioned above:  Kansas City, Pittsburgh, Cleveland or Houston, among others?   Even one of the cases you hold up as proving the need for a new model, Philadelphia, seems to undermine your claim—musicians took a 15% pay cut, and that was part of a bankruptcy proceeding.  You have demanded the Minnesota musicians take a 40% cut… just because.   Why the vast difference?

One other point on this section.  I recognize that the League of American Orchestras is an important trade group and a reliable source for facts and figures—I can see why you would quote them.  But this article by Philip Kennicott, the art and architecture Critic of The Washington Post, has shown in clear terms where as a group they often fail at seeing the forest through the trees, and may not be the best source of strategic thinking.  I think you would benefit from drawing on other sources that could provide a more holistic view of the situation.

* * *

In these pages, you move from industry trends to the specific trends of the Minnesota Orchestra.  All well and good—this is exactly the kind of thing your plan should do.

Page 8

This graph is good.  But it contains few specifics.  I’d like to see grand totals here to get a better sense of what we’re talking about.  Plus, I get that this is still a “background” section, but I hope at some point you indicate what your preferred percentages would be.  If you’re goal is to wean the Orchestra off the endowment completely, for example,  that will have tremendous implications for everything else in the plan.

Page 9

Page 10

The charts on these subsequent pages vividly demonstrate some of the financial challenges the organization has had, and I am willing to believe your data.  In fact, I doubt there are many that wouldn’t agree that some sort of changes must come to the Orchestra to give it greater financial stability.

That said, there are some problems right off the bat.  Despite your clear indication that this section of the strategic plan sets out to describe how things stand for the Orchestra, you give no indication of why things stand this way.  For example, why did the earned income fall?  Was it because ticket prices were too high?  People are losing interest in classical music?  Traveling downtown is a burden?  Osmo is passé?  These are not random questions—each would require a different strategy to overcome.  You’ve assumed classical music is unpopular, based on a decline of revenue… but what if the problem is in the presentation of classical music?  Same with contributed income… why are these trends happening?  How do you propose to enact a solution to this problem when you don’t know or can’t explain why the problem is occurring?

It’s no different from having a doctor say to you, “You have abdominal pain?  I must remove your gall bladder at once!”  End of discussion.

Similarly, you don’t give any indication of why the endowment has dropped.  Why not?  The assumed rationale seems to be “the stock market tanked as part of the Great Recession.” This statement may be true, but it is woefully inadequate.  Were all your investments in the stock market?  In the stock of one company?  I suspect not, which means that the reasons for the decline are many and varied—lack of diversity, bad investments, selling low and buying high, and so forth.  These are serious concerns that must be addressed before moving forward; before demanding $5 million in sacrificial cuts from the musicians, why don’t you spend $50,000 to re-evaluate your investment strategy?  Less charitable folks may also suggest that if you were going to downsize the staff, you should have started with the person managing your investment portfolio.  That may be extreme, but I would reiterate that if you are going to truly lay out the Orchestra’s situation, you have to give the specific reasons for the decline in investment revenue, or you will never be able to effectively address them.

Another point with this section is you seem content to talk about “The Endowment” as if it was a single monolithic entity.  This is not the case.  Sure, there is $150 million in “the endowment,” but how much of that can be accessed at any given time?  In other words, how large is the board-designated portion?  My recollection is that because of the way the endowment has been set up, there is only a relatively small amount that can be spent at the Orchestra’s discretion, with everything else being untouchable.  Is that still the case?  If so, what is the real-world maximum you can draw down to?  Isn’t that number equally important to note?

I have another point that may seem minor, but is quite significant—why haven’t you included industry averages in any of these charts for comparison?  You give industry-wide data on the first page, but after that we’re only left with your numbers on where the Minnesota Orchestra is.  This may not seem a huge issue, but essentially it means that the solutions you lay out in the final part of the document don’t take into account other data, or provide examples of what you might be able to achieve.  If you were to compare income streams at a range of orchestras, would you see that one or another of these steams was underperforming? Or realize the Orchestra is actually doing pretty well and ahead of the curve?  You aren’t looking to your peers in any meaningful way, either to see how they’re doing or to see how they achieved their results.

As a result, it is no wonder your ideas are the only possible solutions—you’ve given yourselves no other options to choose from.

Similar to the above point, if this really is an attempt to give the “lay of the land” and explain the need for an orchestra that the community can afford, why no general information about the community?  Why no comparison data for other Twin Cities arts groups, or non-profits in general?

The lack of this information only furthers the feelings of disdained detachment and close-mindedness that permeates this document.

Page 11I note that in this document, $7.4 million is spent on administration, building and financing, and general overhead. This summer, when he was forced to return a nearly $ 1 million grant back to the Minnesota State Arts Board, Henson implied that the Orchestra spent approximately $13 million this last year. That’s nearly double.  Why the discrepancy? What was the additional $5.6 million spent on?

More to the point, your own “independent” analysis brings up another uncomfortable truth…  that your financial situation may be worse than you report because of severely underfunded pensions and a $9.3 million bonding debt due in 2015.  (This may help answer the question I asked directly above.)

Why haven’t you listed those items?  Yes, in the strictest of senses, they don’t fit nicely into a chart depicting “operating expenses” and so could be left off.  But doing so wildly skews the numbers and gives a false report of the true extent of the Orchestra’s financial situation.

…in your organization’s strategic plan.

How on earth do you plan to get out of this financial morass if you don’t accurately identify the problems looking you in the face?

And how does this lead an outside observer to have any faith in the information you’re laying out?

Page 12

Your point here is straightforward, that musician costs have risen compared to all others.  Great—I believe you.  The graph vividly demonstrates the rise in musician costs.  But… well, as an isolated fact, it means nothing.  Did those other costs decline because they were inefficiencies or redundancies that you were able to pare down?  Did you eliminate costly expenditures?  More to the point, are you getting a good return on investment by allocating more resources to the musicians?  Does this improve your product, making it easier to attract interest, audience members and donors?

Page 13

This starts to get into your main argument, that the Orchestra’s finances have been in a precarious state for the past decade, and only stern medicine now can save it.

Really?

But as reported in 2010, the Orchestra had had four straight years of balanced budgets.   How do you publicly reconcile this fact with your present position?   Another point of fact.  You yourselves indicate that for most of the 2000s, you were averaging a healthy draw from the endowment of less than 7%.  The “dangerous” draws of 10% or more only happened after the 2008 recession.  So how does this match with your statements that the organization has been in financial crisis for more than a decade?

I can understand that in the wake of the 2008 bust that things went astray.  I can recognize that you pulled extraordinary draws from the endowment to balance the budget… as Alan Fletcher mentioned in his recent speech at the Orchestrate Excellence meeting, such tactics are sometimes necessary and many organizations did the same.  That’s one of the reasons you have an endowment, as a buffer in times of trouble.  But weren’t your finances in reasonably good shape prior to that?

In the report from you “independent” analysis, there is an indication that you have been underfunding pensions and leaving off debt financing from the books.  For a financial manager, these problems had to be easy to spot.  So why didn’t you resolve them?  Why is there no indication of these monstrous red flags in your strategic plan?  You certainly knew these problems were in existence–to my knowledge, all the men who served as chairman of the board during the 2000s are still on the board.

And as I look over this section, an uncomfortable question is developing in my mind:  you have been blaming vague trends for your financial predicament, generally using the passive voice (“the stock market fell” or “musicians’ salaries have outpaced revenue”).  Is the real problem one of financial mismanagement over the last five to seven years?  Isn’t the $9.3 million taxable bond due in April 2015 a much bigger problem than the musicians’ salaries… and isn’t it a problem of your own creation?

So, why are you demanding $5 million in salary cuts from the musicians to cover for your mistakes in other areas?  Why are you so fixated on the musicians’ salaries without publicly admitting the much larger problem?

Page 14

This chart does show, in vivid terms that there is a difference between your income and expenses.  But what is the basis for this? What are the assumptions? I recognize again that you are calling this a summary document, but you essentially put two disembodied bars on a graph and say, “See?  We have to make cuts to balance things out!” Obviously this page is a teaser, but it brings immediate questions to mind:

Based on the fact that debt servicing and pensions are not included elsewhere in this document… what confidence can we have that this chart is factually correct?

There’s no indication of a timeline here.  Is this a chart for the next forthcoming year? A five year goal?

Will the gap recede as the market improves (especially since the market has done so)?

Again, if this is a temporary situation, why suggest a permanent solution for it?

Perhaps most importantly, let us assume that all your projections are correct, and this is the start of an ongoing financial gap that will persist well into the future. This chart doesn’t tell you what kind of change is necessary.

It might indicate that a large-scale business reset is required, but there is no indication of what such a reset should look like, what the options are, who should come up with ideas or who should implement them.  Or, for that matter, the timeframe over which they should be implemented.  Is it better for the organization to have all the pain at once?  Or will that be too much of a shock, and the preferred method is to integrate painful transitions more slowly?

This gets to the heart of the dispute… are you justified in demanding $5 million in pay cuts unilaterally with the musicians, effective immediately?  Can’t there be a more organic solution?

I’m curious as to how subsequent pages address these questions.

* * *

Thus far, you’ve given some indications of why a new business model might be necessary, but you haven’t given a clear justification of your specific course of action.

One final thought.  You are an arts organization… where is your statement about the your art?  How can you lay out your current situation—in your strategic plan—and make no mention of current state of your music, and your music making capacity?  This is beyond baffling… do you suppose that music just spontaneously happens, completely divorced from what else is going on in the organization?

Next: Unclear Goals, Uncertain Paths to Success

Xochipilli

An Infuriating Development

Yesterday I began a deep analysis of the Minnesota Orchestra’s strategic plan, looking both at the data it contained as well as the reasoning that informed it.  Given the size, amount of information, and importance of this document, I had planned on releasing my analysis in sections—there was simply too much for a single blog entry.

Although the analysis is complete, I’ve elected to put it on hiatus for a bit.  As it turns out, today the Orchestra’s management has released its “independent financial analysis.” I haven’t looked over the document, but the data it contains can and most likely will color my own analysis, and I want to be sure of what I’m saying before I continue.

But I have to say, today’s turn of events raises some serious red flags for me, and I think it’s important to lay out my concerns.

First, let me say a bit about this analysis and why it’s important.

The story begins over a year ago in April of 2012.  As part of the ongoing contract negotiations, the Orchestra management put forth their “final offer” to the musicians, insisting on a 40% pay cut and numerous contractual changes; the rationale for these demands was the Orchestra was teetering on financial ruin.

The musicians were taken aback.  For months previously, President Michael Henson had been giving media interviews to domestic and international news organizations promoting the financial health of the organization, and showing how it was riding out the recession from a position of strength.  He had also testified before the state legislature regarding the financial health of the Orchestra, which allowed him to secure state bonds for the reconstruction of Orchestra Hall’s lobby.

Why the complete about face?  How did projections go from “rosy” to “catastrophic” in less than a year?

The musicians subsequently stated that they would only submit a formal counterproposal if they could see an independent financial analysis of the Orchestra.  This only made sense—if they were going to agree to sacrificial cuts, they wanted to be 100% sure these cuts were warranted.  Many outside observers remarked that this request was logical and understandable, and urged the management to comply.

Management refused, arguing in effect that the musicians should disregard previous statements of financial health, and agree to the various concessions on faith alone.

Subsequently, there were renewed questions about the true state of the Orchestra’s finances. Board minutes revealed that there was a plan to take extra draws from the endowment, which would mask the Orchestra’s budgetary woes while management was seeking state funding. Later, management could use the fact that these extra draws were necessary to prove that its finances were in bad shape.  (A complete timeline has been put together by the citizen advocacy group, Save Our Symphony Minnesota)

These and other revelations sparked further questions into the finances, and ultimately the state government joined the calls for an independent review.  Under pressure, the management agreed to a review, but ultimately walked out of a deal with the musicians and declared they would conduct their own “independent” financial analysis, and share their findings with the musicians.  The analysis was completed in June, and it is being shared now.

With that background in mind, let me share my red flags.

1.  It is no surprise that this “independent” review supports the management’s position—it is entirely beholden to them.  What else would it say?  The management hired the firm, dictated the scope of the work, determined which areas should or should not be examined, and provided all the data.  For example, when the firm states the Orchestra can’t fundraise it’s way out of this position, is that because they did their own fundraising capacity study interviewing donors and surveying other institutions… or because you told them it was impossible and gave them no other option to examine? There was no system of checks and balances, no chance to look into hidden areas, no chance to challenge assumptions, no independent verification.   I don’t doubt the firm went about its job with complete professionalism; but given the tightly constrained situation it was thrown into, it’s hard to believe it was able to produce document that is anything but a rubber stamp on management’s previously-stated position.

2. It doesn’t get to the heart of the matter—a question of trust.  The reason the musicians (plus nearly every other person observing the situation, from the state legislators to the state’s largest newspaper) asked for an independent analysis was there were too many questions about the managements’ accounting practices, plus a vast disconnect between management’s grim offer and its public statements of financial health.  It doesn’t mean that anything illegal was happening, but there were legitimate questions that needed answers.  Management can never answer these questions by itself… again, if the problem is people no longer completely trust its statements, then there has to be a mechanism to verify these statements independently.  They must be evaluated by outside authorities whose neutrality  and credentials are unimpeachable.  The financial analysis management has presented does not, and cannot meet these standards; therefore, it cannot assuage the doubts and concerns of the broader community or work to restore trust in the managements statements—or actions. This is unfortunate, because the whole reason for doing this analysis was to build trust.

3. The timing is… problematic.  I’m trying to be polite.  I find it infuriating that a document that was requested—for good reasons—over a year ago came out today.  It is doubly infuriating to know that the document in question was completed months ago, but is still only coming out today.  It is beyond infuriating that, as the Star Tribune reports, “management said it withheld release because of the possibility of pending mediation.”  You withheld vital information that the musicians had asked for months previously… because you didn’t want to interfere with the negotiations? The information contained in this report gets to the heart of what negotiations were all about! Were you ever going to release the report? To be blunt, I find this outrageous.  Moreover, I can’t help but believe the only reason it made its way into public now was that you’ve hit a wave of bad publicity and are trying to change the subject, and to latch onto something that you think will support your chosen narrative.  In honesty, I can’t fathom why you’re releasing this now.  Not to be flip, but I shudder to think that the PR you’ve been getting recently been so bad that you hoped this would be an improvement. Again, this doesn’t help your trustworthiness, and is making you less and less credible.

4. Financial incompetence.  As I mentioned, I have not read the document, but the points that have been made public are beginning to make my hair stand on end.  Your analysis, using your hand-chosen data points, suggest serious—if not existential—threats to the organization.  How on earth did you let things deteriorate to this state?  If these facts are true, how could you in good conscience fundraise for a new lobby when the organization was in such dire straits?  Where were your priorities?  But also, if things were this galactically bad in 2012, they were certainly not good in 2009-2010 when you were painting such a rosy picture for the press… as well as donors, lawmakers and audience members. I hope the information isn’t as bad as the Star Tribune suggests; but if it is, I’d say the ongoing labor dispute is the least of your problems.

All of this tells me that this document, released now, can offer very little to the conversation.  But it absolutely confirms that the musicians (as well as most observers) were absolutely right to demand more financial information.  I’m still not sure we have what we need.  More to the point, this document does nothing to help establish the management’s overall credibility—as partners in negotiation, arts managers or as fiscal stewards for the Orchestra I so dearly love.

Xochipilli

An Un-Strategic Plan Part 1: Beginnings

In honor of Labor Day, I’m delighted to take part in The Minnesota Orchestra Cross-Blog Event.  It’s a collection of more than a dozen bloggers, musicians, patrons, and administrators writing about the Orchestra’s devastating work stoppage. You can find all of the contributions in the following list and the authors encourage everyone to participate by sharing, commenting, or publishing something at your own culture blog. 

Thanks to all the writers for taking part—there’s some very good reading to be had!

 ____________________

As of Labor Day 2013, the Minnesota Orchestra labor dispute has been going on for 11 months—and an ultimate resolution seems as far away as ever.  One of the reasons this labor dispute has been so difficult to resolve is that more than a simple dispute about pay, contractual duties and such, it represents a clash between two fundamentally different view of what the organization should look like.

What should it do?  Who should it serve? How can it be supported?

It has been clear for some time that the MOA (Minnesota Orchestra Association) leadership wants to move the organization into a new, and some say radically different direction.  What do they collectively want?  What’s their overall plan?

Fortunately, we don’t have to guess.  The MOA leaders have given a clear indication of their intentions—a multi-year strategic plan listed on the front page of the Orchestra’s website.  It spans 33 pages and lays out their vision in several key areas, including the organization’s finances and the art itself.

I have to say, I’m not entirely impressed.

I’ve worked at several non-profits in my time, including many years at the Orchestra itself, and I’ve done my fair share of strategic planning.  Based on my experiences and background, I’m beginning a multi-part analysis of the document, looking both at its stated intentions and its unspoken undercurrents. As the document is reasonably long, my analysis requires more space than I can provide in a single blog.  Subsequent parts will appear throughout the week.

Some basic thoughts.  From my perspective, the plan presents several problems—many of which recur throughout the document.  In particular, I see five general weaknesses:

1. Too Generic.  Your strategic plan should be so closely associated with your organization, that if someone saw it without the coverpage or any identifiable markings, they could still tell it was yours simply by reading the text.  That’s not the case with this plan; too often it feels like the goals and tactics could be cut and pasted into the strategic plan of any other arts organization in the state.

2. Too vague and… well, obvious.  Too often, your big ideas are ones that every arts organization should be—and is—doing.  “Increase Board giving.” “Expand corporate sponsorship.” “Conduct market research.”  How are these different now from what you used to do?  What will change?  How is this different from, say, the Minnesota Opera?  I recognize that you’re trying to be concise in this document, but you need to give some sort of details.  This is the battle plan of your entire organization for the next few years.

3. Buzzwords rather than substance.  Repeatedly this document relies on strong action words we’ve all been taught to use on our resumes:  create, implement, initiate, maximize, etc. Worse is when these words are strung into catch phrases—you know, those business jargon phrases that everyone uses in pretty much the same way, without giving much thought to what they truly mean.  “Initiate national touring strategies” is one that comes to mind.  “Initiate” is a strong word, but it could mean anything from making a few calls to drawing up a budget or bringing in a focus group.  Also, what does “vital summer and holiday concerts” mean, especially since this phrase lacks a verb?  Will the Orchestra perform them?  Present other groups?  What makes them “vital?”

4. Too backwards looking.  Despite liberally adding such terms as “innovation” and “new,” there isn’t much here that’s different or points to a truly new direction.  Not that a strategic plan has to, heaven knows, but you’ve positioned this particular plan as a roadmap to future greatness—a roadmap that is necessary because the old way of doing things was unsustainable.  But nothing is new, nothing is fresh… it feels like you’re going to do the same things. With more feeling.  Worse, you never articulate any future goal that you’re striving for, let alone give any indication of how you will know once you’ve achieved it.  It feels more like a simple justification for making budget cuts in the present rather than reaching for the future.

5. There’s no art.  It is astonishing how tangential art is to your strategic plan—you are, after all, an arts organization.  It’s not just that it gets shunted to the end of the plan, it isn’t woven into the plan.  Why are you going to all this trouble, if not to make music?  How do issues of governance, marketing, fundraising intersect with the music? Why isn’t your art evaluated in the same way the finances are?  You should have a plan for creating great art, with objectives and benchmarks to know you’re succeeding… what you measure is what you are likely to pay attention to.

With those broad comments in place, let me turn to the strategic plan itself and discuss some of the particulars, beginning with the preliminary materials:  the mission statement and the executive summary.

 * * *

THE MISSION STATEMENT

This is been the source of much controversy, and in some way there seems little to be left to say.  I am pleased that you have changed the statement since this document was produced.  For reference:

As listed in your strategic plan:  “The Minnesota Orchestra Association inspires, educates and serves our community through internationally recognized performances of exceptional music delivered within in a financially sustainable structure.”

Now: “Our mission is to enrich, inspire and serve our community as a symphony orchestra internationally recognized for its artistic excellence.”

I appreciate the changes, but for me, they hardly end the controversy.  And I am not sure you understand why this is such a big concern, so let me explain.

For those who are upset with the removal of the terms “orchestral music,” and its replacement with the phrase, “financially sustainable structure,” the change isn’t just a tiff regarding semantics.  Rather, this gets to the heart of the labor dispute and vividly reveals the clash of competing visions.  Read literally, there is nothing to indicate that the Orchestra should perform, or will perform, classical music—the form of music for which it was created and is best able to supply.  The Orchestra, in fact, wouldn’t need to perform at all, or at least to perform live.  This mission statement could equally serve an organization that provides music archiving services—one that provides access to historic CDs.  Or it could serve a house radio band playing somewhere in a basement studio, or a pop band. Or a jazz trio.

And what on earth is meant by “financially sustainable?”  That is a sliding metric that can be achieved in any of a bewildering number of ways, from filling the stage with cheap high school performers to quadrupling the ticket prices.  Every business and organization has to stay financially solvent in order to exist, so this point is both obvious and redundant; it is roughly the equivalent of replacing those words with the phrase, “within legally acceptable bounds.”  Let us also note that if you really wanted to save money, you could do so by eliminating rehearsals, selling the Hall and performing concerts in some public space, with only one volunteer musician playing a song that is in the public domain.  According to this document, such a performance would still be in line with the mission of the Minnesota Orchestra.  Would it qualify as an orchestral concert?

In general, a mission statement should cover the following questions: Who are you?  What do you do?  Who do you do it for? What sets you apart from others… what is your competitive advantage?

Do you think your statement does so?

By your own account, the mission statement was re-worded as a goodwill gesture to bring musicians back to the table.  I’m sure you mean well, but that in and of itself raises red flags.  This is your mission statement—the clearest expression of what you do and what you hope to achieve.  Isn’t it slightly disconcerting that you agreed to change it as part of a negotiation tactic? Are you going to re-reword it next week?  Does it have any deeper meaning for your organization?  What about those employees who had already begun to shape their job-related duties based on that earlier mission statement?

With respect, this small change telling it suggests a lackadaisical approach to thinking about your organization right from the beginning.

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THE EXECUTIVE SUMMARY

From your document:

The Minnesota Orchestral Association has many assets:

     •rich history of artistic excellence

     •strongly supportive local community, Board and management

     •established local, national & international artistic reputation

Our organization faces economic barriers that prevent us from taking full advantage of  these assets.

  Current opportunities to create a sustainable model include:

     •focus on artistic excellence and community service

     •renovation of Orchestra Hall, to be completed in 2013

     •new agreement with musicians in 2012

     •opportunities for growth in income streams

The overall goal of this plan is to create a business model that supports exceptional artistic quality with financial viability.

A plan that got off to a questionable start really runs aground here.  Let’s start with the list of assets you provide, particularly the first and third bullet points:

*rich history of artistic excellence

*established local, national & international artistic reputation

One thing that immediately jumps out about these that they are looking backwards.  Yes, the history of excellence is important, but when did this excellence occur?  Was it in the early 2000s?  During the tenure of Eiji Oue?  Dimitri Mitropoulos?  Has it continued up until now and you hope to prolong it?  Do you see the organization entering rebuilding phase now?  Or will it do so soon?  You are careful wordsmiths, so I’m surprised this point is so vague… it feels like boilerplate, or a marketing tagline.  This may seem like a petty semantic detail, but I fear it’s symptomatic of a larger problem of vision.

Likewise for the last bulleted asset; an established reputation is a good thing, but it isn’t enough.  Not for any company.  Brand loyalty can help you weather transitions, but there are certainly limitations—especially when your present-day product is lacking.  In an earlier blog I wrote about how Howard Johnson’s serves as a cautionary tale of a company that assumed that customer loyalty and patience were infinite. As a result, this once-mighty business behemoth is no longer with us.   Need a more current example?  The New York Times just ran a series of articles about Steve Ballmer’s tenure at Microsoft, noting that it so jealously held on to its past successes that it refused to face the future.  A line from the story tells it all:  “Past success can obscure new opportunities when emerging markets or technologies don’t operate by the same rules as a company’s tried-and-true products. And Microsoft has suffered from that kind of corporate myopia.”

These two assets listed here, however, imply that you are perfectly content to rest on your laurels, and are not overly concerned about maintaining standards.  They also imply you are not afraid of getting rid of the expensive things that make up today’s excellence, because people just trust your brand and won’t notice a difference.

Let’s also look at that middle asset you mention—the support of the community, board and management.  These areas of support are critical for success, to be sure.  But I can’t help but notice glaring omissions:  the musicians, the music director, and the staff.  You have assembled a world-class collection of musicians playing at the top of their game.  That is an asset.  They are involved in community outreach, fundraising events, teaching and other activities that keep audiences engaged.  That is an asset. Osmo has brought international acclaim and world-wide attention to the Orchestra.  That is an asset.  Osmo has brought BIS to record CDs at Orchestra Hall, greatly expanding the reach of its music.  That is an asset.  The Orchestra Hall staff, mirroring the on-stage accomplishments of the musicians, is one of the greatest groups of arts administrators in the state.  That is an asset.

The fact that your list only includes the community, the board, and the management is shockingly short-sighted, and telegraphs your intentions vividly.  It is no surprise you have shown such indifference to the musicians, Music Director and staff during the dispute—they are obviously incidental to your plan.

Before moving on, I want to point out something obvious seems to be missing in your list of assets—the present-day artistry of the ensemble.

Right now, in the words of Alex Ross this orchestra is one of the finest anywhere, playing at the highest level.  Right now, it is in a golden age of artistic excellence.

That is an asset.

As an aside, you famously own your own hall.  The problems with the Atlanta Symphony Orchestra should convince you that having your own space can be a huge asset.  You acknowledge this by your efforts to refurbish the facility… so why isn’t this listed as an asset?

After the list of assets, you list your current opportunities.  The items you mention are good, if straightforward, but there is one more issue I take with your plan at this point.  In the very last line, you mention you want to achieve exceptional artistic quality along with financial viability.

“The overall goal of this plan is to create a business model that supports exceptional artistic quality with financial viability.”

I’m pleased that artistic excellence gets a shout out here, but up to this point—both in this specific document and in your public statements as a whole—there is nothing to indicate what you think artistic excellence looks like, how it is defined, or how it will be achieved.  Do you even need the Orchestra, or any orchestra, to deliver it?  I recognize this is the executive summary of a summary document, but the term is so briefly and carelessly tossed out it seems like an afterthought.  Or, again, as marketing boilerplate that is devoid of meaning.

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Thanks for reading—Happy Labor Day!

Next up:  Assumptions that Assume Quite a Bit

 

Xochipilli