A few weeks ago I received an email from the creative-thinking Christina Loewen, executive director of Opera.ca, the national association for opera in Canada. She invited MaRS’ information technology, communications and entertainment (ICE) practice to the organization’s annual meeting to discuss whether the methodologies and lean/agile principles that our technology clients use could also be used to help the Canadian opera sector.
I have to admit, the invite seemed a bit out of left field, but it was just the kind of challenge we like here in the ICE practice.
Turns out, Christina isn’t alone: the San Francisco Opera recently reached out to Silicon Valley’s Phil Libin, the CEO of Evernote, to see how technology methodologies could help their institution. There seems to be a myth that only startups can innovate, but we believe that large enterprises and the arts community can also solve some of the world’s largest problems.
“The definition of insanity is doing the same thing over and over and expecting different results.”
– Albert Einstein
Like the San Francisco Opera, Opera.ca is facing many serious business model challenges. Doing the same thing over and over again has caused a few key challenges:
- The institution leans heavily on sponsors and board members, most of whom have made their money in their cities’ dominant industries (finance in Toronto, oil and gas in Calgary and telecommunications in Winnipeg).
- Public funding is completely flat-lined in real dollars.
- Ticket sales are diminishing and audience demographics and behaviours are changing.
- There is an intense and widespread stigma that the opera is only for the elite.
Operas are paring down productions and struggling to reinvent their business models. Case in point: Just last week, the New York City Opera filed for bankruptcy. Michael Bloomberg himself was quoted in the press as saying “the business model doesn’t seem to be working.”
Enter lean methodology
In a two-hour discussion, we outlined how Opera.ca can use lean methodology tools by getting outside of their respective buildings and listening to their customers. We used the Entrepreneurial API within which our technology clients operate to help the opera. This includes one part Business Model Generation by Alex Osterwalder, one part Customer Development by Steve Blank and one part The Lean Startup by Eric Ries, all customized to the opera’s challenges.
For those unfamiliar with the lean methodology, the concept helps solve large problems by favouring experimentation over elaborate planning, customer feedback over intuition and iterative design over traditional up-front development (which saves a lot of capital). Frank Gehry’s video on “Managing as Designing – Multiple Models” illustrates how the arts community can use the lean method and iterations to get closer to what customers truly want.
If there is anything we have learned in the technology startup community that we can share with large enterprise, it is that we no longer just compete on a “killer” product or service, we also compete on business models.
To assess a business model, you need to be constantly asking yourself (according to Osterwalder) the following six questions:
- How protected from competition is the business model?
- How rapidly can the business model scale without hitting roadblocks?
- How does your business model get customers or third parties to create value?
- How does the business model earn money before spending to get it?
- What are the recurring revenue streams?
- How easy is it for customers to switch to another company?
In order to innovate, experimentation will be key. The San Francisco Opera is experimenting with tablet apps, live high definition and other ideas to stay relevant. They are actively engaging social media outlets and other paid and free forms of media to deliver and capture value in the business model, to reach new audiences and to reduce the dependence on public funding.
Thankfully, our meeting was well received, with Opera.ca finding the presentation and discussion informative. The meeting was an excellent way for Opera.ca to provide member operas from across the country with access to the tools they need to build their businesses. Christina plans on using the session to catalyze a broader arts community project called “Lean Performing Arts” and to create lean training programs for operas to use across the country.
The conversation continues with Opera.ca and other large enterprises, as MaRS’ platform and place help us share validated learning with technology clients and the broader community we serve.