A time for change

Fundamental change is a significant theme in the American arts scene. The diversification of America creates real demands to learn about, engage with and explore different traditions, cultural expressions and delivery systems. This requires a willingness to change the way things have always been done. Generational change is leading to critical transitions in staff, board and philanthropic leadership. Many founders, both artists and board leaders, are leaving the arts field, resulting in a potential gap in stewardship and leadership that will place new demands on artistic successors and boards. The emergence of the ‘Pro-Am revolution’1 (amateurs using technology to undertake arts activities at professional standards) has forced the sector to question the definition of an art maker and the role of traditional experts in what is becoming a self-curated world. As content providers continue to become increasingly varied and informal, and as access to the marketplace becomes easier and less expensive, approaches to reaching arts consumers must also shift. The new connected, empowered and creative generation demands control of what and how they engage, and this has significant implications for how the arts sector engages its potential customers.
Challenging traditional systems
The emergence of universal, on-demand access to information and entertainment leads one to question the continued utility of the traditional venue (theatre, museum, gallery, etc.) as the primary delivery mechanism for the arts. The highly passive relationship with audiences and visitors (e.g. ‘sit and listen’ or ‘stand and look’ activities) may not be as relevant for today’s emerging art forms or future audience expectations. Recently, I joined a young, diverse group of more than 600, while a three-dimensional performance took place around us without a word of spoken text. We stood the entire time, and moved around the performance space as we shifted scenery and participated directly in the performance on the reconfigured stage of a dark opera house that we had entered through the loading dock. Given the tremendous capital investment in traditional cultural facilities and the ongoing costs to operate these buildings, exploring solutions to accommodate changing forms, audience desires and production requirements is an essential task, especially as traditional boundaries are blurring with artists intentionally and continually moving between commercial, non-profit, and informal settings. These changes are only amplified by advances in technology.
Financial pressure
Much of the arts and culture sector in America is comprised of not-for-profit corporations that rely on their tax-advantaged status to combine earned revenue, contributions and public sector support to fund their annual operations. The economic downturn has brought into sharp relief just how tenuous this model is. Reductions in, and in some cases elimination of, government funding, dramatic declines in corporate support as corporate profits fall, and smaller grants from foundations which have seen the value of their investments decline dramatically have magnified a structural gap in the financial model for many organisations. Clearly, operating at a deficit is not a sustainable strategy, and reconfiguring these organisations is essential. There are three kinds of strategy that arts organisations must pursue to be successful going forward.

1. Tell a better story.
The arts sector must be one of the most under-documented sectors in business. We need to develop a vocabulary that communicates value to those who are essential to our success. We need to demonstrate the positive impact that the arts have on community, civic pride and competiveness. This requires a commitment to rigorous research. Transparency is also important. The time is past when content alone was enough to justify support. In the US, organisations such as the web sites Guidestar and Charity Navigator are developing and disseminating performance measures that give five star rankings to organisations that meet their standards, and direct potential supporters to them. We also need a commitment to continuous improvement. By benchmarking operations and seeking ‘best in class’ performances, organisations can assure their investors that they are effectively and efficiently using their resources.
2. Embrace change.
The way companies do business is changing. Microsoft and Yahoo now partner to compete with Google. Why aren’t our opera, dance and theatre companies collaborating to deliver programmes? Shouldn’t museums and school systems work directly together to develop high-impact educational programmes in history, art and the sciences? Achieving these goals requires a willingness to participate in non-traditional networks. By developing strategic partnership the arts sector can gain both resources and advocates. Simultaneously, we need to use technology to connect both to networks with prospective markets. The producers of the performance I attended encouraged people to take pictures and videos, to text and Twitter their friends throughout.
3. Abandon ‘zero to zero’.
Perhaps the most fundamental change is in the assumption that success is found in a balanced budget. Given that most arts and cultural enterprises have little or no capital depth and that access to annual funding in increasingly difficult, we need to rely on our own resources to achieve our goals. This suggests two avenues to generate more revenue and a measurable return on capital, so that we can reinvest directly in our organisations. First, let’s turn the traditional revenue pyramid on its head: where we invest less time and resources in the few highest donors and supporters, and instead find ways to drive more value from the large group of people who are regular participants in our programmes but not yet among the elite. Second, how about demanding that our annual budgets include funds for research and development, a set-aside for cash reserves and working capital, funds to invest in better tools to market and produce work? In these ways arts organisations might become more self-reliant and less subject to the winds of change and vagaries of revenues streams over which we have no direct control.
It is certainly a difficult and challenging time in the arts sector in America, but this is also a time when innovation and leadership will be highly valued. Those who can explore and adapt will find opportunity and success.