Apples and Bananas: Benchmarking and the Cultural Sector
(Photo Credit: See https://flic.kr/p/9anRy4 CC License)
Guest Blog Post from Robert Stein, NCAR Senior Advisor, and Executive Vice President and Chief Program Officer of the American Alliance of Museums
For most of the last 10 years, my career has been spent working in large art museums like the Indianapolis Museum of Art and the Dallas Museum of Art. During that time, I’ve also had the pleasure of collaborating closely with many colleagues at other museums of all types and sizes across the globe.
In scenes that play out in museum conference rooms all across the nation, museum executives and managers like me are working hard to figure out how best to use their resources. Even in years of relative financial success, a common refrain is one of doing more with less, or ensuring that our resources are spent wisely and for the highest purpose of the museum.
In my role as EVP and Chief Program Officer at the American Alliance of Museums (AAM), I’ve been thrilled to gain an even broader perspective on the field of museums. It’s really amazing to see how many different kinds and sizes of museums are doing important work here in the U.S. It’s also clear to me that the long-term financial sustainability of these museums is a topic that we’re all working very hard to understand and promote.
What are the best ways for museums to use their limited resources?
How can museums reach new audiences most effectively?
If we can only pursue a few strategic directions this year, what are the right places to make those investments?
These are the questions we continuously wrestle with as staff of museums, and the same questions that many of our board members care deeply about too.
At least part of the problem lies in the fact that the tremendous diversity of the museum field makes it very difficult to develop effective benchmarks. If we really seek effective comparable data, we need to think carefully about how museums that may seem similar on the outside actually differ significantly in their financial operations.
An art museum with a $10m budget faces very different expenses around collections care, climate control, and security than a science museum with a similar $10m budget. That science museum faces costs for exhibitions, gallery staffing, and facilities that are again different from similar expenses that might affect a history museum. Among museum friends, we like to joke that each museum is like its own delicate flower, but when you’re faced with finding peers whom you might compare your museum with, the challenge can seem daunting.
Making sense of the fruit basket
During the early part of 2016, I was very fortunate to work closely with the staff at NCAR as a Senior Advisor on the creation of the KIPI Dashboard. Before museums, my career had focused on information visualization and computer graphics. It was a rare and enjoyable opportunity to resuscitate some of those skills to help build a tool that could address many of the issues around benchmarking that my museum colleagues are facing. For museum leaders, NCAR’s KIPI Dashboard can really help provide clear and actionable insights into financial performance that is based on sophisticated and comparable benchmarking data. The methods that NCAR has used in its analysis account for many of the primary differences between museums including budget size, age, and type of communities you serve. (See What is a KIPI?) These adjustments effectively level the playing field between museums of similar types and sizes, and THAT allows for more meaningful comparisons to be made regarding financial performance. Now, rather than comparing apples to oranges, bananas, or pears – the whole fruit basket is sorted to give us a true look at how apples compare to other apples.
Making it simple
By providing a level playing field for financial data from similar museums, the NCAR team addresses a really significant barrier standing in the way of using financial benchmarking data inside the decision-making process of museums.
Let’s be honest – even with the right data in our hands, it can still be really hard to have a substantive conversation about where to focus our resources. In my view, this is often due to the fact that these numbers and the insights derived from them can still be pretty complex. There are a lot of components that need to be considered, and it’s sometimes overwhelming to know exactly where to look and what factors to consider.
This is why I really appreciate the format of a Dashboard that NCAR has used to present this data. By breaking down the data into nine general areas (we called them buckets during development), arts managers can get a quick snapshot impression of how they compare against their peers. Once you see this information for your own organization, you’ll find yourself quickly diving into the parts of the data that most interest you.
Maybe you’ll notice that your museum ranks at the top of your sector and size for earned revenue and marketing impact. These are great achievements that are important to celebrate and use to encourage your staff and board.
Perhaps you’ll see that your expenses are higher than those of your peers – leading you to discuss among your team what comparable organizations are doing that might save you money in your budget discussions this year.
By diving in deeper, you’ll be able to notice trends that reflect the actions you’ve taken over time to address these areas of your museum. Perhaps you’ll notice that your fundraising campaign has moved your museum from the bottom quartile to the top quartile in a number of Contributed Revenue metrics.
These kinds of insights put a simple and straightforward tool in your hands that couples your own financial performance data with a picture of what is happening across the sector. This facilitates the kind of “what if” scenario discussions that all museums need to be having, but bases them on solid data and financial performance.
I also think that this format can be an important tool to use with our museum boards. It is often so hard to give boards a good picture of how we are performing with respect to our peers. When we face difficult financial choices, it is easy to feel that our museum is the only one with this particular problem. In fact, most of the time, a tool like this could show a board that their area of concern is perhaps part of a trend that is impacting many different museums. This kind of informed decision-making can really help museums make better choices, focus our efforts on financial areas that can most influence our strategic goals, and communicate clearly about how we stack up against our peers.
While the KIPI Dashboard has just been released, I know that the team has a vision for how it will grow and change over time. What are some features for the Dashboard, or types of information, that you would find useful in your organization and that might facilitate open and fact-based discussions about finances?
Robert Stein is the Executive Vice President and Chief Program Officer of the American Alliance of Museums (AAM) where he oversees the teams responsible for AAM’s diverse content and programs. Prior to his work at AAM, Rob was Deputy Director of the Dallas Museum of Art and Deputy Director for Research, Technology, and Engagement at the Indianapolis Museum of Art. Rob brings a strong technology background to his work and a focus on the impact and social change that museums can bring to the communities they serve.