Grade A Entrepreneurs

The recession is bad for everyone. But is it worse for arts organizations? Yes and no. “We are in tough times in the arts just like everybody else,” says Russell Willis Taylor, CEO of National Arts Strategies. “Access to capital has always been difficult, and it’s not going to get easier. Even rich people don’t feel rich right now. Sure, that’s a big problem. But non-profit arts organizations, just as any other organization, also have to take a hard look at themselves, reassess their strategy – because strategy, in its essence, is do less, and better.” Despite this grim landscape, Russell remains confident (“I am not worried, but indeed am confident about the future of the arts”), but is calling for action: “Organizations will have to focus. Pick the things you do best and do them better than anyone else.”

Meet Russell Willis Taylor: From for profit to non-profit organizations (NPOs): Faulkner said he loved Virginians “because Virginians are all snobs, and I like snobs.” Well, Russell was born in Virginia and she is definitely not a snob and that’s why I like her. She is first and foremost an amazingly hard worker with an impressive track record in both commercial and non-profit organizations. I suspect that NPOs ended up interesting her the most because they are a continual challenge: “The non profit sector has a different layer of complexity. When people come from the commercial sector, working with big numbers and tough deadlines, they tend to believe that an NPO will be a snap. You soon realize that when you have virtually no access to capital markets and you don’t measure performance in numbers only, it’s actually quite complicated to run a non-profit. What NPOs can learn from the for profit sector has to do with adequately supporting your endeavors, hiring people who are the right fit, aligning people’s skills to the task at hand, paying them decently… but I believe that the for-profit sector can learn from the NPOs that mission-driven organizations who really spawn value are the best businesses.” Wherever she has served, as the director of development for the Chicago Museum of Contemporary Art early in her career, as the initiator of the fund-raising department of the prestigious English National Opera (ENO) that she later rejoined as executive director, as a special advisor to the National Heritage Board in Singapore where she resided for three years, and since 2001 as the CEO of National Arts Strategies in Washington, D.C, she has successfully championed operational efficiency and organizational leadership, and one simple, yet powerful mantra: Make meaning!

Navigate inside and through this zoomorama (you can zoom-in/out the pictures and videos as well as see them in full screen). Note on 4/6/9: Temporary problem with the videos due to an unexpected change in YouTube policies. Zoomorama is addressing the issue.

Making meaning in a world that has changed: It’s not enough to simply state that NPOs must be run more like businesses. “‘What business do you have in mind?’ is the question I ask to many NPO executives,” Russell says. “Do you want to be run like Enron or Worldcom? What we do is help organizations contextualize information from the graduate schools of business and make it useful to people who are running NPO businesses. For some subjects, 90% is what you learn in an MBA program and 10% of it is need to be contextualized and for some other subjects, maybe 50% is what you learn in a business school and 50% has been customized to the topic at hand. This 10% to 50% is where an NPO brings a specific value – where it makes meaning. That’s the hard part, and where many traditional arts organization are having the biggest problem.”

In a good economy, a so-so company, whether it is commercial or non-profit can struggle along for years. But recessions often end up revealing a variety of undersides and flip sides, and dismembering business-as-usual attitudes. As unwelcome they may be, they are a time when companies can’t sweep latent problems under the rug and hope for the best – the best won’t happen miraculously. So how does this translate for the arts? “Although the arts in America are doing great,” Russell says, “lots of arts organizations are in a tough spot because they have to address several issues at once. They must determine what their optimal size should be, based on their financial resources, as well as redefine their market, and by doing both, define their goals.” A turnaround of sorts.

Financial resources are the most visible part of the problem. “A lot of NPO’s are undercapitalized. Most medium-sized art organizations (between $5M and $25M) would be tiny businesses in commercial terms. Many don’t have reserves. They don’t do pure income budgeting, they do project based budgeting. If you are in performing arts you have a really tough problem because you have to commit long before you have the revenue and signing contracts that are three years out to get the singers you want or the directors you want, for example, but you can’t always plan your revenue that way, and, as a result, these companies are very high risk businesses, inherently.”

This inherent risk can endanger NPO’s when combined with an over-provisioning or mis-provisioning of a given market, two issues that have been plaguing the arts scene well before the beginning of the recession and were often left unattended by organizations – which have kept doing basically the same things they did in the 90s’, i.e. what was done in the 80’s, i.e. in the 70’s (when NP Arts was a thriving young industry). And yet, over the last 10 years, commercial arts have changed significantly, sometimes pulling the rug out from under NPO’s feet: “The NP arts have been extraordinarily successful in establishing a national niche market and we thought that we had the moral high ground because what we do is of the highest quality. The finest commercial companies couldn’t enter that market because you couldn’t make money in it, so we were OK, but now with new technologies, new distribution systems, and with changing customer behaviors, commercial companies have found ways to make money making high quality products. Twenty years ago, a regional theater’s biggest competitors were other performance venues within a 100 miles radius; now its biggest competition is HBO. Vertically integrated companies have intensive marketing, spend a lot of money on a creative product, and realize the gain from it over a 3 or 4-year period. You can have HBO, you can have Sundance for films – there is a way to make money out of high quality products. You can now make profitable niche marketS in the arts. We used to view ourselves as the arbiters of taste and the only people able to provide non-commercial high-quality artistic products. It’s not true anymore. We can choose to stay on the ice that we occupy that is getting smaller and smaller, like polar bears with global warming, or we can use our creative intelligence to invent how to bring meaning to people. If not enough people want to come and sit in a symphony hall, does that mean that people are not interested in classical music? No. It doesn’t. The first symptom of an industry that is in trouble is when it blames its customers. When a symphony orchestra has trouble and we say that people are not appreciating arts, we are blaming our customers. It’s not the appetite for music that goes away. People only expect different delivery modes or different programming, and ultimately a better integration into the social fabric.”

The other meaning of the word recession: ceding back: The problems that NPO’s may experience during a recession are no different from the ones experienced by commercial organizations. “What we are seeing is what economists refer to across the globe in every market, not just the arts, as a brutal rationalization of the market and it’s not going to be fun for anybody, and I am not dismissing it. But no recession, no depression ever killed the arts. I think we are doing a lot better in articulating the unique value we add. For so long we have been talking about the instrumental benefits of the arts in order to get legislators, city council people, and federal government people, with the goal to make it OK to support us –and we need to get more comfortable with the intrinsic language again — talking about our work in a way that matters and doesn’t just refer to economic benefit. We make communities, communities of joy, of thought, of debate — it’s important work on its own terms.”

At a time of an economic recession, it is only appropriate to also remember the other meaning of the word “recession” as the act of ceding back. I would venture to say that arts organizations are not designed for the mere preservation of the arts or the employment of the people who run them – no more that commercial organizations are aimed at only pleasing its executives and a bunch of shareholders. The primary goal of an organization is to satisfy its customers and users, and reach out to them – i.e. ceding back their feel of ownership. That’s what multiple initiatives have been able to achieve well before our current recession. “Look at enterprises like Community Musicworks in Providence. Wow Are they amazing! It’s a quartet. They decided that they were interested in completely changing the quality of life of that 20% of the population in Providence that doesn’t know anything about classical music. So they opened a storefront school, and they work with the community. Sebastian Ruth is one of the most extraordinary, charismatic people you will ever meet. He is not charismatic in a big loud way. He is incredibly intense. They are incredible musicians. People get on the train from New York to see them. They are doing these concerts with the kids from the neighborhood who had never picked up an instrument before they went to see these guys. They are unbelievable. They are doing this because they believe that great art has the power to change lives. The quality of their work is superb. And of course look at El Sistema. The founder, José Antonio Abreu is an economist and amateur musician. When he founded the Social Action for Music, he believed that they only way to affect poverty was to make it possible to young people to create something of beauty. And his program is now probably the most successful social program in the world!”

Russell is definitely optimistic: “People are going to be coming together for the kind of experience that the arts provide that doesn’t cost a lot of money but means a lot. I think the community is not simply a nice thing, it’s the only thing, and arts organizations have a premier role to play in creating the sense of community. There is a Starbucks at every corner. There is a Walmart in every town. But you know how you know where you are when all towns start to look alike. You know where you are by the art that is being enjoyed and created — that is what gives us that important sense of place now.”

Marylene Delbourg-Delphis

For more information:

About National Arts Stratetegies: http://www.artstrategies.org;

Russell Willis Taylor’s detailed bio: http://www.artstrategies.org/about/staff/Taylor_Russell.php

Community Musicworks (Providence String Quartet):http://www.communitymusicworks.org/quartet.htm

El Sistema: http://en.wikipedia.org/wiki/El_Sistema

José Antonio Abreu: http://en.wikipedia.org/wiki/José_Antonio_Abreu

I also wrote a post on the impact of the recession for start-ups a few weeks ago: http://delbourg-delphis.com/wp-admin/post.php?action=edit&post=116