Towards a Mission of Service

A year after I joined Milwaukee Rep, we had put out a few fires and were ready to take on strategic planning. Little did we know that the process would take a year and lead us to redefine our mission. We had just celebrated six decades of proudly serving our community including groundbreaking cultural exchanges with Japan and Russia, the conversion of an abandoned power plant into a state of the art three-theater complex, and collaborations with legendary artists such as Tadashi Suzuki’s first American residency. Milwaukee’s track record of innovation and service prepared us well both artistically and financially to discern how best to continue its legacy.

From our planning work, the theater embraced a vision that Artistic Director Mark Clements had embarked on three years prior when joining the company, but had yet to formally adopt as its mission. Once complete, the new mission realigned the theater toward maximizing its resources for the betterment of our community. In many ways, this steered the ship into uncharted territory, and for me has been some of most fulfilling work in my career and a wonderful opportunity for learning.

Soon after planning, we launched Mpact, an initiative that coordinated efforts between our education, community engagement and marketing departments toward using the creative assets of the theater to create a better tomorrow for Southeastern Wisconsin. Mpact exponentially increased programming aimed at strengthening and celebrating Milwaukee, nurturing diversity and inclusion, and building social-emotional learning and literacy. As we look back on the first two years, there is much to be thankful for and a fair share of lessons learned. Below are the standouts:

Sometimes you can’t wait for an invitation, but we must listen first. In the wake of the devastation in Houston, one of the most unusual stories to emerge was the delay of Joel Osteen’s mega-church in sheltering displaced residents. In part, Mr. Osteen explained that he was waiting on an invitation from the city to create a shelter, unlike several others who saw what needed to be done and did it. For those that have a mission of service, when need is apparent, we can’t wait for an invitation to do the right thing. But, we must actively listen to ascertain how best to help. Sometimes arts organizations can make inaccurate and costly assumptions, leading to unnecessary programs that do not effectively address need. Driven by funders, artists and educators with sometimes the best of intentions, to those on the receiving end, these programs can become prescriptive and woefully inadequate. Listen. Learn. Program. Evaluate. Improve. Our most successful programs at Milwaukee Rep began with a spirit of inquiry and a simple question – how can the assets of our theater be leveraged in service of others, as they are told to us, not as we perceive they are.

Reorient your idea of success. We often ask what does success look like? Non-profit arts organizations should have a single primary metric of success – are we achieving our mission? To answer that question, leaders must recognize that if something is important, it should be measured to the best of our abilities. In the arts, all too often we look to external reinforcements as primary indicators of success. While positive press and awards may be nice, orienting an organization’s perception of success around them can be self-serving rather than mission-serving leading to an abundance of flash and a dearth of substance. Or conversely, it can cause an exceptional organization to question itself purely on the basis of an awards committee. Really? We must develop assessment tools to measure mission achievement and impact, and use those as our true north.

Towards abundance and away from scarcity.
Managing non-profit arts organizations isn’t for the weak of heart. Many have not rebounded since the great recession, several have little to no working capital, and funding for the arts in many localities as a percent of overall philanthropy has been declining for decades. This can lead non-profit managers to develop a scarcity mentality and a desire to protect their turf. Scarcity thinking stifles collaboration, impedes creativity and leads to redundancy. We must embrace that systemic change cannot be achieved through our actions alone. To be the change we wish to see, we must help strengthen others as a primary means of creating a better tomorrow. Imagine the powerful partnerships that can develop if first we seek to be helpful to others? Managers that view funding as a zero-sum game, in which to win others must lose, don’t fully appreciate that funders don’t exist to keep us in business, but rather to advance strategic goals. In my experience, the overall funding pie often increases when non-profits work together to realize greater achievements that could not have otherwise occurred individually.

Sprinkles on the cupcake. When we changed our mission, we clearly defined its new pillars. While we were predominantly known for high-quality productions, on their own, they would no longer be enough to declare success. Our work now must: 1) create positive change, 2) provoke, inspire and entertain, and 3) serve an audience reflective of Milwaukee’s rich diversity. While all programs begin with the art we create, education and engagement are as central to our mission. I once heard a manager refer to his theater’s engagement programs as “sprinkles on the cupcake.” To him, they were ancillary and secondary to the plays in their season. Personally, I believe this may be why in part some theaters have lost touch with their communities. While we can’t sacrifice production quality, we must understand that a great cupcake has more ingredients than just good productions.

Now is our moment. By their nature, 501(c)3 organizations are limited in terms of political advocacy. We can’t attempt to influence legislation as a substantial part of our activities and we can’t participate in political campaign activity. That said, many of our organizations were founded as tax-exempt entities based on educational purposes. In a divisive political climate, particularly for those of us operating in purple states, we must clearly define our educational mission and live by it. To me, the power of the theater isn’t in a didactic approach, rather in our ability to bring disparate groups together for shared live experiences that examine varying worldviews. We have the power to create spaces that are welcoming and inspirational to all. Where dissent and respectful dialogue are not only allowed, but encouraged. Today, many of our patrons curate news, friends and content to exclusively match their worldview while “unfriending” those that don’t leading to a worrisome trend where our ability to civilly engage with each other is atrophying. Perhaps now more than ever before in recent times, we can demonstrate the intrinsic value of the arts. Sitting on the sidelines at this moment might be viewed as playing it safe, but those that do, communicate volumes in their inaction. Our artists should lead at a moment when they are so needed.

New vs. Existing: A Time for Every Patron

As a chief marketing officer, consultant and now managing director, I’ve participated in my fair share of marketing committee meetings. One of the most hotly debated topics is whether to focus resources on developing new audiences or on increasing loyalty to bolster return on investment and per capita revenue. Two camps usually square off – the artistic team and trustees vs. the professional marketing staff.

Can you guess which sides of the argument they typically represent?

Nothing is sexier to most artistic directors and trustees than developing new audiences. On the other hand, marketing directors with limited resources are constantly trying to find ways to do more with less, which means developing ways to increase returns, and naturally, some shy away from audience development because it requires significant upfront capital, both monetary and personnel, with limited short-term gains.

Here are three things I’ve learned over the years…

1) If your company is in financial trouble, a heavy focus on new audiences might be the nail on the coffin. The first order of business is to understand why you’re in trouble to begin with. I once had a client that was posting million dollar plus deficits year after year, and they couldn’t understand what was going wrong, as the number of new households that were purchasing was up 24% in two years. But, for every new person that was walking in the front door, twice as many were running out the back. There was an abrupt and substantial change in programming which accomplished what they intended – large numbers of new audiences were coming, however it also had the unintended consequence of driving an established core audience away. Subscriptions were in a free fall, but a new under-30 membership program was skyrocketing. The financials were problematic. It cost $0.13 on the dollar to renew current subscribers and $0.62 on the dollar to acquire new under-30 members, while at the same time, the per capita revenue from the under-30s was 42% less. If the company was capitalized well, over time the gamble might have paid off. But they completely underestimated the costs of a heavy acquisition campaign over multiple years, and found themselves in the position of taking loans from their endowment to cover payroll.

2) If your company is financially stable, not investing in new audiences will slowly kill you. When I was the director of marketing and membership at the Smithsonian Associates, my immediate predecessor was somewhat legendary, known for being a great analytical strategist. I joined just as the world economy was starting to rebound from the global economic crisis, and to help shepherd the organization through rough waters, every department at the Smithsonian was asked to find ways to do more with less. On the surface, the data and financials in my department looked pretty healthy – we were spending less and revenues were steady, which was about all you could expect at that time. But under the surface was something troubling. To reduce cost of sale and increase ROI, a decision was made to cut expenses earmarked to acquire new visitors and patrons, and developmental money was jettisoned for new programs and experiences. For the time being, on paper, things were great. But in looking ahead, we didn’t have a pool of cultivated prospects to convert into members; even with a great membership renewal rate of above 85%, without new prospects and patrons, we were in trouble. The Smithsonian is the world’s largest cultural organization, and perhaps the most financially stable. It was clear that a sizable investment to develop new visitors and patrons would not risk the overall health of the organization, but without an investment, memberships would steadily decline thereby jeopardizing key programs in the coming years.

3) Product is the most important of the marketing P’s in developing new audiences. When I was in my 20s, I was often hired as a technology and marketing consultant who was tasked with helping mature organizations reach Millennials. However, most organizations viewed audience development as a marketing activity, and few paid enough attention to product development. Facebook + Twitter + Snapchat does not = younger audiences. Those tasked with developing new audiences should work closely with their artistic colleagues to create experiences that are attractive to their targeted demographics. Without the right product, other strategies will fall on deaf ears.

In coming to Milwaukee Repertory Theater in 2013, I was fortunate to join a company that was on the rise. They had a talented staff, a relatively new Artistic Director that had excited audiences, and the stability of being a large LORT theater with a 60-year history. However, over more than a decade, the company had amassed an accumulated operating deficit of nearly $1 million and was coming off an unexpectedly rough year with some unusual circumstances leading to a near $375,000 operating deficit, although the company had increased in size by almost 20% in the prior three years. Along with members of the senior leadership team, TRG Arts and Management Consultants for the Arts, we conducted an exhaustive situational analysis of all of our business lines. One finding I did not expect – we were heavily underinvested in marketing, which for a company that has a 65/35 split between earned and contributed revenue, probably wasn’t good. Some wanted to increase marketing expenditures substantially and immediately to acquire new audiences, but the data showed that doing so would have exacerbated our underlying structural deficit. So, we decided to temporarily reduce our operating budget by nearly 5%, maintain our marketing expenditures, focus on building loyalty, and launch an aggressive fundraising campaign to widen our evergreen base of annual fund donors.

In that first year, we ended with a 5% operating surplus, and two years later, have not only restored all cuts, but have significantly expanded. Also, our accumulated operating deficit stemming back to 2004 was completely eliminated, and we’ve been able to use operating surpluses to build cash reserves so that when the next recession hits (and it will), we’ll be prepared. Our operating budget is now the largest it has ever been supported by a business model that has proven to operate in the black consistently for three years. Circumstances have now changed. If we don’t invest in cultivating new audiences now, we will be in as much trouble in a few years as if we would have invested in new audiences just a few years ago. Data drives strategy. Don’t go on a hunch. And realize that sometimes there isn’t a right or wrong approach, merely the right time to pursue each.