Stuff To Think About: The Profitability Equals Value Assumption

You haven’t been working in the non-profit arts and culture sector long enough or you haven’t been paying close enough attention if you haven’t heard/read someone say that an arts organization shouldn’t exist if it can’t be self supporting.

If you have found yourself at a lack of response to this argument, you might read up a little on a blog post Seth Godin made earlier this year where he addresses the mistake of equating profitability with value.

Profit is a good way to demonstrate the creation of value.

In fact, it’s a pretty lousy method. The local water company clearly creates more value (in the sense that we can’t live without it) than the handbag store down the street, and yet the handbag store has a much higher profit margin. That’s not because of value, but because of mismatches in supply and demand, or less relevant inputs like brand, market power and corporate structure.


I hope we can agree that a caring nurse in the pediatric oncology ward adds more value than a well-paid cosmetic plastic surgeon doing augmentations. People with more money might pay more, but that doesn’t equate to value.

The best way to measure value created is to measure value, not profit.

The purpose of society is to maximize profit

Well, since profit isn’t a good measure of value created, this isn’t at all consistent. More important, things like a living wage, sustainability, fairness and the creation of meaning matter even more. When we consider how to advance our culture, “will it hurt profits?” ought not to be the first (or even the fifth) question we ask.

Pay attention to the last line of this next quote from Godin because it is basically verbatim a core point made by the Potter-Warrior-Philosopher Carter Gillies.

The only purpose of a company is to maximize long-term shareholder value.

Says who? Is the only purpose of your career to maximize lifetime income? If a company is the collective work of humans, we ought to measure the value that those humans seek to create.

Just because there’s a number (a number that’s easy to read, easy to game, easy to keep track of) doesn’t mean it’s relevant.

Okay, so Carter may not be a warrior, but he does fiercely fight to advance the notion that just because we can measure it, it doesn’t mean the measure is relevant.

One of my favorite quotes from Carter that runs along these lines is in a guest post he made on Diane Ragsdale’s blog.

The way we mostly talk to these people is we have found that our ends, the things we value in themselves, can be the means to their own ends. They value the economy? Well, the arts are good for the economy! They think that cognitive development is important? Well, the arts are good for cognitive development! We make our own ends the means to their ends.

But this never teaches them why we value the arts. It is not a conversation that discusses the arts the way we feel about them. Its not a picture of the intrinsic value of the arts, because in talking about instrumentality we always make the arts subservient. That’s never only what they are to us. Sometimes we just have to make the case for a lesser value as the expedient means to secure funding or policy decisions. It’s better than not making any sense at all.

Just as Godin says, concepts like economic impact and cognitive development can produce numbers that are easy to understand, game and keep track of which helps when making the case for funding and policy. But none of these numbers are expressions of the core value of arts and creativity. Why those of us in the field value it.

It takes more effort to explain a complex concept like the value of arts and culture which is why Arts Midwest and others are engaged in a long term project to build public will for it and create an environment in which a similarly shorthand expression of value is possible.  I don’t think anyone will necessarily equate the value of arts and culture with clean water and pediatric nurses. The goal is an environment where the value of arts and culture is generally assumed.

Back in June Diane Ragsdale made a similar post exploring the different concepts of value and cited an idea that there are different types of “economies” that exist, each with a different “currency” that serves as a valid measure of value and relevance. In this context, we wouldn’t equate the value of clean water and pediatric nurses with that of arts and culture any more than we would equate the winner of the World Series with the most effective Coast Guard cutter crew.

Oh Sure, I Love Doing That…But That’s Not Art

Tyler Cowen featured a study on the Marginal Revolution blog noting that children in India couldn’t do formal math problems, but had no difficulty finding the solution when it was framed as a market transaction.

It has been widely documented that many children in India lack basic arithmetic skills, as measured by their capacity to solve subtraction and division problems. We surveyed children working in informal markets in Kolkata, West Bengal, and confirmed that most were unable to solve arithmetic problems as typically presented in school. However, we also found that they were able to perform similar operations when framed as market transactions. This discrepancy was not explained by children’s ability to memorize prices and quantities in market transactions, assistance from others at their shops, reliance on calculation aids, or reading and writing skills. In fact, many children could solve hypothetical transactions of goods that they did not sell. Our results suggest that these children have arithmetic skills that are untapped by the school system.

This somewhat paralleled the concept I have raised many times here. If you ask people if they are a visual artist, dancer, singer, actor, etc, they will say no. But if you ask about their hobbies you might find they are a woodworker, sing in the church choir, design and execute elaborate parade floats, etc.  All of which yield some artistic and creative product.

There has been an effort, in varying degrees, from the National Endowment for the Arts to Arts Midwest’s Creating Connection initiative, to reframe what people do to help them recognize their capacity for creative expression.

The last line in the passage I cited above was what made the connection for me. Just as the children have arithmetic skills untapped by the school system, people in general can have creative ability untapped by the way creative/artistic expression is currently framed.

Solving problems on a piece of paper is difficult math. Handling a complex financial transaction which ensures a livelihood is something simple you learned when you were five.

Creating a delicate sculpture is something only real artists can do. Recreating a spindly Eiffel Tower out of lumber, chicken wire and flowers so that it is structurally sound enough to travel a windy route as a parade float is the type of exciting challenge you dive into every year.

Discussing creative expression in different frames of context can help people recognize they already participate in some manner or can help remove the intimidation factor by modifying the concept of what being creative entails.

The process of that discussion takes time which is why Creating Connection is envisioned as a long term effort. It will also take creativity to help people make those connections to their personal creativity.

Fortunately, that is one resource we don’t have a shortage of.

Do We Underestimate The Power Of “Wow, I Didn’t Know You Were So Talented”?

I had mentioned before that I will be presenting part of a pre-conference professional development session at the Arts Midwest Conference next week. I was going to make a shameless plug for people to sign up, but I see it is sold out (woo hoo!…oh wait, also increased pressure!)

The session deals with Arts Midwest’s Creating Connection/Building Public Will For Art and Culture program that I frequently discuss.

One of the central tenets of the program is helping people recognize their capacity for creativity.

As I was developing the content for my contribution, it occurred to me that one things we lose by having less art in K-12 schools is the affirmation and validation of one’s capacity to be creative. Basically, the experience of having someone walk up and say some permutation of, “Wow, I didn’t know you were so talented.”

It seems like a simple thing to stick your kid’s art up on the refrigerator, but the effect is likely cumulative. And when the opportunities for creativity stop, so does the reinforcement.

Obviously, not everyone is going to reveal a great talent or have an inclination to apply themselves.  I suspect that when art instruction, and more importantly, active creative expression, is a regular part of a child’s education rather than intermittent, the child grows to take their basic creative capacity as much for granted as they do their basic mathematic and reading ability.

This may seem blatantly obvious but I remember a time when I mentally conceded that if kids at least got exposure to the arts in school, that was acceptable.  Even that is disappearing now. Now I realize a compromise of that nature gives up development opportunities that can never be regained.

See Me (And Other Cool People) Talk About Building Public Will For Arts and Culture

I have been writing enthusiastically about Creating Connection (a.k.a building public will for arts and culture) for so long, the folks at Arts Midwest have asked if I would speak enthusiastically about the topic.

On August 28 I will be joining Arts Midwest CEO/President, David Fraher, and Arts Midwest Program Director, Anne Romens,  to present the in-depth seminar, Messages that Matter: Tapping into What Audiences Value.

The session is being held just prior to the Arts Midwest conference in Columbus, OH, but you don’t need to be registered for the conference to participate. If you are going to be in the area, I would love to meet you.

As an added bonus, I will be bringing at least one of the members of the Creative Cult that I have written about who will talk about their founding philosophy and the work they are doing.

Hope to see you there.

Here is the session description:

What core values inspire your potential audience to participate in arts, culture, and creativity, and which messages should you use to connect people to your programs?

This in-depth seminar will share the data-driven strategies coming out of Creating Connection that can help strengthen the power of your communications, programming, and outreach. Arts Midwest leaders will discuss a growing body of research around the intersection of creativity and public values, and offer tangible messaging strategies, tools, and real-time examples aimed at helping you attract and retain audiences and connect more deeply with your communities.

Work in tandem with your artistic, marketing, and support staff during this session, and be prepared for hands-on learning that you can take back to your organization to start exploring how your offerings—no matter whether you’re a presenter or an artist or manager—can tap in to the values and motivations of diverse stakeholders.