I spend a lot of time reading business journals, nonprofit studies, seemingly unrelated non-fiction because I actually find that these sources inform my thinking as much as if not more than traditional periodicals and studies of the arts. In last month’s Harvard Business Review an article, Understanding the Post Recession Consumer did an interesting analysis of current and future consumer trends. For days after reading the article, I found myself jotting down notes as to how the articles key points related to the arts.
I was especially intrigued because I often feel the arts are behind the rest of the working world in realizing or adopting new trends even though I know this can’t be true considering the creativity and intelligence in the field. Perhaps we just don’t do enough analysis – who has time or the money – or we just don’t realize the trends until after they happen – see the note about time and money.
So what happens if we steal a page from corporate America and look at what consumer trends are? We have to keep in mind of course we aren’t selling shoes – wouldn’t that be easier? Of course this means looking beyond a single ticket sale or donation. We have to look at our institution as a whole (Doug McLennan and Andrew Taylor addressed this nicely last week – as my next post will cover).
But back to consumer trends and Understanding the Post Recession Consumer…the researchers note a methodology of assessing past recessions, consumer surveys and other impressive details that I will not enumerate so I can get to the meat of the article:
Four key trends are being accelerated by this recession: consumer demand for simplicity, a call for ethical business governance, a desire to economize, and a tendency to flit from one offering to another.
Four other important trends are slowing: green consumption, a decline in respect for authority, ethical consumption, and extreme-experience seeking.
So what the hell does that mean for the arts? Well, good question. First we have to understand the accelerating trends:
A demand for simplicity.
Downturns are stressful and typically increase people’s desire for simplicity. Even prior to this recession, many consumers were feeling overwhelmed by the profusion of choices and 24/7 connectivity and were starting to simplify…. The recession is accelerating this maturing trend. Consider the rise of edited retailing (consumers are offered limited collections of coordinated product choices), a growing demand for trusted brands and value, an increasing desire for advisers—ranging from social networks to product ranking web sites—that can simplify choicemaking, and enthusiasm for less complicated, more user-friendly technologies.
If consumers are really searching for simplicity and are turning to their peers to help them eliminate choices, are the arts positioned to address this need? We should be, after all what is more simple and natural than a community gathering to share an idea or experience.
Are we the “trusted brand” in business terms? Have we built the relationships that are necessary to make us vital to our audiences? Are we producing and creating relevant art that provides a valuable experience for our community? Many an organization is a cornerstone in their community, but I have to wonder if each art organization pulled five random names from their databanks, called them and asked one simple question, “would you recommend to a friend that they participate in our programming,” what would the answer be? This might inform us about the quality of the relationship. Another key component for the arts is that the organization must be trusted to produce art that reflects the community, both large and small. This often rests in the trust that the community has in the leadership of the organization.
As arts organizations we build as much of our brand on our leadership as our programming, and many have reaped the benefits of engaged, charismatic, community-building leaders, but some leaders have become absentee in the day to day or aren’t even members of the community the organization interacts with. Of course there are organizations this can work for if the leadership is at the top of their field and the organization is aligned with the idea that the artist’s association is enough, but it seems more and more like attendance is not mandatory for many of the field regardless of their stature, and we are falsely elevating many of the artist’s stature simple because they don’t want to be tied down to the institution. Is this really helpful in creating a brand for the organization or is it serving the brand of the artist?
Many organizations are utilizing social networks – they have a facebook page and twitter account, the key is of course what are they communicating with these platforms? Some are presenting additional perspective on their work or insights about the process of creating arts. But some are simply offering another discount offer? It is important to really assess what we have become in our communities and than strategize about how and what we are communicating in response. We have to move away from just sending out the message and skipping the conversation – how else will we build trust? A few months ago I addressed the idea of trust and trust issues, and each day this becomes the absolute key to surviving and flourishing – after all isn’t the basis of every relationship trust. It is precisely this idea of trust that will prevent Eric Dillner from ever successfully running Milwaukee’s Skylight Theatre.
Which brings us to the next consumer trend:
Call for ethical business governance or a focus on the boardroom
Like the simplicity trend, the focus on the boardroom has been building for years, spurred by notorious governance failures at companies like Enron and WorldCom early in the decade. The huge, taxpayer-funded bailouts of badly managed businesses will accelerate this trend, with two important effects: Government intervention will intensify, and the consumer backlash against companies with unethical or ineffective governance will worsen. The growing interest in the boardroom builds on an older instinct, the public’s well-established reflex to punish companies for unethical labor or customer practices is potent
From bloggers to print media, we are seeing more and more stories about arts organization’s leadership salaries and boardroom antics. It is not just the new I.R.S. 990s that are searching for examples of quality leadership. It is easier to attack nonprofit governance over corporate giants. Frankly, some of the salaries at the top are ridiculous when compared to others in the organization, and I am not one who thinks that because you work in nonprofits you have sworn off having a livable or prosperous wage; however all one has to do is look up on Guidestar the gap between key leadership (and development directors) and the middle manager/department head level, to see the discrepancies – often double in scale.
Those in the performing arts are familiar with the arguments about performers pay usually falling far below livable wage and again out of scale with staff positions. At this point it doesn’t matter who is right or who is wrong, the arguments and discrepancies are no longer internal or private. We must take control of them as we must also deal with the issue. As our consumers become more and more educated and are looking for simplicity, why bother with an organization embroiled in any kind of controversy. Perhaps more prevalent and obvious is a board out of control or an organization without a clear sense of purpose, mission and vision.
Lack of strategy is visible to the outside world. It is time arts organizations realize that scattered programming (often grant-driven), stop-start initiatives, inconsistency in quality, and endless changing/cancelling of events makes it very clear that there is no clear identity for the organization and no relationship to the community. When this happens, it is the board and leadership that has failed the organization. The board, as keepers of the long-term vision as well as fiscal trustees, should work WITH leadership to center, and the board should properly govern the organization. Too often a board is entrenched in the day to day (they shouldn’t be at all) or kept at bay by the leadership so the result is that they are ineffectual, and therefore they are not governing. Too often drastic changes must be made in the board make-up or membership that go ignored. Better to act, right the organization, and deal with the fall-out rather than damage the organization, drag it off course, or worse – and this is what often happens – trap the organization in a cycle of repeating the same tasks and conversations over and over with no action or forward movement.
Trend number three is no surprise as a result of the severe recession.
Discretionary thrift or a desire to economize
Some consumers have no choice but to be thrifty. Increasingly, though, many affluent consumers are economizing as well, even though they don’t always have to. This is a relatively new trend, having emerged in the final three years or so of the prerecession boom. Our research among more affluent consumers has revealed mounting dissatisfaction with excessive consumption….Initially, many of these newly frugal consumers were reluctant to admit their attraction to thriftiness, concerned that others might see them as dull and austere. But the recession has made discretionary thrift acceptable—even fashionable….Recoveries typically unleash pent-up demand, and we expect that people will celebrate this one by buying a few indulgences and replacing their aging durables. But, as President Barack Obama observed on his way to the G-20 summit in March 2009, even the famously gluttonous United States is unlikely to reemerge as a “voracious consumer market.” Many postrecession purchases, we suspect, will be less extravagant versions of the originals. The discretionary thrift trend should regain momentum over the long term as consumers continue to find personal and practical satisfaction in it.
After all those discussions about whether discounts were bad and not don’t matter. We can’t deny that we have trained our audiences to look for a deal – as has every other industry. The entire field is rethinking/restructring the subscription model and bulk ticketing to address package price points and advance ticket sales (here are my thoughts – halfway down the post – on throwing out the model).
We also can learn to better state our value and help our donors, as well as community leaders, understand the continuing effects of the organization– education programs, quality of life, community improvement, economic impact, etc.
But if discretionary spending is going down, we do need to address ticket prices (at least in the performing arts) and continue exploring delivery methods. This does mean addressing costs and business models. We have to assess whether the expectations we, artists, and audiences place on production and the institution are realistically attainable – notice I didn’t say cut. Each organization needs to assess what it’s financial model should be and what it can be. We also have to understand the perception of our company, most arts organizations don’t have discretionary funds to spend so can’t we turn the eye on ourselves and take a look at what our consumers might be seeing.
This of course brings us to the final rising trend:
Mercurial consumption or a tendency to flit from one offering to another
In the prerecession boom, consumers became agile—and fickle—shoppers. They could instantly find a profusion of brands or products to meet their needs but would just as quickly abandon any choices that somehow fell short. They have brought this increasingly erratic loyalty into the recession…. The instantaneous spread of word-of-mouth through online social media has only accelerated the trend. Technology- and social-network-enabled shopping strategies will allow this trend to pick up steam well into the recovery and beyond. Exactly what consumers buy may change, but their facility in navigating the options will prove durable—as will their readiness to shift allegiances.
Perhaps the most obvious and the scariest of trends. The arts have many competitors for attention, support, and funds, and if allegiances are going to shift rapidly do we have strong enough bonds to supporters and the staff to maintain and grow the bonds. The arts rely more on loyalty then one would assume from the discussions in blogs and print media. This lesson is learned over and over again when a company has veers off path and the audience feels betrayed or a move into a new building causes huge upsets amongst subscribers regarding their tickets. Audiences and long-term donors demand loyalty from the organization, and we rely on their loyalty to help our cash flow, create word of mouth, and simply to show up. As these bonds fade, what can we as arts organizations rely on? What new models will we have to create? We know about the fly-by-night audiences (the choosers) who show up when there is a good review and then disappear until the next one. If we are not focusing on maintaining the allegiance or an alternative, can we survive in between the hits? Already we have seen the attempts to address this – star casting, event/festival programming, etc – but what are the achievable adjustments (sacrifices?) that we can make to bridge the potential losses of our most loyal and repetitive customers.
We need to understand what activities pull people away. It is not as simple as saying what is our competition. We need to know what the competition offers. How the experience compares to ours and how they are similar. We can’t simply declare all entertainment, the internet and the world our competition. We must focus on the immediate draws and the true alternatives first. Perhaps this will even lead to further evolution of our programming.
What goes up must come down?
And what about those declining trends: green consumption, a decline in respect for authority, ethical consumption, and extreme-experience seeking?
How do they affect the arts? Declines in green and ethical consumption present a concern for price and ease out-weighing the supposed “good for you and the world.” The kick-back was going to happen with or without the recession, after with all of the products labeled organic, energy-efficient or some other qualifier that lets the consumer know they are doing good well shopping and the increasing high prices for said products there was bound to be consumer revolt sooner or latter. I know I have bought every organic cleaner, as well as, organic food (for the dogs and cat too). I drive a Prius – which I love. But we are embracing being “green” and internalizing it into simple day to day tasks, we waste less, recycle, and conserve water. The articles researchers felt that that green consumption had stalled and would take off again post recession while ethical consumption would recover at a much slower rate.
“When people are focused on feeding their own kids and keeping a roof over their heads, concern about children in other parts of the world, or about animal welfare, drops on the list of priorities.” It is this idea that many in the arts are struggling with, after all, when it comes down to feeding hunger or the feeding the soul, hunger will always win. Of course we need both, but base human instinct will take over in times of trouble. So how do the arts acknowledge this but still voice their value so that when the trend reverses the arts are not lost in the vast number of options? We do only what we can do, focus on creating great work that is relevant. We take a serious look at how we run our businesses. We partner with and assist other groups in our community who are addressing the more immediate needs. The institution becomes an activist in its community and serves the community in an unselfish way. We can use our own education programs and community libraries as a example. We all know that the programs that work in schools are the ones that enter into an equal partnership that addresses the needs of the students over the needs of the organization and shows educators the utmost respect and appreciation rather than condescending attitude. We have all seen the amazing way that libraries have become the living rooms to many communities and have embraced technology and have maintained being a resource to the community.
As for the decline in respecting authority (“the decline of deference”), this has to be the one thing the arts can immediately turn into an opportunity. After all the arts traditionally question authority and challenge the norms! And the downward trend in extreme experience seeking has a companion effect of an increased local presence and awareness that surely we can capitalize on.
When I look around at several of the organizations out there and read the wonderful thinking that is happening out in the field, I have to believe that we can clearly address these trends. Awareness is half of the battle after all.
