Home Page

Mutant Business Models Are Coming! (Embrace Them Before They Embrace You)

April 27, 2011

by:

Joe Patti

Apropos to yesterday’s post about non-profit business models is a piece by Saul Kaplan on the Harvard Business Review discussing how every organization that offers some sort of service needs a business model regardless of whether you are a non-profit, NGO, government entity or for profit business.

If you have never thought about your organization’s business model but figure it is about time you did, you may found Kaplan’s comments about the mutability of business models a little disheartening.

“If you ask any ten people in your organization how it creates, delivers, and captures, will the answers even be close?

If not, it’s probably because, in the industrial era when business models seldom changed and everyone played the game by the same set of well-understood industry and sector rules, it wasn’t as important to be explicit about business models. Business models were safely assumed and taken for granted.

That won’t work in the 21st century when all bets are off. Business models don’t last as long as they used to. New players are rapidly emerging, enabled by disruptive technology, refusing to play by industrial era rules. Business model innovators aren’t constrained by existing business models. Business model innovation is becoming the new strategic imperative for all organization leaders.”

He goes on to talk about the need for new, hybrid business models that blur the existing lines. I take some comfort in the fact that business models are currently a hot topic of discussion among various arts administration blogs. It means we are staying current with trends rather than following far behind.

One thing in particular I took away from Kaplan’s post was the importance of keeping involved in the conversation about business models given that existing lines of separation between profit and non profit are likely to become less distinct.

“Perhaps the most important reason for developing common business model language across public, private, non-profit, and for-profit sectors is that transforming our important social systems (including education, health care, energy, and entrepreneurship) will require networked business models that cut across sectors. We need new hybrid models that don’t fit cleanly into today’s convenient sector buckets. We already see for-profit social enterprises, non-profits with for-profit divisions, and for-profit companies with social missions. Traditional sector lines are blurring. We’re going to see every imaginable permutation and will have to get comfortable with more experimentation and ambiguity.”

Business Models, Leadership, State of the Arts

No Comments

Wait, What Is This Guy Actually Talking About?

April 26, 2011

by:

Joe Patti

In the morning when I look at all the Twitter streams I follow, I often click interesting looking links and then come back to the web pages when I am done with all the new tweets. The result is often a long series of tabs on the Firefox browser and often I don’t quite know who suggested what story when I get around to reading it.

Since most of those I follow have an association with arts and culture, you might understand why I initially thought the blog post I was reading was on that subject. It wasn’t until I got to the sixth point that I had any inkling it was on another industry altogether and the eleventh before I was sure.

RULES FOR BUSINESS MODELS

* Tradition is not a business model. The past is no longer a reliable guide to future success.

* “Should” is not a business model. You can say that people “should” pay for your product but they will only if they find value in it.

* “I want to” is not a business model. My entrepreneurial students often start with what they want to do. I tell them, no one — except possibly their mothers — gives a damn what they *want* to do.

* Virtue is not a business model. Just because you do good does not mean you deserve to be paid for it.

* Business models are not made of entitlements and emotions. They are made of hard economics. Money has no heart.

* Begging is not a business model. It’s lazy to think that foundations and contributions can solve news’ problems. There isn’t enough money there. (Foundation friend to provide figures here.)

* There is no free lunch. Government money comes with strings.

* No one cares what you spent. Arguing that news costs a lot is irrelevant to the market.

* The only thing that matters to the market is value. What is your service worth to the public?

* Value is determined by need. What problem do you solve?

These sentiments are actually about news delivery and found on Jeff Jarvis’ BuzzMachine blog. For awhile there I thought an arts blogger was replicating Adam Thurman’s posting style on Mission Paradox. I had to go back to my Twitter account to try to figure out where the heck I got this link, finally discovering it was the Artful Manager, Andrew Taylor.

Honestly now, if I hadn’t alluded to the fact it wasn’t about non-profit arts and cultural organizations, would you have known it wasn’t? Every point made is a topic of conversation that has come up regarding the arts. Hopefully, they are conversations you have had at least with yourself, if not the staff and board of your organization.

The fact that news organizations are facing these same questions is of some comfort–at least we know the arts are not alone in the challenges being faced.

At the same time, the fact these questions can be asked of the news industry only serves to confirm their wider relevance. These are questions any business must ask. The arts are not special in this regard.

As much as I feel my practical side provides a good balance to my idealism, it is tough to think about the arts not being the exception. Every time I scroll up to re-read these points and see “Virtue is not a business model,” and “Business models are not made of entitlements and emotions,” there is a part of me that says, “Yes, but the arts are different.” In many respects this is true, but the arts in the U.S. operate in an environment where what is written above is also true to a great degree and must be acknowledged.

Rather than try to talk all of us out of our belief in the sublime experience the arts can bring to every day existence, I will merely stress the need to be mindful of the aforementioned truths and not allow our aforementioned belief in the power of the arts to dismiss the stark reality they represent.

Business Models, General Musings, Management Philosophy, State of the Arts

1 Comment

I’m Not Standing Here Acting For My Health, It’s For Your’s

April 25, 2011

by:

Joe Patti

I always keep an eye open for stories about people using arts in health care in some fashion. Mentions of organized programs seem to be pretty rare though…or perhaps I am not looking hard enough.

I almost skimmed by it, but thanks to a job listing for a managing director I became aware of the NiteStar program at St. Luke’s Roosevelt Hospital Center in Manhattan. The program has been around for nearly 25 years with a mission of using “the performing arts and peer education to help young people make informed decisions, providing options for changing attitudes and prejudices, and creating opportunities for promoting healthy behaviors.”

Their programs address issues of “sex and sexuality, domestic and teen violence, substance abuse, and multiple health threats, including teenage pregnancy, HIV/AIDS and sexually transmitted diseases.” A 1996 PBS documentary, Sex and Other Matters of Life and Death, chronicled their efforts over the course of a year.

While it might not be the subject matter everyone would want to tackle, I wanted to note their efforts because their basic experience developing and delivering programs in diverse venues in conjunction with health services could help those with similar ambitions avoid reinventing the wheel.

Art(ist) Education, Audience Relations

No Comments

Info You Can Use: Beware Non-Profit Identity Theft

April 21, 2011

by:

Joe Patti

Non-Profit Law Blog editor Gene Takagi encourages all non-profits to take note of a recent investigation by Forbes magazine that uncovered someone redirecting non-profit registrations to a post office box in Las Vegas. The majority of the registrations have been for religious organizations, but the weakness in the IRS’ system could be exploited to hijack nearly any non-profit’s registration.

Someone has hijacked the tax identity of more than 2,300 tiny or defunct nonprofits, apparently taking advantage of a hole in a new electronic Internal Revenue Service filing system to list the same person as a charitable official at the same mail box drop in Las Vegas.

[…]

A search on Melissa Data of nonprofits in that zip code produced 2,370 listings. A random spot cross check by Forbes of dozens of them on the official IRS site listed Alexander and the N. Rainbow Blvd. address in every instance. The nonprofits originally were located elsewhere all across the country.

[…]

Another nonprofit listed by the IRS as being led by William Alexander out of Las Vegas is Godsline Ministries. The clothes-donation charity used to be located in McMinnville, Ore.–and died there about seven years ago, according to Rob Rabon, who ran it with his then-wife. “It only lasted two or three years,” he said. “We went to the state and filed papers dissolving it.”

Yet the IRS proclaims Godsline alive and well, with the same tax identification number as when the Rabons ran it.

The problem has its roots in the recent requirement that non profits making less than $25,000 file a statement to that effect. If you recall, there was a big panic last year that these small non-profits would lose their status because they were unaware of the requirement. Since these small entities don’t have a lot of resources, the IRS endeavored to make it easy for them to verify their status with a simple postcard or online filing.

Because so few details are required in the filing, there isn’t a lot of verifiable data being supplied to the IRS. This makes it easy to slip in and replace the authentic organization. The Forbes articles notes that the names of the small non-profits in danger of losing their status were published in an attempt to make people aware of the impending change, but in fact may have been serving to let fraudsters know which organizations were vulnerable to identity theft.

Arts in an Age of Technology, Government Relations, Info You Can Use

No Comments