Sunday, August 24, 2014

Fearing Fear Itself

Several months ago, my former employer Arena Stage hosted a series of conversations entitled “The Summit” curated by Washington Post theater critic Peter Marks. In the first of three conversations, Mr. Marks began the discussion by citing the falling attendance rates at theaters as put forth by the NEA’s most recent Survey of Public Participation in the Arts, and asking five theater leaders to discuss various factors that may have led to declining attendance. Towards the end of the evening, a question was asked about gender parity in regional theaters, both in the terms of female directors and playwrights. It set off a passionate discussion about why women aren’t better represented at our nation’s regional theaters.

Fast forward a couple of months, and we received news that San Jose Repertory Theater would be closing its doors after 34 years. Many of us knew that San Jose Rep had been struggling, and questions surfaced as to why a regional theater could not seem to sustainably operate in the resource rich Silicon Valley. Soon after the announcement was made, some began to declare that San Jose’s closing was due to their inability to deeply connect with their community. In an interview with the San Jose Mercury News, local scholar and director Tlaloc Rivas stated “This is what happens when your theater is deliberately indifferent to the diversity of your city.”   

As 501(c)3 non-profit organizations, we have a responsibility to represent our communities, and in some cases, our communities have changed or are rapidly changing and our arts organizations haven’t adapted. It is almost as if some are programming their organizations to reflect the 1960s version of their cities. But why? I believe this is occurring at least in part not because of the reasons that have already been discussed, but primarily as a result of fear. During the global economic crisis, several theaters exhausted their cash reserves and dipped into their endowments to offset plummeting sources of contributed revenue. Many survived, but emerged on life support. Earned revenue became much more of a driving factor as support from state and local government, corporations and foundations nose-dived. It became clear that in order to stay alive, many would have to rely on box office revenue as their primary revenue source. As marketers, we know that when looking at the 4 Ps of marketing (product, place, price and promotion), that by far product is the most impactful on box office revenue. In an attempt to adapt to the worsening economic environment, some theaters began to program “safer” seasons, and increased ticket prices to drive more revenue. Many adopted models that looked far more similar to Broadway than the regional theater just a few years prior. I don’t say this to be judgmental, only to illustrate that desperate times required desperate measures for some.  

As a consultant, I noticed that many of my clients during this time selected their seasons from a place of fear. And I couldn’t blame them. The one thing they could control was their operating expenses as no one could reasonably predict revenues. Shows got smaller, cheaper and less “risky” (though as I have previously blogged about, trying to determine what is “safe” in the theater can be a fool’s errand).Given their financial positions, one wrong move and it was over. Gone were the days of unrestricted operating grants, endowment draws and investment gains that could offset programmatic risks. Many Artistic Directors needed to ensure that the audiences they had would stay with them through the storm, and therefore, some programmed “tried and true” plays that they believed would please their audiences. Perhaps necessary at the time, this is not a forward-thinking strategy.  

Five years after the market crash, the stock market is at an all-time high, and experts are declaring that we’ve emerged from the recession. But some temporary programmatic measures adopted during the recession continue today at some theaters across the country. And I believe there is an easy explanation. Theatre Communications Group in its most recent Theater Facts reports shows that working capital at theaters nationwide has decreased by 82% from 2008 to 2012. In addition, growth in cash reserves lagged inflation by 16%. The working capital ratio for theaters dropped by 25% in four years. So, what does all this mean? Many theaters remain as risk-adverse today as they were during the height of the recession because there is no safety net. However, those that are waiting until sunnier days to make programmatic adjustments are living in a fool’s paradise. And I would argue that it is perhaps riskier not to make programmatic adjustments to better reflect the communities you serve than it is to “play it safe” and make programming decisions for an audience that is rapidly decreasing.  

Some unsolicited advice for arts organizations that find themselves in this situation: 

1)     Build an artistic capital fund if possible. Typically, I would say that nothing is less sexy than hitting up donors to help create cash reserves. But, you need risk capital. If you are living constantly on the edge, you’ll never be able to look beyond today. And as your community changes, you’ll stagnant. Consider this an innovation fund. Something that gives you the freedom to risk and improve without the fear that a small failure will cause your demise.

2)     Look at the unmet needs in your community, and develop programming for them. You don’t have to radically change everything overnight, but take incremental steps to program to underrepresented and underserved populations in your community.

3)     Marketers must become relationship builders as much as we are revenue generators. To be successful, we’ll need to develop new relationships and outreach strategies. I’m impressed by recent initiatives at Pasadena Playhouse riffing off concepts pioneered by Woolly Mammoth Theater Company’s Connectivity Program where they have marketing staff that are much more akin to community organizers. If you are new and trying to build new relationships, don’t be surprised if some view you as suspect. In some cases, you might be speaking with someone, to use a term coined by Donna Walker-Kuhne, who has never been invited to the party before. So they may be curious why now?

4)     Don’t give up quickly. Don’t expect immediate results, and avoid developing transactional relationships. This is about becoming a better citizen of our communities. Arts organizations that have excellent track records for developing young and diverse audiences have committed countless hours and significant resource for years.

5)     Listen. We don’t operate in vacuums. We operate in complex and evolving communities. Don’t assume that you know what’s best for your community. Invite people into the process. Hear their voices. You may be much more successful at certain initiatives than you thought, and you could find that you need to dedicate more time and attention to initiatives you’ve never considered. If you are a larger institution, be careful that national aspirations don’t trump local needs. Many of us operate in both national and local communities, but unless you are a destination organization, your audiences are local. I think I’ll call this the Eric Cantor principle.

6)     As we’ve been taught, the biggest thing to fear is fear itself. I’m always amazed by the number of managers who would rather stick with a failing business plan that is destined to lead to disastrous results than risk throwing it out the window for a shot at success. Why rearrange the chairs on the Titanic? Put on a life vest and take a leap. In an attempt to keep your organization afloat by maintain status quo, you may ensure you’ll be alive tomorrow but you can be certain you’ll be dead soon thereafter.

Adopting temporary tactics to whether a storm is perfectly understandable in some respects. But non-profit arts organizations cannot adopt long-term strategic plans that focus primarily on staying alive. If we aren’t fulfilling our missions or serving our communities as they are today, then what is the point? We have an obligation (and the privilege) to produce art that is reflective of the diverse communities we serve. To employ artists that push us beyond our comfort zone. To engage, develop and nurture a heterogeneous talent pool that challenges us to examine the issues our communities grapple with from multiple perspectives. And if fear of taking a leap into the unknown is what is holding you back, what you really should be afraid of is becoming irrelevant – because I can guarantee that will happen. And then it is over.

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