How can access to capital help organisations develop their assets and evolve their business models?

8/8/2019 How can access to capital help organisations develop their assets and evolve their business models?

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How can access to capital helporganisations develop their assets and

evolve their business models?A review on behalf of Business Link & Arts Council EnglandMargaret Bolton for Mission Models Moneyhttp://www.missionmodelsmoney.org.uk


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Introduction

This report reviews an action research project developed collaboratively by Arts CouncilEngland, North East (the Arts Council) and Business Enterprise North East (BusinessLink) and designed to examine how arts organisations might better exploit their assets todevelop income generating products and services.

The organisations receiving support through this initiative are:

Generator Live Theatre (through a subsidiary LT Online) Northern Stage Seven Stories

Each of these organisations is regularly funded by the Arts Council. In each case

investment, advice and support is helping these organisations develop or better exploitdigital technology and to develop and market new income generating products orservices. The idea for this approach was conceived and developed because theorganisations concerned lacked capital to invest. Neither could they access thedevelopment grants available to businesses in the region without having their own fundsto contribute towards project costs.

One of the recipients describes the investment provided as like research and development money . She comments that funding of this sort is often hard to attract.However, it is really important enabling the organisation to pilot things, to invest to save,to take risks . A recent report by MM Not Rocket Science 1 argues that arts organisationsshould have access to funding for research and development activities, the knowledge generated will enable them to stay ahead of the technological curve, to lead artistic and even social change.

Each of the four organisations receiving investment is seeking to implement a newstrategy based on diversifying their income through sales of new products and serviceswhich align with their mission. The initiative is a recognition that organisations need bothinvestment and advice and support to enable them to make this transition. It coincidedwith a reduction in the availability of private and public funding because of the recession.An environmental change which, while it made it more difficult to secure investment forwork of the kind supported through this initiative, made it all the more necessary.

The Arts Council and Business Link contributed in total 145.3k towards the costs of theprojects supported. They characterise the initiative as action research examining whatarts organisations, poised for enterprise development, might be able to achieve ifprovided with some capital and business advice and support. It is difficult at this stage to

1 Hasan Bakhshi, Radhika Desai and Alan Freeman.


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gauge the success or otherwise of the initiative in meeting its overall objectives. It is asyet at an interim stage. It was planned as an eighteen month initiative lasting untilAugust 2010. So far only one of the projects has been fully implemented. This reporttherefore reviews progress to date and offers a commentary on some of the issuesemerging.

The report is based on:

i) a survey of the original written material prepared by the four fundedorganisations about their projects;

ii) interviews with the Arts Council and Business Link and the four organisations;iii) observation of quarterly update meetings.

It has been produced by Mission Models Money (MMM). MMM was asked to undertakethis work by the Arts Council because of its programme examining financialsustainability or resilience in the arts and cultural sector.

The action research and what it was designed to achieve

The initiative was designed to test whether a one off investment of capital providedalongside on-going business support could enable arts organisations, at an appropriatestage of development, to exploit new business opportunities thereby generating more oftheir own income, thus enabling them to become more financially resilient. Theinvestment was to be in infrastructure namely the development of digital products andservices.

The need for the project emerged from on-going business development work with asmall number of organisations regularly funded by the Arts Council. It was consideredthat these organisations, if they could access additional capital investment, couldprogress planned projects which would make them more financially resilient in themedium to longer term. The amounts of capital required were not large (relative to theorganisations overall budgets) but the Arts Council considered that they could make all the difference to the individual organisations concerned.

The Arts Council decided to invest 80k in the initiative on the understanding that itsinvestment would act as leverage, providing organisations with the contribution towardsproject costs needed to enable them to access investment for business developmentfrom the North East of England Investment Centre (NEEIC). NEEIC is a brand under theBusiness Link umbrella but separate from the Business Link advisor function.

The Arts Council s objectives for the initiative, were to:


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test the potential for regularly funded organisations to increase income fromcommercial sources;

enhance the sustainability work being delivered by MMM; gain valuable research evidence as to the need for one off infrastructure

investment into the creative sector; support the partnership between the Arts Council and Business Link.

For the Arts Council the initiative was regarded as developmental, with the potential toinform models of investment and support both regionally and locally. It represents a newapproach to supporting the development of arts organisations and therefore entailsrisk . However, it is a new approach that appears to have significant potential becauseit joins funding up with the Business Link diagnostic undertaken by an appropriate person and identifies opportunities for organisations to become more sustainable .NEEIC investment would be provided to projects at levels proportionate to itsassessment of the extent to which the project would produce a return on investmentrepresented by jobs created or safeguarded and increased turnover and profit.

The Business Link advisor who helped initiate and deliver the project describes it asmodelling a new approach to asset development for arts organisations:

The objective was to open minds to for example, digital opportunities. The approach was one based on asset development..Regularly funded organisations spend their money on running costs. One idea behind this funding was to give money for projects which generated a return not funding which would pay utility bills and go into the huge black hole of running costs...I would hope that this funding will enable these projects to get a return on the investment, to

increase participation in their work with target audiences and to test ways they can digitalise.

The organisations supported through this initiative are regarded by both the Arts Counciland Business Link as being at the leading edge of developing new business activity andnew business models in the subsidised arts sector. They are entrepreneurialorganisations who have loads of ideas about new income generating initiatives but don t have the resources to follow them through . The projects supported are describedby the Business Link adviser as:

Examples of fastest possible impact with the least amount of resources and budget invested.

Although relatively quick wins, it was considered that the projects supported would help these businesses think about what they re doing well and the demand for their services ie that they would make a major contribution to the future strategies of the organisationsdeveloping them.


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The genesis of the initiative

This initiative is the product of a long standing relationship between the Arts Council andBusiness Link, which dates back at least nine or ten years (see the box overleaf). Thiswork has resulted in a significant and sustained partnership between the twoorganisations. A Memorandum of Understanding (MoU) and Statement of Intent (SoI)define the relationship between them. A Business Link advisor specialising incommercial creative industries uses the Arts Council as an office base one day a week.The advisor provides business development advice on issues such as marketing andstaff training and development or signposts to other relevant specialist agencies. He orshe also helps organisations access NEEIC investment. However, the Arts Council doesnot focus on Business Link s investment role, it is only a very small proportion of what it does . The primary value of Business Link s relationship with the arts sector is, in itsview, the access that it provides to valuable and much needed business support andadvice.

Supporting business development in the arts

2001: The Cultural Business Venture Grant Scheme bringing together Arts Councilmanaged funds and single programme One North East is launched. It offers access tofinance (capital for example, for new equipment and work space refurbishment ormarketing and also elements of consultancy). It was available to start ups and existingbusinesses in the creative industries. It offered funding of between 1k and 10k. 25 percent match funding was required; this had to be in place at the time of application.Applicants filled in a form, submitted a business plan and a 3 year cash flow forecast.Business support was provided through the Business Link support function in the region,

regional enterprise and development agencies (some applicants chose not to accessexternal support). The scheme worked in partnership with the Prince s Trust. Anallocation of the fund was passed on to the Prince s Trust who awarded it as a smallgrant alongside their loan scheme.

2006: The One North East funding stream changes. The maximum grant from theCultural Business Venture Grant Scheme was reduced to 6k and only start upbusinesses were eligible (new ventures developed by existing organisations fell into thiscategory). The scheme valued 50k a year. To be eligible organisations had to accessthe business support network.

2003 - 2008: Arts Council England, North East co-ordinate an Objective 2 ERDF andESF bid Cultural Sector Development Initiative (CSDI). Arts Council England, NorthEast led the development of the Cultural Sector Development Initiative (CSDI) inpartnership with key regional agencies and sub regional representatives. It helped thecreative and cultural sector to engage with this strand of European funding. CSDI wasan umbrella initiative comprising a number of projects that delivered tailored business


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support and skills development opportunities to cultural and creative practitioners in theNorth East. Total project funding over three phases was in the region of 32m.

[2004]: As a result of the relationships developed through work on the Cultural BusinessVenture Grant Scheme and the need for the arts sector to engage with mainsteam

business support, Business Link and the Arts Council agreed that a Business Link Tyne& Wear advisor should be based part time in the Arts Council. The post holder wasbased in the offices of the Arts Council and Northern Film and Media.

[2007] There are four independent Business Link offices in the region. A merger of theBusiness Links is proposed. The new merged body decides that it will work with asmaller number of key partners and Arts Council is one of these. The relationship withthe Business Link advisor is therefore maintained.

As a result of the MoU and SoI, Business Link and the Arts Council have regularquarterly meetings. These meetings discuss themes emerging from the work undertakenwith Arts Council clients and the feedback received by the Arts Council on the service.(NB work with specific organisations is not discussed as this would breach clientconfidentiality and data protection). At one of these meetings the issue of access tocapital was discussed.

The Business Link advisor had been working on business/product development with theorganisations supported through this initiative over a couple of years. Generally helpingorganisations develop and test new business ideas (or pre-service design ). Her view isthat while the business models pursued vary, as does organisational capacity to deliverthem, these organisations have important things in common, for example, they are all

open minded about income generation and the opportunities offered by digital .

A major barrier to such organisations developing their business ideas is a lack of capital.All four organisations were unable to make the financial outlay for their projects inadvance of payment, while NEEIC pays on completion of the project. Neither did theyhave funds to make the partial contribution required for eligibility for NEEIC investment.These two factors were key to motivating the Arts Council to dedicate funds to theinitiative.

Selection process and conditions of participation

As already mentioned the intention was that this initiative would build on businessdevelopment work already underway in organisations and focus on those organisationsready for investment to enable them to take particular income generating projectsforward.


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When it was clear that some Arts Council investment might be available to supportprojects around business development, the Arts Council and Business Links met todiscuss what work they might do collaboratively and agreed to take an action researchapproach. On a confidential basis the Business Link adviser approached four ArtsCouncil clients with whom she was working, who were at an appropriate stage in their

business development work and asked if they would be interested in participating,explaining the Arts Council s aims and objectives for the initiative. She applied theBusiness Link diagnostic (a series of meetings to discuss all areas of the business) tothose interested in participating and examined whether the projects proposed wouldproduce the return on investment required to unlock NEEIC money.

The four organisations considered to be appropriate to participate were required toagree certain conditions, namely to:

- attend quarterly meetings;- share information about learning and progress;- communicate with each other and the Arts Council and Business Link;- contribute to evaluation and review.

After the four organisations had agreed to these conditions, The Arts Council made aformal investment offer and they submitted project outlines, a narrative of benefits andbudget forecasts.

The projects supported

The four projects that form this initiative have a number of commonalities. They are allbased on online solutions, they all underwent the Business Link diagnostic to identify theneed for the project and the opportunities it presented, all received support from theBusiness Link adviser and all accessed NEEIC investment. However, they are all atdifferent stages of development. Generator s project is the most advanced and is largelycomplete. The other three are still underway. Live Theatre and Northern Stage are, atthe time of writing, close to completion. Seven Stories, having undertaken significantpreparatory work, made their application for NEEIC funding at the end of 2009. One keypiece of learning from these projects so far is that they take significant development timeand that the capacity to deliver them needs to be carefully planned into organisationalwork programmes.


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Generator

The organisation Generator is a development agency for music. It works in the areas of music businessdevelopment, musician support (including the commercial viability of artists) and livemusic, most significantly in supporting promoters and representing the musicdevelopment sector in the UK. Based in Newcastle, it was established to serve theneeds of the North East and Cumbria. However, it was asked by the Arts Council to takeon a national role assisting other fledgling agencies and representing the musicdevelopment sector to government.

The organisation has been in operation since 1991. It had a major restructuring in 2008and has a new board and a new organisational structure. The restructuring wasdesigned to enable the organisation to operate more effectively including by pursuing amore entrepreneurial approach to income generation.

Over the last four or five years Generator has received 3 investments from NEEIC fordiscrete projects. These have enabled it to put in place new organisational systems andexamine product development and markets. Generator describes itself as having a very productive relationship with Business Link. They have just signed an MOU to worktogether Business Link makes referrals to Generator because of its music industryexpertise.

Generator has recently heard that an ERDF bid has been successful. It will provide asignificant injection of funds, 822k over three years, to develop their music businesssupport work.

The organisation s turnover in 2008/2009 was 400k. In the current year it is 660k.Projected turnover for 2010/2011 is 760k The organisation now has 9 full time and 2part time staff .

Project overview The project has three main elements:

- a new Business Management System (website) to enable Generator to moreeffectively market and sell its services to both organisations and individuals;

- development of a new training course for fledgling music businesses (for examplepeople setting up record labels and live music promoters covering finance,planning, digital marketing etc) for which accreditation is being sought;

- the music business network Plugged In .

Generator has for a number of years run a number of unaccredited training andeducation packages for those wanting to increase their understanding of the musicindustry. Discussions with individuals and organisations in the music industry indicated


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that there was a market for formal, structured training provided by a specialistorganisation that focuses on running small music businesses. A survey of musicdevelopment agencies (part paid for by NEEIC) indicated that they were interested inproviding such training and that, rather than reinventing the wheel, they would buy itfrom Generator.

Generator had witnessed increased demand for its training over the previous two years.For example for one course typically there were three applicants for every placeavailable. Working with other music industry bodies as training delivery partners,supported by an appropriate website, would enable Generator to train many morepeople. Offering a bespoke level 3 course that was accredited would produceguaranteed income on a fee per head basis for its music industry partners thus enablingthem to buy into Generator s courses.

Generator was fortunate to employ a part time information manager who had therelevant experience to develop the Learning Zone that not only supplies informationand course notes to beneficiaries but also has a series of pass word protected levelsthat can be accessed by assessors, verifiers and examiners as necessary. Generatorhas now been able to employ this member of staff on a fulltime basis. This keydevelopment has gone some way to reassuring NCFE (the national accreditation bodythat Generator is forging its education partnership with) that they can stand alone anddeliver all aspects of accredited training.

A new website meanwhile is seen as a means for Generator to more effectively marketand sell to both individuals and organisations. For example, the new website will enableGenerator to market training packages to other organisations with an interest including

further education institutions and local authorities. It will also enable its training partnersto download course materials from the web and to register course participants andaccess information about their previous use of Generator services. While a client relationship management function will enable it to track individual s contact with theorganisation and the support provided and suggest which of its services might be mostappropriate for them (for example one to one advice on business or legal issues through clinics , information or guidance packs or training).

One element of the project is the Plugged In network. Plugged In is a member snetwork which publicises opportunities for the music business, offers a members forumfor the discussion of issues, and the sharing of opinions, problems and solutions withother network members. It also offers a streamed feed of information affecting musicbusinesses in the region and nationally.

The organisation reports a number of benefits related to increasing confidence in theteam. It has also helped build strong relationships with other key music industry bodiesand cemented Generator s reputation as the leading music development agency in the country . Even at this early stage the project also appears to have had some tangible


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benefits. It has already helped Generator to attract other funding notably the large ERDFgrant mentioned above. On the basis of this project and the potential strength of the newwebsite they have also won a tender to establish a music network for Yorkshire.Generator regards this project as:

Central to taking the agency forward. It

s been key to the organisation to learn how to develop a product and market it .

The next stage of project development, following Generator s employment of amarketing and communications officer, will be to engage a consultant to advise on anappropriate marketing strategy to ensure optimum uptake of the full range of supportservices the agency can now offer across the UK. A timeline outlining key projectmilestones for this and the other projects is provided in an annex to the report.

Aspirations This project is central to the future development of Generator. The aspiration is that theproject will increase awareness of the need for the sort of training provided by Generatorand help develop a national appetite for relevant research and other developmentalwork.

Generator projects that over a period lasting 12 months after project completion it willcreate 1 extra job and safeguard 5. The turnover generated as a result is projected at60k over the same period.

The selection of and relationship with suppliers The Business Link office extracted from its supplier register the names of five possible

suppliers with the relevant skills and experience to undertake work on the project.(Organisations can use a supplier not on the register and still be eligible for NEEICinvestment if it is the first time they have contracted with them). The organisations onthis list were invited to tender. The supplier recruited is regarded by Generator as strong,showing a clear understanding of the organisation s business .

It proved impossible to find a consultant with appropriate expertise to map the courseonto the appropriate occupational standards and Generator therefore undertook thishighly specialist task itself.

Investment The Arts Council contributed 20k toward the project. NEEIC contributed 16k. Thisinvestment will pay for:

content development in the form of training materials; Business Management System (website) development; marketing and PR consultancy.


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Generator itself contributed approximately 8k in management time to the project.

Advice and support Business Link advice and support has been very important to the development of theproject. The Business Link advisor helped with the writing of the brief. She also

suggested the development of the client management system. This is a really importantelement of the project. It will provide the business management information formonitoring and evaluation that potential funders expect. Generator consider that thiselement of the project contributed to their success with the ERDF bid. Indeed, the ERDFteam at One North East were extremely impressed with this system that even goes sofar as to measure changes in an individual businesses turnover.

Issues and challenges

Negotiating the accreditation process has been time consuming and difficult, whileaccreditation is key to the success of this particular business model. However, one ofGenerator s board members has expertise in this field and provided the organisationwith a key piece of advice at an important stage that enabled progress (board membershave been recruited because they have expertise in areas necessary to thedevelopment of the agency which is complementary to that of the staff team). One pieceof learning they have taken away from the project is that it would have been helpful to domore homework on the accreditation process and what it involved at the beginning of theproject.

Setting prices has proved difficult. Expert views about what prices the market can bearhave varied greatly. This is mainly due to there being no precedent for the offer.


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LT Online (Live Theatre)

The organisation Live Theatre is a theatre which produces new writing and supports new writers. For thelast two years the organisation has been exploring new ways to generate income to helpsustain the company s work into the future and enable it to become less reliant oncurrent revenue streams. It has worked with a specialist consultant to develop a twopronged approach:

raising investment to put together a portfolio of property around the theatre(based on experience gained in their recent capital development);

developing a range of businesses which exploit the intellectual property, skills andexperience of staff working within the organisation.

Live has established a separate but linked company to develop and manage thesebusinesses, including the property portfolio in order to ensure it can involve the right sort of business brains . This company received support through this initiative to developthe first of these businesses an on-line playwriting course.

Live Theatre heard in the Autumn of 2009 that it had been awarded 1m through theArts Council s Sustain programme. With this funding it will be able to pursue its businessdevelopment strategy. This funding, which Live hopes to match through prudentialborrowing from Newcastle city council, will enable it to deliver five planned projects,each of which are potentially large scale:

- the on-line playwriting course;- a new restaurant - a joint business venture;- an SME incubator in the old school house (part of the complex of historic

buildings in which Live Theatre is based);- commercial property investments with partners;- a city park.

Live has previously received funding from NEEIC, investment for the early developmentstages of the on-line play writing project. This was for pre-service design. It enabled theorganisation to develop the project from a one page proposal to the appointment of aweb development agency with a brief to design the course website.

Live s turnover in 2008/2009 was 1.8m. In the current year it is projected at 1.7m.Projected turnover for 2010/2011 is 1.6m. The organisation currently employs 14 fulltime and 10 part time staff.


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Project overview The project was to develop an on line version of Live Theatre s existing popular off-lineIntroduction to Playwriting course, which had been devised and delivered by Gez Caseyand Jeremy Herrin. Desk research suggested that there was a gap in the market for aplaywriting course which was attached to a theatre with a reputation and proven record

in supporting successful writers. No other playwriting courses offered on the web aredelivered by people with an established reputation in professional theatre.

The idea of providing the scriptwriting course on line came from within the organisation.It was in part motivated by staff interest in digitalisation given that digital will be such animportant channel for distribution of arts content in the future. Already, staff at Live areenvisaging the development of a range of educational resources provided on line. Thescriptwriting course is the first to be pursued.

The off line course is massively oversubscribed and many of its graduates have gone onto have work professionally produced. Live are aware that linked to the on-line coursethey can develop a range of connected products which might include a writers forum, adigital work book, a hard copy book etc.

The course has been designed and developed and was soft launched during the recentnew writing festival held at the theatre in March. The 5 modules are now being tested by6 aspirating playwrights. Feedback will be gathered and the course amended before it islaunched to market in September 2010.

Of the 1m investment Live Theatre have received from the Arts Council s Sustainprogramme, 100k will be used for the development of the on-line play writing course in

the future.

Live regards this project as:

potentially commercial, 100 writers a year might go through the course. It might generate 100k profit as against 200k costs. However, really it s a cultural project, it s about spreading our brand. The secondary thing is its commercial nature. However, if we could develop 6 or 7 social enterprises like this one it would be very helpful to Live .

Aspirations To develop a series of business ventures that generate revenue for Live Theatre. Thisproject is helping to provide the knowledge and develop the skills to enable Live toachieve this.

Live considers that the project will create 1.5 full time jobs and safeguard 25 . Theincrease in turnover is projected at 300k. It is considered that the project will safeguard1.4 m in turnover.


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The selection of and relationship with suppliers Once the design brief was drawn up it was sent to a number of agencies. These wereselected by prior knowledge and by looking at examples of previous work. 3 agenciessent in responses and all were invited into Live Theatre to pitch for the contract. An

excellent relationship has developed between project staff at the supplier and LiveTheatre. The supplier has been very flexible in adapting to the stop start nature of theproject and the consequent changes in deadlines.

Investment The Arts Council contributed 20k towards the development of this project. NEEICcontributed 15.3k. Live Theatre contributed 3k in kind funding from its own resources.

This investment will pay for:

- the development and building of the different course modules;- more detailed testing and market research;- further work on strategic planning.

Advice and support The Business Links adviser was very supportive and successfully helped Live Theatrestaff through the uncharted waters of NEEIC investment.

The design process consultant who helped the organisation undertake the pre-servicedesign is described by Live as very important to the project. He helped Live thinkthrough what they needed to do in order to set up the new venture. A piece of work

described as potentially very valuable in their future planning . This consultant wasrecommended by an agency specialising in digital, broadcasting and IP.

Issues and challenges The two course tutors, Jeremy and Gez, have found it very difficult to find the necessarytime to dedicate to the project. Half way through the project Jeremy took a job at theRoyal Court and Gez took over the position of full time Literary Manager at Live Theatre.Both had huge demands on their time, but following some delays did successfullycomplete the scripts and interviews. They are busy producers, in demand and thereforeover committed.

Live considers that the biggest challenges are yet to come, in marketing, costing andlaunching the course: At the moment we are concentrating on making it. The post making process is going to be equally tough and it s difficult at the moment for us to quantify the work involved . Notably, Live knows that it needs to build capacity andskillsets within the organisation but suggests predicting what is required in advance isdifficult.


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Live says that a danger might be that:

..the project gets treated as another production. It gets made and it s successful and then we move on to something else whereas it should be seen as a long term project, the start of something big. We need to see it as such and be

in it for the long term .

The organisation is seeking to avoid this by including in its business plan the recruitmentof a course moderator and a digital producer.


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Northern Stage

The organisation Northern Stage is a producing theatre company which also presents notable local,national and international theatre. For the last couple of years it has been consideringhow it might better exploit its assets. These assets include its new building, its reputationand its people.

One issue it has been considering is how it might use its website to generate additionalrevenue by increasing on-line ticket sales, corporate hires, merchandise sales anddemand for its training. A major barrier however, has been its outdated website. The sitedates from 2003/2004 and it very limited compared to some of the more sophisticatedsites that now exist which for example, incorporate Amazon type selling.

Northern Stage s turnover in 2008/2009 was 2m. In the current year it is projected at

2.4m. Projected turnover for 2010/2011 is 2.7m. The organisation currently employs39.5 full time equivalent staff.

Project overview The project is the development of a website that emulates some of the sales functions ofsites like Amazon. The site will enable customer accounts to be attached to a profileand customers will be able to comment on the products they buy on-line. It is consideredthat over time the functionality for peer review and comment could develop into animportant sales tool (since peer reviews tend to have more credence than professionalones). The intention is to build stronger relationships with audiences through thewebsite, increase engagement and build a sense of community.

The website will allow for:

- an improved, more sophisticated contact management system;- increased opportunities to up-sell and cross-sell including user recommendations,

purchase reminders and suggestions of ancillaries including an ability topurchase programmes and interval refreshments when booking tickets;

- a customer log that allows tracking of site-navigation and purchases enablingrecommendations to be made to customers;

- multi-media postings, which would enable staff or users of the site to upload moreinformation around the show for example, author histories or rehearsal diaries;

- an on-line facility to add a donation to the ticket price and to register donations forgift aid;

- short clips from the communications skills course and video testimonials;- building the profile of the building as a bookable venue to encourage facilities hire

including by on line booking.


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The development of the new website has involved the senior management team and arepresentative from every team in the company. A strategic planning workshop was heldwith the senior team and a planning day for all staff.

This project has already had a number of distinct benefits. It has helped Northern Stage

to think in a more sophisticated way about its digital priorities and put in place plans todevelop this work over time. It has also helped the organisation to develop its brandingand communications and to consider how these can support its strategic development. Itis now looking to develop strong sub brandings for a) the audience; b) the theatreindustry; c) people interested in participation. For example, as regards the theatreindustry Northern Stage will seek to understand what information producers want/needand to present this to them in an attractive way on the website (a service that they don tperhaps get elsewhere) so they will want to bring their productions to the theatre.

According to Northern Stage, the project has:

encouraged a lot of cross departmental working and helped demystify marketing people across the organisation now better understand the marketing messages and why they re important. It s increased understanding of organisational roles and what s important to the individuals in these roles. The internal learning and the cohesion generated have been unexpected .

Aspirations Northern Stage s aspiration for the project is that it will increase both sales and revenueand make the organisation more financially resilient. Currently the split of publicfunding/revenue generation is 60 per cent/40 per cent. The organisation would like to

reverse this over ten years. This project is an important step towards this.

Northern Stage estimates that the project will generate an extra 5k in turnover andsafeguard 30k in turnover over a period lasting 12 months after project completion

The selection of and relationship with suppliers The project allowed Northern Stage to complete a large public tendering process, thefirst it has been able to execute in four years. Previously, the scale of projects andassociated costs had prohibited this.

According to Northern Stage:

the tendering process was a valuable opportunity to build Northern Stage s reputation as a forward thinking organisation to suppliers and helped it be seen as a client to be pursued. The tendering process made the company really focus on the project; made it attach targets and goals to something which had previously been aspirational and visionary. The process of selection and subsequent interviews helped to further cement the organisations plans. Overall,


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the opportunity to tender impacted positively on the company s profile and the planning process.

Funding The Arts Council contributed 20k towards the development of this project and NEEIC

9k. Northern Stage contributed 2k from its own resources. This investment will payfor:

- web development and technical upgrades;- marketing and promotion of the new website, including the opportunity to try

previously untested methods, such as SMS marketing and online advertising.

Advice and support Business Link advice and support has been very important to the development of theproject. Northern Stage said that they had been encouraged by Business Link to look atupselling and cross selling. Business Link:

.are very interested in innovation. An aspect of the bid that they were particularly keen on was an SMS marketing campaign linked to the website. They appear to like the idea of models developed in the commercial sector being applied in arts organisations .

Northern Stage received help from a consultant in scoping their portal. They have alsohad discussions with the Culture Lab about what their broader digital strategy might be.

Issues and challenges

A major challenge with the project has been the tight timetable for development of thenew website. This timetable was dictated by Northern Stage s desire to launch inJanuary 2010 to coincide with the 40 th birthday celebrations for the theatre. In the eventthis deadline was missed because of difficulties reconciling the existing on line ticketingsystem with the new website and its functionality. This has been a major headache likelyto afflict other arts organisations undertaking similar web development projects.


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Seven Stories

The organisation Seven Stories is a centre for children s books, it is an accredited museum with animportant and growing collection of original manuscripts and illustrations. It has astrategy which is aimed at achieving national status and impact (it is working towardsbecoming the national children s literature gallery and archive) and includes developinga business model enabling it to generate more of its own income and thereby achievinggreater financial stability and resilience. It has undertaken significant work developing arange of products and services which, whilst contributing to mission, will also enable it togenerate more of its own income. These products and services include book packagesfor schools Hooks Into Books , continuing professional development for educationpractitioners and special projects for schools.

Seven Stories turnover in 2008/2009 was 1.3m. In the current year it is forecast to be

1.1m Projected turnover for 2010/2011 is 1.2m. The organisation currently employs39 staff .

Project overview The current web site was launched when Seven Stories opened its visitor centre in thesummer of 2005. Its main purpose was to promote activities at the new centre and theorganisation now considers that it limits its ability to promote its new agenda which ismuch broader. The intention is that the new website will act as a hub for children sliterature and help to optimise income generation and fundraising opportunities.

Seven Stories has developed a plan for the project as a whole which comprises 4phases over eighteen months. They have planned the first two phases and funding fromthis initiative is contributing towards these; the development of the site map and initialcontent, work on functionality and the content management system, and the adding ofproducts and e selling. Phases three and four will comprise ongoing development.Although the project has a long way to go before completion, a lot of detailed andthorough work has already been done.

During the first half of 2009 staff members attended various courses and seminars aboutdigitalisation in preparation for the project. These encouraged staff to think about howthey might use digital in their work. As a result Seven Stories has begun using Flipcameras.

In April, Seven Stories heard that an application to the ONE Northeast CollaborativeInnovation Partnership (CIP) developed with the University of Newcastle had beensuccessful. This provided Seven Stories with a part time postgraduate student for ninemonths to help the organisation develop its use of gallery-based digital interactivecontent and more specifically to develop digital content to showcase the collection. Theopportunity during this period to develop an understanding of the potential of social


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media and to test the use of Twitter and Facebook made a valuable contribution toproject design and to wider organisational strategy.

The second six months of the year were taken up with preparatory work: pulling the brieftogether and recruiting consultants to undertake it and scoping the organisation s

contact management system requirements. NEEIC support for the project wasconfirmed at the end of December 2009.

Part of Seven Stories strategy for the future is to promote its charitable aims and todevelop its donor base. In order to fundraise effectively it needed to sort out itsdatabases and management systems. This project gave the organisation the opportunityto undertake this work. Work on the contact management system was initially regardedas a tedious chore but the organisation reports that:

in the event, it s been quite exciting. It has enabled staff to join up their thinking and provided them with an appreciation of what they ll be able to do with well organised richer data to cultivate relationships with their audiences. It s created a huge buzz in the organisation .

This buzz has been an unforeseen benefit of the project. As Seven Stories commented:one thing that s worked really well is getting staff really involved in thinking about the impact of the project on their area of work . Another unforeseen benefit has been theway in which the project has enabled the organisation to better utilise the skills of itsyoung staff team. It was discovered that the part time receptionist was a budding filmmaker and she now works one day a week recording and editing digital content for thewebsite. Another member of staff is a skilled photographer, who now takes photographs

for the website.

A notable feature of the project is that Seven Stories has twinned the senior member ofstaff with responsibility for the project who, because she is over 30 is a digital migrant (ieshe didn t grow up with the web), with a younger member of staff, a digital native, towhom web applications come much more naturally.

Seven Stories describes the project as having a profound impact on the organisationboth in terms of how content is generated and how it s managed.

The selection of and relationship with suppliers Eight companies were invited to apply for the contract, four were short listed. Informalmeetings were held with these four companies. These were described by Seven Storiesas very informative, providing them with a much richer understanding of theopportunities and challenges of the project and an insight into the strengths andcharacters of the different companies. More specifically these conversations helped theorganisation see the potential of the project:


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Discussing some of the issues and recognising their complexity meant that Seven Stories started to see the possibilities that the project could offer .

On the basis of these conversations the brief was tightened and refined before theformal interviews. A joint bid for the work from a digital media company and a marketing

agency was accepted.

Aspirations One of the aspirations of the new website is that it will achieve national reach,developing the audience for Seven Stories work. As Seven Stories describes theproject:

We already had an award winning website but the objective of this new project was to think about audiences, to put user groups at the centre. The new website is also an opportunity to capture and communicate the multiplicity of our work .

Seven Stories wants to use the new website to: generate more sales; to broaden anddiversify audiences and to cultivate more sustained and deeper relationships.

Seven Stories believes that the project will safeguard 2 full time jobs. The turnovergenerated as a result of the project is projected at 81.5k over a period lasting 12months after project completion. It is projected it will safeguard 131k in turnover overthe same period.

Investment The Arts Council s initial investment of 20k enabled Seven Stories to raise a

considerable amount of other funding. NEEIC provided 25k and an anonymous donor20k. Seven Stories also contributed 9k from its own funds.

Advice and support Business Link has provided a significant amount of advice and support to Seven Stories.It has helped the organisation think through how it might use the website and theinternet to generate more trade and improve is financial viability. Generally, it has helped the organisation to focus on its business development needs.

Business Link support was regarded as particularly beneficial in the early stages of thiswork:

In the early days we received a lot of support. [Business Link] helped by asking useful questions. The advisor has a lot of skills and knowledge and knew what the organisation needed. Iterative conversations really helped .

Events and training run in the region by Tyneside Cinema and MMM have helped SevenStories with its thinking, by providing inspiration and concrete examples of practice.


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A commentary on the initiative

This action research initiative was designed to test whether an injection of capital couldhelp the organisation s supported to generate more of their own revenue enabling themto become more financially sustainable. All of the projects involved the development ofnew websites to enable the organisations to better market a range of products andservices, while two involved putting an off line product on line to increase reach andsales. It is too early to comment on whether the initiative has been a success in helpingthe organisations concerned generate income it is not yet concluded, it is scheduled tolast until August and it will take time for the projects supported to show an impact onorganisational revenues.

While it is not possible to comment yet on the extent to which this initiative has achievedits overall objectives, it is possible to draw out some learning points from the work so farundertaken, to inform future funding and provide arts organisations engaged in similar

enterprise development projects with an indication of what may be in store.

A long development period These projects demonstrate that it takes significant time and capacity for organisationsto develop and implement new approaches to raising revenue. All four organisationsstarted the process of thinking about how they might diversify their income sources anumber of years ago.

The first stage was identifying potential products or services through the strategicplanning process. Later stages involve developing and testing particular product ideas.Also, specific organisational development activity has underpinned the projectsdeveloped for example, work on systems and processes. A specific example is SevenStories work on its contacts management systems.

There are a number of specific development and testing stages that projects need toprogress through. It takes time to navigate the process particularly when externalexpertise may need to be sourced at different stages. A mainstream business mightspend two or three years on product development from initial idea to launch but for theseorganisations the process. has taken longer than conventional business development because the organisations are trying to balance social as well as economic outcomes .The overall objective of the work is of course to better help them achieve their mission (Business Link).

The strategic nature of web development projects Each of these projects will potentially make a major contribution to helping theseorganisations effectively pursue their future strategies, in the case of:


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- Live Theatre, the project is the first in a series of enterprises that it plans todevelop and therefore could be seen as a pilot or testing initiative, helping theorganisation to understand what s involved in developing new enterprises;

- Seven Stories and Northern Stage, the website development project has enabledthese organisations to take an in-depth look at different audiences for their work

and how it communicates with them;- Seven Stories and Generator, the project is a key means of marketing and selling

products that both organisations are currently developing and testing.

For Northern Stage it has helped the organisation as a whole become much clearerabout the importance of marketing and marketing messages. It has also prompted moresophisticated thinking about branding and communications and how it can serve theorganisation s strategic development.

Seven Stories has been struck by the potential of the new web site to help it achieve itsfuture aspirations for example, in the area of fundraising, where it offers the opportunityto develop the organisation s donor base and to communicate with donors much moreprofessionally. As Business Link commented in relation to these projects:

All the projects have said that this work has helped them to look at all the areas of their business in a different way not just those areas that we are specifically working on.

The importance of the right advice and support All four projects have gone relatively smoothly. In some measure this appears to bebecause they have been able to access the right advice and support at key stages. Two

of the projects spoke very highly of the consultancy support they had received enablingthem to develop their project (in one instance this was funded through this initiative, inanother not, it was part of the preparatory work feeding into it and was regarded as anessential building block). One organisation referred to how the advice and support of atrustee with the right skills and experience had also made a significant contribution.

All the projects found the advice and support from Business Link extremely helpful.However, responses varied depending on the stage of enterprise readiness of theorganisation. A couple had received more support and more intensive support andacknowledged this and how helpful it had been. All regarded the connection withBusiness Link as very valuable in helping to access investment for businessdevelopment and innovation. Northern Stage emphasised particularly how Business Linkwas interested in and able to support the application of models developed in thecommercial sector in the subsidised arts sector. Seven Stories said how helpful theiterative conversations with Business Link about business development had been.

The capacity challenge


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A common challenge all four organisations have experienced has been aroundmanaging the volume of work generated by these projects on top of already fullprogrammes. The website development projects particularly have required theseorganisations to undertake a heavy burden of strategic and systems work. Organisationshave sought to negotiate the burden by effective project planning, appropriate use of

external consultants to steer and advise, and by sharing responsibility for contentgeneration and contact management systems across the organisation.

Conversations with the projects revealed a couple of relevant issues that perhapsrequire more consideration:

- Live referred to the difficulty of planning capacity to undertake enterprise developmentwhen you re not yet sufficiently experienced to know what capacity is needed and inwhat specific areas.

- Live and Generator indicated that one specific issue on which more general guidanceand support would be very welcome is that of pricing new products or services.

Funding difficulties and project pitfalls Although as mentioned above, all the projects have gone relatively smoothly, there havebeen a few difficulties related both to the investments and the web developmentsthemselves.

One organisation referred to the NEEIC investment process as being extremely opaquebut complimented the advisor on the help and support she had provided in bothsignalling opportunities and supporting organisations through the process. Also, the

work funded by NEEIC needed to be complete and invoiced for within a 6 month period.Two of the organisations commented that this had caused some difficulties.

One organisation emphasised that ideally they would have liked longer to prepare fortheir project, they had planned to develop a new website a little down the track.However, they had taken advantage of investment being available. While the supportwas very welcome, coming at the time it did, it had intensified the capacity problemsdiscussed above.

Organisations have also experienced some technical difficulties with their projects. Forexample, a major difficulty for Northern Stage has been the difficulty of integrating itsexisting ticketing system fully into the new website and its functionality. Attempting tomake the join look as seamless as possible has created significant extra work. This maybe a problem for other arts organisations seeking to maintain an existing ticketingsystem but introduce a new website with Amazon selling features.


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The benefits of the early work on these projects Although it is still early days, the projects receiving investment through the initiative havealready generated a number of benefits:

- Generator describes it as having helped to leverage some contract income, it also

helped the organisation attract a large ERDF grant because the new web site hadthe capacity to collect the sort of monitoring and evaluation data that the funderexpected. It also seems likely that the project work considered here, or at leastthe thinking that generated it, made some contribution to Seven Stories receivingsupport from CIP and to Live and Northern Stage receiving significant Sustainfunding.

- Generator also describes the project as helping to build its reputation and enableit to develop valuable connections and networks in its industry.

- Seven Stories and Northern Stage say that unexpectedly the project hascontributed significantly to cross team working and organisational cohesion.

- Seven Stories also describe how the project has enabled them to better deploythe specific skills and experience of its staff team for example, using itsreceptionist s film making skills to produce content for the new website.

The Arts Council and Business Link perceive the projects as having had a number ofsoft benefits related to collaborative work and relationship building. There has beenregular attendance at update meetings and communication between organisationsbetween meetings and the general tenor has been positive and enthusiastic.Organisations have been able to discuss issues and solutions and share learning andgood practice. They also describe the project as having benefits as regardsdevelopment of the working relationship between Business Link and the Arts Council.

Conclusion

While it is too early to tell whether this initiative has achieved its overall objective ofenabling the organisation s supported to generate more of their own income, only timewill tell, it appears that it has helped them on the journey to achieving this end. Theirsuccess will be contingent on a number of factors, for example, whether:

- the websites and products when launched have the functionality intended forthem;

- they are backed by appropriate marketing efforts (two of the investments includeprovision for work on marketing);

- whether the products they are seeking to promote are attractive at a price whichgenerates additional net revenue.

Nonetheless these projects are providing some of the necessary infrastructure anddeveloping the knowledge and experience that should help these four organisations


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achieve their future plans for income generation and greater financial resilience. Theywill enable them to reach a broader audience for their products and services at relativelylittle cost and exploit new proven marketing and selling techniques used to great effect inthe private sector.

The action research is in some ways weighted in favour of success. The fourorganisations participating in this initative are regarded by Business Link as havingsignificant enterprise development skills and/or potential. They also have significanttangible and intangible assets which they can exploit in order to generate income. Theseassets include: buildings; a collection; the good will of artist collaborators; significant artform knowledge and expertise. Before they were awarded this funding each had spent asignificant amount of time considering product and service development or how better toexploit existing product. As Business Link puts it there s potentially a lot to be learned from these organisations .

However, a notable factor is that even though these organisations are leading the field inthe arts in terms of mission related enterprise development, their financial positionduring this transitional period is uncertain. Also, their development and growth plans,given the funding situation, are slightly ahead of their organisational capacity to deliver.This is a stressful situation which, while perhaps inevitable, needs to be managedcarefully by organisations and funders alike.

Despite the difficulties of making the transition but perhaps because they are making thetransition - additional funding has been raised by these organisations since investmentthrough this initiative was agreed. This will enable them to consolidate and develop theirapproach to business development. For example, Live s funding through the Sustain

programme will enable it to pursue its wider strategy for enterprise development. While,Generator s ERDF funding will enable it to further develop the range and quality of theservices it offers to the music industry. The projects receiving investment have had anumber of other benefits for all the organisations involved, the development processhas:

- created staff buy in and support for new communications, marketing and productdevelopment initiatives;

- increased confidence in the development of commercial products and services;- increased staff and board skills.- enabled the development of strong supplier relationships.

This is an interim report considering these projects and their progress. The initiative isdue for completion in August 2010. In the Autumn of 2010 MMM will revisit the projectsand consider the extent to which the original objectives for the initiative have beenachieved.


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Annex - Project timelines (capturing major milestones)

GeneratorMarch 09 May 09 June 09 Sept 09 Dec 09 Feb 10Briefdeveloped.Tender sentout.Considerationofhard andsoftwareinfrastructureneeds.Examination

of LSCaccreditation.

A supplierselected(from 3shortlisted)

Businesscasedeveloped foraccreditation

Inventoryand thecontent forthe learningzone andnational andregionalmembershipzonesdeveloped.Plugged In

MusicNetworkplanned.

BusinessManagementSystemfinished.Content ofcoursewritten andwith partnersfor review.

Sitelaunched

LiveMarch 09 May 09 June 09 Sept 09 Dec 09 Feb 10Selected webdeveloper.Developingfirst module.

Writersfilmed forcoursecontent.

Subsidiarycompany setup and boardmembers withappropriateskills andexperiencerecruited.

Markettested firstseminarwith friendsand family .

Module 1on line

3 moduleswritten.Full launchplanned forSeptember

Northern StageMarch 09 May 09 June 09 Sept 09 Dec 09 Feb 10

Issued anopen tender

10 interested,4 shortlisted.

Appointedconsultants

Wire framestage

Official launchplanned for

April withsomeadditional offlinemarketing.


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Seven Stories

March09

May 09 JulyandAugust09

Sept 09 Sept to Dec 09 Feb 10

Scoping adesignbrief andmeetingwithdesignersto informthe brief

Briefput outtotender.

Technicalanddesign/marketingconsultantsappointed.

Teamdiscussions rewebsite andfunctionalityrequirements.

Scopingprocess andsite mapdeveloped.

How can access to capital help organisations develop their assets and evolve their business models?

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Transcript of How can access to capital help organisations develop their assets and evolve their business models?