• McKinsey has an interesting report out on philanthropic prizes. (pdf)
• WolfBrown has been rather on fire lately with systematic arts analysis. First, this cultural action plan for the Richmond, VA region is a comprehensive policy prescription for creative vitality. I hope to accomplish something similar, though on a smaller scale, for the New Haven region as the final project for one of my independent studies. The Richmond plan itself (skip the exec summary, it misses much of the good stuff) is a wonderfully thorough document, with specific time frames, cost estimates, and model examples included with every recommendation. It’s an impressive achievement and one can only hope that it will find a receptive audience with the appropriate decisionmakers. The other publication of note is the Philadelphia-based Cultural Engagement Index, which measures various types of community participation in the arts over time. The CEI was commissioned by the Greater Philadelphia Cultural Alliance, which apparently plans to do one of these every year (or at least regularly) until 2020, with the goal of doubling arts participation in the region by that time. More on the CEI at smArts and Artful Manager.
• Social entrepreneurship in the arts? The Yale School of Music has established an unusual grant fund for alums who have started music-related projects or nonprofit organizations. The first-round winners include Createquity reader Tina Lee Hadari, with whom I had a lovely conversation a few weeks ago about her string quartet and music mentoring program called Music Haven.
• Missed this last time around, but Allison Fine wrote a follow-up to her arts and social capital post from a couple weeks back.
• Might the Fed help with nonprofit capacity building? Chuck Grassley and Max Baucus want to do just that:
  

  The Senate Finance Committee’s top two members — Democrat Max Baucus and Republican Charles E. Grassley — teamed up today to introduce legislation that would provide money to help small and medium-sized charities get training and management assistance.

  The legislation, introduced as an amendment to a national-service bill now being debated by the Senate, would provide $25-million over five years to a “Nonprofit Capacity Building Program” within the Corporation for National and Community Service.

  The amendment would “strengthen small charities around our country, especially where resources are scarce,” Senator Baucus of Montana, who chairs the finance committee, told his colleagues on the Senate floor. He said it would allow groups to get training, for example, in how to manage their finances, raise money, fill out tax forms, work with new technology, or plan long-term budgets.

  UPDATE: And it looks like it’s passed, as of today. Woohoo! See here and here.

• There’s now such a thing called a city’s Walk Score, measuring how easy it is to access life’s amenities without sticking the key in the ignition. Though the methodology has issues, it’s still an interesting exercise. What I find most interesting is that the list of top 10 cities for walkability bears an absolutely uncanny resemblance to the cities with the most active and interesting arts scenes:
  

  1. San Francisco
  2. New York
  3. Boston
  4. Chicago
  5. Philadelphia
  6. Seattle
  7. Washington, D.C.
  8. Long Beach, Calif.
  9. Los Angeles
  10. Portland

  Switch out Long Beach for Minneapolis, and that list packs a formidable punch.

• Barry Hessenius has a nice interview with Janet Brown, new executive director of Grantmakers in the Arts.
• This is what the future of journalism looks like.
• I’ve been writing recently about executive compensation in the nonprofit sector, and as if on cue, so does the Wall Street Journal.
• Speaking of leadership in the sector, should board members be actively recruited by search firms? Frankly, I don’t think it’s such a bad idea, considering what an important role board members play in a nonprofit organization and how difficult it is to engage them properly.
• Ever wanted to figure out how to make cool graphics without too much effort? Seth Godin has some tips for you.
• Two people whose writings on the NEA I criticized last month, Greg Sandow and Leonard Jacobs, are back at it (see: Exhibit A, Exhibit B). Now that I read them more carefully, I am struck by how they are taking diametrically opposite positions from each other. Leonard says we should rely exclusively on economic arguments for supporting the arts, because “there will be a backlash against artists and arts funding coming from the right-wing and it’s going to be as intense as it was during the NEA wars of the early 1990s.” Greg says don’t sweat the wingers, they’re never going to be convinced anyway; instead, focus on the people in the middle, and the way to do that is by pushing arts’ intrinsic value. (Or at least, that’s what I think he’s going to say; he hasn’t gotten to the good stuff yet.) Frankly, I don’t understand why it has to be an either/or proposition. I’ve felt for a while that the separation between intrinsic and instrumental arts benefits is a little artificial. Why not accept and own them both, and tailor our arguments according to the specific group — or even person — we’re trying to reach? With due respect to Greg, I can tell you from personal experience that the analytically-focused people in my program are a lot more receptive to economic arguments about the arts than they are to wishy-washy expressions of “well, don’t you see, they’re just great!” But on the other hand, I do think it’s possible, to a degree, to measure intrinsic reactions to the arts — and there, I think, we can get somewhere with people who are less receptive to the economic arguments. (As for the right wing, I think that the best way to ballast against the hypothesized coming storm is to put the arts in as strong a position as we can, now, while we have the chance. And if the storm never comes, then so much the better.)
• Yale SOM’s former Dean Joel Podolny weighs in on whether business schools should bear some responsibility for the financial crisis. A very interesting column, but this comment from Aaron James is what rocked my world (emphasis mine):
  

  Business schools teach us that goods and services are good for society, that when people buy and sell things they increase their personal utility. The notion comes from basic economic theory and it finds its way into every business discipline. It justifies commerce by identifying a social contribution: value created through trade. In this convenient theory, every transaction makes the world better; every profitable business contributes to society simply by virtue of its existence.

  Economists will tell you that this theory is too simple, that it ignores externalities like pollution and omnipresent realities like government regulation. But somehow these complications don’t find their way into dominant business logic or core business curricula. Somehow MBAs get stuck with a remedial economics that ignores environmental and social costs and regards regulation with disdain.

  Is it any wonder that managers seek unregulated markets and pursue them blind to the consequences? Is it any wonder that leaders act purely in their own self-interest? They’ve been taught that doing so is the best way to contribute to society. They’ve been taught that doing so is their job.

  This crisis will not be solved by the addition of ethics courses. Too often, such courses perpetuate the same logic described above. If we are serious about teaching responsibility in business education, we need a curriculum that reflects the real world context in which business operates, including its social and environmental consequences and the necessity of regulation for maintaining competitive and transparent markets. Instead of training MBA’s to lead in a hypothetical world of simplistic economic theory, let’s train them to lead in our world. It’s time to get real.

In my last post, I talked about how suppliers of creative content are (for the most part) declining to exit the industry despite extremely strong competition and unfavorable odds for financial self-sustainability, to say nothing of massive success. The standard explanation of this is that artists, writers and the like are “driven to create”—they can’t imagine doing anything else with their time. That may be true at least in some cases, but a class from my business school core curriculum provides a more interesting way of looking at it. The dean of the school, Joel Podolny, and my Competitor professor Fiona Scott Morton co-authored a study of California wineries and found that hobbyist suppliers—basically, rich people that wanted to run their own winery—concentrated so heavily on the high end of the wine market that they collectively made it less profitable for businesses that were interested in maximizing profit. As a result, businesses that wanted to make money would concentrate more on lower-end wines. Podolny and Scott Morton called these hobbyist suppliers utility maximizers and suggested that these winery owners consumed the quality of their own wines (in other words, were willing to accept a lower profit level in order to possess the identity of a high-quality wine producer). Another study found that investment banks with the best reputations actually did not need to pay top dollar relative to their competitors to attract their targeted employees, because the employees to some degree consumed the status of their employer (and were willing to accept less money in exchange for the prestige of working for a top firm).

Basically, I think that the reason we don’t see more exit from creative industries is because most creative content producers are also consumers of their own status as such, and are therefore willing to put up with a boatload of bullshit—including a very high likelihood of making next to no money—in order to be able to call themselves composers or directors or actors or artists. Because, let’s face it, being a creative professional is fun. It’s virtually guaranteed to get people’s ears perked up at parties, and can serve various aphrodisiac functions (though the whole poverty thing can just as easily kill the mood). The undercurrent of ego is strong, particularly for something like composing—you’re getting other people to pay their own money for the privilege of experiencing something that you created for the fun of it. Not only that, many creative professionals retain a massive degree of control over the final feel and execution of their vision, making the satisfaction level at the end of the process that much higher.

There’s a cultural shift going on in which more and more young people are graduating from high school and college and wanting to do interesting things with their lives, something that reflects who they are and what they think about the world. In previous generations, most young adults would end up working in agriculture, manufacturing, or other labor-intensive mega-industries and form their professional identities around a career that might have been set in stone before the child was even born. Now, having been weaned on a Baby Boomer-influenced education emphasizing self-expression and -actualization, Millennials want creativity to be a part of their professional identity, and more and more that means working in some kind of creative industry.

That leads in to the other side effect of this shift: as more and more people decide that it’s not enough to be an audience member or a reader or a listener and decide to express themselves as well, they have less time to consume the work of others. In other words, as the number of suppliers of creative content increases, their average audience decreases (even if the total audience might be increasing dramatically). Andy Warhol’s prediction that in the future everyone would be famous for fifteen minutes is proving ever more prescient in the Internet age. As universal awareness becomes more and more difficult to achieve and a minimal level of awareness easier and easier, the lines between amateur and professional content creators are becoming increasingly blurred. It may be that we are all pursuing vanity projects to some degree.

Some kind of massive aggregating system will undoubtedly pop up to organize all of this content for us and keep it manageable. What I’m less sure of right now is what it will look like. Until then, I’ll try to keep up with my RSS reader.