Howard Raynor offers some advice on how to fight for your budget.
No one remembers ?The Illiad? for being delivered on budget. We are left as future generations to speculate whether Homer had a great finance assistant or whether ?The Illiad? was in fact hopelessly over budget. I like to think that he just knew that the story should be sufficiently vital and different to capture imaginations in perpetuity.
I raise this curious idea because it is getting close to the time when budgets need to be drawn up and the pressure is on for us to cut costs. Don?t get me wrong, I am not here as an advocate for scorched earth cultural policies; but when the city treasurer or finance director decides that we have to cut our costs, how do we make sure the main purpose of being there is not overlooked?
First, be sure that you have used every diplomatic and political opportunity at your disposal to ensure the finance guru recognises the economic value you are adding to the community ? the fact that they are asking for cost reduction at all suggests they haven?t grasped the less tangible reasons for keeping you well funded. For ease of reference, here is a quick checklist of economic value added arguments that may help to hold up the cuts:
- Making a positive impact on the value of land rent around your building, particularly in regenerating less valued and image damaged areas of the town
- Attracting private partnership funding
- Attracting central government investment
- Attracting EC funding
- New building helping to drive the local construction and fit-out trades
- Impacting on the image of your town
- Tourism delivery (which crops up in cultural strategies up and down the country)
- Your organisation?s role in establishing and maintaining a sophisticated urban core serving its region
- Attracting people from the region who would not come in to the town/city for any other reason. In turn, they spend on dining, parking, bars and public transport
- Scale of employment ? all employees need housing, food, social life, etc. and, of course, pay their council tax
- Development of the intellectual property of your town/city
- Aesthetic excellence ? your building adds significantly to the look of the city and creates the potential to be an icon
- Your impact on car park revenues
- Balancing the night-time economy from bar-driven youth culture to a wider population (a new favourite)
- The desire for the arts ? 95% of Amsterdam?s residents believe that institutions they never visit should be maintained; 95% also maintain that the arts and culture are very important to the atmosphere of the city.
If this has been done and the arguments are still being levelled, don?t give up the diplomacy and political arguments ? keep them in an appendix to the budget or plan.
At some point the management team either has, or should, establish the core mission of the organisation ? which has to be real to the audience This organising thought/muse/vision ? call it what you will ? is all important when you have to scale back costs. You will need a methodology for cost reduction that everyone involved in implementing it can understand and, I think, in broad terms there are three choices:
- Give in and destroy your organisation by eliminating training, marketing and risk contingency ? not recommended
- Focus on the most profitable customers and service the living daylights out of them whilst trying not to worry about the social responsibility or consequences ? not recommended
- Focus on what makes your organisation different to the other services available in your town/city/community and take a long hard look at the marginal activity ? recommended!
Developing strong organisations always requires creativity and hard work, no matter what the budget, but here are some of the places to look when the going gets tough:
- Drop the marginal activity, unnecessary opening hours, uncompetitive retail and catering
- Increase prices and know what your margins are
- Invest in innovation through either capital programme work or programming (remember the mission and hang on to the risk contingency)
- Market the organisation?s uniqueness through alliances with other organisations who talk to your audience
- Focus developments on key audiences, at least one of which can deliver a useful margin
- Focus on audience needs, not your organisation?s strengths. This might make for uncomfortable but necessary strategic change
- Make sure individual managers have responsibility for key development / action areas.
Next time I will be looking at how to deliver serious improvements to your organisation without betting the farm ? Kaizen theory.
Howard Raynor is Group Chief Executive for The Bridgewater Hall and Urbis.