About a year ago, I began designing a graduate certificate program for American University focused on technology issues in arts management, and this past summer, I taught my first course focused on the intersection of technology and marketing. To open the course, I asked students to read Malcolm Gladwell's The Tipping Point, which if you haven't read it, describes how social epidemics evolve, providing a great platform to discuss word-of-mouth marketing and how technology can be used to ignite a movement.
Early in the book, Gladwell discusses "The Law of the Few," which boiled down is a riff on the 80/20 principle - 20% of the people are responsible for 80% of the work. As marketers, we latch onto this principle, as it correctly argues that if we can identify and cultivate relationships with a select group of influential people called "connectors," then our returns can be maximized. One connector can be worth his weight in gold, and easily as valuable as ten non-connectors.
As I was giving my lecture, it struck me that most non-profit arts organizations have designed their business models on the "Law of the Few" principle, not just in their approaches to marketing, but in how we program, fundraise and communicate. A previous supervisor of mine used to say that a grassroots movement begins with the grasstops. But if we are all focused on the few, are we ignoring the many?
I ask this question, because as society shifted away from a one way, web 1.0 world towards an interactive, web 2.0 one, the ways in which we do business and view the world radically changed. Previously companies had much more control of their brands as they could carefully craft messaging, but today, brands have a life of their own in the virtual universe. We used to seek out experts when we needed information, now we rely upon the collective of Wikipedia or Google (when was the last time you consulted an encyclopedia?). At one time knowledge was proprietary, but presently, a growing number of us look to the commons (and companies trying to maintain business models built upon charging for knowledge are struggling). We used to rely on authority figures to inform us, but now in moments of crisis, millions flock to Twitter, where we learned an hour before President Obama confirmed it that Osama Bin Laden had been killed.
I believe that many of us used to defer to the knowledge and experience of a small few, placing trust in their expertise to guide the rest of us. But when a handful of very powerful and experienced bankers plunged the world into a global economic crisis resulting in the loss of 40% of the world's wealth, the masses started to wonder if the few could be trusted to lead. In the web 1.0 world, most were passive recipients, willing to receive content as delivered. Today, the least among us now demands a seat at the table, and via web 2.0 technologies, an even playing field has begun to emerge.
So how will this affect the non-profit arts? Here are just a couple of examples:
The Citizen Critic (and the Future of Arts Journalism)
A couple of weeks ago, Barry Hessenius, former director of the California Arts Council, issued his annual list of the most influential people in the arts. On the list were a handful of notable bloggers, including Ian David Moss, Diane Ragsdale, Clay Lord, Doug McLennan and Thomas Cott, however not a single traditional journalist was mentioned as there wasn't a category for journalists. Was this an oversight, or a trend? Nielsen recently reported that 92% of consumers trusted word-of-mouth from friends and family, while only 58% trusted editorial content such as newspaper articles. Harvard University recently published a study that contended that average reader reviews on Amazon.com were just as trustworthy as book reviews from professional critics. Even Maura Judkis, a writer for the Washington Post, in her article for the NEA's blog ArtWorks states "readers of my generation, the Millennials, are more likely to want to see a movie or play because their friends like it than because a critic does." Word of mouth has always been powerful, but advances in technology have allowed connectors to broadcast their thoughts to followers instantaneously, and others, the opportunity to feed into social networking, user review sites like Yelp.com. So where does that leave us? Ask yourself - if you were visiting New York, and thousands of patrons had described a Broadway play positively in online reviews, would it have more of an impact on you than negative reviews by professional critics? [could this explain the mysterious success of Spiderman?]
Crowdfunding and Microfinancing
In her article "It is Broke, We Should Probably Fix It," Alexis Clements argues that many non-profit organizations chase a few, large foundations, whose money would have been public via taxation but is now controlled privately. She goes on to say that via grants from private foundations, wealthy individuals can "funnel money to organizations that will uphold their personal beliefs." That is a pretty charged statement, but I do wonder how often arts organizations manipulate their missions in order to receive a large grant or donation from a private funding source? How many arts organizations are alive today primarily due to the generosity of one or two major donors, and for those, do the donors in question wield too much influence? In 2008, President Obama demonstrated the power of the collective when he raised unprecedented amounts of money from small donations. As of August, the crowd funding website Kickstarter has raised $275 million in funding for projects, and has grown exponentially since its founding in 2009. And we aren't just talking about tiny amounts of funding either. The top 10 projects funded on Kickstarter all raised more than $1 million. And Microfinance website Kiva has leveraged $346 million in funds from 823,474 lenders to launch projects aimed at combating poverty in 63 different countries.
Crowdsourcing Curation and Programming
When I was at the Smithsonian, an internal debate was occurring about the "Art of Video Games" exhibit at the American Art Museum. The Smithsonian invited the public to help curate which video games would be featured in the exhibit, and in doing so, more than 3.7 million votes were cast by 119,000 people in 175 countries. Pretty impressive. However, questions began to arise about the role of the curator. For the most part, non-profit arts organizations are lead by artists with extensive training and sometimes decades of experience. As the resident experts in their fields, they are regularly called upon to make value judgements on what art to present, and how to present it. In the past, the public has remained a passive receiver of said art, but a growing number of patrons today would like to play a more active role. Technology has changed what used to be a one way conversation into a dialogue, and in turn, many community stakeholders now expect to be able to exercise their voice. I believe this phenomenon prompted Arts Journal editor Doug McLennan to host the "Lead or Follow" debate early this year. If you didn't catch it, here is a good recap.
Understandably, non-profit arts organizations have built models based on the "Law of the Few," and I am not advocating for the abandonment of those models. I am however suggesting that there is wisdom, money and resources to be found in the collective as well. This isn't an either/or proposition between the few and the many; it's a both/and situation. There is a significant role to play for the few and the many. But to tap into the collective, I believe we must become vital and essential to our communities again. I fear that for many non-profit arts organizations, if they were to disappear, we'd barely hear a whimper, when there should be protests in the streets.
The Myth of the Ubiquitous Solution
Today I tread lightly into the “new models” discussion which has recently been at the forefront of chatter among arts managers. For a good recap, please read the following:
“Why Arts Managers Short of Cash Are Looking at Detroit,” by Terry Teachout, The Wall Street Journal
“Theaters Look for New Ways to Draw in Subscribers,” by Nelson Pressley, The Washington Post
“The New Model, Part 2,” by Michael Kaiser, The Huffington Post
“Swimming Downstream in the Current of History,” by Adam Huttler, Fractured Atlas Blog
As Michael Kaiser states “the world is changing – but it has always been changing.” I agree with Mr. Kaiser to a point, but I’d like to point out that the amount of change organizations have faced in previous decades probably pales in comparison to the change they have confronted in the past ten years. In a one decade, pretty much everything we have been taught is now in question. How many of us were taught that the key to financial stability was saving money in order to purchase a house? For those of us who purchased prior to 2007, becoming a homeowner could be the dumbest financial decision we make in our entire lives. Who knew that we would experience a global economic crisis so severe that it would destroy 40% of the world’s wealth, or that people would actually opt for negative investment returns in order to move monies into safer investment vehicles? For the first time in the history of the United States, Standard & Poors downgraded the credit rating of the federal government to below AAA status, and the youngest Americans will most likely be worse off than their parents. Staples of American life, such as Social Security and Medicare, seem to be imploding, and new college graduates are entering the work force with record high student loans. And this is to say nothing of the arts. States and municipalities are slashing funding, arts education barely exists in school curriculums and the lack of discretionary income is affecting ticket sales.
As they say, necessity is the mother of invention. It shouldn’t come as a surprise to anyone that arts managers are engrossed in discussions about new models. Many organizations had reserves to weather a couple of bad years, but recently we’ve begun to ask – what if this is the “new normal?” And how arts managers describe the “new normal” reminds me of the Hindu tale of the Blind Men and the Elephant. As the story goes, six blind men were asked to touch and describe an elephant. Each man’s description varied widely depending on the part of the elephant the man touched, and as the tale says “each in his own opinion exceeding stiff and strong, each was partly right, and all were in the wrong.”
Our descriptions of the “new normal” are as different as our points of views, and thus our responses to our changing environments should be as unique as each of our institutions. I fear anyone who offers a panacea to all proclaimed from his or her own mountain top, as the view from my mountain may be different. For example, in his mostly excellent article about the Detroit Institute of Arts, Terry Teachout chides theater companies that “cling to the old-fashioned subscription model.” Similarly, in Nelson Pressley’s article “Theaters Look for New Ways to Draw in Subscribers,” Tony Heaphy, Director of Marketing at Centerstage, describes subscribing as “a chestnut.” I have no doubt from their perspectives these comments are valid, but theaters that have experienced significant growth in their subscription base might view the situation differently. What works for one, rarely works for all.
Therefore a customized approach tailored to your institution is wise. When looking at possible adjustments to your business model, I would suggest:
Therefore a customized approach tailored to your institution is wise. When looking at possible adjustments to your business model, I would suggest:
1) A test a day. Test a new idea, small in scale, each day. Every day that an organization doesn’t test, is a day that it doesn’t learn.
2) Test small, miss small. Identify a challenge. Develop a hypothesis. Test a solution. But don’t bet the farm on it. Conduct each test fully expecting a negative result.
3) Test ideas that are easily scalable. In order to minimize risk, I’ve tested ideas that performed very well on a small scale only to realize that putting them into play in a larger way would be cost prohibitive.
4) Identify your sacred cows, and test those first. Often times we shy away from testing solutions to a known issue simply because that issue is a sacred cow. If you are looking for meaningful impact, identifying sacred cows is a good first step.
5) Be informed, but question everything – even “experts.” Read everything you can. Follow experiments at other companies. Conduct research. Analyze data. But don’t accept anything or anyone as infallible. Even the best are human, and they speak only from their experience.
6) Be careful of “one size fits all” solutions. I can’t tell you the number of times I’ve heard marketing directors wonder why something that worked so well in one city, bombed in the next. There are few universal truths in the marketing world.
7) Overcome your fear of change. As humans, we are all programmed to fear change. You’ve identified a challenge. Formed a hypothesis. Tested a solution with impressive results. Developed a plan to scale the solution. And now it is decision time. Some people are paralyzed by fear of change. Be comforted by knowing that if you desire different results, you must act differently. Some difficult decisions are easy because they are demanded by circumstance.
The Perfectionist and the Jack of All Trades
I've been called a perfectionist, and until recently, I've always accepted that description as a compliment. However as a leader, one of my primary responsibilities is to help prioritize the work of the departments that report to me, and in doing so, it is very important to understand that most nonprofits are under resourced. In a world where there is never enough, either in terms of money or human time, where and how nonprofits commit their limited resources becomes very important. Perfectionists struggle in these environments because by nature, when we start something, it's hard to walk away with even the slightest flaw remaining. On the other hand, marketers routinely leave projects behind when a greater return on one's resources can be found in other places, bowing to the law of diminishing returns. To be both a marketer and a perfectionist has caused a few schizophrenic debates for me over the years, but I've come to learn to focus on core competencies, and to strive for excellence, rather than perfection, in those areas.I've chosen to write about this today because I've recently worked with two very well respected marketers that I observed struggling with the same issue. The first was a technology specialist who was known for making even the most complicated systems work. He was part of a team that over time found their marketing costs rising while their returns fell (not a good place for anyone). I was brought in to conduct a marketing audit. In my first week with them, I observed this marketer spending 25 hours working on a fix for a technology enhancement that this organization was hoping to roll out to their members. After inquiring, I learned that he had been working on this fix for over a month, and had put in well over 100 hours on it. When I asked him if this particular technology enhancement was worth so much effort, he replied that it was to him because he had never failed to deliver before. From an outsider's perspective, it was easy for me to see that he was chasing perfection to the detriment of the organization. After looking at the demographics of their members, and the usage statistics from the previous technology enhancements the organization had launched, it was easy to project that less than one half of one percent of their membership base would likely use this new feature. So why focus so many resources on it?
At almost the same time, I was advising an organization who had hired a strategic planning and market research firm to audit marketing and membership operations. The organization had selected one of the best firms in the business, but was experiencing cost overruns on projected labor expenses in the early stages of the project. The organization in question was large and complex, and one of the first things the firm did was request financial information in a variety of formats. Once delivered, a new junior member of the firm started analyzing the data sent, but in doing so, she couldn't get the financials to match perfectly between the various formats. She continued to work on the financials in an effort to get them to match to the penny, and in doing so, soared past the projected work hours set aside for the initial phase of the project. When I discovered the issue, I asked her how far off the financials were, and the gap was less than $1,000 on a $40 million operating budget. Even if she had found a way to reconcile the remaining funds, the conclusions from her analysis wouldn't have changed in the slightest. Her fear was that if this data was shown to the board of the directors, she would be held at fault because they didn't balance perfectly.
Perfectionists sometimes lose their way in an attempt to achieve something that might not be achievable, or if achievable, probably isn't worth the cost of the achievement. Perfectionists struggle with concentrating too much on one task, while others (I'll call them Jack of All Trades) struggle with just the opposite - not being able to decide where to focus their attention. During times of strife, marketers can find themselves getting friendly advice from a wide-range of well meaning others - board members, executive directors, senior staff members, artists and even spouses. People love to brainstorm, and send all their ideas to the marketing department. This isn't to say that ideas should be ignored. Great ideas can come from anyone, but the same can be said of poor ideas.
A couple of years ago, I spent some time with a new managing director of a mid-size regional theater. It was his first time leading a company, and he wanted to get it right. The company was known to have serious challenges, and when he started, everyone started sending him helpful hints on how to solve the issues. When I visited, he confided he didn't know where to start, and most important to him was pleasing the board that just recently hired him. So he vigorously pursued each idea that was sent to him from board members, and hadn't achieved much except exhausting himself. Over lunch one day, I asked him what the theater's most important challenge was; the one that if left unaddressed, would result in catastrophy. His answer was quick and clear - the theater's debt. I asked him what would happen if he focused all his energies on eliminating the theater's debt. He was afraid the general operations of the company would falter. He feared that the board would be upset because he wouldn't have time to focus on each issue they brought to his attention. And he was afraid of failure, so he tried to be a jack of all trades in an attempt to be everything to everyone. In the end, he decided to concentrate on dealing with the debt issue, and six months later, had identified a foundation that was willing not only to eliminate the theater's debt, but also wanted to establish a working capital fund for future operations.
Deciding what to focus on and more importantly what not to focus on takes courage of conviction. Perfectionists get lost in single projects, and Jacks of All Trades try to address everything at the same time. I've been both in my career, and over time, have become better at prioritizing. Below is a basic matrix that may help:
In priority, concentrate on solutions that provide the following:
High Impact on Critical Issues/High Revenue Line Items - these should be few in number but receive the most amount of your attention.
Low Impact on Critical Issues/High Revenue Line Items - even a small improvement on a critical issue can result in an excellent return on investment.
High Impact on Minor Issues/Low Revenue Line Items - only spend time on these projects if all critical issues and high revenue areas are performing well.
If you are in a nonprofit, and have the time to concentrate on solutions that will provide a low impact on a minor issue/low revenue line item, then perhaps you are overstaffed (or have reached the holy grail of the nonprofit sector).
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