Friday, February 15, 2008

Good Point...And Some Follow-up Thoughts...

From the comment(s) on this post, Don Hall says this:

"The flaw in your analysis is that in the Foundation model there is no
product bought and sold, merely created and distributed. The Standard Model
of theater business treats the art, rather than a boon to be distributed, as
a commodity to be bought and sold.Thus, the Standard NFP Model was started
as a charitable organization and has become a Corporate Machine."

A fair point. But I think that's part of the problem with the Standard Model. In your normal "corporate" entity or business, if you're the CEO, top manager, chair, what-have-you, there's some flexibility to market your product more effectively. You can deal with competition, changing markets, make decisions about efficiency more easily because the buck stops with you. The money coming in is spent as you see fit, or as demanded by your product.

In the Standard Theatre Model, as it's used in most places, the artistic/professional staff is hamstrung by their board. If the board doesn't support their decisions, the decisions don't happen. Again, the specter of the foundation world creeps in: the Carnegie Foundation doesn't have to worry about competition, doesn't have to worry about replenishing its funds (not through "sales", at least not as far as I know). They have to make sure that their treasure is well-spent, the books balance and none of the Carnegies are making money off of it.

I agree that there is intense pressure on theatres to operate as a business, but within this framework of having a board that can veto your business decisions and not take the blame for timidity or falling revenues. I'm of the opinion that the first place you start to change this is by changing the model. And not being afraid of the word "corporate". It certainly has the connotation of staid, controlling, timid business, but it doesn't need to. Rethinking how we talk about organization and working models is as important as rethinking the models themselves.


Anonymous said...

I had a discussion with someone else recently regarding this. I read an article that essentially stated that grad students these days are resorting to higher levels of technology to solve problems that their superiors can't solve, rather than going back to the basics and questioning the base assumptions made by the scientists. To use a (very bad) example, let's say scientists are trying to resolve a conflict between dark matter and Einstein's theory of relativity. Instead of questioning Einstein's assumptions in his theory of relativity, students are resorting to higher technology (bigger, badder telescopes and faster, more powerful computers) to try and solve the problem. In short, the study said that grad students were becoming electronic engineers rather than problem solvers.

In the conversation with my girlfriend, we discussed the definition of "models" and how models are just that -- representations using assumptions and facts to replicate real life. In science, when a model doesn't work, you change the model to fit the facts -- not the facts to fit the model.

One of the problems that I see regrading the NFP model and other "corporate" models is that very few people are questioning the basic assumptions behind those models. They say "Well, it worked for Microsoft, so..." and assume that the model works, but that's not quite the way it works. It only takes one negative result to throw the whole model off.

Obviously, the traditional models aren't working anymore. So what we need to do is question the assumptions behind those models. Why aren't they working? What result are we looking for that they're not providing? Where in that model is the theory going wrong? How can we adjust the model to give us the results we're looking for?

Once we've answered those questions, we're on the road to resolving this crisis.

Unknown said...

I'm of the opinion that the first place you start to change this is by changing the model

I completely agree.

And not being afraid of the word "corporate". It certainly has the connotation of staid, controlling, timid business, but it doesn't need to.

Here's where we disagree. I see "corporate" as being exceedingly aggressive in the pursuit of conformity and the acquisition of dollars over any other consideration. The more corporate a company, the more likely it values the financial bottom line over the human creative element.

I also think your view of the Standard Business Model (the CEO has carte blanche on the day-to-day decision making) isn't quite right - modern CEOs have figured out ways to use the bureauracracy and sprawling size of organizations to create opportunities to "run the show" but the Board of Directors, in tandem with the Shareholders, ultimately call the shots.

I do, however, think we're on the same page. The paradigm under which we operate is hopelessly inappropriate for live theater and it is up to us to find those changes. As long as the Nederlanders and the like are finding profits, it is in their best interest to keep the rest of us dancing in the red tape.

Anonymous said...

I believe that a common problem in nonprofit theaters is the make-up, personalities, and background of the board. Too often, board members are chosen solely for their ability to give or get money or based on their position in the community. Those aren't necessarily bad reasons to appoint a board member, but there needs to be more from them. Rarely do many board members have any experience in theater, whether it be artistically or in management. Then, instead of attempting to understand the business of theater, they impose standards and make decisions based on what works in their own field—whether it be manufacturing, engineering, sales, government or something else.

If board members understood that the theater business is different—and that they could learn from the theater’s experienced management and staff—everyone would work much better together. This doesn’t mean that board members should always consent to management decisions either—it means more that there should be a mutual respect (which is often lacking from some board members) and a kind of give and take. I’ve known many board members who unfortunately have no idea what goes into getting a show on stage or how time-consuming it can be. I’ve know others who either take the time to learn or simply respect the fact there’s far more involved than they’re aware of. In the latter case, these board members are almost always more pleasant, more productive, and make better decisions.

What I’m saying, I suppose, is that theaters that train their board members in some way seem to do better with this standard nonprofit model. It all depends, though, on getting board members who are willing to learn about the business that they’re responsible for.

Chris said...

The greatest source of misunderstanding I've seen as I've surfed the myriad theatre blogs addressing the ostensible failure of the NFP theatre model is a gross lack of knowledge on the part of the plaintiffs of the rest of the NFP universe, board governance, diffuse executive models, etc. As the practitioners of a collaborative art with great opportunities for both earned and unearned revenue streams unique to our business model, it seems we could do much, much better by investigating how we as NFP theatre leaders are not taking advantage of the tools on the table. Every NFP lives or dies by the quality of its board. Blame your management for building a bad board before you blame the board.

One of the glaring oversights in every thread I've read about creating a new business model is the total lack of math. The general agreement among audiences and NFP theatre producers is that ticket prices are too high - that costs are too high to take risks, etc. Due to tricky things like Baumol's Cost Disease, "affordable" theatre exists in a state of what traditional economists call "market failure" - meaning the cost of the supply is higher than the existing demand is willing or able to bear. NFP status provides a vehicle through which we create subsidy that compensates for the difference.

If we ditch the NFP model, where is the subsidy going to come from?

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