Why a Flanagan?

While there’s been some public discussion about the Flanagan book, as I mentioned here, there’s been almost none about its genesis, with one exception that I’ll discuss below. This is unfortunate; how and why an analysis originates can be very informative about the substance of the analysis. So I will try to rectify that and provide some speculation about why we’re all now dealing with the Flanagan book.

The original Flanagan report came out what became known as the “Elephant Task Force.” The official explanation for the existence of the ETF, as well as the commissioning of Flanagan’s original analysis, comes from the Mellon Foundation:

In 1999, The Andrew W. Mellon Foundation established the Orchestra Forum as part of a ten-year initiative designed to further creative thinking and innovation among orchestras and related organizations. Forum meetings bring together musicians, managers, and trustees of participating orchestras with invited scholars and leaders from the performing arts, and sessions include blocks of time for ad hoc discussions focusing on participant-posed questions.

The so-called Elephant Task Force (ETF), a cross-constituent group of musicians, managers, and trustees, grew out of one such discussion in late spring 2003 – a time when a significant number of orchestras were facing financial challenges. The economy was still reeling from the bursting of the stock market bubble and the direct after-effects of 9/11, and national resources were being reallocated away from the arts. Orchestras, both major and regional, had reported significant financial deficits the prior season. All of the Forum orchestras admitted to projected deficits that year ranging from 5 to 15 percent of revenue.

From the outset, one key issue for the ETF was the question of whether fiscal problems were structural or cyclical. This question loomed large, for the organizational implications of it being one or the other are significant. A verdict in favor of cyclical would imply that the status quo is fundamentally sustainable, and the key financial challenge for orchestras would be to gain greater ability to withstand the inevitable ebbs and flows of the economy. A verdict that the problem was structural would carry with it far greater implications for the long-term management of the organization.

In March 2006, in response to the ETF’s conclusion that there was a need for
independent, third-party research this issue, the Mellon Foundation engaged Stanford University Economics Professor Robert Flanagan to analyze the cyclical and structuralinfluences on the economic performance of orchestras.

This rather spare description begs several important questions. The first, and most important, is: why Flanagan? Robert Flanagan was not, as the Mellon Foundation implies, on the Economics faculty of Stanford University: he was actually on the faculty of the Stanford Graduate School of Business as the Konosuke Matsushita Professor of International Labor Economics and Policy.

Given that labor economics

seeks to understand the functioning and dynamics of the markets for labour. Labour markets function through the interaction of workers and employers. Labour economics looks at the suppliers of labor services (workers), the demands of labour services (employers), and attempts to understand the resulting pattern of wages, employment, and income…

a labor economist would seem an odd choice to analyze the “cyclical and structural influences on the economic performance” of a given industry unless the people doing the choosing had already concluded that the fundamental issue was labor-related – which, I suspect is a major reason he was hired by Mellon. Labor economists spend their entire careers viewing problems through the prism of labor issues – compensation, bargaining, and the like. Hiring a labor economist to analyze whether orchestra financial problems were cyclical or structural almost guaranteed that the answer would be “structural,” given the slow-moving nature of the orchestral labor market.

I suspect that those who know why Flanagan was hired aren’t going to tell anyone. The most likely process, in my view, was that, when the subject of commissioning a professional analysis of orchestra finances came up Mellon staff offered to find some willing candidates. (According to Bruce Ridge’s review of the Flanagan book, the musician member of the ETF suggested Ron Bauers without success.) Staff then brought one candidate (Flanagan) to the ETF and the ETF said “OK; sounds good; can’t see any reason why not.”

If true, this would suggest that the ETF didn’t perform the necessary due diligence on the choice of Flanagan, but that kind of due diligence is often offloaded onto staff. It is pretty typical for a committee such as the ETF to essentially rubber-stand a decision that was really made by senior staff without anyone on the committee asking the right questions.

Which still begs the question: why Flanagan? Well, one of those senior Mellon staffers was Diane Ragsdale, who at the time was a senior Program Officer for the Mellon Foundation’s performing arts programs. One of her formative experiences was attending the inaugural session of the Executive Program for Nonprofit Leaders at – ta da! – the Stanford Graduate School of Business.

My guess is that Flanagan and Ragdale met there and found they agreed on things. Given Ragsdale’s oft-stated belief that arts organizations need a great deal of change, I suspect that Flanagan was at least open to the idea that orchestras were badly run and needed to change as well. Given that Ragsdale had worked as an arts administrator in smaller organizations and had dealt with many of the issues that lead arts managers to obsess about labor issues, I wonder if she sensed a kindred spirit in Flanagan. So, when the subject arose of finding someone to do a report on orchestras – the largest and arguably the most static of the performing arts fields – she thought of Flanagan as someone who would do the kind of report she might agree with.

This is all conjecture, of course. But absent a more plausible and more informed explanation of what happened, it’s what I believe happened.

There’s been much more discussion, and criticism, of what happened next. Bruce Ridge expresses ICSOM’s point of view in the most recent Senza Sordino:

One of the most controversial aspects of [the Flanagan] report was the data it used. The data was supplied by the League of American Orchestras and was widely acknowledged to be inconsistent at best. In fact, the League joined with ICSOM, ROPA, and the AFM in the Collaborative Data Project (CDP) to see if sense could be made by having a shared data set. But instead of achieving success in gathering accurate industry-wide information, the CDP process was injured when the data we were examining was given to Professor Flanagan, with virtually no restrictions aside from the direction that specific orchestras could not be identified through the data.

This is a little reminiscent of the old joke about the two little old ladies in the deli (“Waiter, this soup is terrible!” “And such small portions too!”) It is true that the League’s dataset on orchestra finances is imperfect. It’s also true that it’s unquestionably the best such dataset in the performing arts, that its flaws are well-known and obvious, that no one seriously contests its accuracy in painting a broad-brush economic portrait of the field as a whole over decades. And it is also true that the data was given to Flanagan without restrictions.

Was this wrong? ICSOM and the AFM strongly believe that the League should advocate for orchestras in specific ways, the most important of which is to portray the field in a positive light. In a speech that Bruce Ridge gave last week at an event at the University of Michigan, he said:

… I think the field needs the League, but we also need the League to change. We need the League to use its resources in developing positive messaging. There is a seemingly instinctive negativity that comes from the League at times, and it is being noticed by some of its own members. The League relies on the collection of $1.9 million in dues money to survive, and to pay considerable salaries to its upper staff. This year, one ICSOM orchestra left the League, citing the “dispiriting” rhetoric that emanates from the League. There are other managers who have privately expressed this same thought.

Putting aside the question of whether or not this is an accurate portrayal of the League’s “messaging” (and I believe it’s a simplistic portrayal at best), it does raise the question of what the League is supposed to do. The whole point of collecting masses of data over decades of operation is because it’s felt that the data is useful. One of the ways in which it’s useful is to figure out what’s happening to the field as a whole and to figure out how to deal with changes that the data identifies.

Should the League place restrictions on how the data is used? To some extent, it already does (especially in the context of labor negotiations). Should the League not make the data available to researchers? That would, in my view, deprive the field of potentially valuable analysis by people with the skills to do that analysis and provide valuable insights to us – insights that the field itself doesn’t have the time, energy, or technical skills to develop on its own. Should the League make the data available to such researchers with restrictions? It’s interesting to imagine what such restrictions might look like.

It’s also important to remember the context in which the data was given to Flanagan. Mellon is, after all, a major funder in our field – of the League as well as of its member orchestras. I suspect a request from a foundation of that importance is very hard to refuse, or even to answer conditionally. And, of course, the intention of the report was to assist the Elephant Task Force, which was generally viewed as a legitimate and balanced group trying in the best of faith to get to the bottom of a core issue.

My own conclusions are that, while one core purpose of the League is advocacy, another is learning. The purpose of collecting all that data was that member orchestras could learn from it. If skilled analysis from outside can also help the field learn from the data, it should be encouraged. Placing the kinds of restrictions on the use of the data is not going to encourage that kind of analysis.

But I’ve always found it curious that the League, and not Mellon, has been the main target of criticism in discussions of how the Flanagan report came to be. It was Mellon that commissioned the report (and, I assume, paid for it, although I don’t know that for a fact) and it was Mellon who picked an analyst who was likely to focus on compensation issues as the core problem of the field. Why is Mellon exempt from criticism for unleashing Flanagan on us all?