New Year’s resolution: organizational culture and change

Greg Sandow recently composed a list of the top ten changes in classical music in the past decade. It’s an interesting, albeit incomplete, list with plenty of agreeable and perhaps some disagreeable items. What stuck out for me was item number three: a new attitude toward classical music:

Mainstream classical music institutions have tried many innovations — new, informal ways of giving concerts, musicians talking to the audience, large videoscreens, and much, much more.

Some of these innovations have been smart, some have been silly, and many of them haven’t been well thought out. Rarely have mainstream classical institutions developed real strategic plans for change. More often (as I’ve observed firsthand), they’ve tried things out impulsively, only to discover, a year or two down the road, that their innovations don’t make much difference. In particular, they don’t attract a large new audience.

That’s because a single innovation isn’t enough. But all of them, taken as a whole, have changed the mood of classical music, bringing it closer to contemporary life.

A new attitude toward classical music is crucial. But I would like to frame it from a marketing and strategy perspective. The market has changed, now institutions and administrators must change. Let’s introduce two concepts: product-driven vs. market-driven organizations, and strategy in strong-culture organizations.

The latter concept comes from the book Strategy: Core Concepts, Analytical Tools, Readings by Thompson, Gamble and Strickland. A book I have used before. According to the authors, strong-culture organizations have well-defined corporate characters with deeply rooted values and behavioral norms. Clearly, orchestras fit this description.

But first, orchestras are by their very nature product-centered organizations, as opposed to market-centered organizations. The product (by that, I mean the production of art in any form) is the raison d’être, whereas for corporate institutions, the market (or maximized profit) is their reason for existence.

It is easy to be a product-centered organization when you hold a near monopoly and your product is in demand. But as we have seen before (PDF), the arts and culture have significantly proliferated in the last decades. According to the National Endowment for the Arts (NEA), in the last 20 years, the number of performing arts groups has risen to an all-time high. On the other hand, as the NEA recently reported, fewer people attend the arts. In other words, more choices, but a shrinking market.

The danger in product-centered organizations is the assumption that the superiority of the product is the key to the success in the market and the dismissal of external information and sources. We all recognize a certain elitism in classical music institutions: an attitude of play it and they will come.

For years, decades even, institutions have dismissed reports that spoke about the decline of classical music. Greg Sandow calls it “the myth that the audience would always renew itself.” Let me bluntly generalize and state that orchestras are run in this culture of superiority, elitism and dismissal. There appear to be some cracks in the foundation of this culture, but only just recently, the League of American Orchestras recognized the dire situation of declining audiences.

The authors of Strategy: Core Concepts explain how a mismatch culture and strategy occurs in strong-culture organizations, such as orchestras. They “tend to occur when a company’s business environment undergoes significant change, prompting a drastic strategy revision that clashes with the entrenched culture. A strategy-culture clash can also occur in a strong-culture company whose business has gradually eroded…” That is already sounding familiar.

The authors cite the example of electric utility companies that were “long used to operating as slow-moving regulated monopolies with captive customers.” I think we can all recognize orchestras in this example.

Electric utility companies are now “confronting the emergence of a vigorously competitive market […] and growing freedom on the part of […] customers to choose their own energy supplier.” I think the comparison is canny.

Well then, what’s the answer? The authors recommend shifting “away from cultures predicated on risk avoidance, centralized control of decision making, and the politics of regulatory relationships and toward cultures aimed at entrepreneurial risk taking, product innovation, competitive thinking, greater attention to customer service, cost reduction, and competitive pricing.”

Should orchestras then change from a product-driven strategy to a market-driven strategy? Hold your horses, not so fast. In market-centered organizations, the product is born from, and evolves, based on the needs of the market. If this were applied to orchestras, they would all turn into Andre Rieu’s blasphemous Strauss orgy.

Thus, for orchestras, a market-driven strategy does not mean performing Beethoven’s Fifth in every concert because that’s what the market wants. The product should unwaveringly focus on artistic integrity and innovation. In marketing terms, the product is not up for grabs in a market-driven strategy.

But that still leaves the other three P’s in the marketing mix: price, place, and promotion. How can orchestras be a more market-driven organization in those aspects?

Greg Sandow’s list offers some insights on the changes that have happened in the last decade: Peter Gelb taking over at the Met and infusing its strategy with bold, risk-taking innovation; improved customer service; and artistic improvising.

But the greatest opportunity for innovation lies in Sandow’s eighth place item: classical music goes online. Think about the opportunities in place (streaming, social media, new sale outlets, partnerships etc.), promotion (search engine marketing, social media, partnerships etc.), price (micro-payments, donations, subscriptions etc.), and yes, even product (adaptations, mash-ups, collaborations etc.).

That is exactly why we need to get rid of the product-driven culture of superiority, elitism and dismissal. The Internet culture, and particularly social media, is the antithesis of those forces. Shift away from risk avoidance and centralized decision making and move toward innovation, competitive thinking, customer service, and competitive pricing.

Number one on Greg Sandow’s list is a movement for classical music change. “I know they’re out there,” writes Sandow:

So the next step might be to draw this movement together. Maybe we do need an organization. I’m available to help to build it. Or maybe we just need some new but more informal ways to meet each other, and connect. I’m available to help make that happen, too.

But that might be our new year’s resolution. Let’s make our movement stronger. Let’s connect, and make some noise.

8 thoughts on “New Year’s resolution: organizational culture and change”

  1. Great thought provoking post!

    What about the notion of the 4 C’s of marketing instead of the 4 P’s? The 4 C’s being: Customer value, Customer costs, Convenience, and Communication

    In other words, do you think the overall marketing strategy needs to shift away from the “product” focused 4 P’s and more towards the customer focused 4 C’s? Or is it some delicate combination of the two?

  2. Thanks Zack. I’d almost forget about the 4 Cs. I think the 4 Cs are perhaps more useful for nonprofits. I also think they fit the concept of social media better.

    I’ll try to look at that angle soon. Good point, thanks!

  3. Zack,

    Funny, when you said 4 C’s I was expecting Customer, Company, Competition and Collaborators. But that’s because I took marketing courses in business school, where these 4 C’s were the basis for decisions on the 4 P’s Marc is talking about.

    Marc, I think you are taking this discussion–what should orchestras do now?–to another level by forcing us to think about the culture of these institutions. It might go without saying that there are intensely held artistic values in orchestras that won’t be sacrificed to the market, so how do we go forward?

    I’ve been thinking a lot about this, and about whether an orchestra that is also a civic institution can be receptive to entrepreneurial ideas, or not. I’ve been thinking about dipping my toe in those waters to find out… I hope the water isn’t too cold!

  4. Thanks Aaron. I always find it interesting to apply somewhat older marketing concepts to the new environment. I have heard about your four Cs as well and it’ll be interesting to see how it fits in the model I’ve been thinking about.

    And yes, it should go without saying that those “intensely held artistic values” won’t be sacrificed. One could also argue that orchestras have been listening to the market too much by moving away from contemporary programming.

    But much more than programming and marketing, I’m interested in transparency, decision-making processes, attitudes toward initiatives, centralized vs. decentralized, etc.

    But let’s say, no matter how many studies come out that state that a 10-hour, 4-day work week is more productive, it will be nearly impossible to change that culture.

    The change needs to happen from within. A civic institution can be receptive to entrepreneurial ideas if the organizational culture is receptive.

    But the question undoubtedly is, who funds these entrepreneurial ideas? Who assumes the (financial and artistic) risks? Venture capital for orchestras? Spin-off organizations?

    So please dip your toes. I’d be very interested to hear what you have to say/write!

    On organizational culture, I came across something to keep an eye on next week:

  5. “But the question undoubtedly is, who funds these entrepreneurial ideas? Who assumes the (financial and artistic) risks? Venture capital for orchestras? Spin-off organizations?”

    You hit the nail squarely on the head. One ideal source should be private philanthropic foundations. Unfortunately, R&D usually doesn’t rise to minimum desired levels of sexy ways to spend your money but it is what the business needs now more than ever.

    For example, one item I hear time and time again in the orchestra field is marketing professionals want to use audio clips of their respective orchestra in broadcast and online sales efforts. However, musicians typically have agreements that limit this ability more than they prefer or require additional payments under electronic music guarantees (EMG) via their collective bargaining agreement (CBA).

    Marketers claim using audio clips to sell a listening oriented experience will sell more tickets but I have yet to see any empirical evidence supporting this notion. However, this notion is purported more often than not as fact, and the solutions (if you can call them that) have focused mostly on negotiations that accomplish nothing more than creating antagonistic relationships. Nonetheless, the creative solution is for a foundation to select a trio or so of ensembles, provide resources necessary to pay the required EMG and conduct a study to the effectiveness of these efforts. If it turns out that the hypothesis is correct and the results have a dramatic and positive impact on sales, it will be much more difficult for musicians to push back against a request that has been proven to improve the attendance.

    Even if the project were carried out over two seasons, the cost is minimal compared to what some foundations have spent on other orchestra related programs that produced little more than dubious results.

  6. Thanks Drew. It’s amazing in how many directions this post can be pushed.

    I think the plan you described would be a worthy effort. Ever since taking the Search Engine Marketing course, I’ve been thinking about small scale tests on which you can elaborate once you find success. Search Engine Marketing is, of course, the perfect tool for that, because of the very low costs.

    I think in the plan you describe, people should not just look at what one thirty-second audio clip can do. Think about what different kinds of media, in different formats, lengths and distribution can do. What has a better response rate and conversion rate.

    I’m sure lots of orchestras have different kinds of entrepreneurial ideas. Some might execute some of the ideas, in various scales. But in what way are the measured? Are ticket sales the only measure of success? And ticket sales to what audience?

    To take it in yet another direction, take the famous El Sistema, for example. Many US orchestras and orchestras around the world are looking for ways to emulate the program. I think many get excited by the prospect of building a new generation of audiences, or a like goal.

    To me, however, it seems that El Sistema is a program for social change first, a program to get kids off the street. It’s not about the music, getting kids to play music, or ultimately building a new generation of music lovers and performers.

    Perhaps that was also in my mind, when I wrote about superiority and elitism. Maybe it’s a case of “ask not what your audience can do for you, ask what you can do for your audience”? That’d be a cultural change.

  7. Interestingly, I just ran across a post by Andrew Taylor:

    The report Andrew mentions states that “In today’s more democratic, inclusive, and culturally diverse environment, the elevation narrative is basically irrelevant, and no new narrative has really taken its place.”

    Again, so it’s not the music that lifts these kids out of the slums.

    Perhaps the same story in cultural diplomacy. It’s not the art itself that opens talks with North Korea, or with Eastern Germany or the Soviet Union. It’s the actual act.

    Anyway, by now, I’m way off topic.

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