What’s My Cue To Exit?

by:

Joe Patti

David Dombrowsky, Executive Director of Center for Arts Management and Technology, retweeted an article from Inc magazine about exit strategies for non-profit entrepreneurs asking, “Can you think of arts examples?” Since the Inc piece is about entrepreneurs using their exits strategically to help their organizations grow/transition, my assumption is that Dombrowsky is asking if anyone can think of a person who has done so in the arts. I can’t.

I have covered the topic of succession planning or the lack thereof a number of times on this blog. Most arts organizations haven’t addressed the absence of a succession plan much less examined if that plan considers how to leverage the departure of the founder/executive director to their benefit. I will be honest and say that outside of signs of mental instability it never occurred to me that the departure of the founder could be cause of increased confidence. At best, a well executed transition could maintain existing confidence that might grow as a successor proved their mettle. At worst, a poorly handled transition (or complete absence of a plan) could be cause for alarm and unease.

Says Susi Soza in the Inc piece,

This leads up to the second reason why exits are so important: They signal to the market that an organization has reached a certain level of financial sustainability and scale. Exits are, by definition, big, and for a company founder to achieve an exit—whether by acquisition, a mezzanine round, or an IPO—that means it has achieved significant milestones in terms of revenue, profit, and market validation.

[…]

In the non-profit social entrepreneurship space the word exit appears like a misnomer. How can you have an exit for an organization with no owners?….

Non-profit social entrepreneurs would benefit from exits just as much as their for-profit peers. I believe more non-profit exits would actually attract additional capital to the non-profit space as it does in the for-profit space. Donors are persistently frustrated by fragmentation and duplication in the non-profit market, and I believe exits – whether by acquisition, merger, or even just closing down shop – would bring some welcome consolidation and efficiency that would provoke additional philanthropic investment.

Exits are also important for organizational realignment and revitalization. In the for-profit world, exits are often accompanied by changes in leadership team and business strategy. Unless businesses build exits into their lifecycles, non-profits rarely have catalytic events to spur these types of transitions. Furthermore, succession planning and transition beyond the founding social entrepreneur are often neglected because there are no unambiguous end points in sight. What if non-profit social entrepreneurs could aim toward an exit that came with a $50,000 bonus to do with what they wished?

While her observations are mainly directed at the social rather than arts sector, there is still a lot that is applicable. The comments about donors being frustrated by duplication of effort especially resonated with me. Partially because I am meeting this weekend to discuss governance of our booking consortium after we absorb our sister organization. But also because the idea that there are too many non-profit arts organizations conducting similar operations in the same geographic area is more frequently discussed these days.

I recognized her point that there are not too many widely recognized milestones against which non-profits and their supporters can measure organizational growth. With that in mind, a clear plan for recognizing transitional moments can be valuable. I also like the idea of working toward a $50,000 bonus. Something like putting $5,000 away annually for 10 years, but not adding to it if the leader stays past the agreed period might provide an incentive to move along.

Of course, that only works if everyone has been working toward grooming a successor. If they haven’t it becomes too easy to fall into the trap of deciding the current leader is the only one qualified to direct the course of the organization and extending their tenure and bonus.

But briefly back to Dombrowsky’s question. Are there any arts leaders who have done this? Even if it is only a handful, their example provides a template.

Alec Baldwin Hates NPR and Turning STEM into STEAM

by:

Joe Patti

If you have been listening in on the public radio fund drives occurring the past couple weeks, you probably heard Alec Baldwin issuing various over the top threats about pledging to your public radio station. If you haven’t some of his greatest hits are collected on the KPLU website. In the first, he channels his character from 30 Rock and in a later one, reprises one of his speeches from the movie, Glengarry Glen Ross. Not included is an extremely frank, but very funny bit he did on This American Life this weekend. I have been trying to find it to no avail. If anyone has a link, send it my way.

Alec Baldwin has come a long way since his first appearance on NPR. (Warning, double entendres)

In other news, I got in to work just as the President’s Council on the Arts and Humanities started a live streaming chat this morning. Chuck Close, Margo Lion, George Stevens, Jr. and Damian Woetzel were talking about the place the arts have in the US and what can be done. You can watch the archived video here if you missed it. There was a simultaneous chat on the White House Facebook page so you could watch and discuss at the same time. (And let me just say, apropos to yesterday’s entry, as I listen to the archived video I realize how much I missed while trying to stay abreast of the comments.)

Chuck Close seemed to carry the day among commenters with his dismay/disgust with the lack of the arts in schools. He mentioned, as he often does, that the arts gave him hope in school and he credits the arts with keeping him out of jail. After the subject how the focus of education is on STEM courses, someone in the chat suggested it be changed to STEAM to include the arts.

It got me thinking that acronym would really lend itself to some good slogans. – STEAM drives America’s Productivity and Creativity; STEAM Powers The Economy. Not the most imaginative perhaps, but I am sure the products of STEAM education can generate some inspirational ones. It provides a good shorthand to use during advocacy because it binds the arts in with concepts in which many policy makers are already intellectually invested in advancing.

Twitter Thursdays

by:

Joe Patti

So we have a production coming up that will have six performances. Because one performance is generally poorly attended, we generally offer some sort of last minute rush promotion requiring people to say a silly phrase to get their discount. Since the audience for this show tends to be younger, I thought I might also experiment and make that night a “social media performance.” Essentially, we would have a night where people would openly be invited to do text friends and update Twitter and Facebook status. The only thing we couldn’t let people do due to intellectual property concerns is record or take pictures.

If it was successful, I might consider expanding it to other performances as appropriate. We don’t get a more than 5-10 people commenting about our shows on social media sites so I wanted to see what would happen if we openly encouraged it. Because most classes were required to see the production the previous week, we wouldn’t see too many grouses about being forced to see the stupid show by a professor.

Knowing that a lot of people don’t like to have those around them leaning over a glowing cell phone, I thought having a specific performance dedicated to the practice might help draw those who liked the practice and allow those who disliked it to attend at other times. It wouldn’t guarantee a texting free environment at all shows, but might lead both groups to feel we recognized their needs.

When I brought the idea up at the weekly production meeting, I thought there might be some resistance. My biggest concern was for the actors who might not get the same audience reactions on that particular evening as they did in other performances due to divided attention. In fact, there might be more conversation at that performance as individuals whisper inquiries about what has transpired after everyone else laughs or gasps. I figured there would have to be some discussion of appropriateness and shifting expectations.

What I hadn’t expected was a vociferous and absolute refusal to perform that night from one of the creative team. The individual was wholly opposed to the practice which he felt was an awful trend and inappropriate at a live performance. He was under no illusion that it wouldn’t happen anyway regardless of what we did, and perhaps become more common and widespread, he just didn’t want to be party to an effort to encourage people to do it.

I think this is just part of a set of concerns that has existed for awhile and may become more prevalent soon enough. Do we diminish the performance by validating something outside of the usual practice? For orchestras, it has been projection of video images in support of the music in some way. In theatre it has been stunt casting of television/movie/pop music figures in stage performances. This isn’t just about Broadway casting choice. All across the country weather forecasters and football heroes get cast in the hope that their popularity will bring more butts to the seats. I am not sure what the characteristic corresponding situation would be in fine arts and dance.

In many ways this is different. Those elements, for better or for worse, are part of the artistic product. It may be cheapening the product to dilute it in this manner in the name of getting more attendance. It is another thing to encourage people to ignore the performance entirely to tell their friends to come to the show.

In one of my favorite Take A Friend To The Orchestra outings, Drew McManus takes a guy to a concert in Carnegie Hall. Drew tells him it is okay to be bored during some portions of the performance and I think brings binoculars so he can look more closely at the musicians during these times. Even though Drew says it is okay to be bored and not entirely engaged by the performance, his suggested alternatives encourage his companion to try to remain involved even if the music isn’t finding purchase in his ear.

Encouraging people to text sends the message that is okay to be bored, but encourages them to disengage themselves from the performance entirely without making the attempt to involve themselves in some other aspect of the experience and give the performance a chance to connect and draw them back.

I know I sound like I am siding with the objector against something I proposed doing. But this is really a matter of the two sides of my identity as an arts professional in conflict. From the marketing standpoint, allowing people to tell their friends about their experience can improve attendance. Not just as a matter of simple recommendation, but as a way for experimenters to lead their more wary friends to new experiences.

But it changes the way people are interacting with the arts in some undesirable ways. If people are viewing a performance in terms of what they can report on every few minutes, there isn’t any time given to digest the experience. There are many inveterate arts professionals who aren’t really sure what they thought about a show until the next morning. If you view a performance as a loaf of bread to comment on a slice at a time, you may never see the golden beauty of the loaf as a whole. You decide that Helen Mirren as Prospero is dumb when she first appears in The Tempest and then look for the next moment to comment on, and then the next and the next, you may miss what Julie Taymor was trying to do with the story.

Is this the way we want to encourage people to approach their experience with art? Mediated through the lens of whether what just happened was interesting enough to report to their friends at the expense of missing/incompletely comprehending what happens next? I remember reading about how certain actors in Shakespeare’s time were judged masterful when the girls wandering the aisles stopped hawking oranges. Will the power of a show be judged not by a standing ovation, the value of which seems to have degraded of late, but by the fact people were so entranced that they stopped texting?

Tip You Might Be Able To Use

by:

Joe Patti

With all the discussion of using GroupOn to sell subscriptions and tickets that has been occurring of late, (neatly summarized by Drew McManus last week), my brain was receptive to the mention of a similar service which may be better for both the consumer and the business.

I was listening to the radio when I heard an interview with a representative of a company called Tippr that provides a similar service to GroupOn’s. The benefit for businesses is that they have representatives in every city in which they have a presence who can sit down and structure an offer specific to your company and needs rather than the same arrangement everyone else gets. This includes making sure responses don’t exceed your company’s resources and ability to service them. One of the biggest problems businesses have had with Groupon is being overwhelmed by the number of people seeking to redeem deals. Tippr seems to view themselves as a service that provides growth to businesses rather than a discount deal site.

Which is not to say the consumer doesn’t benefit. Tippr offers three deals a day rather than just one. But the real value comes in what Tippr calls an Accelerated Deal. The more people sign on to deal, the bigger the discount. It starts at 50% but can go up to 90%. Presumably, the business can set a cap on how large the discount grows to.

You won’t see the Accelerated Deal anywhere else. The process was patented by a company named Mercata in the 1990s which went belly up according to Gigaom because, “Online social networking didn’t exist back then, customers were much less likely to spend money online…” Tippr bought the patents on the process.

When I first heard the Accelerated Deal described, I thought it was a system that rewarded early adopters. In my post on GroupOn, I had suggested that with the correct timing, one could use that service to reward people who committed early.

When they first started talking about how Tippr worked, it almost sounded like you could pay $10 for $25 worth of merchandise and then as people joined in the next level of discount would have you pay $15 for the discount which might now be at $30. Except that since the discount was the same for everyone, the person who paid $10 now was getting $30 worth of merchandise. So as the discount increased, the late comers were getting a really great deal, but the early adopters who were driving the whole effort really made out well.

For the business, this could really work out well if you structured the curve of the discount well. Sure, you may end up giving $100 of merchandise for $10, but if the cost of the discount went up to $20 after the first 10 people bought, you limit that exposure. The same if you limit the number of $20 deals knowing the discount will top out at $100 merchandise for $60. If you have a couple hundred people buying at the $60 range when the average sale in your store is $15, it might be good planning. Especially if you know from more modest offers that a fair percentage will return to your store to buy at full price and since they have already paid $60 in your store once, they are inclined to spend more than the normal $15 average.

While that isn’t how Tippr actually works, if more companies enter this market niche, you may see companies using this type of model of obscene discounts for the first responders to differentiate themselves from the pack. Hmm, maybe I should download the patent paperwork….

I am not sure how well Tippr might work for arts organizations. It may make sense for subscriptions over single ticket sales. If earned income is 40% of your budget and you have the potential of discounting your tickets anywhere from 50%-75%, it could be a perilous situation. But it can be absolutely worth it if you decide rather than spend a couple thousand dollars on print and radio advertising, you will forgo a couple thousand dollars in ticket revenue knowing every few dollars lost is a guaranteed audience member. Since Tippr has a representative to sit down with you and listen to your concerns so you can develop a sane plan for how much to discount and limit the number offered, you can also be guaranteed not to incur any more expense than you intended.