No matter how monolithic they may seem, most companies are really engaged in three kinds of businesses. One business attracts customers. Another develops products. The third oversees operations. Although organizationally intertwined, these businesses have conflicting characteristics. It takes a big investment to find and develop a relationship with a customer, so profitability hinges on achieving economies of scope. But speed, not scope, drives the economics of product innovation. And the high fixed costs of capital-intensive infrastructure businesses require economies of scale. Scope, speed, and scale can’t be optimized simultaneously, so trade-offs have to be made when the three businesses are bundled into one corporation.<\/p><\/blockquote>\n
Most arts organizations juggle these same three demands — customer relationships, product\/program innovation, and infrastructure — without realizing the inherent competition between them.<\/p>\n
In the past, as Hagel and Singer suggest, there wasn’t much choice, because logistics, transaction costs, and other ‘frictions’ of the marketplace required consolidation. As the marketplace becomes ever more ”frictionless” through digital technologies and business innovation, it’s now possible to ”unbundle” those functions into separate businesses that can focus on a more singular goal.<\/p>\n
The modern performing arts center is a classic example of three businesses bundled into one: they are customer relations machines because the have to be, they attempt program\/product innovation (although this particular goal often loses to the other two), and they are operational beasts with massive infrastructure. As a result, they strive for scope, speed, and scale simultaneously only to be frustrated on all fronts.<\/p>\n
Could there be an ”unbundled” version of the major performing arts center? Of the resident theater company? Of the regional art museum? Are there already examples of such unbundling we should be exploring? <\/p>\n","protected":false},"excerpt":{"rendered":"
My conversations at the Salzburg Global Seminar last week reinforced the inherent tensions in the business of arts and culture. Example 1: We build organizations to resolve cost and scale problems. Organizations, by their design, seek to reduce or mitigate risk. Art is risk. Tension ensues. Example 2: We require more capital or cash to […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[4],"tags":[],"class_list":{"0":"post-1399","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-main","7":"entry"},"_links":{"self":[{"href":"https:\/\/www.artsjournal.com\/artfulmanager\/wp-json\/wp\/v2\/posts\/1399","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.artsjournal.com\/artfulmanager\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.artsjournal.com\/artfulmanager\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.artsjournal.com\/artfulmanager\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.artsjournal.com\/artfulmanager\/wp-json\/wp\/v2\/comments?post=1399"}],"version-history":[{"count":0,"href":"https:\/\/www.artsjournal.com\/artfulmanager\/wp-json\/wp\/v2\/posts\/1399\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.artsjournal.com\/artfulmanager\/wp-json\/wp\/v2\/media?parent=1399"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.artsjournal.com\/artfulmanager\/wp-json\/wp\/v2\/categories?post=1399"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.artsjournal.com\/artfulmanager\/wp-json\/wp\/v2\/tags?post=1399"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}