Published in: GIA Newsletter, Vol 9, No 1 (Spring 1998)

National Arts Stabilization , 30 South Charles Street, Suite 1515, Baltimore, Maryland 21201, 410-332-1900, natarts[at[

National Arts Stabilization published its first issue of a new Journal, whose purpose is "to listen to the voices of arts managers and share the best thinking on nonprofit arts management." Issue #1 is devoted to information about NAS new initiative, titled "Strategic Leadership in a Changing Environment." This initiative brings business school faculty to local communities for a four-day intensive seminar with classes of about thirty arts leaders. Participants thus far have included key staff and board members from a broad cross-section of arts organizations. Case studies from both the for-profit and not-for-profit sector form the basis of the course material. These are provided as background reading and as preparation for lectures and class discussions.

The NAS Journal describes some of the course's underlying philosophy, its objectives, and the responses to date of several seminar participants. The seminar's faculty, Jim Phills and Joel Podolny, then participate in a conversation about strategic choices facing arts organizations with Project Director Ed Martenson and Senior Advisor Robert Augsburger. Lastly, the Journal presents brief essays by eleven arts managers, asking them to comment on changes in their fields, to identify "the most pressing challenges specific to organizations in their discipline," and "to tell us what might characterize arts organizations likely to thrive in the next decade."

The result is lively reading. For example, one article describes two generic strategies defined by Michael Porter in his book Competitive Advantage (Free Press, 1985). "Cost leadership is the generic strategy in which a firm sets out to achieve a competitive advantage by being the low-cost/low-price competitor in the industry. Differentiation is the generic strategy in which a firm sets out to achieve a competitive advantage by being unique in its industry in ways so valued by buyers that they will pay a higher price." These two strategies, the seminar faculty explain, "provide the framework for resolving the most pressing choice facing arts organizations today: to broaden the program to appeal to a broader audience, or to focus more firmly within the existing niche."

Martenson presses the faculty by stating, "...Arts organizations generally don't compete for audiences and donors on the basis of price. For example, in the theater, the plays with the broadest appeal charge higher prices, not lower ones. Donors don't give in larger numbers to small arts organizations because they're perceived to be more economical than are ones with larger budgets.” Augsburger replies, “We are talking about a changing environment, not the past.... I am assuming that competition for the arts increasingly will be defined more broadly: all those activities that compete for entertainment time and dollars, not just the narrowly defined field of arts organizations.” Then Phills makes this comment, “Even differentiators must maintain cost proximity to their competitors; if their costs are too much higher, they either will be unable to maintain their higher price or they will face market share erosion. Similarly, cost leaders must maintain some aspects of quality proximity or no one will buy their product even at a lower price. Hence, for arts organizations the key choices are really about where to incur added costs in order to differentiate — but to do this intelligently rather than indiscriminately. The other side of the coin is to find opportunities for reduction in areas of cost that do not contribute effectively to differentiation. Robust strategy requires clear choices.”

The Journal is a publication about arts management, and grantmakers may find that some of its material is difficult to apply to the wide variety of circumstances that we face in our work, particularly our work with small or grassroots organizations. Many of the practitioners comments deal almost exclusively with management and governance concerns, however, a few people remind us that management is in service to art. “A thriving opera company is not just the financial indicators and the audience growth indicators, but is also something that furthers the art form,” says Patricia Mitchell, executive director of the Los Angeles Opera. “'s the magnitude of the willingness to try, even if you fall short of the mark, often. True flourishing has to have that component of artistic chance, the excellence and the adventure. Nobody buys tickets to a balanced budget.”