When Business Meets Culture

When Business Meets Culture

Also by Beatriz Muñoz-Seca and Josep Riverola THE NEW OPERATIONAL CULTURE: The Case of the Theater Industry PROBLEM-DRIVEN MANAGEMENT: Achieving Improvement in Operations through Knowledge Management

When Business Meets Culture Ideas and Experiences for Mutual Profit Edited by Beatriz Muñoz-Seca and Josep Riverola

Selection and editorial content Beatriz Muñoz-Seca and Josep Riverola 2011 Individual chapters the contributors 2011 Softcover reprint of the hardcover 1st edition 2011 978-0-230-28016-8 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6-10 Kirby Street, London EC1N 8TS. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2011 by PALGRAVE MACMILLAN Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan in the US is a division of St Martin s Press LLC, 175 Fifth Avenue, New York, NY 10010. Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave and Macmillan are registered trademarks in the United States, the United Kingdom, Europe and other countries. ISBN 978-1-349-32733-1 ISBN 978-0-230-29511-7 (ebook) DOI 10.1057/9780230295117 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. A catalog record for this book is available from the Library of Congress. 10 9 8 7 6 5 4 3 2 1 20 19 18 17 16 15 14 13 12 11

Contents List of Tables List of Figures List of Boxes Preface Notes on Contributors vii viii ix x xii 1 Introduction: A Business Point of View 1 Beatriz Muñoz-Seca and Josep Riverola Part I Brand 11 2 The Solomon R. Guggenheim Foundation 13 Francisco Iniesta and Elvira Marco 3 Marketing the Arts 27 Francisco Iniesta and Elvira Marco Part II Focus 47 4 Museo Nacional del Prado 49 Elvira Marco, Beatriz Muñoz-Seca, and Josep Riverola 5 Designing a Strategy 63 Adrián Caldart 6 Gran Teatre del Liceu: Rising from the Ashes 83 Serge Poisson-de Haro 7 The Financial Function in Cultural Institutions 102 Antoni Subirà Part III Facilities 111 8 Tate: Reinventing Operations to Become a Different Type of Company 113 Beatriz Muñoz-Seca and Josep Riverola v

vi Contents 9 Reinventing Operations 129 Beatriz Muñoz-Seca 10 The Musée de La Cassette 144 Josep Riverola 11 Javier López-Gil Antoñanzas: Art Lover 151 Josep Riverola 12 A Practical Approach to the Design of Visit Systems: Application to the Musée de La Cassette 163 Josep Riverola 13 The la Caixa Foundation: Art exhibitions 182 Philip G. Moscoso and Alejandro Lago 14 A Service Perspective of Cultural Entities and Their Customers 191 Philip G. Moscoso and Alejandro Lago Part IV Brains 213 15 Jesús López Cobos: Managing Artists 215 Santiago Álvarez de Mon 16 Valentín Fuster: Manager and Researcher 226 Santiago Álvarez de Mon 17 Managing Talent 234 Santiago Álvarez de Mon 18 Fundación del Teatro Lírico: Teatro Real 244 Josep Riverola 19 Insights from the World of Culture 260 Beatriz Muñoz-Seca 20 Fifteen Challenges for the Cultural Sector 273 Beatriz Muñoz-Seca and Josep Riverola Bibliography 279 Index 285

Tables 5.1 Audit of a museum s strengths and weaknesses 77 5.2 Strategic initiatives to increase revenues from merchandising activities 81 6.1 Current and target audiences 100 6.2 Petit Liceu ticket sales 100 6.3 Number of performances per session 100 6.4 Subscription sales 100 6.5 Income and expenditure, 1999/2000 and 2007/08 101 9.1 Translating the promise into a specific operational structure 133 14.1 Summary of the characteristics of services and their management challenges 192 14.2 Examples of different groups of customers of major art museum 196 vii

Figures 5.1 A rational approach to strategy development 67 5.2 Porter s Five Forces Framework + sixth force (Oster, 1995), applied to museums 72 5.3 Identifying key success factors 73 5.4 Capabilities associated with different business processes and business firms 75 5.5a Key strengths and weaknesses of the Prado before 2003 79 5.5b Key strengths and weaknesses of the Prado by 2008 79 9.1 The three players 131 9.2 Nine questions to make operations sustainable 135 9.3 Nine action objectives 136 9.4 Cross-comparison between operational and action objectives 141 9.5 An integrated framework for reinventing operations 142 12.1 Adapted version of Maslow s pyramid 164 12.2 Average number of items in the queue 166 12.3 Graph for N Queue 171 12.4 Arrivals per minute 173 12.5 Network of stations 173 12.6 Probability of loss 180 14.1 Key steps in developing a strategic service model 194 14.2 FLC s value proposition for cultural activities 197 14.3 Customer Value Equation 198 14.4 Value proposition of Cirque du Soleil 201 14.5 Fundamental options for redefining the value proposition 202 14.6 Customer corridor and moments of truth (example of museum visit) 208 14.7 Gaps in service provision 209 viii

Boxes 1.1 A brief historical introduction to museums 4 1.2 Some macroeconomic data on the cultural sector 6 3.1 Typical steps in segmenting a market 32 5.1 Examples of mission statements 68 5.2 A PEST analysis of the macro-environment relevant to the museum sector 70 ix

Preface This is an unusual book: eight professors from IESE Business School have teamed up to write a book about the management of cultural institutions. The reader may well wonder what prompted them to do this and, in particular, what the world of culture can contribute to the world of business. Two of us started to take an interest in the world of theater, specifically opera, four years ago; we wanted to understand how people in the theater approach and manage their service delivery operations. It was a tremendously rewarding experience that resulted in a book entitled The New Operational Culture: The Case of the Theater Industry. Encouraged by this first encounter, we brought together a group of colleagues to join us in our exploration. We realized that it was worth examining the cultural sector in order to assess what it has to offer and the problems it faces. This two-year effort has resulted in a specialized course in the management of cultural institutions, and this book. Our aim has been to approach the world of culture from a business perspective. Coming to the field with the eyes of outsiders, we have highlighted the issues that we consider most important for improving the management of companies and cultural institutions alike. Studying a world so different from those we are accustomed to has opened our minds to new themes and stimulated new ideas. Our objective is to bring about cross-fertilization between the two worlds that will lead to improvements in management and economic development. Opening one s mind to new environments is always conducive to progress. The book consists of case study chapters and conceptual chapters: the cases provide real-life examples from the cultural sector, while the conceptual chapters offer a structured view to help towards a deeper understanding of each topic. All the cases except one 1 are written by us, either with the cooperation of the institution concerned or based on public information. Each chapter is the responsibility of its author. As editors we have provided the frame of reference and brought some unity to the book. This adventure would not have been possible without the participation of Elvira Marco Martínez, who introduced us to the world of 1 The case Gran Teatre del Liceu: Rising from the Ashes. x

Preface xi culture. Elvira is the director of the Cultural Institutions program at IESE and co-author of three chapters of this book as well as of various technical notes written for the IESE program. Elvira has accompanied us on our expeditions into the world of culture and has proven to be not only an excellent traveling companion but also a prudent and knowledgeable guide. We would also like to thank Marta Rodríguez Merinero for her efforts in coordinating the production of this book. Managing eight university professors is no easy task, and she has accomplished this feat with consummate skill. As for our co-authors, we would like to thank them for their company on this journey. It has been fun, and nobody has suffered any physical harm, though we must admit there was the occasional urge to strangle a colleague. But the fondness and respect we have for one another proved stronger, and we all remain very good friends. As coeditors, we must end by saying that any errors are solely the other s fault. Having written eight books together, we are used to passing the blame! Beatriz Muñoz-Seca and Josep Riverola Madrid, October 2010

Contributors Santiago Álvarez de Mon Santiago Alvarez de Mon is Professor of Organizational Behavior at IESE Business School, University of Navarra. He obtained his PhD in Political Science and Sociology at Universidad Pontificia de Salamanca and holds a Master in Business Administration from IESE. Visiting professor at various business schools in Latin America, Europe, and Asia, Dr Álvarez de Mon has written many articles, research papers and book chapters on the subjects of coaching, career planning, team building, leadership, corporate culture, and self-management. He also works part-time for various companies as a leadership and teamwork consultant. Adrián Caldart Adrián Caldart is Professor of Strategy at AESE Escola de Direcção e Negócios (Lisbon and Oporto, Portugal). He obtained his PhD in Management at IESE and holds an MSc in Management and Economics from ESEADE. Dr Caldart is also visiting professor of strategy at IESE Business School and Associate Fellow at Warwick Business School (Coventry, United Kingdom), where he was a full-time lecturer in strategy from 2004 to 2009, receiving five Outstanding Teaching Awards for MBA and MSc teaching. He has served as visiting professor at business schools in Argentina, Spain, and Nigeria. Formerly an executive, he worked for the Argentine industrial groups Perez Companc and Organización Techint between 1992 and 1999. Francisco Iniesta Francisco Iniesta is Professor in the Marketing Department at IESE Business School, University of Navarra. He obtained his PhD in Business Administration from Boston University and holds a Master in Business Administration from IESE. His areas of specialization include the management of marketing channels and franchising, new product development and introduction, market research, and organizing and controlling the marketing effort. Alejandro Lago Alejandro Lago is Associate Professor for Operations and Technology Management at IESE Business School, University of Navarra. He holds a PhD in Engineering from the University of California at Berkeley, a BS xii

Contributors xiii in Civil Engineering from Universitat Politècnica de Catalunya and has completed a Management Development Program at IESE Business School. Before joining IESE, he worked as a researcher for the French Atomic Energy and Alternative Energies Commission (CEA) and the Institute of Transportation Studies (ITS) at Berkeley. He also has extensive experience as a senior consultant in the area of operations and service management, having worked for large industrial and retail firms, airlines, and airport authorities, and more recently for banks and insurance companies, among others. Elvira Marco Elvira Marco is Director of the program A New Approach in the Management of Cultural Institutions at IESE Business School, University of Navarra. She has a degree in Law from Universidad Complutense de Madrid and a degree in Political Science and Public Administration from Universidad Autónoma de Madrid. With extensive experience in the arts field, she has worked for long periods with the Spanish Government, where she served as Secretary General of the Spanish Agency for Cultural Action Abroad (SEACEX), promoting Spanish culture in cooperation with major international cultural institutions. She currently works as a consultant, lectures on arts management and cultural diplomacy, and is a regular contributor to specialized cultural journals. Philip G. Moscoso Philip G. Moscoso is Associate Professor for Operations and Technology Management at IESE Business School, University of Navarra, where he teaches courses for both executives and MBA students. He has completed senior executive programs at Harvard Business School and IESE, and obtained his MSc and PhD at the Swiss Federal Institute of Technology (ETH) in Zurich in the department of Industrial Engineering and Management. He was also employed at ETH as a senior research and teaching assistant, lecturing on operations research. Prior to joining IESE, Dr Moscoso was a manager at the management consulting firm Bain & Co. During his time in Switzerland, he was also a member of the board of directors of two industrial companies. Beatriz Muñoz-Seca Beatriz Muñoz-Seca is Professor in the Operations and Technology Management Department at IESE Business School, University of Navarra. She obtained her PhD at the University of Navarra and holds an MA in Education (Organizational Behavior) from Harvard University. Dr Muñoz-Seca worked for over 15 years in national and multinational

xiv Contributors companies, in both the private and public sectors, in Mexico, the United States, and Spain. She joined IESE in 1990. She teaches Operations Strategy at IESE and at various business schools in Latin America. She has been an advisor to the European Commission, and has participated in and led numerous international and national projects in her field. She also works as a part-time consultant in operations strategy, service design, and innovation. Josep Riverola Josep Riverola is Professor in the Operations and Technology Management Department at IESE Business School, University of Navarra. He holds the University of Catalonia s Chair in Production and Operations Research (from which he is currently on leave) and the Alcatel-Lucent Chair of Production, Technology, and Operations Management at IESE Business School. He is the founder and manager of IESE s Centro de Excelencia de las Operaciones. He obtained his PhD in Industrial Engineering at E.T.S.I.I., Terrassa, and his PhD in Operations Research at Stanford University. Dr Riverola also holds an MS in Operations Research from Stanford University. During the last 35 years he has worked as a part-time consultant for several companies in technology, operations management, and software. Antoni Subirà Antoni Subirà is Professor of Finance at IESE Business School, University of Navarra. He obtained his PhD in Industrial Engineering at Universitat Politècnica de Catalunya and holds an MS in Industrial Management from the Massachusetts Institute of Technology. He was Minister of Industry, Trade, and Tourism in the Catalan Government from 1989 to 2002. Dr Subirà has also been Chairman of the Advisory Board of TCI, Director of the IESE International Center for Competitiveness and member of the boards of various institutions, including Institut Català de Consum, the Spanish Institute for Foreign Trade (ICEX), and Turisme de Catalunya. He is a member of the Independent Expert Group, chaired by former Prime Minister of Finland Mr Esko Aho, which produced the report Creating an Innovative Europe. We would like to thank Serge Poisson-de Haro. Assistant Professor at the Department of Management, HEC-Montréal, Canada, and PhD in Management from IESE, for his contribution through the case Gran Teatre del Liceu: Rising from the Ashes.