HBS Cases: Making Lincoln Center Cool Again
When Reynold Levy took over as president of New York's Lincoln Center for the Performing Arts, he faced challenges ranging from crumbling buildings to an aging customer base. How could the venerable institution get its high notes back? Key concepts include:
- The case teaches about budgets in tight fiscal times, managing challenging groups of constituents and board members, using technology wisely, and planning for a future in the digital world.
- It also shows that there are alternative paths for a CEO to take—and that a strong organizational leader can make up for many organizational shortcomings.
When Reynold Levy took over as president of New York's Lincoln Center for the Performing Arts in 2002, he faced a classic challenge for any nonprofit leader navigating a complex environment: staying relevant to the next generation.
Levy knew that 18- to 44-year-olds weren't attending arts events in the same numbers of two decades ago. Levy's genius, says Harvard Business School's Allen S. Grossman, was in not only recognizing the problem, but also bringing together resident organizations and board members to start solving it.
"I entered an environment where everyone was exhausted and intellectual capital was drained"
Levy, who was a senior lecturer at HBS before he took the Lincoln Center job, has stayed committed to the institution's funding base—the fiercely dedicated baby boomers who have consistently contributed to the institution and attended its performances—while reaching out to the younger demographic and speaking to them in their own language.
"Lincoln Center hadn't been cool for a very long time, but it's cool now," says Grossman, the MBA Class of 1957 Professor of Management Practice. His new case study about the transformation, Lincoln Center for the Performing Arts: Alternative Futures, cowritten with Coleman Radell (HBS MBA '11), addresses many more challenges for the Lincoln Center's chief beyond fundraising.
The case is a compelling read for nonprofit leaders concerned about budgets in tight fiscal times, managing challenging groups of constituents and board members, using technology wisely, and planning for a future in the digital world. It also shows that there are alternative paths for a CEO to take—and that a strong organizational leader can make up for many organizational shortcomings.
Founded in 1955, Lincoln Center is mind-boggling in its scope and prestige. Eleven resident organizations in arts and education share the campus: the Chamber Music Society of Lincoln Center, the Film Society of Lincoln Center, Jazz at Lincoln Center, the Juilliard School, Lincoln Center Theater, the Metropolitan Opera, New York City Ballet, New York Philharmonic, the New York Public Library for the Performing Arts, the School of American Ballet, and Lincoln Center for the Performing Arts.
The leadership structure is complex. In 2010, Lincoln Center's board included 80 directors, and the dozen constituent organizations had 512 trustees and numerous senior staff. Levy oversees the Lincoln, but has no hiring or firing power within its organizations.
Like many nonprofits, Lincoln Center has both thrived and struggled over the years. By the late 1990s, deferred investment had taken its toll on the center's buildings and infrastructure. The concert halls required modernization. And the public spaces needed to become more "patron friendly," Grossman says.
A $1.2 billion campus redevelopment campaign began, including plans for a new Alice Tully concert hall in the Juilliard Building; a modernized David H. Koch Theater; an amphitheater for the Film Society of Lincoln Center; a 33,000-square-foot expansion of the Juilliard School; new dance studios for the School of American Ballet; the David Rubenstein Atrium/Visitor Services; and a high-end restaurant called Lincoln.
"A key strength of Levy's is knowing how to structure organizations"
But controversy over the massive project persisted—an early dome-style design by Frank Gehry for the plaza was front-page fodder for critics. The New York City Opera threatened to leave, frustrated with performing in a hall shared with the New York City Ballet. By 2002, when Levy took over, the ongoing $1.2 billion redevelopment project had "pitted [constituents] against one another in open warfare more reminiscent of the shoot-out at the OK Corral than of a night at the opera."
"I entered an environment where everyone was exhausted and intellectual capital was drained," said Levy, who previously ran the International Rescue Committee, which responds to the world's humanitarian crises. "I needed to avoid getting caught up in trivial political conflict, and instead find higher common ground by listening to those who disagreed and then incorporating their feedback."
Finding the next generation of funders
Levy also faced significant financial challenges. In general, funding for nonprofits was becoming harder to secure, and performing arts organizations were relying too heavily on older donors and subscriptions. By 2010, for example, nearly 75 percent of Lincoln Center's $53.5 million operating revenue—excluding revenue from facilities operations—came from contributors. Attendance continued to decline for the youngest Americans in 2008, but it also dropped for 45- to 54-year-olds—a group that historically made up a significant share of ballet, symphony, opera, and theater audiences.
"What do you do is the big question," Levy said. "It gets at a central tension. Do you modify your programs to attract a young audience? To many committed to the classical arts that is a sellout. It's sacrilegious."
Levy understood that his primary goal had to be bringing the various Lincoln Center constituents together to build consensus around continuation of the redevelopment project and making Lincoln Center economically sustainable.
Levy placed a huge emphasis on coordinating and communicating with the center's many diverse leaders. "Many nonprofits are led by people who only know programs, not operations," Grossman says. "A key strength of Levy's is knowing how to structure organizations."
His efforts to better coordinate the constituent organizations included:
- A focus on fundraising. The Lincoln Center Corporate Fund raises money for the whole Lincoln campus. Corporate donations go directly to Lincoln Center constituents, and their use is unrestricted. In fiscal year 2010, Lincoln Center raised almost $5 million in unrestricted funds.
- Improved visitor services. Renovation of the David Rubenstein Atrium/Visitor Services became the central launch point for all information about the center and its 10 organizations. It now houses a 42-foot-wide media wall promoting Lincoln Center events, ticket kiosks with day-of discounts, and an Internet café.
- Live performance innovations. Performance collaboration among the organizations has also increased. In 2006, Bartlett Sher, who directed Light in the Piazza for Lincoln Center Theater, was tapped to direct Gioachino Rossini's Barber of Seville for the Metropolitan Opera. And this past September, the New York Philharmonic opened with the US premiere of Swing Symphony by Wynton Marsalis, artistic director of Jazz at Lincoln Center.
- Additional networking opportunities. Lincoln now has forums that enable board chairs and presidents from the constituent organizations to interact, such as cross-organization meetings on key areas including PR, marketing, financial, legal, and technology. Dinners, cocktail parties, galas, and other social gatherings provide opportunities for board members, VIPs, donors, and patrons to mingle.
- Improved event promotion. In 2010, Lincoln Center launched infoscape, or information landscape, which includes 13 four-by-eight-foot LED "blades," or digital posters, lined up along West 65th Street; a large digital display outside Alice Tully Hall; and scrolling text on the steps of the main campus entrances. Levy noted that the infoscape "will cause [people] to stop in their tracks and really take a look. We are endeavoring to create a feeling, engender a mood, provide a sense of the drama and the beauty of what goes on in our halls. We want to attract passersby, but we also want to surprise Upper West Siders."
Alternatives to ponder
When Grossman teaches the case he points to several management options that Levy has going forward: digital expansion, international consulting expansion, a redesign of Avery Fisher Hall, and cutting operating costs. Each alternative comes with its own challenges and tradeoffs.
Digital expansion could include everything from improving the center's website to streaming live performances to movie theaters around the country. Another option is to work more closely with content distributors like iTunes or Hulu to bundle content for purchase.
International expansion could bring new revenue and expand Lincoln Center's core base beyond New York. (In 2011, Lincoln Center planned to welcome the Royal Shakespeare Company to campus, an expected major draw.)
A total redesign of Avery Fisher Hall, home of the New York Philharmonic, could cost $400 million and displace the orchestra for up to 36 months. A partial redesign could come in at $360 million and force the orchestra to relocate for up to 30 months.
Finally, reducing operating costs could include sharing supplier management, venue rentals, purchasing, and human resources among the constituent organizations. As Grossman asked in his case, would this be a good way to return to the original vision of creating synergies throughout the Lincoln Center campus?
Readers of the case ponder along with the protagonist on whether to do some or all of the options, and whether they should be initiated all at once or staged over time. Which of his choices are key to Lincoln Center's mission and which might distract time and attention from its core programming?
Grossman observes that despite the important challenges that must be addressed, Levy and the institution are in an enviable place for a nonprofit, focused on growth and change instead of survival or a crises.
"When Reynold came in, the Philharmonic was going to leave, support was declining, and the buildings were aging," Grossman says. "Now they are focused on growth, on their depth of engagement. It's about how do we become even more relevant to the community, and how do we make people want to come here. These are the questions a leader wants want to be in a position to ask."