In This Episode

Erik and Michael talk about the traits that differentiate healthy arts organizations, how the cycle of marketing, fundraising, and programming work together, and how cutting marketing budgets is the absolute wrong move when faced with a declining audience.

It's really hard to run an arts organization. I challenge myself as much as I challenge anyone else to think through our programming, marketing, and fundraising. These things take a lot of energy but I don't leave it to chance, and I don't believe in inertia.

ABOUT MICHAEL

Michael Kaiser is "the turnaround king." In his distinguished career, he has worked at Kansas City Ballet, Alvin Ailey American Dance Theater, American Ballet Theatre, and the Royal Opera House. Perhaps he is best known for serving as the president of the John F. Kennedy Center for the Performing Arts from 2001–2014. Michael has also written several books including, The Art of the Turnaround: Creating and Maintaining Healthy Arts Organizations and The Cycle: A Practical Approach to Managing Arts Organizations.

EPISODE TRANSCRIPT

Erik Gensler: Thank you so much for being here. When I came up with the idea of having this podcast, you were one of my sort of wish list guests-

Michael Kaiser: Thank you.

Erik Gensler: ...so I'm very excited.

Michael Kaiser: It's great to be here.

Erik Gensler: Thanks. I met you briefly when City Opera was falling apart. I don't know if you remember those days.

Michael Kaiser: I do very well.

Erik Gensler: You've worked with many arts organizations, and I'm curious to start with the question of what's some of the key drivers that you've seen in successful and thriving arts organizations versus ones that are flailing?

Michael Kaiser: The very biggest differentiator is the excitement and engagement of the art itself. Healthy arts organizations do really interesting art for a long period of time. It doesn't mean they don't have failures now and then, but they're taking risks, they're being surprising, and I use the word "surprise" an awful lot in my work. And the organizations that are not doing well, typically something happened that caused some kind of financial challenge, and the first immediate reaction is to cut back on the art, get more conservative with the art, try and do what someone else is doing, and one ends up causing yourself to lose those who support you and care about you because there are so many other places for them to look.

Erik Gensler: You talk about the cycle. In fact, it's the name of one of your books. Can you tell us what that is?

Erik Gensler: Thank you so much for being here. When I came up with the idea of having this podcast, you were one of my sort of wish list guests-

Michael Kaiser: Thank you.

Erik Gensler: ...so I'm very excited.

Michael Kaiser: It's great to be here.

Erik Gensler: Thanks. I met you briefly when City Opera was falling apart. I don't know if you remember those days.

Michael Kaiser: I do very well.

Erik Gensler: You've worked with many arts organizations, and I'm curious to start with the question of what's some of the key drivers that you've seen in successful and thriving arts organizations versus ones that are flailing?

Michael Kaiser: The very biggest differentiator is the excitement and engagement of the art itself. Healthy arts organizations do really interesting art for a long period of time. It doesn't mean they don't have failures now and then, but they're taking risks, they're being surprising, and I use the word "surprise" an awful lot in my work. And the organizations that are not doing well, typically something happened that caused some kind of financial challenge, and the first immediate reaction is to cut back on the art, get more conservative with the art, try and do what someone else is doing, and one ends up causing yourself to lose those who support you and care about you because there are so many other places for them to look.

Erik Gensler: You talk about the cycle. In fact, it's the name of one of your books. Can you tell us what that is?

Michael Kaiser: The cycle is a very simple vision, model, for how healthy arts organizations work, and it's simply this. It starts from exciting art, great art. The art has to be marketed really well, both... I break marketing into two pieces. One piece I call programmatic, which is getting people to buy tickets or come to your exhibitions. The other piece, I call institutional marketing, which is the marketing to get people to say, "This is the coolest place. I've got to engage somehow." And when the art is really exciting, and the marketing is really strong and when the organization is good at welcoming people and isn't cliquish, then you build this family of people who care about you and who do things for you. And I use the word "family" advisedly, and I'm not talking about the internal staff or artists, I'm talking those around the organization, the volunteers, the donors, the ticket buyers, the board members. When the art's exciting, the marketing's strong and people... and the organization can welcome in family members, those family members help produce revenue. And when that revenue goes back into great programming that gets marketed well, the family gets larger, happier, more engaged and you get more money. And it's that cycle that characterizes the healthy organizations, and sick organizations typically have a breakdown over one or several of those places along the cycle.

Erik Gensler: So is institutional marketing versus, programmatic marketing, you call it, or show marketing, I believe you say if you do the institutional marketing well, you then have to spend less marketing each show. Give a good example of that.

Michael Kaiser:When people go to Milan, Italy, they go to La Scala. It's La Scala. And my parents went to Milan and they ended up seeing Porgy and Bess at La Scala. Now it wasn't really the first-choice opera they had, but they still bought tickets to go to La Scala because it's La Scala. When you go to London, you go to the Royal Shakespeare Company or you go to the National Theatre or you go to the Royal Opera House because those are such iconic places to go. And so, when you build your institutional image, it does reduce a bit how much you have to spend in selling each show. But, for me, that's not the prime reason for doing institutional marketing. The prime reason is it helps you with your fundraising and I think what's misunderstood by a lot of arts managers and board members is the link between marketing and fundraising. They get the link between marketing and ticket sales.

Erik Gensler: Can you talk a little bit more about that?

Michael Kaiser: I'm constantly trying to build my family of supporters, and my family will get created both because I do really interesting work, but also because I can put a spotlight on all the different things we do in an exciting and interesting way so that... because a lot of people don't know everything an arts organization does. Most arts organizations are spending all their marketing time and money on programmatic marketing, which means they're putting all their marketing focus on their shows or their exhibitions if they're a muse and very little on the other things they do, which might be of more interest to donors like their education programming, like their outreach programming, like their work with disadvantaged people, like their work with, with communities of color, whatever it is that the organization also does besides their base programming. If you only say, "Come see next week's performance of Giselle," then people don't know that you're doing these other things. And so, I'm really interested in providing many different entry points for donors into my organization, and that means putting a spotlight on a lot, not just on the performances.

Erik Gensler: How does that work for a performing arts center that is not producing its own work, but is presenting it? And oftentimes people aren't going to the performing arts center because they have a loyalty to it, they're going because they want to see Hamilton, or they want to see a dance piece that's there.

Michael Kaiser: See, for me, running a presenting organization, which I did at the Kennedy Center, is more about curation than it's about simply presenting. Of course, there's some things you present because everyone's going to want to buy a ticket, like Hamilton. You don't really have to market Hamilton.

Michael Kaiser: But Hamilton doesn't create necessarily great good will for the organizations that present it either. There's a lot of competition for tickets. There's a lot of hurt feelings. Read the Washington Post, yesterday about what happened at the Kennedy Center. But when you're really an exciting, well-managed, thought-through presenting organization, you're really a curator. You're putting things together. So, while it is true that at the Kennedy Center, most of what we presented was not produced by us, although we did have our own symphony and our own ballet company, and we did produce some of our own theater, a lot was coming from other places. But I would curate things. For example, I curated a huge festival of Arab culture. The largest Arab culture festival in the history of the world was in Washington, D.C., at the Kennedy Center in 2009. And we had 700 performers, visual artists, representing all 22 Arab countries. It was really quite an astonishing project. We put that together. We didn't produce the art. I didn't make the dance performances or the musical performances, but I put them together. And I think the great presenting organizations are curating in a way that get people to go, "Wow, that was original." I did an a cappella festival, which brought a cappella singers from all over the earth because it's one of the rare art forms that still has national differences and I wanted to hear the difference between Ladysmith Black Mambazo from South Africa and Le Mystère des Voix Bulgares from Bulgaria, how different it sounds and, and how the human voice actually sounds different in different countries. And so, we put this festival together. It was lots of fun. It was fantastic. Bobby McFerrin was the host. That was a curation. That was not about saying, "Yeah, what's the slot that we have to fill for next February?"

Erik Gensler:How would that work for , institutional marketing, for a smaller organization? So, in your examples, you mentioned La Scala, which is.... you know, and the National Theatre, which are iconic world brands.

Michael Kaiser: I'll take my little Kansas City Ballet, which was my first arts job and, we had to create a real excitement and interest around this organization that had real challenges financially. So, what did we do? Well, my artistic director did a Balanchine work. We created a Balanchine work that hadn't been done in 30 years. The dance press came from all over America to that little Kansas City Ballet to see this work. We negotiated our debut tour to New York City. We were the first performing arts organization from Kansas City to perform in New York. That created great excitement. We did a big gala performance where our dancers danced, but we also had star dancers from the San Francisco Ballet, New York City Ballet, ABT and the Royal Ballet and, and Alvin Ailey, all come and dance on the same program, which was unheard of and really exciting. We did a whole series of things that got people to go, "Wow. This company is really cool." And you can do that big or small. It's, it's not about your size. You can't get on television if you're not a huge organization typically in a big way. When I ran Alvin Ailey, we did, we got on the Donahue show. We did President Clinton's Inaugural Gala. A big organization, fancy, famous organization like that can, can have a, a very broad footprint. But if you're running the Kansas City Ballet, you don't need such a broad footprint, but you do need to influence 100, 200 people in your community to support you who never thought of supporting you before. And when you do that, you change its history.

Erik Gensler: I'm hearing a lot around the collaboration of programming and marketing and development. Do you think the way that most arts organizations are set up internally support the cycle, support this healthy balance that's required to be successful?

Michael Kaiser: No (laughs), in a word. I think that, in most cases, we have silos of departments who oftentimes feel unhappiness with each other. The development people say the artists aren't getting the information on time or the artists are saying the marketing people didn't show us the pictures first or whatever. And I think that this is really what a general manager, what the leader of the organization, needs to be able to do, which a big part of that job is to force, if you will, the coordination and the collaboration amongst departments because that's where the real power comes.

Erik Gensler: I'm waiting for an organization to come out with an amazing case study when they combine marketing and development, the idea that development is just marketing. You're just talking to a more engaged patron and why we're separating that and looking at that differently, I think there's a real opportunity there.

Michael Kaiser: I agree with you and, again, I felt it was my job, running an organization, to build that marriage. I think the challenge is some organizations have tried to hire one person to run both and, at this point, they're different expertises, technical expertises. And the problem is, when you hire someone to do both, you typically lose expertise in one or the other, if, particularly if you're a smaller organization without the resources really to have great middle management staff who can fill in. And so, I think... And very often these days, it's the marketing side that's missing out, where someone's brought in because they know how to do fundraising because everyone's so scared we're not going to raise enough money and be-, to make them feel exalted, they give them the title of external affairs, in which they have both marketing and fundraising responsibility, but not necessarily the real expertise in both. So, I agree, fundraising is marketing, but the tar-, the way you target, the way you work, the way you interact, is different than the expertise you need to have, to do good social media.

Erik Gensler: I think in the corporate world, they call it acquisition and retention-

Michael Kaiser: Mm-hmm.

Erik Gensler: ...which is similar, I think.

Michael Kaiser: It absolutely is and, and you're right. It's a question of scale and, and the size of the relationship. The size of your relationship with a ticket buyer is very different than your size of your relationship with someone who's giving you $50,000 a year. but that also demands different kinds of attention and different kinds of ways of interaction and, as long as the organization is really cognizant of that, you're right, they're both marketing.

Erik Gensler: Speaking of scale, you say that an organization needs to balance its scale of programming vision with the size and generosity of its patrons.

Michael Kaiser: Correct. I am an optimist when it comes to programming and I'm always trying to program big, but what you don't want to do is go bankrupt in year one because you programmed work that wasn't going to find support from your, from your donor base. I'm a very big believer in advanced programming. I work three to five years in advance for not every project, but for some of my very big signature projects, which gives me the time to make sure I can find the resources to support the program. I don't think it's fun to work in an organization which has great vision but is spending every minute running around like crazy saying, "Oh, my goodness. This show is next week, and we don't have the money to pay for it." I think that's not the way you create a happy, thriving organization, both for the internal family, but particularly for the external family.

Erik Gensler: That's a really great point, and I've seen it with many organizations where they have to launch their subscription and they have to slot seven shows and the deadline for the first brochure is coming up and they only have four of the shows.

Michael Kaiser: It happens so often, particularly, I find, in theater more than other art forms because ballet and symphony and opera tend to rely more on known quantities, less new work. And, yes, I find that's, that's a real challenge and a real problem for a lot of theater companies.

Erik Gensler: I've learned so much already in this, in this interview around it coming down to being as strategic in your programming as you are in your marketing. I come at, I come at this with such a marketing first hat on, but really, it's so much about the programming.

Michael Kaiser: It has to start from the programming. But when I talk about planning in advance, I'm not trying to put people in a straitjacket all... I really talk about dreaming. I find that one of the real problems of the arts today, particularly as we face so many alternative forms of entertainment that are competing with us and are a lot cheaper than we are, is that we're not dreaming enough. Our work isn't interesting enough in many cases. It's sort of two percent different from last year. And so, when I talk about planning in advance, what I'm really saying to artistic leaders is dream. Take some time. Sit in a nice comfortable place, have a glass of wine and what have you always wanted to do? But rather than say let's do it six months from now when we may not have the resource, let's plan it for three years from now when we know we can find the resource and so we can do it really right. And when you can start working in that timetable, what you're allowing artists to do is really to pursue their dreams, and that helps the arts organization. And what, what doesn't help is to rush to say, "What can we do six months from now that we can afford? Let's plan our work to a budget," and you end up with, with works that typically not quite as interesting.

Erik Gensler: You call it the slot mentality.

Michael Kaiser: I call it the slot mentality, when organizations have the Christmas slot, the family slot, the funny slot, the new work slot. And when they program that way, they end up s-, feeling repetitive every year. The audience feels it. The public feels that. I always, when I announced my seasons at the Kennedy Center, I wanted people to go, "Where did you think of that from? Where'd that come from?" "Country music? Country music at the Kennedy Center? Where'd that come from?" You know, you want to surprise people a bit. You want them to pay attention and be engaged and, and not sort of get into this mentality of just sort of, "Oh, it's the same old thing, what they do next year. Which Beethoven's symphony?" And, you know, there's a concept in fundraising called donor fatigue, which is meant to be that donors after while get bored of giving to an organization and so they stop, or they give less. There's no such real thing as donor fatigue. There's just donor boredom. If our work isn't interesting to the donor, over time they start to get bored and then they do say, "Hmm. That group over there is doing really interesting stuff and maybe I'll move over there." Then people blame it on quote donor fatigue, where all it was if the organization had done a better job of programming. They wouldn't have lost that donor.

Erik Gensler: As Seth Godin says, "The product is the marketing."

Michael Kaiser: It is. It's exactly correct. And the product is art. It's an arts organization (laughs), and yet it's amazing how many arts organizations start from the budget and then say, "Okay, what can we do?” rather than, "What do we want to do? Now let's figure out how we support that."

Erik Gensler: You also write about tent poles. Can you talk about that?

Michael Kaiser: I believe it's unrealistic to assume that every arts organization is going to do all programs of equal size and excitement in a year. And so, I try and have, every season, a few, and how many depends on the size of the organization, frankly. The Kennedy Center did 2,000 performances a year. There are going to be more than at a, at a ballet company that does four programs a year. But I always wanted to have one or two or three or more programs a year that really got people excited and where you really put a ton of emphasis and where you also made it an emphasis for your donors early on to get them excited and engaged. The Arab festival I mentioned was one of those projects. It was an unlikely project for the Kennedy Center. Most of my donors had never heard of any of, and my audience frankly, of any of the performers we brought, but we ended up selling 96% of the tickets to the program, to the whole four week festival, and we ended up raising all the money we needed because we spent time really engaging people in this very exciting project and, because we gave it a lot of time, we were able to work a relationship with PBS that them doing 10 minutes a night for five nights in a row on the new, the news hour about our festival. They went to a different country and did a 10-minute segment each night about the artists who were coming to the festival. This was unprecedented for PBS, but it really built excitement and awareness of the festival. It helped me to raise money. It helped to build an audience, but it was one of the main programs of that year. Not every program could get that level of attention and that level of investment. But by doing a few of these each year, you do keep your whole family truly excited and engaged.

Erik Gensler: So what do you do about the programs that aren't part of the tent pole? So, there's a production next week. It sold 40%. You've put money towards it. It's not moving the needle. What do you do?

Michael Kaiser: Well, you have to decide for every program, long before next week (laughs). to be honest, you have to decide why are you doing a program and what's its draw going to be, and therefore how do you price it or how do you build audience for it. And if it's really something that you're doing that you think is important but it's just not going to draw, how do I fill the seats in other ways? And I just don't give up and have empty theaters. And it happens that you have an empty theater, but that's certainly not my first choice. For example, at the Kennedy Center, I met with my marketing director every single morning at 6:00 a.m. to go through all the performances for the next few months and figure out what's going, what's not selling, what do we need to do. A lot of times, there's certain productions you're just not going to sell them, no matter how much you put in marketing and how much you advertise them and, therefore, you build audience in different ways. You might invite students. You might invite senior residents, seniors. You might, in, in some cases, one of our favorites... we brought a Cambodian dance company that wasn't going to have a natural audience in D.C., but there's a Cambodian community and we spent quite a bit of time building a relationship with that Cambodian community and sold out the performance that way. But I couldn't do that in one week's notice.

Erik Gensler: I believe you call that missionary marketing as opposed to information marketing.

Michael Kaiser: You've read my books (laughter). Information marketing is when something's easy to sell. Yo-Yo Ma is coming. All you have to do is give a phone number and say Yo-Yo Ma and, and he sells out. Hamilton's coming. What kind of marketing do you need to do? There's no genius in selling out Hamilton today. On the other hand, missionary marketing is when you have a program that's much harder to sell. Maybe it's a brand-new work by a new artist. Maybe there's no one involved who's easily recognizable to your audience. Maybe it's an art form, like my Arab art, that wasn't familiar to your audience. Then you have to do a different kind of, of marketing. And the great news now is we have technology. We can give so much more information so much more cheaply than when I started in this field 30 years ago when there was no internet. And when you were doing a new work by an artist no one ever heard of, you, all you still could do was send out the postcard and maybe do a few ads and no one was attracted. But now you can do audio clips and video clips and this... You can do so much that you can send out in a different kind of way now. I think technology, which has been a challenge to the arts in some ways, has been an incredible help to us in marketing.

Erik Gensler: Let's talk a little bit about pricing since you mentioned it, and, in your book, you said, "Pricing is a trade-off that must be determined by analysis rather than emotion." What determines the appropriate value for a ticket?

Michael Kaiser: Economics would tell you it's what you can get for it. I think it's your mission of your organization that really ultimately says, "Who are we trying to reach? How are we trying to build a, an audience and do we need to have a diversity of entry ticket prices so that different kinds of people can afford to come?" which is where I think most arts organizations end up, not all. Those with very small theaters typically will have one price. But I think, if you only charge the maximum amount that economics tells you can, I think you don't end up with the diversity of audience that you're really trying to get to if that's in the mission of your organization. What I have found is that, if you go back to your economics and think of demand curves where the higher the price, the lower the demand, that the arts typically have what's called a kinked demand curve, which is that the slope at the higher prices is less than the slope at the lower prices, which means that if you raise a ticket price by five dollars to someone who's willing to pay $200 for a ticket, you're not going to lose much of that audience. But if you have people who are only going to pay $12 for a ticket, going to 14 can lose you a big chunk of your audience. And that's why we see these mammoth Broadway prices for the select seats these days. The people who used to pay $100 a ticket are now paying $600 a ticket and they don't care, but you couldn't have done that on the lower priced tickets. And I think that we're... We have to be very careful to do analysis and learn our audience and learn the kind of program we're doing and what they, what the market will bear. But then we also always have to go back to our mission in saying are we bringing in the audience we want? And if we're not, then we have to think about pricing as one tool to address that, but only one.

Erik Gensler: I've never heard that analysis about the demand curve. I think that's fascinating. That makes a lot of sense. No, no, great answer.

Michael Kaiser: By the way, there's other ways of diversifying your audience. If I could give, a really good example of that.

Erik Gensler: Please.

Michael Kaiser: When I was running Alvin Ailey, this is back in the early 1990s, Ailey was unusual. It's a predominantly African American company, but in most of our cities, we got a predominantly African American audience, except for New York, where the majority of our audience was white. And this was concerning to us, not that we didn't want to have white people in our audience. Alvin wanted all kinds of people in his audience, but the question was we wanted a range of people and we wanted people to feel at home and comfortable. And then we did an analysis. What we realized is we were only advertising in the New York Times and a lot of the African American population at the time, that wasn't their paper of choice. So, we were the first people, first arts organization, to advertise in the subways of New York. We took huge three sheets of Desmond Richardson whacking his leg up and, and immediately our audience was much more diverse because we were reaching peop... We had to think through. We were not achieving our mission because we were not addressing the audience that we were trying to bring in with the way we, with the channel we were using for our marketing. We were selling our seats, but it wasn't necessarily the only result we were looking for.

Erik Gensler: That's interesting. Ailey was our, Capacity Interactive's, first client, working with Sharon Luckman and -

Michael Kaiser: I hired Sharon to-

Erik Gensler: (laughs).

Michael Kaiser: ...to, to the Ailey organization as our development director.

Erik Gensler: Yeah, she's coming in to be on the podcast very soon.

Michael Kaiser: She's the best.

Erik Gensler: She's the best, but I'll, you know, you can be confident that every single year we've been working with them, and we still work with them very closely to this day, we've chipped away at the New York Times (laughs) in outreach in different ways. They've been very, very forward-thinking and it was really one of the first organizations to be heavily investing in social media-

Michael Kaiser: Mm-hmm.

Erik Gensler: ...and was really one of the first to just pour more and more money in, with, you know, a thousand plus percent ROI, like at City Center and through Facebook and Instagram and digital channels, and being able to use those tools to reach new audiences and it's been a really great case study.

Michael Kaiser: And the first new channel we used was the subway (laughs).

Erik Gensler: Yeah. Oh, now, I mean, you, everyone in New York knows Ailey. It's iconic-

Michael Kaiser: Mm-hmm.

Erik Gensler: ...because I think that those subway ads, and which is extended to bus ads, and-

Michael Kaiser: Right.

Erik Gensler: ...I know they had a board connection that allowed them to, you know, reach a lot further, make their money go a lot further with those and, yeah, they're... I think they do... that's institutional marketing. They're almost ... They've become institutional, I think, because-

Michael Kaiser: Absolutely.

Erik Gensler: ...of some of that. Yeah.

Michael Kaiser: my favorite Ailey story is when I first started out with Ailey and we were in deep financial distress and everyone was sort of confused, "Why are we in such deep financial distress? We're Alvin Ailey. We tour the world. We are on TV. Everyone knows Alvin Ailey." And then the author Alex Haley died, the author of the book Roots, and we got many, many letters of condolence because people thought Alex Haley was Alvin Ailey-

Erik Gensler: Oh, my gosh.

Michael Kaiser: ...which told me that we weren't quite as famous as we thought we were, and it really taught me a lesson about the arts. We take our own press too seriously and our name can be floating out there, but a lot of times, people don't know exactly who you are.

Erik Gensler: No. I want to turn to leadership-

Michael Kaiser: Mm-hmm.

Erik Gensler: ...and you mentioned that you met with your marketing director at 6:00 a.m. every day. I know you had a senior staff and a daily meeting that started very early in the day. That's an intense management style.

Erik Gensler: I'm curious why you choose that path.

Michael Kaiser: I think it's really hard to run an arts organization. I don't think this is easy, and I don't think it's just gut feel, and I don't think it's just doing what we did last year. And I think I challenge myself as much as I challenge anyone else to really be thinking through our programming, our marketing, our fundraising, the way we interact with our board members, the way we interact with our customer. These are things that take a lot of time, a lot of energy and a lot of thought and I don't leave it to chance and I don't believe in inertia. The world is changing, and we have to change with it. And so, this is hard and there's... It's not, it's not so easy to build a donor base, it's not so easy to maintain a donor base or an audience base, and so these are challenges that we really have to think through and work hard on. And, and there should be joy in that too, which is a joy of achieving and a joy of seeing the audiences come and doing great art. I will say that of my 20 senior staff, I think I had two retirements and one person leave over 14 years.

Erik Gensler: Wow.

Michael Kaiser: And it was the long-term artistic plan that I think, more than anything else, kept staff because I sort of fooled them every time a year was over, we added another year at the end.

Erik Gensler: (laughs).

Michael Kaiser: They always wanted to be there to see that programming happen. So, it's an intense way of working, but it's not an unrewarding way. People work very hard in arts organizations, but I think when you feel, particularly, that your boss cares and when you see the results and when the work is really interesting, I think that's one of the most... greatest joys of the world and that intensity pays off.

Erik Gensler:Are we lacking good leadership in the field? Are we nurturing the next generation of arts leaders? Are we investing enough in professional development and, making sure we're, we're planning for the future in terms of leadership and management?

Michael Kaiser: The easy answer to that is no, but I, but I think it needs to be more nuanced than that. number one, all arts organizations are challenged financially. We're all small businesses, even the Metropolitan Opera is a small business compared to the big behemoths of industry. None of us really can afford a number two, so what happens is you get a really good number one as the director of a museum or the head of a dance company or the head of an opera company and they don't really have that person training underneath them to become the number two. We can't afford it. It doesn't seem like a good use of money if we can put the money somewhere else, so we don't do it. So as a result, there's a generation of arts leaders, I'm sort of some of the, one of the older ones (laughs), but there's a generation that's going to retire over the next 10 years who have been leading a lot of the big arts organizations for a lot of years and, in many case, pretty well, but they haven't trained that next generation and that's why I do the work I do. My real focus of my institute is on making sure that those who are, not necessarily going to inherit the big organizations three years from now, but the ones who are in their thirties, early forties, are really going to have the tools they need so they can ascend, and they can learn the lessons that we've learned because there's very little good codification of, of arts management. And we can make sure that we have a new generation of arts leaders over the next 10 and 15 years who can take over in this very challenging field.

Erik Gensler: Did, have you seen the Bottom Line report from NCAR from Zannie Voss-

Michael Kaiser: Yes.

Erik Gensler: ...showing that most arts organizations are barely skating by once you add in depreciation for fixed costs. You talk in your book about tightly controlling expenses because of our small businesses. I'd love for you to talk a little more about that.

Michael Kaiser: Sure. I don't waste a penny (laughs), which does not mean to say, say that I managed by restricting budget. There's a difference. I start with the art and then say what budget do we need to do that art and how do we find it, and can we find it, but I don't want to waste money because I really think that's immoral in the arts. And it's immoral to donors to say, "We're going to take your contributions and, oh, yeah, well, we'll figure out what to do with the money." I don't believe in that. I want to get every dollar out of every dollar, every dollar's worth out of every dollar. And so, I am very careful about expenditure, but the budget of the Kennedy Center grew from 125 million to over 200 million in the course of my 14 years. So, it's not that I restricted expenses. What I did was just to make sure that we were doing, we were using the money to do interesting work that would help generate new revenue.

Erik Gensler: One thing I remember from your first book in addition, and you mentioned it earlier, when organizations get in trouble, they cut risky programming, but you also talk about the perils of cutting marketing.

Michael Kaiser:Again, if you think of the cycle, it's art and marketing. And, unfortunately, when arts organizations hit financial challenges, the first two things that almost always get cut are art and marketing. And the problem is, when you cut art and marketing, you cut the reason for people to care about you and that means you're going to have less money next year. You can't fool people. So, yes, both of those are areas that I don't want to cut. I don't cut when I... unless it's we're at death's door and we just have to do it. But, even then, what I try and do is plan really, really, really exciting art for two years from now or three years from now. When I got to American Ballet Theater, and we were very sick at American Ballet Theater when I arrived in 1995, one of the first projects we announced was a new full-length ballet to a commissioned score, the first time in ABT's history, surprisingly, that there was a new full-length ballet to a commissioned score and it was a production of Othello, choreographed by Lar Lubovitch. And, and we talked about that because we needed to sound really interesting at a time that we didn't have a lot of money to spend (laughs). And, and I believe people don't care so much as you're programming this year and next year or the year after, they just want to know that you're vibrant and alive.

Michael Kaiser: And so, so, yes, I believe in being careful with your money, but I also believe that boring programming is the death knell for arts organizations.

Erik Gensler:I'd love to talk about you and, and what motivates you and, and how you learn and where you look for inspiration, so let's start with that. Where, where do you look for inspiration?

Michael Kaiser: Goodness, I love going to the arts and watching artists. I watch, I like watching, watching excellent people. It doesn't have to even be arts. I love excellent sports people because I love the sports. I love watching just people with brilliant minds. And I look how they're thinking and then, somehow or other, I can't tell you the process by which an idea comes, but it almost always comes in the shower.

Erik Gensler: (laughs). Yeah, because you're relaxed and...

Michael Kaiser: Yeah.

Erik Gensler: I was just listening to a podcast the other day. It's this podcast for COOs, the, the number two that most corporations have, and you have the, the founders, the visionary and the COO, who's running the day-to-day business. And it's an interview with a COO and one of the COOs said, "It's so important for me to run the day-to-day business so the visionary can have the space to come up with the ideas."

Michael Kaiser: I think that's true and I think the mistake that gets made in a lot of corporations, and also some of the larger arts organizations, is when the visionary retires, and they make the COO the top person because the skill base is different and, and the vision goes away.

Erik Gensler:There's another book I read that says successful businesses need a visionary and an integrator, so the integrator who loves leading people, who loves special projects, who loves the day-to-day, but most visionaries are pretty bad at that.

Michael Kaiser: I wrote, a blog once, what did I call, the messiness ghetto, which I believe that arts organizations need to have this area that they let be very messy. And boards are uncomfortable with that and sometimes staff members come in, brought in to, you know, tame the group and don't waste money and make sure everyone's working in a more business-like way. But if you do that and you don't let that messy place happen, you don't get good art.

Erik Gensler:You mentioned sports and I know you've written about this. I'm curious what can arts organizations learn from sports teams?

Michael Kaiser: I think sports teams do the cycle so well. They create an interesting product. They do great institutional marketing, and they build this astonishing family of fans who give them of tons of money, which they put into buying better players and market the hell out of those players and build even a happier, more engaged family. And when you look at the... You know, I'm a Yankees fan since I was three years old. You know, that's what they've done so well, and they do great institutional marketing and they build a great family of supporters. And while I know that many arts people get mad when I use this example, because they're so mad that the, that the sports have so much many, I say, "Let's try and learn from them and let's build these intense families who love us and let's use good marketing as a technique for taking what we do that's wonderful and making people really want to be part of us."

Erik Gensler:I think just calling them fans sets a new paradigm-

Michael Kaiser: Mm-hmm.

Erik Gensler: ... because it, it honors their love of what you're doing.

Michael Kaiser: Mm-hmm. And, in England, where I lived for a while, it's which team do you support, and I'm a supporter of this team, and you actually feel like you support them.

Erik Gensler: (laughs). What are some must-read books for arts administrators who want to take their career to the next level?

Michael Kaiser: I don't think it's in books. I think it's in... I think the must-read is reading arts news daily, which I do voraciously, and then thinking what would I do in that situation? Are they handling it correctly? What's the prescription? What are they saying that doesn't make sense to me? And I don't think you can find that in a book. I think you have to practice, and I think you practice by reading everything you can read about what's going on in, in not just the art form you care about, but all arts, and seeing what's happening in this institution. Do I think they're handling that right? This is what I think is the best training.

Erik Gensler: What's something you are really good at and something you're working on improving?

Michael Kaiser: Professionally or personally?

Erik Gensler: I think they're interrelated.

Michael Kaiser: Oh. I'm really good at baking (laughter), and, and, funnily, I did an article in the Washington Post once my press person set up of, of what I cook for Thanksgiving and of the seven cakes I make every year for Thanksgiving. And that article, to this day, that was in 2002, I still get people stopping me in the store asking me if they're buying the right apples for the cake.

Erik Gensler: (laughs).

Michael Kaiser: it had much more response than any article in the arts section I've ever had. But I do love to bake and I'm good at baking. And I would like to get better at, so many things. I would love to get better at taking the time to go to performances more and not, at this point in my career, just spend the time in an airplane.

Erik Gensler: (laughs).

Michael Kaiser: I'd rather actually see the art because it truly is the art that inspires me.

Erik Gensler:So we've come to your final question, which we call it your CI to Eye moment. And the, the question is if you could broadcast to a thousand arts organizations, their leadership, their staff, their boards, what advice would you give them to help them improve their businesses?

Michael Kaiser: Look at budgets a little less, look at income statements a little less, and trust your artists a little more.

Erik Gensler: Great. Thank you so much. This was a pleasure.

Michael Kaiser: Thank you.