Monday, March 09, 2009

Deliberately Unsustainable Business Models

I once asked Eric Siegel, the Director of the New York Hall of Science, why museums are rarely innovative shining stars on the cutting edge of culture. He commented that as non-profits, "museums are built to survive, not to succeed."  Unlike startups and rock stars, museums aren't structured to shoot for the moon and burn up trying. They're made to plod along. Maybe it's time to change that.

Last year, I met Mark Allen, the founder of Machine Project, an extremely cool "post-educational" space in Los Angeles that is part art gallery, part workshop space, part mad scientist party central. They host events like Dorkbake in which people design their own Easybake-esque ovens and then bake cakes in them. Next month, the space is being turned into a magic forest. Their mission statement is: "Machine Project exists to encourage heroic experiments of the gracefully over-ambitious."

At one point, Mark commented that they have a "deliberately unsustainable" business model. In other words: do great stuff while you can, and when you can't do it anymore, stop. This is the model that governs most businesses and artistic endeavors. It's the reason terms like "jump the shark" exist. Most companies, rock bands, and sports teams are only brilliant for so long. Then they start to slide. Then they die.

Of course, the current financial crisis demonstrates what happens when companies set up artificial life support systems to prolong themselves far beyond their ability to provide great products and services. The unusual part of Mark's statement isn't the acknowledgment that Machine Project will only exist as long as it is relevant and good; it's the desire to close up shop when the excellence ends. It's incredibly rare for an organization or company to seek deliberate unsustainability. Most want to provide consistent jobs for their employees so their families can be secure. They want to provide quality products that are reliable over the long run. They want to promise consistent services that consumers can bank on. That's why TV shows jump the shark. When they can, they will claw their way through as many seasons as possible.

The problem arises when the desire to sustain overcomes the desire to be awesome and more resources go to surviving than succeeding. This is abundantly clear in the case of US automakers and banks, whose current arguments for financial support rest on their need to survive, not their ability to succeed. Is it true of your museum too?

For some museums, awesomeness has never been part of the mission statement or core services. Elizabeth Merritt from AAM wrote a provocative post last week about the financial future of museums in which she suggests, among other things, that 20% of museums should be allowed to fail in the coming decades. As she puts it:
My observation, after thirty years of working in the field, is that museums have an amazing ability to survive in the most adverse environments. They are the cockroaches of the nonprofit world--sometimes it really does seem like you can’t kill them with an atomic blast. Most of the time some improbable deus ex machina saves the day: for example an unexpected cash gift or a free building. Mind you, this often only saves the distressed museum from closure—it does not cure the underlying dysfunction. The museum may simply struggle along for another ten years before the next potentially fatal crisis.
The underlying dysfunction that Elizabeth mentions is often an inability to focus on anything but survivability. To make it, museums need to survive AND succeed. I think it's important for museums to undergo an exercise in which you list out two types of things:
  1. core services that people depend on and need to survive. These include jobs for employees and programs that address a societal gap not provided by other organizations or businesses. For example, maybe your museum provides job training for at-risk youth and your community relies on your consistent ability to do so.
  2. services you provide that make you awesome. What drives people through your door, gets them excited, and connects them passionately with your content?
You should be able to point with pride to both the ways you support the community with reliable, consistent services and supreme awesomeness. The desire to survive will always exist, whether you run a small institution or a giant one. It's human nature to want to keep your job and keep doing what you're doing. The challenge is not to make it your primary goal.

32 comments, add yours!:

Sibley said...

It seems to me that this could be used as an argument for museums to take risks to try to achieve commercial sustainability (being so valuable that they can bring in the income needed to succeed through means other than fundraising) or for them to ignore that goal.

With companies, sustainability is definitely a conservative goal that is often at odds with the goal of growth (especially short-term growth). But with museums, so few are commercially sustainable that attempting to achieve sustainability might be on the much less conservative end of the operating spectrum, requiring major risks. What was your thinking on that with this post?

Maryann Devine said...

I'm struck by how often survival, rather than serving the public good, seems to be the driving force behind many nonprofits, not just museums.

I worked at one time for a nonprofit that was in financial crisis, and I remember thinking that if it folded, it would be unfortunate, but it really wouldn't be a tragedy. If people cared about that particular cause, someone else would take it up and move forward.

The truth is that sometimes organizations do outlive their usefulness.

Rena--Museum Educator said...

I think museums are hesitant to take risks that might endanger "survival" because "survival" is woven into the very fiber of our ethical obligations. When items are placed in our care, it is with the understanding that they will be cared for in perpetuity: public trust.

Museums (and other non-profits) should definitely strive to think outside the status quo and be proactive about their "collective" futures. However, operating with the assumption that you will eventually fail simply isn't an option considering one of the basic tenets of museology is preservation.

Jeremy said...

Great post, Nina. Right on the button of my own research, concerning how museums make that equation of resourcing and return on investment, with regard to digital material. In other words, how they decide to splash the cash. As you point out, sometimes the best thing is to spend it knowing that you'll run out of juice for a given project but that it will have done the max for the time it existed, rather than eking it out for way too long. This means being very clear on your mission and how that project serves it.
If you haven't already checked out Jim Collins' "Good to great in the social sector" you really must, some of what you talk about (being awesome in your space) is addressed there.

Evonne @ Amoration said...

Amazing synthesis, thanks for sharing the brilliant model of creators who want to make art for the public that inspires and interacts with them in new ways. It's a thorny forest of fear out there and we have the flashlights....we need more people like you who are willing to go to bat for the experiments still fine-tuning in labs around the world.

Should museums consider mergers? Probably...Should they close doors? Hopefully not. We hope to be one of those community services provided to museums, a space where people come to be inspired by science and art intertwined. As designers of new work we see few museums willing to go out on the new limb alone, and most of the traditional supporters, foundations and pillars are in retreat.

How do we channel our energy to produce new innovations with the climate of financial fear that grips most institutions? Where do you see vibrant partnerships forming to make new works possible?

We're facing fewer community festivals this year, closing parks and diminishing activities for youth in the cities. Feels like time to turn this tide!

jk said...

I agree with Rena. Museums are *supposed* to last forever and store specimens.

This doesn't mean they can't tweak missions. The Museum of Natural History in NYC became an accredited PhD-granting institution last year. Great "Science in the City" podcast profiling the first students.

And, forgive me, but the quality of "awesomeness" sounds, well, awesome, but also Oh So 90's. :-)

Maria Mortati said...

Mark Allen is great. Phil Ross, an artist I blogged about today has a long history of public outreach in science. He's started a temporary gallery event series called Critter Salon in SF that I went to last weekend. I learned about plant subdividing, propagating and cloning.

I agree it's because it's so hard to do stuff quickly in museums-- all the formality of infrastructure. So artists (and many others) are doing projects such as these on the outside. For folks who want to shine, DIY often provides the best results. It's hard sustain the "awesomeness" when you have to go through all the hoops in an institution.

FYI, some of Phil's Bay Area public science meets art projects are:

http://biotechnique.blogspot.com

http://technebiotics.org

http://crittersalon.blogspot.com

Check them out. He's done some projects with Mark as well.

msw said...

This is recognisable across many publicly-funded institutions (eg arts and educational organisations). In the UK, at least, I'd lay some of the blame for this at the door of funding regimes and goals that change from year to year as politicians make their mark then move on.

Why do people in these organisations complain so much about red tape and capricious funding requirements? Because they want to focus on doing great work, but instead have to spend time learning a new set of grant application forms every 18 months so the rug doesn't get pulled from under them.

Jeff Widman said...

Very nice post! "deliberately unsustainable business models" now there's a soundbite!

Sibley said...

To the commentors concerned about preserving objects, I would add that a) not all museums are collection museums, so this while point probably diverges across that difference;
b) if museums took so many more risks that a few failed, the average would probably be so much more successful that way more objects would be preserved than are now (and better used for the public good);
c) a failing museum doesn't mean the objects would go in the trashbin - there would always be the next museum eager to take them up.
I think this point should still apply to collections museums, although I'm probably biased toward the thinking of "how much does it really matter to preserve the 10 millionth item if very few people are actually seeing them or learning much about them." But that is an age old debate that there are many legitimate opinions on.

bigkafka said...

I can see the point that Museum are supposedly "too honorable to fail".
But, what if we had a National Cemetery for Museum pieces.
This is a "shovel ready" project. It would just be in charge of storing and cataloguing any worthy remains of a failed museum.
Then what if non-profits were required to have a "failure plan" -- a plan of what happens when the non-profits is dismantled for lack of volunteers or funds etc.

I really like this idea of "planning for obsolescence" for the non-profit (and museums) space.

John Buchinger said...

I am with the "shovel ready project" idea! Brilliant
Podunk Historical society in danger of closing due to funding: Shovel Ready
The play all day like a grown up children's center is in danger of closing due to funding: Shovel Ready.

Your Mama's Ol' Hot Water Bottle Museum and Wine Bar in danger of closing: Shovel Ready!

We can all get jobs in the green technology of recycling strategic plans, interpretive handbooks, and collections polocies!

Nina Simon said...

Really interesting comments.

@Sibley, whether commercially focused or not, museums and non-profits should focus on growth--but it may be growth of audience, services, value to society rather than $$. So I think your argument is compatible whether break-even/profit is involved or not.

@Rena and jk, is it really possible to say "failure isn't an option"--for any kind of institution? Preservation may be one of those core services on which your institution must focus "survival resources," but we've seen several examples recently of museums that have failed to protect their collections despite conservative models. I once heard a science museum educator explain that people only get engaged in (nature) conservation if they love nature... and that if museums want to support conservation, they need to impart and support enthusiastic exploration of nature. Maybe the same is true of material culture. If you can create services that make connecting to collections supremely wonderful from visitors' perspectives, then they will care to support the survival side.

@msw, great point. One of the reasons I prefer for-profit models in many cases is that you aren't beholden to the mostly conservative funding sources that exist for non-profits. You can move faster, and as you put it, do great work.

@bigkafka, have you read much about Peter Drucker's theory on "planned abandonment?" I hear it tossed around a lot these days with regard to tech experiments, but is a useful and challenging management task for anyone.

Shovel up. Ready to roll.

Adam Huttler said...

Non-profits in general are often excessively risk-averse. In part this is due to various aspects of industry culture that have been addressed above. But structural factors also play a role. For example, managers at non-profit organizations are exposed to the consequences of failure, but are far less able than their for-profit counterparts to benefit personally from success. This distorts incentives and encourages us all to play it safe.

jtrant said...

most of what museums do IS deliberately unsustainable. that's one of the reasons they are so project-driven: raising and burning money for a great idea like an exhibition, installation or on-line feature. none of these things could make it on their own.

but these are different from the organizational and technological infrastructure that needs to be in place to support those activities. the two go hand in hand.

the problem is that sometimes the scale is unbalanced, and 'existence' and infrastructure don't leave enough air for programs that take risks. the co-dependence isn't always healthy.

/jt

Rena--Museum Educator said...

True--not all museums are collecting institutions--however preservation/collection is defined as one of the essential functions of an accredited museum so that function cannot be overlooked.

And of course museums fail. And collections are passed to other surviving institutions. However, I still argue that when a donor signs that piece of paper giving you the authority and the responsibility of caring for the item they are donating, they are doing it with the understanding that you will do it "forever." Planning otherwise (i.e. "to fail") seems unethical.

Do I think that there is an unnecessary proliferation of museums? Most definitely. Do I think that existing museums have an obligation to survive within current accepted ethical parameters? Heck yeah. Do I think that most museums need to be more proactive in securing their futures (casting aside outdated business models). YES indeed.

We are consistently changing ways of engaging our audiences to make them care about "our schtuff." We are trying to grow our next generation of museum advocates through exciting experiences for the children. We are seeking balance between hiding safely in a hole and putting ourselves out there for public curation.

I guess I just see a middle path...

Great conversation here...

Rena--Museum Educator said...

And as always, Nina...great food for thought...

John said...

I think this presents us with a false choice: be awesome or be sustainable. Fifty years ago Walt Disney showed Americans that you can be both. Indeed, the best way to really be sustainable is to continue to be relevant, which means finding new ways to be "awesome" for your constituents, not only for the people you serve but also for those who support you.

Nina Simon said...

@John,
I don't think it's a false choice. The argument is: focus on being awesome first. I believe that the structures to support sustainability will always emerge, and should be cultivated, but that they should remain in service to the superlative program/project at hand rather than becoming the primary focus of energy.

Evonne @ Amoration said...

To me there is no separation...to be awesome we must be sustainable. We're building new tech with cradle to cradle concepts on waste and reuse, a complicated scenario when discussing a touring international experience on energy production. We have no choice but to live our message out in everything we do by being as resourceful, imaginative and inventive as possible as a light down the path for others to follow.

Jennifer - Bay Area Discovery Museum said...

Fabulously provocative, as always.

I'm particularly interested in this economic time - how do museums (and other cultural institutions) prove relevance to society for our survival when social services (food banks etc) are clearly in (greater?) need?

How can we make that 'awesomeness' of our institutions important enough to support? And not just have them be legacy institutions that are supported for no other reason than their long-time existence?

And as a non-collections-based museum, we're not beholden to anyone to preserve anything - but we have transformed historic military buildings into an amazing 7.5 acre children's museum - and if we went under, I'd hope someone would innovate with our buildings for a culturally-relevant experience - I wouldn't want our site to turn into a for-profit entertainment zone!

abjms2 said...

When we describe nonprofit arts institutions as risk-averse, are we truly describing them or just judging them? Non-profits are generally undercapitalized, so their risk is already high--if the art form is live, the risk can be significantly higher.

A museum can control the quality band of its exhibitions over time--when you acquire a Vermeer or a Rothko, you lock in quality. The perceived relevance may change from month to month or year to year, but there are few artists, historians, or imaginative viewers who would argue Vermeer doesn't matter any more, so museums have strategic competitive advantage in cultural history.

A theatre, for instance, deals creating new artistic product all the time, and with shifting perceptions of both quality and relevance at every event. The immediacy and risk of the project is a core value. This is both the source of excitement and the problem--a theatre that's built to last may be doomed; a theatre that's built to reinvent itself or to flame brightly only for a time may have strategic competitive advantage.

Anonymous said...

This all seems rather too capitalist in its dogma.

'At one point, Mark commented that they have a "deliberately unsustainable" business model. In other words: do great stuff while you can, and when you can't do it anymore, stop. This is the model that governs most businesses and artistic endeavors.'

This, actually, is incorrect. The business model that governs all business is to make profit for the owners of the company for as long as possible. If the businesses do produce 'awesome' stuff it's only as a by-product of trying to make money.

Yuhong Bao said...

For non-profits this theory may be true, but unfortunately this blog article misapplied it to a public for-profit. For them this theory is IMO more like the theory I believe:
"The business model that governs all business is to make profit for the owners of the company for as long as possible. If the businesses do produce 'awesome' stuff it's only as a by-product of trying to make money."
Yep, have you heard of the short-termism of Wall Street?

Nina Simon said...

Anon and Yuhong,
I'm thinking about every artist I know, every musician trying to make it, every engineer with a crazy dream to make something great. These people are NOT focused on money. They are focused on making their dreams real. Don't you know people and startups like that?

Ron Mader said...

A year ago friends and I developed an English language training program for a craft town in rural Mexico where I have great relations with the community museum. The language program 'only' lasted 5 months and everyone in town an in the museum were supportive of the program. But others were distressed that the program wasn't structured to endure. "These programs need to be sustainable," they argued. I had a difficult time articulating the logic of creating what I now see is an unsustainable initiative within a larger framework.

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johnverrill said...

For museums with collections, preservation of them is an ethical responsibility, therefore sustainability is the museum's responsibility. Museums are conservative organizations whose boards are less willing to take risk, but that being said museums that do not take risks in today's economy may very well fail. Museums need to serve the public good and seek that quality of "awsomeness" that will provide them with the means to survive just as businesses do when they seek to make a profit.

Move4less said...
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cash advance said...

There may be two issues here. (1) business models that are deliberately unsustainable and/or risky and (2) the time dimension, business models can go from a growth stage to a decline stage. With respect to the latter, this requires the notion of "business model life-cycle."

In addition to this, an organization can be involved in multiple businesses with different business models, requiring them to manage a "business model portfolio." Thereby, it can be beneficial to balance this portfolio by being involved in business models that are in different phases of their life-cycle, e.g. the BCG matrix.