Does Theatre Have Its Business Model Back To Front?

Most businesses focus on their core activity and outsource the rest - why does theatre do it the other way round?

JASON WARD

If you have ever worked with a creative entrepreneur you will have noticed how they do everything. They are creating, they are posting on social media, they are following up payments and trying to sell their services. And it’s not just creatives: in fact any small business owner will tell you that the most frustrating part of running a business is not having time to actually do the thing their business is about!

My creative consultancy clients play many roles and one of our first tasks is to work out what are their most important and valuable actions. In nearly every case we discover that the most important tasks for the creative entrepreneur are those that require creativity. For example, the most valuable task a painter can perform is to paint, and for a choreographer it is to create dance. While Instagram posts can seem important because they provide us with a series of little dopamine hits every time we get a like, they are, at best, an ancillary activity that helps publicise a business’s main activity but are not the main activity in themselves - and we have all been down that rabbit hole! A creative’s most valuable activity is creating and the work I do helps creatives recognise this. Our ambition as creatives is to get to a place where all we do is create and everything else is taken care of by a specialist colleague or outsourced expert.

From the 1980s onwards one of the strongest trends in business has been to outsource activities that are not defined as ‘core’. This means that companies can focus on doing what they are really good at (and what is most valuable) and they can leave other functions to other people who are really good at them. Large companies that have dining facilities in their offices hire a catering company to provide that service for their staff, cruise lines will hire specialists to provide retail and spa services onboard and very few companies employ full time graphic designers because it is not a core activity for most organisations - they use it when they need it. This theory in its purest form is designed to allow for focus on a core activity but it also helps companies save money (and grow their profits).

When a company’s key activity is connected to a high level of skills such as restaurants with chefs, airlines with pilots or Rolls Royce with skilled coach builders then there is no benefit in outsourcing those activities. This is down to two factors: control over product and public perception. Do we want an agency chef preparing our expensive meal or a temp pilot flying us across the Atlantic? But, more importantly, in order to maintain a quality product a company needs people who are good at the job that the company is known for.

And this brings us to theatres. If you were to carry out a business analysis of a theatre you would start by identifying its core activity. What is the one thing that a theatre does that is different to its competition and which makes it unique? Theatre is competing with many other forms of culture and entertainment. It is different from live music in that it tells a story and different from cinema in that it tells the story with live performers.

You might think then that creating and performing stories would be a theatre’s core activity and that each theatre would prioritise hiring people with the skills to deliver this. Outsourcing theory tells us that everything outside of these skills and activities is ancillary to the core activity and should be done elsewhere. Because without a live performance there is no theatre. There could still be a building and an auditorium but, in the same way that cinemas became bingo halls in the 70s, the theatre would be a piece of real estate - with a bar!

And this is what is confusing about UK theatre because theatres in the UK do not have performers on their payroll on a full time basis. In fact the only people who are on short term and low paid contracts are the performers and creatives who, supposedly, have the most important role in the building.

The author and host of Freakonomics radio, Stephen Dubner described theatre as a hand built product that is impossible to scale up in the same way as other industries. He says that unique talents are required in order to create great theatre - creative, performing, technical etc. These elements form the basis of the theatrical experience and without them there is no theatre. In the two part podcast series 'You Can Make a Killing but Not a Living' Dubner examines the economics of putting on a play from the perspectives of both the producers and the performers. So while the business of Broadway theatre is essentially based on a real estate model run for the benefit of property owners, the unique talents that hand build each show all need to look elsewhere to actually make a living. It is hard to imagine those Rolls Royce coach builders being forced to work in a KwikFit branch in order to make a living. This is because their employer recognises the value of their skills and pays accordingly.

I am not naive enough to think that there are not a myriad of financial and organisational reasons that could be brought out to justify why the theatre business behaves differently to other high skilled professions. But do any of these reasons stand up to meaningful scrutiny? We are consistently told by theatres that they have terminal financial problems and falling audiences and their response is always to reduce investment on core (creative) activities and try to develop further their commercial operations - bars, cafes, venue hire and even splits with producers. The game is Outsourced Diversification in terms of both operations and programming. Theatres are offering something for everyone and, while some try, very few become hubs for their communities. Except those that are actually producing new work such as The Young Vic, The Bush and The Kings Head.

Part of the UK problem is from the Conservative Government’s politically motivates decisions to halve arts funding and remove arts subjects in state schools - although it is interesting to note that according to a study by Warwick University private schools have increased their investment in the arts hugely. In fact the hugely expensive Westminster school which has annual fees of around ￡40k per pupil says this about the arts in its prospectus:

"Involvement in music, art and drama sparks creativity and innovation in many areas of life and study as well as building our pupils’ confidence, improving their communication skills and sharpening their empathetic abilities. Engaging in the Arts has a positive impact on a pupil’s all-round academic performance, improving both their interest in other subjects and their results. … . This is borne out in wider society: creativity is now one of the top five skills sought by business leaders when recruiting new talent"

The funding crisis has been exacerbated by a complete mismanagement of the arts by Arts Council England which prefers questionnaires and dogma to actually supporting creatives.

So why do I think that theatres’ justifications for their organisational structures don’t stack up? Firstly, the business model is demonstrably not working because the same arguments have been made for the last 40 years; less money means less actors, less creatives, less technicians.

Theatres protect the jobs of ancillary staff but not the core activity which is why there are mid-size regional theatres with large marketing, promotions and engagement teams but no capacity to actually produce theatre. These same theatres will insist that visiting producers provide their own promo material and give split contracts that mean that the touring show has to invest heavily in promotion in order to make a profit. This way of operating leads to theatres becoming little more than promotion and advertising organisations that put on shows. In fact UK regional theatre is moving much closer to a real estate based Broadway style of business that provides a space and little else.

Of course it is important to market, promote and advertise theatre and of course UK theatre would benefit from more state support both directly and in the wider context of education. However, the business model for the majority of UK theatres is not working and has been drifting away from core activities for the last three decades. Once upon a time bars were a service for patrons whereas now they are profit centres. Seasons and even weeklong runs have almost vanished and, from a programming perspective, there is a reliance on a continual string of one night stands. But theatres keep doing this same thing and keep expecting something to change. And we all know where that leads.

Theatre is full of creatives who come up with new ideas. So let’s think of a new way of organising our national cultural jewels. Why not have a theatre hire a permanent cast of actors and actresses who could develop their skills through constant work and build connections in the community over a period of time before moving to other jobs like people in ‘normal’ professions? These companies could be supported when needed by an outsourced team of marketers, social media professionals and programming assistants - much like in other industries.

Let’s look at the ridiculous way that funding is distributed and the insane amount of admin that goes with it. Where is the professional actor apprenticeship scheme? In every other industry companies have to invest in training, including apprenticeships, or pay the equivalent amount in tax. Right now there are only two drama based apprenticeships advertised on the UK Government website: a drama teacher at a private school and a finance assistant at a London theatre school. If you search for engineering apprenticeships you will find mechanical engineer, manufacturing engineer, civil engineer and maintenance engineer all on the first page. The Arts Council itself offers apprenticeships under the heading ‘You don’t have to be an artist to work at the Arts Council’ - and what are those Arts Council apprenticeships? The answer: marketing, customer service, grant management, finance or HR. No sign of acting, musicianship, art or creative skills.

In performer and creative focused theatres, strategies should be built around seasons, years and decades rather than having to book whatever touring tribute shows and TV comics are available. Of course we need to fill our seats this week but the crowd that is coming to see this week's TV comic is not coming to see next week's play but, sure, you're definitely building up your mailing list!

Some theatres run co-production programmes between themselves so costs could are shared, audiences better served and best practises spread around the industry. This is a positive and creative focused activity that should be better utilised.

There will always be a place for touring shows and one nighters that offer variety for audiences and time off for cast and creatives. There will always be a need for input from marketing experts and engagement specialists that can help craft seasons and ensure that expert advice is on hand for creative and artistic directors. But above all theatres need to be able to focus on what their core activities are and become what they always should have been - the home to great stories well written, well told and well enjoyed.

Find more like this at The JasonWard Creative Substack: https://jasonwardcreative.substack.com

Jason Ward is a live entertainment creative consultant who has worked with Disney, English National Ballet theatre companies, arts festivals and major cruise lines. He is based in the Republic of Ireland and is currently EU Casting Director for global entertainment producer TAGLive?