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Why Most Discussions About New Models Are Dead Ends

It’s time to own up to the reality surrounding the sea of “new model” discussions in this business and why they’re futile unless they examine and propose adequate solutions to the genuine issues that drive professional performing arts evolution.

First, it’s fair to acknowledge that most new model discussions, as they relate to professional orchestras, boil down to changing one fundamental aspect of strategic planning: removing the bulk of contractually obligated expenses. Meaning, instead of setting revenue goals by future expenses, the system should set future expenses by previous revenue performance.

Or if you prefer less wonky sounding language, “here’s how much money you need, go get it” is replaced by “this is how much money we have, so this is what you’re going to get.”

Some Relevant Retrospection

Since the 1960s most professional orchestras determine their annual expenses by labor costs dictated by the collective bargaining agreement; which, in turn, are projected anywhere from one to several years in advance. Likewise, related production expenses are determined by the numbers of weeks per year the orchestra performs, how many rostered musicians it employs, etc.

In short, this is the “here’s how much money you need, go get it” model.

The current push behind most new model doctrine is to reverse this trend by eliminating the bulk of projected expenses as dictated by the collective bargaining agreement. Future expenses are therefore determined by previous revenue performance; which is the “this is how much money we have, so this is what you’re going to get” model.

Within all of this are a myriad of issues that touch on everything from wages, work rules, benefits, pensions, and more; each of which drill down into increasingly detailed discussion points that characterize modern stakeholder relationships.

Unfortunately, even though the vast majority of these issues are worthwhile topics for each orchestra’s stakeholders to address they completely miss the bigger picture as it applies to revenue performance, which is the grease that not only keeps the artistic machine moving but evolving.

In short, we’re talking about motivation and accountability.

For all of its faults during periods of economic depression, the current model does a bang-up job of motivating each orchestra to maximize its respective potential. It pushes board members to go above and beyond in order to maximize [sws_css_tooltip position=”center” colorscheme=”rosewood” width=”450″ url=”javascript:void(0);” trigger=”contributed revenue” fontSize=”14″]Which will be the lion’s share of revenue among professional US orchestras for decades to come. [/sws_css_tooltip], it demands top notch marketing performance in order to get the most out of earned income, and it inspires executive leadership (administrative and artistic) to leverage remaining revenue and rally all institutional stakeholders behind a clear and universally accepted strategic vision.

Perhaps unsurprisingly, this model becomes strained during economic downturns. And when you add political agendas into the mix, you end up with the makings for a real disaster.

As a result, the “this is how much money we have, so this is what you’re going to get” approach becomes increasingly attractive to board stakeholders; even in the face of increasingly hostile stakeholder relationships.

The Problem

If you completely remove the legally enforceable motivation of revenue generation by way of a collective bargaining agreement, what fills the void to ensure that an organization is truly reaching its revenue performance potential?

It’s nice to believe that boards will be motivated solely by a well intentioned sense of responsibility but if that was a reliable system, it’s doubtful the current model would have ever evolved in the first place. Simply put, human nature dictates otherwise.

The Solution

Typically, I offer up some sort of tidy solution at this point and although I wish there was an easy answer, there isn’t. Many an hour has been spent attempting to divine a method that addresses the issue with as much certainty as profit margins have on for profit boards sans the legitimate stressors employed by the current system.

Ultimately, the trouble with new model discussions is they don’t address what can perhaps be defined as a fundamental “inspiration void.” But until they do, you’re better off putting your nose to the grindstone and avoiding new model discussions that ignore this critical reckoning.

In the meantime, I’d love to hear your ideas and thoughts on all of this. Have you taken part in discussions that identify and acknowledge the inspiration void? Do you think there’s a solution?

16 Responses to Why Most Discussions About New Models Are Dead Ends

  1. tom merle January 11, 2012 at 2:28 am #

    While you string together a rationale for what I would call the gun to your head model, I believe it has outlived its effectiveness for raising contributions. It leads to intense acrimony a la Detroit from which orchestras don’t really recover. Other Arts and charitable organizations follow the second model which I would characterize as here’s what we want to do, now let’s raise the funds to do it. We see boards in all these other fields rise to the occasion without coercion. But whether the second approach can work in the classical music domain, which is shrinking, it is the only one that will be increasingly embraced by the benefactors.

    • Drew McManus January 11, 2012 at 9:57 am #

      I think the “gun to your head” analogy doesn’t really fit, but I may be misinterpreting your remarks so feel free to weigh-in with added detail. But it doesn’t reflect decades of revenue target related strategic planning arrived at by *mutually agreed upon* collective bargaining terms; after all, that’s the way collective bargaining is supposed to work. Nor does it properly embody what’s been happening since the economic downturn in 2008.

      For example, the amounts of wage concessions and work rule modifications over the past three years has been considerable (take a quick spin through ICSOM settlement bulletins for details http://www.icsom.org/settlement.html). Similarly, when push has come to shove in the larger budget orchestras, it has been the musicians who caved on most if not all of their critical positions when the threat of institutional collapse was leveraged as a bargaining (speaking of guns and heads).

      Consequently, your assessment about the acrimony it produces in places like Detroit is accurate. So the “here’s what we want to do, now let’s raise the funds to do it” is likely a better approach but the impetus for reaching those goals will still need something beyond trust that all parties will internalize risk and push themselves past self imposed goals.

      But I’m curious to know which professional orchestras you’re thinking of that have reached equal levels of maximizing local potential without revenue targets determined by a contractually obligated expense structure.

  2. Mike Walk January 11, 2012 at 6:54 am #

    One big problem is that in some cases it seems “this is what we have” tends to devolve to “this is what we are willing to provide.” Perhaps when starting a new orchestra this could be sensible and workable, but when dealing with an established group of players who willingly moved to town to be part of what they thought was a major, committed ensemble, it leads to the strong perception that the musicians’ employer pulled a “bait and switch.”

    When work conditions are significantly eroded for musicians, it leads to difficulties. People have mortgages, kids to provide for, etc. Boards and managements need to understand they’re not dealing with an easily replaceable pool of unskilled labor. Neither is it as simple as “moving on” for the musicians caught in this situation, after devoting all of their adult life and a significant portion of their childhood preparing for the job they have. It is a very tenuous relationship that must be treated delicately. Lately, there seem to be lots of bomb-throwers making headlines.

  3. Bruce Hembd January 11, 2012 at 10:27 am #

    I would add that without motivation to raise funds, non-profit boards can slip into being complicit and somewhat lazy in their actions and thinking.

    In some instances, being a board member at an arts institution is more about the prestige of membership and less about supporting the institution and actually doing something to keep it growing.

    • Michael Comins January 12, 2012 at 11:57 am #

      It’s rumored that this is exactly what the Philly Orchestra Board is about.

  4. Todd Lowe January 11, 2012 at 2:44 pm #

    Let’s see, Drew, if you could go ahead and plug in that solution at this point it would be dandy.

    I’m not on an orchestra board, but have chaired a fairly large regional theater and now a museum with a capital campaign. I spent two or three years at the theater trying to stimulate discussion about new models, and now I’m engaged in the same at the museum.

    I don’t know that there are any new models, but there are only tweaks to existing models that seem to help. It seems in the orchestra world that the players (and I’ve subbed with several orchestras over the years in the trumpet section) always feel like the board is under-asking for gifts, and the obvious strain exists over personnel costs from the board side. The truth is that annual giving, if it is maxed out at some relatively high level, likely can’t grow with costs. At almost every organization with which I’ve worked I can see a cap develop on annual giving, and it’s hell to grow it past that point, nearly always only incrementally.

    I think another huge problem is that most arts organizations are either under-endowed or they overuse their endowment and damage it. It’s the hardest money to raise, but the most important, I believe. Growing an endowment and using it carefully is often the only answer to the structural deficits that most organizations live with.

    OK, no solutions from me. But I’m hugely sympathetic to both sides.

    • Drew McManus January 11, 2012 at 3:13 pm #

      “hugely sympathetic to both sides” – what a terrific and concise statement to sum much of this up.

      Those are all terrific points Todd and you do a great job at providing a first hand account of the sorts of pressures in play for some groups right now. The part about annual fundraising is especially apt as it is a part of the larger strategic giving picture alongside capitalization campaigns and brick and motor campaigns. to that end, I agree that, for some groups, annual campaigns and board resourced annual gifts have pretty clear cut limits but on the positive side of things, enhancing those caps with micro-donation fundraising efforts can produce some welcome results.

      In the end, making sure that the bargaining process as means for stakeholder involvement remains a positive, albeit “lively”, way of maximizing potential and not a venue for assigning blame. Communication, learning, and incentive go in both directions (or at least, that’s the way it should happen).

  5. MK Wilson January 11, 2012 at 2:54 pm #

    What is difficult about collective bargaining agreements is that, in many cases, the number of services contracted do not equate with revenue generating activity. Educational performances, community engagement activities, and other similar programs are important aspects of an orchestral organization’s mission, but they are often not fully-funded activities.

    It is easy to place blame on board effort, but economic and community factors must be taken into account when considering what the community wants and what each market will bear – especially now.

    Working in orchestral administration is a daily roller coaster with constant financial challenges despite a lot of passion and hard work. Classical music organizations may need less of a focus on evolution and more of a focus on a revolution.

    • Drew McManus January 11, 2012 at 3:22 pm #

      Yours is a very timely comment MK, see my reply to Todd about the dangers associated with percieving the bargaining process as a vehicle for assigning blame. In the end, the overall thrust of the article is about making sure that economic pressures aren’t used as a way to solve immediate problems at the cost of future potential.

      The temptation to do otherwise can be considerable but in the end, if an orchestra desires a mutually respectful stakeholder relationship, it has to find a way to implement strategic decision making within an environment of limited, but enforceable, checks and balances (which is what exists today as the “traditional model”).

      Reevaluating that structure to modify and adapt to current conditions is what most groups are doing (and doing just fine) and in the best of circumstances, those stakeholders grow closer, even if tempers flare along the way.

  6. Benjamin Lemon January 11, 2012 at 8:23 pm #

    “I think another huge problem is that most arts organizations are either under-endowed or they overuse their endowment and damage it. It’s the hardest money to raise, but the most important, I believe. Growing an endowment and using it carefully is often the only answer to the structural deficits that most organizations live with.”

    For me, Todd hits the nail on the head here. Endowments are hard to raise, and easy to mis-use. But I’ve served for two years on the Board of a well-established non-profit with long-term roots in its community and a large endowment that is well managed by an excellent staff and board, and the difference it makes cannot be overstated – stabillity, stability stability. Has recent (the last 3 years!) market action created some tensions? Of course. But were they better prepared for the downturn, and better able to take advantage of opportunities presented (even in “the Great Recession”)? Infinitely.

    I would love to see more performing arts institutions adopt the endowment model more aggressively. Nothing else addresses the stresses of the economic cylcle, the “wax” and the “wane”, more successfully. It provides a better baseline for planning. And a healthy endowment also grants a sense of “maturity” and seriousness of purpose that can benefit a younger organization in the eyes of potential donors.

  7. Jon Silpayamanant January 11, 2012 at 10:35 pm #

    Drew, this is only tangentially related to this post, but have you had a chance to read an advance copy of Flanagan’s book (just released today, I believe), The Perilous Life of Symphony Orchestras? Sarah Lutman gave a short synopsis/review of it here but would really love to hear your thoughts about it as it relates to the issues you raise in this post!

    • Drew McManus January 12, 2012 at 10:50 am #

      I have not yet read the book and as of now, it isn’t on my short list so unfortunately, I don’t have any observations to offer.

  8. tom merle January 12, 2012 at 12:48 pm #

    Drew writes: “Ultimately, the trouble with new model discussions is they don’t address what can perhaps be defined as a fundamental ‘inspiration void.’ But until they do, you’re better off putting your nose to the grindstone and avoiding new model discussions that ignore this critical reckoning.

    In the meantime, I’d love to hear your ideas and thoughts on all of this. Have you taken part in discussions that identify and acknowledge the inspiration void? Do you think there’s a solution?”

    Well, what about this attempt at moving on from the more prevalent adversarial mode? It seems that such an “inspiration void” is conspicuous by its absence in Tulsa. This orchestra seems to have painstakingly constructed a New Model of governance which extends into every facet of the group’s activities, work, where consensus has replaced confrontaton.

    But I am an innocent outsider who probably suffers from a Pollyanna syndrome. Perhaps there are some in this forum who can offer another perspective on the Tulsa experience; that it really isn’t a solution after all.
    http://www.faithandleadership.com/features/articles/what-makes-the-tulsa-symphony-orchestra-different

    • Drew McManus January 12, 2012 at 1:48 pm #

      I wouldn’t say your suffering from any Pollyanna syndrome at all Tom, but the Tulsa example you’ve linked to is no different than a traditional bargaining relationship in that it depends on the people involved more than any system of communication. there are plenty of examples of orchestras that use a traditional bargaining system and don’t suffer the sorts of problems many of the new model discussions attempt to address.

  9. Andrew Balio January 16, 2012 at 5:11 pm #

    Great stuff, Drew. Most attempts at new models are a way of wriggling out of the hard work entailed in keeping an expensive art-form humming away. There are indeed some new models that build on what has been in practice and make us more adaptive that could be called effective new models. But the challenge of hitting fastballs is not solved by playing T-ball or softball instead.

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