Next week, the small-to-medium arts sector will be notified of the Australia Council’s Four-Year Government Funding decisions. We all know the stats on applications vs funds available and it is certainly an anxious wait for all.
As we brace ourselves for the announcements, it’s a good time to take a breath, have a cup of tea and be reassured that there’s always a Plan B. From the work we’ve done supporting applicants across the sector, we know that every artist, administrator and enabler has the smarts and wherewithal to make empowered decisions about the future.
Next week will be a watershed moment: a once-in-a-generation shift that could threaten the survival of dozens of enterprises. But – don’t ever think you can’t call the shots on how pull through it.
Here’s a bunch of things to think about and rally around so you can fight your way forward with courage and conviction – with or without the security of four-year support.
What do we do if the computer says ‘no’?
When organisations are exposed to life or death circumstances, good strategy is critical.
In the words of Harvard and Yale professors Adam Brandenburger and Barry Nalebuff, ‘successful business strategy is about actively shaping the game you play, not just playing the game you find’.
Game theory is a field ripe for exploration, but we can cherry pick some important ideas to help us think about life without four-year funding. By scrutinising the industry situation, the various players and rational behaviour, we can take a good stab at predicting how events will unfold. This helps us look beyond our own perspective and – in strategy – that’s good.
It also helps us decide which category in this well-worn quote that we want to be in:
“Some people make things happen, some people watch things happen, and some people wonder what just happened!” [source indeterminate].
Since the surprise announcements in the 2015 budget, we’ve found companies adopting one of three mindsets. An explanation of each follows – but our purpose here is to stimulate thinking about changing the game and using the remainder of the current funding cycle to mount a perfect offence.
1. NON STRATEGY | What game? Are we in a game?
Otherwise known as denial or avoidance – a lot of organisations are in this space right now. Major decisions, new programs and new spending have been put on hold until after the May announcement. Funding is OK until the end of 2016 – so it’s business as usual until we know the future landscape. We all understand the comfort of putting heads in the sand when anxiety is intense and paralysing – but right now, this is not a good place to be.
2. DEFENSIVE STRATEGY | Accepting the Game
This is reactionary strategy and designed to protect a company’s existing position. In the commercial world, businesses will work to raise barriers to entry and destabilise the opposition through product and pricing strategies. Right now in the arts however, organisations have battened the hatches and are working to retain audiences and donors while attempting mount defences from the following positions:
- Reinstating the game as we know it
o By sector organisation.
o By lobbying for political intervention, protection, reinstatement of funds to the Australia Council and increased support.
This approach was executed with some success by the hundreds of artists and organisations who protested against last year’s cuts. $8 million was returned to the Australian Council and the maligned NPEA was replaced by the Catalyst program.
- Cutting cloth to fit
o By looking for savings across the budget.
o By choosing lower-cost artistic options.
o By reducing the scope and scale of activities.
Careful pruning can be helpful but a serious word of warning: the wrong combination of decisions here can trigger an organisational death spiral.
Compromising artistic quality and cutting budgets that are about generating income (marketing & fundraising) erodes the premise of your existence. Lesser art, marketed in an average way leads a slide into ordinariness and there are generations of cases from around the world that prove this. Audiences, sponsors, donors and funders are disappointed and become disenfranchised. Contributed income falls, ticket sales slow, discounting commences, budgets are cut further and so on until a shell remains.
- Buying time
o By securing a line of credit or a low-interest loan while working out how to to bridge the shortfall.
o By calling on understanding patrons, and the organisation’s friends.
There is definitely a time and place for defensive strategy so long as it is balanced with long-term thinking. How will your organisation survive and flourish in the new world order?
3. OFFENSIVE STRATEGY | Changing the Game
Let’s face it. If we’re talking about games and your four-year government funding application is unsuccessful – the game is a dud and you need to change it. The power lies in realising that you can be a game maker. How? It goes back to thinking beyond your organisation and anticipating the behavior of others…
- Change the players
o By forming strategic alliances that give you additional reach, credibility, economies of scale and scope
o By working with complementors (organisations that do or make things that complement your work)
o By identifying the new providers of revenue or capital
- Change the ways you create value
This is potentially the most exciting response where the opportunity for true innovation resides.
o By continued artistic excellence and expanding the ways you engage others as an industry expert, influencer, teacher, mentor, inspirer, facilitator, thought leader, ideas generator.
o By finding new ways to package your intellectual property and intellectual capital to create value for existing and new audiences/clients.
o By applying your unique thinking to solving problems in the wider community.
- Change the scope
This is about your mission, thinking long and leading with a legacy vision that attracts capital – donors, seed funding, new forms of finance.
o If you change the players and the ways you create value, where else might you play?
o Think about niches – being highly specialised, building loyalty and owning that space.
o Think about exits – what are you currently doing that no longer makes sense?
- Take the parachute
This may sound counter-intuitive, but a genuine form of offensive strategy is deciding when to pull the plug. This is still a proactive response to your new set of circumstances.
o You may emerge with something new down the track – or this may be goodbye.
o Make sure you go out with a bang, have a party and genuinely celebrate the contribution your company has made.
o Make the right choices about company assets and intellectual property. Perhaps they become part of a national collection, or released to the world under a creative commons license.
To leave with some counsel from our game theory professors – one of the most paralysing mental traps is to think you have to accept the game you find yourself in.
“Just realising that you can change the game is crucial. There’s more work to be done, but it’s far more rewarding to be a game maker than a game taker.”
Sharpen CIC is offering a day of free 45-minute consultations in Sydney and Melbourne for leaders of organisations facing changed government funding circumstances. Book in and come along and debrief, troubleshoot or blue sky in a confidential 1:1.
- Melbourne CBD | Monday 23 May 9:00-5:00pm
- Sydney CBD | Friday 27 May 9:00-5:00pm
To make a booking, please drop us a line with your preferred time: firstname.lastname@example.org