New Models Redux

In our last episode, I responded to Michael Kaiser’s frustration with “new models” chatter.

Well, this week he’s back with New Models, Part 2, and you knew I wasn’t going to just sit here (even if I am supposedly on vacation!) Kaiser once again criticizes the critics for a lack of specificity:

The constant drumbeat for new models for arts organizations is deafening. But none of the experts calling for the creation of new models is being very specific about what these new models should be or even what specific problems they are meant to address.

Who knows if I meet the definition of “expert”, but I’m happy to offer a few thoughts about what exactly is broken with the traditional arts organization construct: administrative bloat, unhealthy risk-aversion, and chronic undercapitalization, to name the first three that spring to mind.

Administrative Bloat - In the 1960s and 1970s, Carnegie Hall had fewer than 15 employees. Fundraising was done by volunteers. Yet despite that skeletal infrastructure, the stage was graced by the likes of Vladimir Horowitz, The Beatles, Frank Sinatra, Itzhak Perlman, and Luciano Pavarotti.

Today, Carnegie Hall still boasts world-class performances by top-tier artists. But to accomplish that, it employs a professional staff of over 200 and spends $5 million per year on fundraising, out of a total institutional budget of $85 million.

So what the heck happened in the last 30-40 years? The non-profit cultural sector grew up. We professionalized our organizations. Our org charts were modeled after the rock stars of corporate America, industrial titans like General Motors and US Steel. We started pursuing masters’ degrees in arts administration. In short, we became (superficially) “business-like”.

Like living organisms, corporations (including non-profits) pursue self-perpetuation above all else. Even more darkly, they exhibit a persistent bias towards growth, favoring it over more rational metrics like (for-profit) return on equity or (non-profit) mission impact. To paraphrase Edward Abbey, growth for the sake of growth is the ideology of cancer.

Organizational infrastructure is a beast that demands to be fed. As the growth of non-profit arts organizations - both in numbers and size - continues to outpace the growth of both audiences and funding, we must ask ourselves where the money will come from to feed this monster. Is art itself to become solely a luxury item? Or do we keep cutting expenses, inevitably including artist fees and production costs? There is no third option, short of a radical change in distribution models along the lines of what I suggested in my last post.

So why not cut administrative overhead? Well, the really perverse part is that this administrative infrastructure probably is necessary in the context of a non-profit organization. It can’t be slashed without negative consequences, like incomplete compliance with charity regulations or uncompetitive fundraising. When the beast can’t be cured, it must be killed.

Unhealthy Risk Aversion and Fear of Failure - Let’s imagine that someone offers you a bet. He’s going to flip a coin; if it’s heads you lose $100; if it’s tails you win nothing. You’d be pretty stupid to take that bet, right? Well this isn’t so different from the position in which managers of non-profit organizations find themselves.

I realize that few if any of us got into this field because we were motivated by personal financial gain, but on some level, incentives matter. They influence our behavior, even if only on an unconscious level. Unlike their for-profit counterparts, non-profit employees and board members can’t own stock, so when an organization experiences great success there’s almost no participation in the “upside”. Sure, you might get a raise or a promotion, but there is literally zero chance you’ll find yourself in Bill Gates’s or Mark Zuckerberg’s shoes.

Make no mistake, though - you can still be fired!

So what’s the rational response when you’re exposed on the downside but have no access to the upside? Extreme conservatism. There’s a reason we keep producing The Nutcracker year after year. Meanwhile, institutional funders almost universally say they are comfortable with failure (and no doubt a few really are), but in a system where the only available reward is professional prestige, who can blame them for being cautious in practice?

Meanwhile, Silicon Valley has FailCon, “a one-day conference for technology entrepreneurs, investors, developers and designers to study their own and others’ failures and prepare for success.” That’s what it looks like to appreciate failure as an authentic precondition for success.

Ours is an industry that desperately needs risk-takers and innovators, both in the art we’re producing and the businesses we’re running. The shocking, wonderful news is that the very best and brightest desperately want to work with us! Last year’s senior class at Harvard University named a career in the arts as the single most popular dream destination. Yet despite that desire, most of them will go on to careers in finance, law, technology, or other industries. We can’t continue to dismiss anyone who wants to make a buck or two.

Chronic Undercapitalization - For decades, our sector has frowned upon surplus budgets and retained earnings, making it impossible to accrue reserves. As a result, we live perpetually on the razor’s edge of survival, permanently dependent on philanthropic support.

Recently, efforts like the National Capitalization Project have sought to address this issue, and they are moving the needle in some important areas. But let’s be honest: a $100K cash reserve doesn’t really change anything. We need war chests. We need the financial freedom to take on hugely ambitious projects with game-changing potential but high probability of failure. When undertaking a project like that, we shouldn’t have to compromise quality or scope because it’s unseemly for a non-profit to aim too high. (Do you have any idea what it’s like to compete with a start-up that has received $50 million in venture capital funding?)

The artists who will experience the greatest success - both creatively and financially - in the 21st century will be those who can move fluidly between the non-commercial and commercial realms. When you want to engage in pure artistic exploration without any ambition of financial success, then by all means do it leanly if you can. But when it’s time to go big, let’s find ourselves the resources to go really big.

No doubt you can expand on the catalog of dysfunction, so let’s leave that as an exercise for the reader.

Kaiser goes on to observe:

Many are suggesting…that board structures be eliminated in favor of other models of governance.

This honestly isn’t a complaint I’ve heard frequently, though I suppose it comes up from time-to-time. For my part, I’m not suggesting that arts organizations should operate without boards. I’m suggesting that:

  1. Artists are increasingly better off operating outside a strict, traditional institutional context. Holly Sidford, one of my own brilliant and supportive board members, observed that the future is in lateral, not hierarchical strategies, and depends on a more democratic distribution of access and involvement. From a structural standpoint, this could play out in many different ways - network-models, cluster management, representational governance, etc.
  2. A board that serves primarily a fundraising function is a double-edged sword. Sure, in the hands of a maestro like Kaiser it can be deftly managed and become a powerful asset. But he’s giving his peers too much credit if he thinks most of us share this skill set at the requisite level of expertise (and in fact he does acknowledge that many boards are poorly managed). I’ve seen more than one fundraising-centric board descend into a morass of dilettantish meddling. Kaiser suggests that the problem is in the insufficient education of both managers and board members. Surely better field-wide understanding of what a healthy board-staff dynamic looks like would be a good thing, but I don’t share his optimism that it would actually solve the underlying problem.

The rest of Kaiser’s piece takes a turn toward the philosophical:

Yes, the world is changing — it has always been changing. Tastes change, needs change. We must adapt to new technologies, new art forms, new ways of communicating. We face a plethora of new forms of entertainment that compete mightily, and at far lower costs, than in the past. And this will have implications…. I fully expect the world of the arts to look different in 20 years. I want it to look different, to grow, to evolve.

But that does not mean that we have to discard an entire way of working, losing the tremendous advantages enjoyed by successful arts organizations. I believe firmly that well-run arts organizations that appreciate how the world is changing, and react accordingly, that engage board members, that excite audiences, that create important work, that grow and change with the times, will survive and thrive for decades to come.

I’m glad he agrees that we are living through a transition to a new era. For the record, I do not intend to suggest that we should “discard an entire way of working.” However, we have a responsibility to examine the status quo unsentimentally and with brutal honesty. Where there are things we do that work really well, by all means let’s keep and refine them. We can’t be afraid to scrap the rest.

As for Kaiser’s primary complaint, that none of the advocates for “new models” has much to offer in the way of specifics about what should come next: I’m neither arrogant nor naive enough to claim that I can paint a perfect picture. More than anything else, I’m arguing for aggressive and ambitious experimentation. But to avoid being accused of copping out, I’ll over a few semi-specific ideas of the future as I see it:

Leaner, More Flexible Legal, Financial, and Administrative Structures - More and more artists are realizing that they don’t need corporations to make art, and increasingly they can get away without them for marketing it, too. Business entities are not sacred — they are tools, and we should use the right ones for the job:

  • Fiscal sponsorship allows us to raise charitable dollars without charitable bloat.
  • L3Cs are useful for undertaking capital-intensive work in the fuzzy area between commercial and non-commercial activity.
  • Shared management technology spreads infrastructure costs across thousands of artists and organizations, while letting each retain its artistic autonomy.
  • Crowdfunding makes it possible for individual artists and collaborative projects to ramp up fundraising as needed without having to maintain a professional development staff.

Traditional organizations will continue to exist, but there will be fewer of them, they will be very large, and they will serve primarily presentational rather than generative roles. The good ones will adapt their business models to facilitate collaboration across sprawling networks of outside content providers. They will still have boards, but the balance of emphasis on those boards will shift from fundraising to advisory.

Radically Different Distribution Channels - Internet-enabled distribution channels are still in their infancy and will open up untold opportunities as they mature. So far they’ve mainly been about (a) using the internet to share already digital media with less friction than used to be involved in making your girlfriend a mix tape, and (b) democratizing access to the mass market. These are critical steps, but Spotify and YouTube aren’t the end game. I’m waiting for the day when artists and technologists join forces to create fundamentally new aesthetic experiences. This will influence our working models because it will radically alter the economics of production and supply.

More Artists, but Fewer Full-Time Professional Artists - This is the one I’m least confident about, which is perhaps a good thing because it’s bittersweet. As the pro-am revolution continues to unfold, art-making will become a nearly universal experience of modern life. Access and influence will be democratized, and the culture wars will fade into the rear-view mirror. The bad news is that, as art-making becomes less marginalized, there will be fewer opportunities to make art a career, at least without substantial financial subsidy. Of course, this is how it worked for most of human history, and how it still works throughout much of the modern world. This isn’t a “new model” so much as a really, really old one.

Perhaps from Kaiser’s perspective, at the helm of a truly great flagship institution, surviving this wonderful and terrifying future does in fact depend on subtle tacks and continued skillful management. That is not a viable long-term strategy for most of us, however. The next 10-20 years will be revolutionary, not evolutionary. There will be lots of “creative destruction” along the way. If we can keep our eyes and minds open and our feet nimble, then we just might make it. Better yet, we may even have a part to play in shaping the world to come.


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23 Responses to “New Models Redux”

  1. Nina Simon:

    Terrific post, Adam.

    I would add “lack of attention to market” to the list of problems with the existing model. Few organizations are anything close to opportunistic when it comes to developing new program formats or experiences. The few programs that do reach broader markets tend to fall in the least interesting categories (Nutcracker technique). The result is that taking risks artistically is completely divorced from, and often pitched as oppositional to, taking risks with audience engagement. We should be at least as excited about risks that can connect art with people in entirely new ways as we are excited about risks in the art itself.

    This issue can be considered both in terms of risk-taking and capitalization. We have to be able to play long games not just in developing new content but also in developing new relationships with potential audiences–especially those who are inclined but completely uninterested due to current formats.

  2. Ian:

    Yes and yes, thank you.

  3. Rick Robinson (Mr. CutTime):

    Adam, I agree with you that our institutions are tragically risk-averse. Having been a member of a “world-class” orchestra for 22 years, I feel that we focus much more on the class than the world. I’ve developed numerous arrangements, compositions for three ensembles to take classical to the people, along with engagement methods that change the perspective of new audiences. CutTime Productions LLC stands ready to help orchestras build new audiences, but only orchestras that can relax their standards temporarily and stick out a long-term effort.
    L3C may be the perfect mechanism for artists like me to serve several orchestras while partnering with interested foundations and donors.

  4. michael rohd:

    yes, a really good post- thank you, adam.
    Nina, to your comment about opportunistic grabbing of new experiences, i thought you’d find this new posting on HowlRound interesting. Not a new idea, but he does frame play, games and participation in a nice way in relation to the market.

    http://www.howlround.com/let-them-play-by-matthew-gutschick/

  5. Ann:

    There is a tendency to characterize administrative bloat and lack of risk taking as symptoms of large sized non-profit entities, while ignoring the plight of smaller scaled organizations that are lean and mean operations. Shared management and fiscal sponsorships still require adequate staff and the accompanying fundraising finesse to survive and thrive. While I don’t fully agree with Mr. Kaiser’s assertion that the current non-profit arts business model will adapt to the demands of the future, I do agree that descriptions or prescriptions for new models remain sketchy and hypothetical. After all, someone’s has to pay for bloggers who also need to consider the economy of words, even online.

  6. Jim Rosenberg:

    Thanks Adam, great post. I really appreciate your argument for “aggressive and ambitious experimentation.” I often hear the conversation about new business models get bogged down in thinking that somewhere out there is *the* new business model that will usher in the next period of stability and success for arts organizations. From my conversations with executives, I feel the important question is, given a specific organization’s goals and circumstances, what new business model can work best for it? I think what is missing from our shared knowledge, more than details of a new model, is understanding of a solid process an organization can use to challenge and reformulate its model. My own bias is towards a design-based approach, having seen in many contexts how this process can open an organization to very different possibilities. Not easy to do but with great potential. And if we can get all those experiments to happen, then I think some patterns and a set of dominant new models may become clear.

  7. Melissa Cirone:

    Great post, Adam. I was wondering when someone was going to address Kaiser’s blog.

    You are showing your NY stripes, however, using Carnegie Hall as an example of arts organizations with bloated administration. Most of us don’t run NY organizations. We are out in the hinterlands coping with one marketing person, one development person, and maybe a couple of interns - if we’re lucky - trying to run mid-size companies to serve our communities. And the days of volunteer fundraising are over. The ladies no longer lunch, nor do they spend their days organizing galas or running the Guild. They either work or spend their time gardening at the summer house. We’re kind of on our own.

    But I do completely agree that we’ve become risk averse. We spend all of our time either holding on or cutting back as if it is our sole duty to ensure our companies will last in perpetuity. Isn’t that in the bylaws?

    Midsize organizations are probably going away. I don’t think that either you or Michael Kaiser can think of a way to save them.

  8. Adam Huttler:

    @Melissa

    The Carnegie Hall example was just to cite a (superficially, at least) extreme case. I know that CH is not a typical arts organization.

    Kaiser and I seemingly agree that mid-sized organizations are going away, although we disagree about how big a problem this is and how we ought to respond. As I noted in my last post, I’m worried that we’re spending so much time trying to figure out how to save our organizations that we’re losing sight of the opportunities that may lie in radically new approaches.

  9. Dominick Balletta:

    Adam:

    I always marvel at the conversations around business models as they tend to deflect from a central question - what am I doing and why am I doing it? I think that if more leaders take a hard look at what they say they are doing, then look at what they are actually doing, and THEN realistically calibrate their expectations, you would see a vastly different landscape. Organizations need to right size themselves, and not pine for some unattainable ideal.

    Best,

    Dominick

  10. Corey Fischer:

    Brilliant and apt post. I was directed here from a parallel discussion over at Diane Ragsdale’s wonderful blog, “Jumper” in which Diane responds to a talk at the recent TCG conference by Michael Maso that a “wedge” is being driven between artists and institutions. Diane points out:

    “With rare exception, artists (in this instance meaning writers, actors, directors, and often designers) are not generally part of the institution (meaning resident theaters). Administrators, marketers, and development staff have a home. Production and technical staff have a home. Literary managers and dramaturgs have a home. But artists are not part of the institution. They are jobbed in as needed and then sent home to live their precarious lives, unattached (in every sense of the word) to theater institutions.
    How does one drive a wedge between two things that are not attached?”

    for her full post and some marvelous comments, go to:

    http://www.artsjournal.com/jumper/2012/07/when-did-being-pro-artist-make-one-anti-institution/

  11. Jane:

    Thanks so much for this..really great post.

    I think a notable thing is that the non-profit model already _is_ being dispensed with (for better or worse) by many artists who start artist-run organizations and see no incentive to get non-profit status. They self-produce and produce fellow-artists’ work in their own spaces on a small scale or in fluid ‘pop-up’ venues and other arrangements. Perhaps this is a good thing? It means organizations can come and go as is appropriate to a scene and marketplace. On the other hand, it’s not particularly stable and depends even more on the goodwill or self-interest of artists. It perhaps also speaks of the failure of the non-profit model - it isn’t serving a lot of smaller organizations.

    This varies of course from community to community based on funding and funding streams. But, more and more it seems like artists are funding themselves (though personal income) or through their own networks (individual donors, fundraising on a small scale, fiscal sponsorship, kickstarter type campaigns, etc., etc.)

    I think funders should really consider this and question where their dollars are going…

  12. H.T. Katt:

    Fine, thought-provoking post, though in 40 years of working in the professional performing arts, I have never heard an organization “frowned upon” for its “surplus budgets and retained earnings.” If anything, such organizations have been greatly admired and ineptly mimicked. I’m presuming you’re referring to operating budgets. But I’m not sure how that attitude you perceive jibes with the mad rush for institutions to build endowments, the more massive the better.

  13. Rachel:

    Great post and coming late to the comment party. In addition to what’s be suggested above by Nina, Michael, Jim, and Corey… I want to explicitly add on to “Leaner, More Flexible Legal, Financial, and Administrative Structures” the word “Collaborative”. And I say this in the spirit of de-specialization and silo-ization of administrative job areas/functions (marketing, fundraising, education, etc) as well as one of rallying to exploit the power of cross-constituency groups (artists, staff, patrons, community partners, volunteers). So much expertise and brilliance is within our reach and we often don’t utilize it.

  14. Janet Brown:

    Adam, What a thoughtful and provocative piece. I, too, am weary of the “new model” discussion when few people actually have any idea what a new model would look like. Especially a new model that would fit more than 2% of arts organizations. Encouraging and supporting new ventures, ideas and sound operations in this time of transition is exactly what we should all be doing. No one knows where this transition is taking us and we shouldn’t be defining solutions.

    I like your list of leaner, more flexible, L3C, etc, and there isn’t an major institution in the country that doesn’t need to take a closer look at how efficiently they are operating. But we have a tendency in these discussions to lump all organizations and artists into one “system” when, in fact, it is an eco-system that flows from amateur artist to culturally-curious, advocates and individual professional artists to institutions of all sizes and shapes. They all operate differently depending on so many factors, like geography, market, population and community culture.

    Thanks for the plug of our capitalization work. We have met with over 100 funders this year in their communities. Living within the reality of market and mission is the challenge for every nonprofit organization. And funders are taking a hard look at how to encourage good fiscal management and risk takers. Keep up the great work Adam and keep these ideas coming.

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  16. Margot H Knight:

    Excellent conversation. I think Janet is right–there are too many different types of cultural organizations to lump us together just because most have the same governance structure. Hydroponic farmers are different than wheat farmers are different than turkey farmers. Let’s break this down taxonomically by TYPE of work–producing, presenting, research, collecting, service orgs, etc. Michael is speaking primarily about presenting and producing organizations–that’s his forte.

    There are variations on the new model theme for presenting, producing and service organizations. On the whole, the arts community always lives with an inferiority complex along the “we must be doing something wrong or more people would love us” angle. But the topic we keep coming back to over and over in these conversations is the role of the artist in the enterprise. How do artists support their solitary practices as well as their public ones?

    The new funding trend du jour of “community engagement” pushes this to an extreme. In order to engage with the world (regardless of the structure of the presenter or producer or exhibitor of their work), artists sometimes need to escape from it. Scientists are given beakers and labs, athletes have coaches and gyms. There is an organized support system for solitary work in anticipation of public outcomes. And there is an understanding that it may take YEARS. In fact, sometimes there is nothing at the end but the PROCESS is still respected. For whatever reason, that has not evolved in the cultural sphere. After art school, the infrastructure fails the talent. Luck and gut instinct become an artist’s best friends. And sometime an income-producing spouse or partner.
    I love that Fractured Atlas, US Artists and others are providing paths for project and fiscal management for individual artists. As I said on the Jumper post, part of the solution is for organizations such as museums and theaters to have artist development embedded into their missions, deepening their vertical involvement with the artists and the field as a whole. Most just jump from arts education (always a funder-pleaser) to public display/performances. I’d like to see more organizational players in the artist development and investment business.

  17. Scott Walters:

    Great post, Adam! I am struck by the confluence of Kaiser’s posts along with seeming assaults at the TCG conference on those who might question the status quo as described by Diane Ragsdale and Ian Thal. Perhaps a back-channel conversation has been occurring among leaders of large institutions?

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  21. Blake:

    I think we should just be honest with ourselves about why these organizational structures exist:

    1) Many artists want some kind of a “legacy” for their work. The performing arts are, by their very nature, ephemeral and lack a feeling of permanence. As such, many feel the only way to achieve a lasting legacy (or to carry out a particular mission)is to found an institution.

    2) I would argue that artists have been complicit with the rise of these structures. Let’s face it, many of us want to have careers in the arts…but we also want steady incomes, benefits, etc….and one big way to do that is to found an institution and/or take on administrative roles in an arts organization. This gives many people the financial stability that they want, while allowing them to remain “in the arts”. Without such roles, I would argue that we would probably have fewer professional artists.

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  23. Brad McEntire:

    Adam, good post. I rarely wade into the theatre blogosphere, but I stumbled onto this post. I’m Artistic Director of a super-small theatre in Dallas called Audacity Theatre Lab. We are purposefully experimenting with a fast, flexible, tight new approach to both administrative operations as well as the relationship between the individual artist and the company (or in our case, collective). We are, in short, trying to be a theatre of our time. We figure if we serve the artist first and foremost, everything will trickle down from there. If the experiment works out, there could be one new “model.” At http://www.audacitytheatrelab.com