Sunday, May 25, 2014

Arts Entrepreneurship Blogathon - Day 1

Good morning.
"And the beat goes on………………"

Beginning today, and through Friday, our panel for this forum will respond to one question each day on the topic of Entrepreneurship and the Arts.   If you would like to comment, please go to the site and click on the comment icon at the end of the blog.

Here is our panel (see last week's blog post for bios on each):

Linda Essig - Pave Program in Entrepreneurship - Arizona State University
Russsell Willis Taylor - President /  CEO - National Arts Strategies
Adam Huttler - Executive Director, Fractured Atlas
Anthony Radich - Executive Director, WESTAF
Richard Evans - Executive Director - Emc Arts
Andrew Taylor - Assistant Professor in the Arts Management Program at the College of Arts and Sciences at American University
Ruby Lerner - President / Executive Director - Creative Capital

Today's Question:

Define Arts Entrepreneurship and its current status within the nonprofit arts field.  What are the main principles, processes and practices that govern arts entrepreneurial theory, policy and application?  

Linda Essig:  First, thank you for inviting me to participate in this blogathon on the topic of arts entrepreneurship and the opportunity to visit, or re-visit, some of the key issues in the field.

Defining Arts Entrepreneurship
Definitions are tricky things. They can serve to illuminate, but can also serve to restrict or confine.  Over several years of teaching and research about arts entrepreneurship, I’ve come up with the following somewhat fluid working definition:

"Arts entrepreneurship can be understood to be the application of entrepreneurial action in the service of art and thus is inclusive of a continuum of activities from individual artists acting to recognize, create, and exploit opportunities for the creation and dissemination of their art through the formation of nonprofit and commercial ventures that support the production and dissemination of art. Entrepreneurial action itself can be understood as a universal form of human action in which an original idea is actualized so as to create value, be it cultural, financial, intellectual, or social value."

 The inclusiveness of this definition is appealing, but those who assume entrepreneurship means “starting a business” might contest it.  I start from the assumption, shared by Koppl and Minitti in an essay on social entrepreneurship that I cite frequently, that entrepreneurship is a “universal form of human action.”  The concept of “action” is important – entrepreneurship is not passive. Whether undertaken by an individual artist seeking their next commission or gig or a group of individuals joining together to form a commercial firm, entrepreneurship cannot be passive.   The working definition noted above is not restricted to the nonprofit arts sector, it is inclusive of both nonprofit and for-profit ventures.

Arts entrepreneurship is more than – or rather different from – merely new venture creation in the arts and culture sector.  “In the service of art” is a phrase used quite purposefully in the definition to denote that arts entrepreneurship keeps art at the center.  I use the metaphor of the Ouroboros to explain this concept, the serpent nourishing itself from its own tail: If art (the head) is truly innovative,  entrepreneurship can connect it to audience in a way that generates money (the tail) and that money then feeds the creation of more art while, I note, sustaining the lives of the artist so they can continue to make that art.

Much of the policy-related work on arts entrepreneurship is focused on art as an economic driver in community development or as a driver of asset-based community development more generally.  In their definitional paper on “Creative Placemaking,” Markusen and Gadwa note that an entrepreneur to lead a creative placemaking effort is one of several pre-requisites to successful creative placemaking endeavors.  An entrepreneur in this sense may not be a business owner, but rather an initiator of projects who can put together the resources to make them happen.  The rightfully contested but still ubiquitous “creative class” concept also affects the policy space relative to arts entrepreneurship as cities attempt to attract artists (I try not to use the term “creative” as a noun, except when referring to the advertising industry) by implementing arts districts, artist live/work space and, in some cases, business training for artists.


Arts entrepreneurship means the application of entrepreneurial habits of mind (e.g. opportunity recognition, persistence, resilience) to artistic practice. One could say “artistic practice for the market,” but if entrepreneurship is a universal form of human action – the action of innovating and actualizing – then it can occur in non-market contexts too.  “Arts entrepreneurship” as a concept has been decried as a neoliberal scourge on the arts, but I view it from a somewhat opposite perspective as a means for artists to control their own means of production, whether individually or through an arts organization.

Richard Evans:  It’s still one of my favorite quotes from the Bush regime.  When belittling the French for opposing the invasion of Iraq, the President noted with that smirk: “Why, they don’t even have a word for entrepreneur….!”  In a sense, his quandary is understandable – the definition of the “entrepreneur” is notoriously disputed, and has not really settled down despite the resurgence of its use in the last several decades.  The roots of the word are old, from the Latin “prehendere,” to grasp, and “inter,” between.  There’s an interesting link to prehensile – “adapted for grasping”…..

By the late 15th century, building on the new idea of an undertaking as an “enterprise,” the concrete associations were giving way to something more abstract – “readiness to undertake challenges, a spirit of daring.”  Merely grabbing was modulating into a preparedness to take risks, and to act without certainty of the outcome.  Making fun of all this, the French initiated phrases like “entrepreneur de pompes funèbres” which refers, of course, to an undertaker (where the outcome is dead certain).  The Irish-Frenchman Richard Cantillon defined the entrepreneur in 1755 as a person who pays a certain price for a product and resells it at an uncertain price: “making decisions about obtaining and using resources while consequently admitting the risk of enterprise.”  Not surprising, then, that by the 19th century the French usage was becoming less morbid, expanding to cover the director of a musical institution or of a theatrical production.  This is when the arts first begin to be associated with the term – although we might say that we have tended since then to veer more to the Italian, impresario having the same root in an “undertaking” (impress).

Enter the modern corporation.  The frequency of the word entrepreneur has climbed steadily (and 400-fold) since 1920.  For economist Joseph Schumpeter, the entrepreneur was the creative rebel, fomenting disequilibrium, and breaking away from the path of routine to implement innovations through “creative destruction.”  Howard Stevenson of Harvard may have summarized this approach most elegantly as “the pursuit of opportunity without regard to resources currently controlled…..” (1983).

In these descriptions, the link to organizational practice in the arts seems clear, despite lacking the underpinning of the pure profit motive.  Artmaking itself for sure “breaks away from the path of routine,” and is creatively rebellious.  And virtually all arts organizations offer their performances and exhibits with a clear enough sense of the associated costs, but with little certainty of them being fully covered.  Arts organizations are in the business of managing both risk (which can be calibrated based on past experience) and uncertainty (which cannot).

In the 1980s, sociologist Paul DiMaggio of Princeton put forward the argument (building on Henry Hansmann) that rational managers of not-for-profit arts organizations seek to maximize neither revenues nor donations, but the aggregate of the two, lowering ticket prices sufficiently below cost to excite the enthusiasm of donors supportive of wider access, but not reducing them so much that the enterprise appears in danger of becoming unsustainable.  DiMaggio concluded that “if the earnings gap didn’t exist, enterprising arts managers would have had to invent it.”

This notion, of the positive advantage and strategic purpose of the not-for-profit vehicle, has fed the ascendency over the last 20 years of the idea of the “social entrepreneur,” whose ability is to sniff out a potential social return on investment – a leveraged benefit to stakeholders who are not private investors – that complements more traditional returns, to constitute a sustainable “triple bottom line” of social, ecological, and financial accountability.

So what might we say about the contemporary qualities of the arts entrepreneur, of the not-for-profit kind?  If we base our current understanding of “arts entrepreneurship” on most of these old established terms of reference, it unfortunately restricts us to a focus on qualities of the individual, essentially as heroic leader.  If entrepreneurship remains defined broadly within these terms, then it is increasingly going to miss the boat – the boat, that is, filled with those who are together “consenting to leave the shore… in order to discover new lands” (André Gide).  Because it is through team endeavors, through the deliberate pooling of multiple perspectives rather than reliance on any single individual, no matter how brilliant, that the “wicked problems” of our time are going to be imaginatively addressed.

For arts entrepreneurship to be a useful tag these days, my experience at EmcArts suggests we need to re-invent it to take account of how we can lead, and have sustainable impact, in the complex adaptive systems that all artists and arts organizations now have to operate in.  This re-invention, I suspect, will place a new emphasis on some aspects of the old terminology (the determination and ability to work effectively through extended periods of massive ambiguity, for instance), while de-emphasizing others (for example, the creative sole operator seeing the opportunity and going for it).

Can arts entrepreneurship be re-thought to encompass the leadership skills and organizational capacity we need to reframe our challenges and succeed in a time of “permanent white water”?

Russell Willis Taylor:  The definition of entrepreneurship is widely debated, but I like a very simple one: the activity of creating new value with less than optimal resources.  By this definition almost every nonprofit arts leader in America is an entrepreneur, and the first writing on the topic would have to be Robert Browning. (A man’s reach should exceed his grasp)  It is the creation of new value that is at the heart of what drives entrepreneurs – they may get rich in the end (if not in our field) but that’s not what gets them off the starting block.  This new value may present itself in the creation of jobs, experiential goods, educational services, societal debate or entertainment.  In our field, this value is created for the public at large rather than for shareholders or investors.

Over the past few years, the term has been used to cover a broad range of revenue generating skills and activities, all geared to enhancing organizational sustainability.  But the creation of value remains the mark of the entrepreneur and the revenue generating is just a means to an end – or should be.

In a recent discussion with a group of our Chief Executive Program leaders, they identified three entrepreneurial activities as concrete examples of how this value creation might manifest itself in our field:

  • Partnering with social service organizations or being entrepreneurial in solving a community problem
  • Being innovative in the way we connect with audiences and communities
  • Redefining our institutions to remain relevant despite environmental shifts

The principles, practices and processes are explored in detail and with real intellectual rigor on Linda Essig’s site and also at SMU’s Meadows Program. Between these two, it would be hard to find better resources to detail all the aspects of entrepreneurship in our field. These could perhaps be summarized as having a clear and compelling vision, being able to communicate that vision to others, having the stamina and expertise to operationalize that vision, and having the skill to rapidly respond to changes in the environment.  These are not ordinary qualities, and they simultaneously create things of wonder and demand a great deal of the leader.

Anthony Radich:  The definitions of the term entrepreneur are many. The root meaning is found in the world of economics, where the term generally has been defined as a person who, through innovation and/or insight, adds value to a product or service and moves it to a higher level of economic return. In recent times, however, great liberties have been taken with the term, and it has come to be generally associated with innovation and the taking of risk not limited to commercial enterprise. Although the term entrepreneur retains a strong association with a person who takes risks to make money, it is widely applied to individuals in government, education and politics who take risks and innovate to create non-monetizable but often measurable results.  

Of course, the term social entrepreneur needs to be dealt with here as well, because in the arts, it is too easily confused with the term business entrepreneur. The social entrepreneur “aims for value in the form of large-scale, transformational benefit that accrues either to a significant segment of society or to society at large” (“Social Entrepreneurship: The Case for Definition,” Stanford Social Innovation Review, spring 2007). While social entrepreneurship has a value and a practice in the arts, we are not--at least I am not--talking about social entrepreneurism in this blog. That said, I find that the arts community is pretty undisciplined in its use of these terms and often blends the concept of the business entrepreneur with that of the social entrepreneur.

I don’t think we can discuss entrepreneurism in the arts without first addressing its current context. A key element of that context is the near collapse of a vision for the arts to be provided in whole or in part as a public good. There has always been a commercial side to the arts such as graphic design, music recording, architecture, popular filmmaking, etc.  Unfortunately, we are currently living in a time in which there is a near complete disinterest in arguments for support of the arts as a public good that has a position outside of the marketplace. Today, segments of the arts that have long had limited commercial application are being reviewed and considered for business entrepreneur treatment. Without the dramatic fade of the vision for large-scale support for the arts as a public good, the entrepreneurial side of the arts would likely remain modest, and the race to put the nonprofit arts into the marketplace through entrepreneurial means would likely be a and ripple not a wave.

Another contextual factor that stimulates the expansion of business entrepreneurial activity in the arts is the dramatic and well-publicized entrepreneur-driven success found in the technology sector. Indeed, when individuals can, through entrepreneurial means, not only become fabulously wealthy but also shape the way in which much of humanity organizes their communication, information, etc., then not just the arts community but the entire society is drawn gold rush like to the entrepreneurial tools applied by the now enormously successful technologists. The highly successful technology entrepreneurs have become the gods of our times, and the power of their wake is too strong for the arts to avoid being drawn into it.

Ruby Lerner:  Take a look at the Wikipedia definition of entrepreneurship; it states, “Entrepreneurship is the process of identifying and starting a new business venture, sourcing and organizing the required resources, while taking both the risks and rewards associated with the venture.” I think that’s a great, broad definition that encompasses business entrepreneurs along with what you’re calling “arts entrepreneurs.”

It’s important to note that this is not a new phenomenon—it’s just a new term. There are plenty of entrepreneurial undertakings in the arts going way back, like Artists Space, the Wooster Group and Steppenwolf Theatre, which were all founded in the ’70s. We didn’t call them entrepreneurs then, but that’s what they were. “Arts entrepreneurship” is a buzzword right now, but I think the status of entrepreneurship in the nonprofit arts field has been strong for many decades.

At Creative Capital, we’re not really involved in arts entrepreneurship “theory” or “policy,” but we’ve developed a system that does a good job of supporting artists as entrepreneurs. Simply put, we believe that artists are entrepreneurs in the cultural arena and that they deserve access to the tools and resources that parallel what’s available in other sectors. Drawing from venture capital models, we surround artists with a comprehensive support structure that provides money, assists with skills and network building, and includes advisory and promotional support.

Adam Huttler:  In the business world, an entrepreneur is someone who has an idea for a venture, assembles the capital to realize it, assumes both risk and responsibility, and reaps the rewards when it succeeds. The nonprofit arts are not fundamentally different. Nearly all artistic creation is project-based in its conception and execution, and nearly all art-makers do so serially with limited continuity from one project to the next. Viewed in that light, we’re all acting as serial (if not frantic and compulsive!) entrepreneurs. But this is simplistic and perhaps reductionist, so let’s take a closer look at the motives and mechanics of entrepreneurship in practice.

First, let’s get the whole profit motive out of the way. Clearly this is a big element that we don’t share with the business world. However, it’s an overrated and misunderstood component of entrepreneurial psychology. Most traditional entrepreneurs are motivated first by a desire to realize a creative vision  on their own terms. Financial rewards are important, but they’re ultimately not what gets us out of bed in the morning.

Likewise, the aspects of entrepreneurship that are most relevant in the context of nonprofit arts have to do with vision and self-determination. Importantly, these are more often manifest in individual artists than in organizations.

Consider as a backdrop the model 20th century arts organization. These institutions are in trouble in large part due to their structural dependence on a limited supply of third party philanthropists. In a Faustian bargain, we traded our basic autonomy for liberation from market forces. Fifty years after Mac Lowry, the bill has come due, and it’s being paid in the form of bankruptcies and labor disputes.

Fortunately, the same macro forces that have some organizations struggling to survive – globalization, the internet, demographic shifts – also create unprecedented opportunities for the entrepreneurially inclined. In particular, new internet-based technologies allow for the radical disintermediation of fundraising (e.g., Kickstarter), production (e.g., digital video, 3D printing), marketing (e.g., Facebook, Twitter), and distribution (e.g., YouTube). That’s pretty much the whole pipeline! 

Perhaps the most intriguing aspect of this is the extent to which many arts organizations have themselves functioned essentially as middlemen. Artists create art. We need organizations only in so far as there are barriers to entry and economies of scale in the aforementioned pipeline. As middlemen become increasingly obsolete, it’s unsurprising that many organizations are struggling to demonstrate their relevance. Meanwhile, entrepreneurial artists are happily exploiting their new autonomy to finance, create, promote, and distribute work without any bloated institutional overhead.

This isn’t to suggest that all arts organizations are hopeless anachronisms, or that they’re incapable of entrepreneurship. But the ones that succeed are those that find something to offer beyond base administrative competence or economies of scale. Today, entrepreneurial arts organizations create value for artists and audiences by enhancing the actual creative process or audience experience, and they do it in a way that is self-directed and sustainable. 

Andrew Taylor:  Like many other hot-button terms in arts and culture, "entrepreneurship" has been stretched and adapted to describe a bafflingly wide swath of endeavor. And also like many other hot-button phrases (community, capitalization, diversity, arts education), we rarely stop to define what we mean when we say it. 

"Entreprendre" in French means "to undertake". The word "enterprise" comes from the same source. Since the 18th century, the "entrepreneur" has been the individual who makes decisions about obtaining and using resources while consequently admitting the risk of enterprise (Richard Cantillon, ca. 1734), or more broadly, "an economic agent who unites all means of production -- land of one, the labor of another, and the capital of yet another" (Jean-Baptiste Say, 1803).

"Entrepreneurship," therefore, is the bundle of activities and attitudes associated to an individual who connects resources and assumes risk to create value. Over the past many decades, we've come to attach special attention to certain aspects -- creativity, initiative, energy, obsessive focus particularly on undiscovered gaps or opportunities in markets, ability to attract and direct other peoples' resources. 

"Arts Entrepreneurship" adds a second elusive word, making it an ideal way to gain consensus at an arts conference without actually knowing what you're agreeing to. We tend to mean it as scrappy and resourceful, compared to deliberative and resource-intensive enterprise. We tend to mean it as dancing more elegantly between nonprofit and for-profit. We also tend to mean it as the thing individual artists and small groups do when they're not otherwise employed by arts organizations.

When I began my academic career, at least one national entrepreneurship group would not accept nonprofits among their ranks, as "entrepreneurship" meant "employment through self-ownership" and nonprofits had no owners. With the rise of social entrepreneurship, all sorts of values and outcomes are now deemed worthy of entrepreneurship. Although policy makers tend to favor economic value and job creation above all others.

For me, the useful framing for "arts entrepreneurship" is as any innovative connection or collection of resources toward expressive ends. Arts entrepreneurs are agnostic about business entity -- nonprofit, for-profit, hybrid, temporary, or non-organizational -- but obsessive about outcome or impact. While "arts managers" continually improve execution of an existing business model, "arts entrepreneurs" discover their business model through hypothesis, testing, and constant iteration. 

Arts entrepreneurship is not a new thing (it's ancient). Nor is it appropriate to all outcomes. But it's nice to see the old ideas finding new energy and life in new markets.

Thank you panel.

Have a great day.

Don't Quit.