A Tale of Two Fails

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If there’s any truth to Oscar Wilde’s witticism that “experience is what we call our mistakes” then learning from the mistakes of others would seem to be a low-risk, high-return investment.

While not exhaustive postmortems, I’ve analyzed the failures of two high-profile arts organizations to see what useful lessons you might learn without having to endure for yourself a fiscal meltdown.

YOU MIGHT BE POPULAR BUT YOU STILL HAVE TO BALANCE YOUR TIRES

Infernal Bridegroom Productions was a critically- and popularly-acclaimed theatre troupe in Houston.  Over its 14 years, the group became nationally known for mounting bold, cutting-edge works and avant-garde classics.  Despite its extensive artistic successes, the group shuttered in 2007 blaming “insurmountable financial difficulties.”

Newspaper reporting at the time revealed the group’s bankruptcy was triggered when the IRS attempted to collect unpaid payroll taxes.  Not depositing payroll tax payments is an all-too-common trick businesses can use to juggle bills when cash is tight.  Perhaps this was the rationalization IBP’s decision makers used to justify their actions taken (or not taken, as is the case).  Although I personally know many of IBP’s founding members, I have no special insight on what happened behind the scenes, and have based my observations only on published reports.

One such report asked whether the fiscal mismanagement might hurt potential plans to re-form as another troupe. An un-named IBP staffer responded, “I think people know the artistic staff had nothing to do with any of this.  So if we started a new organization, I don’t think it would be held against us.”  Whether this person was exhibiting enormous naiveté or shrewd branding bravado in the face of an embarrassing public failure is pure speculation.[1]  In my opinion, though, this statement points to a clear imbalance between the artistic and business sides of the IBP organization.

Here’s where the car analogy comes in: The wheels and tires on your car aren’t quite perfectly round.  The imperfections are too small to notice when you’re stopped, but as you drive these small issues are amplified enough to be felt and heard as shimmy and vibrations.

Being a little short on cash when bills are due is like the small imperfections in a tire.  You could “balance the tire” by addressing the underlying shortfall between revenue coming in and expenses going out.  Doing so might take some time away from your purely artistic efforts, but that’s the way to fix the problem for the long-term.  Your car mechanic does this by affixing a small metal weight to the wheel rim when the tire is first installed.

Or, you could just “borrow” a little money from the IRS by not paying payroll taxes when they’re due, fully intending to pay back the “loan” after more revenue comes in.  When business activities are slow this type of fraud—that’s how the IRS sees it—is easier to pull off and no one really notices or fixes the underlying imbalance.  This is the choice IBP seems to have made.

But the faster you drive on unbalanced tires, the more out of control and noticeable the vibrations become.  Left unchecked, the suspension and other car parts can be damaged.  I suspect that as the accolades and critical praise kept rolling in, IBP’s artistic side continued to dominate.  If you’re doing something right, just do more of it… the formula for guaranteed success, yes?  Clearly, no.  That’s like thinking that your tire vibrations will go away if you just drive faster.

A popular and artistically successful organization cannot remain so if doesn’t balance its artistic success with good (and legal) business practices.

MORE MONEY ONLY MAKES A CASE OF “HEAD IN THE CLOUDS” WORSE

When the city of New Orleans broke ground on the Louisiana ArtWorks building in 2003, they envisioned a 93,000 square foot, five-story artist mega-studio that would provide communal studios as well as top-of-the-line equipment in specialized glass, metal, print and ceramic work spaces.  The complex would be so attractive—a tourist destination, so the plan said—that 500,000 visitors a year would visit, paying admission to watch artists while they work, tour the art galleries, and dine in the café.

The budget, which started at $15 million, ultimately topped $25 million.  The money came from a mix of private donations and public funds, including a federal housing loan that, to this day, costs the city $600,000 a year in interest.

The kicker, of course, is that the project struggled from the start.  The morning after a pre-opening gala was held there in November, 2004, the contractor padlocked the building because of $2 million of unpaid construction bills.  Construction didn’t begin again for more than two years, and this cycle of start-then-stop construction would continue through September, 2011 when the project was finally declared dead.  In an opinion piece-cum-obituary a local journalist blamed unrealistic “pipe dream” and “fantasyland” plans, saying the project’s proponents were “trying to run a business with their heads in the clouds… [and] their hands in our pockets.”

That nails the main problem with the project, in my opinion.  Exactly what business were they trying to be?  Studio?  Gallery?  Museum?  Theme park?  Restaurant?  All of the above, it seems.

The project started out with the admirable goal of providing working space and shared access to expensive, high-quality equipment.  All the artists I know personally would definitely benefit from those two resources.

But a tourist “destination”?  When was the last time you paid just to watch someone work?  A meal at a hibachi restaurant includes a fun show as the cook prepares your meal table-side, but you’re paying to eat.  As a kid, I loved visiting a glass blower’s shop in San Antonio and watching him work.  The space doubled as his gallery and his continued existence depended on enough people buying things when they visited, but he still didn’t charge us to walk in the door.

The Louisiana ArtWorks story is sadly fascinating, and the project’s problems didn’t begin or end with the “tourist destination” angle.[2]  But businesses succeed (or, at least, are much more likely to) when they focus on being really good at doing one thing.

BOTTOM LINE

The punch line of my favorite tongue-in-cheek “demotivational” poster reads “MISTAKES: It could be that the purpose of your life is only to serve as a warning to others.”  Here’s to hoping your creative business continues to be the warned, rather than the warning.

 

NOTES:

[1] The following year, the artistic staff of IBP did form The Catastrophic Theatre, named in honor of the spectacular failure of their predecessor troupe.  As of this writing, the new organization has received similar levels of critical praise while avoiding tax problems.

[2] For a solid recap of the ArtWorks saga, see Doug MacCash’s reporting here.

Photo credit: http://www.flickr.com/photos/29143375@N05/