THE BLOG
07/03/2012 04:26 pm ET | Updated Sep 02, 2012

New Models Redux

In our last episode, I responded to Michael Kaiser's frustration with "new models" chatter.

Well, this week he's back with New Models, Part 2, and you knew I wasn't going to just sit here (even if I am supposedly on vacation!) Kaiser once again criticizes the critics for a lack of specificity:

The constant drumbeat for new models for arts organizations is deafening. But none of the experts calling for the creation of new models is being very specific about what these new models should be or even what specific problems they are meant to address.

Who knows if I meet the definition of "expert", but I'm happy to offer a few thoughts about what exactly is broken with the traditional arts organization construct: administrative bloat, unhealthy risk-aversion, and chronic undercapitalization, to name the first three that spring to mind.

Administrative Bloat -- In the 1960s and 1970s, Carnegie Hall had fewer than 15 employees. Fundraising was done by volunteers. Yet despite that skeletal infrastructure, the stage was graced by the likes of Vladimir Horowitz, The Beatles, Frank Sinatra, Itzhak Perlman, and Luciano Pavarotti.

Today, Carnegie Hall still boasts world-class performances by top-tier artists. But to accomplish that, it employs a professional staff of over 200 and spends $5 million per year on fundraising, out of a total institutional budget of $85 million.

So what the heck happened in the last 30-40 years? The non-profit cultural sector grew up. We professionalized our organizations. Our org charts were modeled after the rock stars of corporate America, industrial titans like General Motors and U.S. Steel. We started pursuing masters' degrees in arts administration. In short, we became (superficially) "business-like".

Like living organisms, corporations (including non-profits) pursue self-perpetuation above all else. Even more darkly, they exhibit a persistent bias towards growth, favoring it over more rational metrics like (for-profit) return on equity or (non-profit) mission impact. To paraphrase Edward Abbey, growth for the sake of growth is the ideology of cancer.

Organizational infrastructure is a beast that demands to be fed. As the growth of non-profit arts organizations -- both in numbers and size -- continues to outpace the growth of both audiences and funding, we must ask ourselves where the money will come from to feed this monster. Is art itself to become solely a luxury item? Or do we keep cutting expenses, inevitably including artist fees and production costs? There is no third option, short of a radical change in distribution models along the lines of what I suggested in my last post.

So why not cut administrative overhead? Well, the really perverse part is that this administrative infrastructure probably is necessary in the context of a non-profit organization. It can't be slashed without negative consequences, like incomplete compliance with charity regulations or uncompetitive fundraising. When the beast can't be cured, it must be killed.

Unhealthy Risk Aversion and Fear of Failure -- Let's imagine that someone offers you a bet. He's going to flip a coin; if it's heads you lose $100; if it's tails you win nothing. You'd be pretty stupid to take that bet, right? Well this isn't so different from the position in which managers of non-profit organizations find themselves.

I realize that few if any of us got into this field because we were motivated by personal financial gain, but on some level, incentives matter. They influence our behavior, even if only on an unconscious level. Unlike their for-profit counterparts, non-profit employees and board members can't own stock, so when an organization experiences great success there's almost no participation in the "upside". Sure, you might get a raise or a promotion, but there is literally zero chance you'll find yourself in Bill Gates's or Mark Zuckerberg's shoes.

Make no mistake, though -- you can still be fired!

So what's the rational response when you're exposed on the downside but have no access to the upside? Extreme conservatism. There's a reason we keep producing The Nutcracker year after year. Meanwhile, institutional funders almost universally say they are comfortable with failure (and no doubt a few really are), but in a system where the only available reward is professional prestige, who can blame them for being cautious in practice?

Meanwhile, Silicon Valley has FailCon, "a one-day conference for technology entrepreneurs, investors, developers and designers to study their own and others' failures and prepare for success." That's what it looks like to appreciate failure as an authentic precondition for success.

Ours is an industry that desperately needs risk-takers and innovators, both in the art we're producing and the businesses we're running. The shocking, wonderful news is that the very best and brightest desperately want to work with us! Last year's senior class at Harvard University named a career in the arts as the single most popular dream destination. Yet despite that desire, most of them will go on to careers in finance, law, technology, or other industries. We can't continue to dismiss anyone who wants to make a buck or two.

Chronic Undercapitalization -- For decades, our sector has frowned upon surplus budgets and retained earnings, making it impossible to accrue reserves. As a result, we live perpetually on the razor's edge of survival, permanently dependent on philanthropic support.

Recently, efforts like the National Capitalization Project have sought to address this issue, and they are moving the needle in some important areas. But let's be honest: a $100K cash reserve doesn't really change anything. We need war chests. We need the financial freedom to take on hugely ambitious projects with game-changing potential but high probability of failure. When undertaking a project like that, we shouldn't have to compromise quality or scope because it's unseemly for a non-profit to aim too high. (Do you have any idea what it's like to compete with a start-up that has received $50 million in venture capital funding?)

The artists who will experience the greatest success -- both creatively and financially -- in the 21st century will be those who can move fluidly between the non-commercial and commercial realms. When you want to engage in pure artistic exploration without any ambition of financial success, then by all means do it leanly if you can. But when it's time to go big, let's find ourselves the resources to go really big.

No doubt you can expand on the catalog of dysfunction, so let's leave that as an exercise for the reader.

Kaiser goes on to observe:

Many are suggesting... that board structures be eliminated in favor of other models of governance.

This honestly isn't a complaint I've heard frequently, though I suppose it comes up from time-to-time. For my part, I'm not suggesting that arts organizations should operate without boards. I'm suggesting that:
  1. Artists are increasingly better off operating outside a strict, traditional institutional context. Holly Sidford, one of my own brilliant and supportive board members, observed that the future is in lateral, not hierarchical strategies, and depends on a more democratic distribution of access and involvement. From a structural standpoint, this could play out in many different ways - network-models, cluster management, representational governance, etc.
  2. A board that serves primarily a fundraising function is a double-edged sword. Sure, in the hands of a maestro like Kaiser it can be deftly managed and become a powerful asset. But he's giving his peers too much credit if he thinks most of us share this skill set at the requisite level of expertise (and in fact he does acknowledge that many boards are poorly managed). I've seen more than one fundraising-centric board descend into a morass of dilettantish meddling. Kaiser suggests that the problem is in the insufficient education of both managers and board members. Surely better field-wide understanding of what a healthy board-staff dynamic looks like would be a good thing, but I don't share his optimism that it would actually solve the underlying problem.

The rest of Kaiser's piece takes a turn toward the philosophical:

Yes, the world is changing -- it has always been changing. Tastes change, needs change. We must adapt to new technologies, new art forms, new ways of communicating. We face a plethora of new forms of entertainment that compete mightily, and at far lower costs, than in the past. And this will have implications... I fully expect the world of the arts to look different in 20 years. I want it to look different, to grow, to evolve.

But that does not mean that we have to discard an entire way of working, losing the tremendous advantages enjoyed by successful arts organizations. I believe firmly that well-run arts organizations that appreciate how the world is changing, and react accordingly, that engage board members, that excite audiences, that create important work, that grow and change with the times, will survive and thrive for decades to come.

I'm glad he agrees that we are living through a transition to a new era. For the record, I do not intend to suggest that we should "discard an entire way of working." However, we have a responsibility to examine the status quo unsentimentally and with brutal honesty. Where there are things we do that work really well, by all means let's keep and refine them. We can't be afraid to scrap the rest.

As for Kaiser's primary complaint, that none of the advocates for "new models" has much to offer in the way of specifics about what should come next: I'm neither arrogant nor naive enough to claim that I can paint a perfect picture. More than anything else, I'm arguing for aggressive and ambitious experimentation. But to avoid being accused of copping out, I'll over a few semi-specific ideas of the future as I see it:

Leaner, More Flexible Legal, Financial, and Administrative Structures - More and more artists are realizing that they don't need corporations to make art, and increasingly they can get away without them for marketing it, too. Business entities are not sacred -- they are tools, and we should use the right ones for the job:
  • Fiscal sponsorship allows us to raise charitable dollars without charitable bloat.
  • L3Cs are useful for undertaking capital-intensive work in the fuzzy area between commercial and non-commercial activity.
  • Shared management technology spreads infrastructure costs across thousands of artists and organizations, while letting each retain its artistic autonomy.
  • Crowdfunding makes it possible for individual artists and collaborative projects to ramp up fundraising as needed without having to maintain a professional development staff.
Traditional organizations will continue to exist, but there will be fewer of them, they will be very large, and they will serve primarily presentational rather than generative roles. The good ones will adapt their business models to facilitate collaboration across sprawling networks of outside content providers. They will still have boards, but the balance of emphasis on those boards will shift from fundraising to advisory.

Radically Different Distribution Channels - Internet-enabled distribution channels are still in their infancy and will open up untold opportunities as they mature. So far they've mainly been about (a) using the internet to share already digital media with less friction than used to be involved in making your girlfriend a mix tape, and (b) democratizing access to the mass market. These are critical steps, but Spotify and YouTube aren't the end game. I'm waiting for the day when artists and technologists join forces to create fundamentally new aesthetic experiences. This will influence our working models because it will radically alter the economics of production and supply.

More Artists, but Fewer Full-Time Professional Artists - This is the one I'm least confident about, which is perhaps a good thing because it's bittersweet. As the pro-am revolution continues to unfold, art-making will become a nearly universal experience of modern life. Access and influence will be democratized, and the culture wars will fade into the rear-view mirror. The bad news is that, as art-making becomes less marginalized, there will be fewer opportunities to make art a career, at least without substantial financial subsidy. Of course, this is how it worked for most of human history, and how it still works throughout much of the modern world. This isn't a "new model" so much as a really, really old one.

Perhaps from Kaiser's perspective, at the helm of a truly great flagship institution, surviving this wonderful and terrifying future does in fact depend on subtle tacks and continued skillful management. That is not a viable long-term strategy for most of us, however. The next 10-20 years will be revolutionary, not evolutionary. There will be lots of "creative destruction" along the way. If we can keep our eyes and minds open and our feet nimble, then we just might make it. Better yet, we may even have a part to play in shaping the world to come.

Crossposted from Fractured Atlas