Corporate Influence and the Innovation Agenda

Corporate Influence and the Innovation Agenda is the third in a series of six essays taking a critical look at innovation culture, its assumptions, influences and impact.

It is certainly not new information that the boards and donors of major legacy arts organizations come largely from the corporate world and wield enormous influence in the priorities and managerial dynamics of those institutions. Nor is it new information that the major foundations – all foundations, actually – acquire their capital through the financial services sector and are obligated by law to disburse 5% of their assets. (This is, I’m told, a result of the Tax Reform Act of 1969 which was supposedly enacted, in part, as retribution by Republicans against the Ford Foundation’s active support of civil rights and voter enrollment organizations.)

The redirection of excess capital through philanthropy is a remarkable American invention, one often underappreciated as a means to pursue social progress and support charitable work. While in Europe central governments have historically taken on this role, America depends heavily on the private philanthropic sector and, for many years, this worked, more or less. However, an argument can be made that over the past 30 or so years – and with the rise of a particularly virulent strain of corporate capitalism – the gap between accepted corporate values and the values of a humanistic society have widened to a seemingly unbridgeable chasm. And herein lies the problem.

Because the not-for-profit sector depends on the corporate sector for support, and because we live in a society where success in business is the measure of all things, we reflexively acquiesce to the assumed expertise of our corporate patrons. However, most of the underlying assumptions of the market-driven corporate business world are fundamentally inappropriate for a cultural sector situated in a not-for-profit economy.

Not to be too obvious, but there is a reason that the arts, humanities and education, not to mention a great deal of mathematics and science – all of which are actually just different facets of the same field of endeavor – are situated in the not-for-profit sector and are funded, largely, through philanthropy. It is because they are not for profit. They’re for something else.

In the recent flap over the “Heart of The Matter”, a report by the Commission on the Humanities and Social Sciences and funded by the American Academy of Arts & Sciences, one kept hearing the phrase “We need to make the case for the humanities” and I have been hearing the phrase “We need to make the case for the arts” since I first became an arts administrator in 2002.

If one is asked to “make the case” for the value of the pursuit of knowledge for its own sake without concern for profitability, the necessity of leading an examined life, the longitudinal value of fostering the individual’s human development through creativity, intellectual curiosity and reasoned discourse, then one is already at a profound disadvantage. If one is asked to “make a case” for why the quality of human life matters as much as the relentless pursuit of money, then we are in dire straits indeed, as the question itself indicates an unbridgeable and irremediable bias that, in being asked, reveals the interlocutor’s assumption of your lack of value.

The not-for-profit sector’s unquestioning acceptance of corporate values as a measure of success and the near-universal assumption that the logic of business is sage and sound has created a culture gap that has only rarely been addressed publicly until recently. In his July 27 Op-Ed to the New York Times Peter Buffett wrote:

And with more business-minded folks getting into the act, business principles are trumpeted as an important element to add to the philanthropic sector. I now hear people ask, “what’s the R.O.I.?” when it comes to alleviating human suffering, as if return on investment were the only measure of success. Microlending and financial literacy (now I’m going to upset people who are wonderful folks and a few dear friends) — what is this really about? People will certainly learn how to integrate into our system of debt and repayment with interest. People will rise above making $2 a day to enter our world of goods and services so they can buy more. But doesn’t all this just feed the beast?

I’m really not calling for an end to capitalism; I’m calling for humanism.

Buffett’s use of the term R.O.I is significant here for many reasons. In the corporate world, particularly the financial services sector, the emphasis is almost entirely on short-term R.O.I. Slow, measured, incremental growth over time is considered old-fashioned and conservative, long-term planning and vision are almost entirely absent. The only thing that matters, we are told is “shareholder value”, or at least the appearance of creating shareholder value while lining one’s own pockets.

From an arts perspective – and that of most humanistic endeavors – there’s no such thing as short-term R.O.I.  Human development is a lifelong activity and the investments we make in the arts, education, humanities and sciences (not outcome-based corporate research) yield returns on long arcs and in subtle ways. Our “shareholders” are the entirety of the human species, animals, plants and the planet itself.

If one function of the arts and culture sector is the production of social objects around which communities form, and insofar as these events create opportunities for meaningful interpersonal interactions in public space, reinforcing the social fabric and promoting social coherence, then the value is difficult to measure with existing methodologies.

It is nearly impossible to measure the increased emotional, psychological and physical wellbeing that results from habitual, communal, social, creative engagement. It is difficult to quantify the value of fostering healthy, imaginative communities and how cultural activities may mitigate the deleterious effects of social conflict or persistent socioeconomic stressors. How does one quantify the economic benefits of civil stability and correlate that to a healthy cultural ecology?

While we can point to example after example of how the adoption of corporate values has imperiled the not-for-profit sector, we must also hold ourselves accountable for our complete failure to counter corporate logic with a compelling alternative.

In Rachel Aviv‘s recent New Yorker article “The Imperial Presidency” about the current president of NYU, she notes:

Craig Calhoun, the director of the London School of Economics and a sociologist who studies higher education, said that faculty members, too, have accepted the logic of the corporate world; rather than spending their careers at one university and devoting themselves to its improvement, they are often on the market, looking for a better deal. He said he wished more tenured professors would be more proactive in responding to the changing conditions of their work. “They are extremely conservative and tend to look at things in a narrow, self-interested way,” he said. “It would be a tremendous resource if they were the ones coming up with ideas about how the university can change to meet future challenges. But all they have is a defense of the status quo.”

While Aviv’s area of concern is higher education, her insights could just as well be derived from a close examination of most of our cultural institutions and the philanthropic structures that support them.

The corporatization of the major legacy arts organizations has introduced to the sector a certain amount of beneficial professionalization; even in my (comparatively) short career I have seen introduced expectations of fiscal accountability, stable workplaces and management best practices that were not present when I started. At the same time, this professionalization has created a huge swath of arts administrators who have been trained in corporate management techniques that are widely inapplicable except in the largest and most well funded institutions.

What’s more, these techniques are aggressively marketed down the ladder, all the way to the BoP community arts organizations. For instance, it is mandatory for recipients of Bloomberg Foundation funding to take classes with Michael Kaiser. The classes are “free” but the cost of diverting the already-limited time of senior organizational leadership and board members to learning Kaiser’s DeVos Arts Management Principles becomes a significant burden to small and mid-sized arts organizations. Not to mention that Kaiser’s approach to arts management is hardly relevant to the operas, symphonies and ballets it is meant to serve, much less small to mid-sized arts organizations.

The most present example in NYC is The BAM Professional Development Program, which by all appearances is designed to “help” small arts organizations in Brooklyn develop the fundraising capacity to self-produce at the Fisher Space at a base rental cost of $25K per week – more than half of the annual budget for many small arts organizations. How does that actually help anybody?

With large, legacy arts organizations being less-than-prone to fundamental change, and small and mid-sized arts organizations being compelled to learn Kaiser’s archaic philosophy of arts management and adopt corporately-derived frameworks for innovation; and with artists being forced to adopt entrepreneurial models more suited to MBAs in the financial services than tech start-ups in Silicon Valley, is it any surprise that we see an arts ecosystem mired in dysfunction?

While there is no argument that the cultural sector needs to innovate, nay, reinvent itself, the unique characteristics of artistic endeavor and the non-monetary value proposition of cultural engagement demand the creation of different frameworks for measuring impact, effectiveness and evaluating change.

Lest you think I’m entirely disparaging of business, let me hearken back to Peter Buffett, “I’m really not calling for an end to capitalism; I’m calling for humanism.”

A few weeks ago the New York Times ran an essay by Peter Ludlow called “The Banality of Systemic Evil”. The word “Evil” is a bit of an overstatement; so let’s use the word “dysfunction” instead. Ludlow offers a quote from Robert Jackall’s book Moral Mazes: The World of Corporate Managers, which I think is relevant in light of the ongoing professionalization and corporatization of arts organizations, funders and consultants. Ludlow writes:

The mid-level managers that he spoke with were not “evil” people in their everyday lives, but in the context of their jobs, they had a separate moral code altogether, what Jackall calls the “fundamental rules of corporate life”:

(1) You never go around your boss. (2) You tell your boss what he wants to hear, even when your boss claims that he wants dissenting views. (3) If your boss wants something dropped, you drop it. (4) You are sensitive to your boss’s wishes so that you anticipate what he wants; you don’t force him, in other words, to act as a boss. (5) Your job is not to report something that your boss does not want reported, but rather to cover it up. You do your job and you keep your mouth shut.

Jackall went through case after case in which managers violated this code and were drummed out of a business (for example, for reporting wrongdoing in the cleanup at the Three Mile Island nuclear power plant).

If we want change then it is going to take individuals in organizations of all sizes, from venues to artist service organizations to funders – who are willing to resist corporatization, stand up for humanism and responsive governance, rock the boat and advocate for change. There are lots of us on the outside, so who is on the inside, willing to reach across the divide?

It is not merely that corporate culture has subsumed the culture of the humanities; it is that the financial capital in the philanthropic sector, especially in the arts, comes from an older, more traditionally corporate cohort of funders with similarly traditional corporate boards. These funders, the older administrators who are their peers and the Ivy League arts administration programs they’ve designed, espouse pre-digital corporate structures and methodologies, not the more nimble and counterintuitive entrepreneurial practices of the tech and new media sector, where new wealth is being generated. Many of these New Economy pioneers are guided by Tim O’Reilly‘s maxim, “Create more value than you capture”, a stark opposition to the narrow traditional corporate value of maximizing shareholder value above all else.

Current arts funders are guided by boards of directors in the mindset of Hewlett-Packard, General Electric & Morgan Stanley, not Apple, Google or Facebook. Thus their adoption of “innovation” is learned second-hand, it is not an intuitive practice; it is not a deeply ingrained way of thinking or being or doing business.

The corporate world is changing as quickly as the arts world, with the introduction of trends like Social Entrepreneurship and Impact Investing. Funders pursuing innovation would be better served by looking at the social, collaborative, creative strategies of artists and small arts organization, inviting them into the process of envisioning innovative solutions, rather than compelling artists to work against their natural strengths and adopt the practices of failing legacy institutions.

So what can we learn from artists and small arts organizations? We’ll discuss that in the following essay.

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