4.3 Benchmarking was undertaken to assess recent performance: “an integral part of the diagnostic phase of performance improvement and change” (Carnall 1999, p. 147). Audience research and evaluation findings in 2003 and 2006 were largely unchanged (Culture and Leisure Committee, 2008, Appendix 2). Key facts included:
4.4 Data was also obtained from the Group for Large Local Authority Museums, which averaged figures from 1998-2003 (see Culture and Leisure Committee, 2008, Appendix 3). Although less current, they provide a UK-wide context (see Appendix 1), confirming Edinburgh Museums score well on visits and income per head of population whilst costing the least to provide. The service scores poorly on levels of funding and investment. Edinburgh Museums have not taken advantage of the funding opportunities available, nor have they had the significant capital investments of other museums services.
Purpose of Strategic Planning
4.5 Kotler and Kotler (2000) summarise the purpose of strategic planning as “to achieve greater visibility, enlarge...offerings, develop a broader audience, and raise income”. In Davies’s study, however, museum managers commented that “strategic management for local authority museums is almost meaningless. The only strategies are short-term, i.e. to survive from one year to the next” (Davies, 1993, p. 54). Longer-term planning is needed to make the lasting survival of the service possible. Public services and local authorities are not immune to this change in focus from mainly internal concerns to those of an external nature and must develop appropriate strategies to cope with the new environment. They need to accept a greater degree of risk than previously deemed “safe”, as to not make the change would involve a greater risk that the service would fail.
4.6 Hatton (1992, p. 145), in discussing the “Strategic Gap Concept” defines many museums as being in a negative, “renewal” category, where the “answer is a complete rebuild of the structure, a retrenchment of all activities that do not contribute directly to viability”. Whilst growing evidence of “entropy” in the Museums Service structure is acknowledged, re-thinking the structure completely also requires appreciation of the opportunity costs of not making the “brave” decisions required.
4.7 Osborne and Brown (2005, p. 64) stress the need for Public Sector Organisations to take a proactive approach to change as change is endemic. Bamford and Forrester (2003), raise Strickland’s 1998 question: “To what extent does the environment drive changes within a system…and to what extent is the system in control of its own change processes?” Whilst the Museum Service has had little control over the external environment, the Project Team are determined to drive the change within the Council, by building internal consensus and will and by winning the trust and power to have decision-making powers devolved.
Options Appraisal
Change management choices in a rigid culture
4.8 Osborne and Brown (2005, p. 94) reference the argument of Robertson and Seneviratne (1995) that the public sector differs from the private because of its multiple and often conflicting constituencies. There is an ingrained and inflexible institutional culture, variable accountabilities and highly formalised procedures which all conspire to create a longer chain of implementation. As a result, the Project Team needed to identify and create options for change management which might most effectively circumvent much of the bureaucracy, whilst simultaneously building the required support. Osborne and Brown (2005, p. 138) discuss the growing importance of relationships and networking due to “the increasing complexity and open-endedness of many organizational goals, and because of the desire to share risks in an uncertain market”. Thus, innovation is achieved through collaboration and is currently considered a more effective means of achieving competitive advantage.
4.9 Innovation and the ability to be prepared for change can be crucial factors in seizing and sustaining competitive advantage (Osborne and Brown 2005). A combination of the visionary with the practical (evidence-based reporting, building consensus and a realistic approach to delivery) will inform the business plan, continuing to maximise the opportunity to win over both “hearts and minds” and successfully manage the implementation of the strategy.
4.10 Taking the proactive decision to do things differently, rather than passively following the standard route could be said to confirm Burnes’s (2006) contention that it is the exercise of choice which is important. Making this particular choice early has enabled them to discuss future strategy from a position of relative strength. As a result of this early establishment of faith, a greater devolution of power and decision-making will be entrusted to the Project Team in the future.
Collecting data
4.11 Davies showed that, when developing their strategic plans, council museums services consulted elected members in 57% of cases, but only consulted visitors in 30%, with other stakeholders accounting for less than 5% of contributions (Davies 1993, p. 58). This demonstrates evidence of a communications gap resulting in a serious shortfall of research evidence. Analytical instruments such as SWOT and PEST, were “never” employed in 34% and 89% of cases (Davies 1993, p. 60). Kotler and Kotler (2000) advocate the need for museums to be clear about their strengths and weaknesses, whilst Osborne and Brown (2005, p. 20) believe that PEST analyses are essential tools to help managers “confront and engage” with the challenges involved. Both methods are pragmatic instruments which assist managers to make unbiased assessments.
4.12 In order to gather data “rich” in content and diversity, the Project Team consulted widely from the start and analysed its current position objectively using the SWOT and PEST tools. This enabled them to deliver a number of possible options for appraisal, develop a robust assessment procedure, and thus present meaningful evidence and recommendations to the Committee for approval (see Tables 2 and 3).
Aligning theory with practice
4.13 By (2005) notes that Planned Change is not appropriate for environments “where more directive approaches are required” such as the current “situation of crisis, which requires major and rapid change”. Emergent model proponents would argue that successful strategy depends less on detailed planning and projections than on comprehending in-depth the complex issues involved, after which the available range of options can be identified and debated (Bamford and Forrester, 2003). Burnes (1996) also makes the point that the preferred approach of an organisation to change may be determined by its culture and that, where the theory runs counter to that culture, its implementation will be either ignored or made ineffective. Hatton (1992, p. 146) concurs that it may be some time before the hierarchies “which undoubtedly restrict flexibility and prevent innovation and change” are banished.
4.14 Osborne and Brown (2005, p. 64) identify the conflict between NPM and traditional administrative bureaucracy. The competing demands question the purpose of the services themselves and lead to new types of governance being required that are more able to respond to change. By taking a less conventional approach to developing strategy, the Project Team are making a radical choice not to take the usual target-driven path for approval and work up the corporate approval ladder. Instead, by taking a “softer” approach to build support and create resonance they are making a creative, proactive choice that in the long run could be more effective. Hutton (2007) argues against the target-led NPM and for policies to take into account the less tangible values of culture itself and quality of visitor experience. He suggests that in forgetting what and who publicly funded institutions are for, there is a question of legitimacy. By attempting to answer “what is needed?” rather than “what can we afford?” the Project Team have taken a refreshing and responsive approach to forming key long-term strategic proposals.
4.15 Given that a radical solution was needed, the Project Team actually took an Emergent approach to achieving large-scale service change. A more incremental development approach protects the service and the Council from financial and cultural risks inherent in the abrupt discontinuity often associated with innovation (Osborne and Brown 2005). Although they did not follow a formal change management theory, the strategy seems to follow the “Eight-Stage Process” recommended by Kotter (see Table 4).
5. FINANCIAL IMPLICATIONS
5.1 Bamford and Forrester’s (2003) findings confirm that change can be difficult in an organisation where financial reporting is of prime importance and the preference is for the utilisation of short-term resources to facilitate tangible results. In the Council there is little scope for longer-term investment and planning unless there is strong evidence of hard, financial returns. As a result, a strong business case with clear financial reports to support the investment proposal will be required. A viable proposition is crucial for the strategic plan to be adopted by the Council and its stakeholders as to enable successful implementation.
5.2 Partners can bring “added value” as well as resources that can swell capacity to deliver new or improved services (Wilson and Boyle 2004). The diversity of professions, trades and specialisms that will be represented in the new Museum offers sponsorship, volunteering, educational and other resourcing opportunities from formal and informal stakeholders in the venture. Savings can also be made from donations of time and services as well as artefacts.
6. RISK
6.1 As Osborne and Brown (2005, p. 190) remind us, “All innovation involves risk”, but risk management is a key challenge for managers. In this project there are risks following the strategy as well as rejecting it:
6.2 As we can see from the above figure, doing nothing is likely to be more risky, especially long-term. In Scotland, local councils are required by statute to provide cultural services. Edinburgh, prides itself in being a “Cultural” capital and hosts the world’s largest arts festival. The damage to its reputation as a result of not providing adequate museum facilities is unquantifiable but, economically, may well prove to be greater than the cost of adequate investment. The financial loss and opportunity costs associated with not improving the service will also continue to increase, whilst capacity to deliver will reduce. Whilst there are certainly risks in pursuing the strategy proposal (many of them unknowable at this stage), the risks of doing nothing are already clear and will grow. The greater long-term risk, to the Museum Service and the City, must therefore be to do nothing.
7. FINDINGS
Possible Barriers
7.1 As we have seen above, there are elements of corporate culture in local authorities that can make change difficult. The Project Team are aware of these and have adopted a creative plan to break down the barriers from an early stage. Nevertheless, it remains that projecting “outputs” can be difficult, as cultural projects involve intangible, as well as tangible benefits, which may not always be understood. There may be legal as well as financial barriers to adoption of the strategy and the legislative hurdles may be too costly or unethical to overcome.
7.2 Local residents will be an important factor, as they are already in dispute with the controversial “Caltongate” development. In general, research would indicate that staff and visitors (including current non-visitors) would welcome the plans to improve the service and facilities. However, there may be some difficulties over the plan to sell the current Museum of Childhood property and relocate the collection.
7.3 The ability to secure capital funding is the biggest barrier to success in implementing the strategy (see below, 7.7 – 7.11)
Corporate Support
7.4 Any major strategic project requires proper planning and corporate support (see Davies 1993). The Project Team have endeavoured to consult with relevant departments within the Council to develop synergy with Corporate strategy and engage them in support for the “vision”, which has been achieved. Support for further development of a more detailed strategy is therefore in place and is likely to continue, pending the outcome of the Business Report. Frank Little, the Museums Manager said “It is an ambitious plan, and it is important that we have gone to the council with the full scope of what we want to do”, confirming the importance of involving the Council at a relatively early stage (quoted by Stephens, S. 2008).
Repositioning Service
7.5 The Trust model developed by Glasgow Council (Grant Thornton 2006) is not an option currently available to Edinburgh Museums as the reduced scale and savings available would not be cost-effective. However, it would be appropriate to revisit this option later, as part of the future strategic planning.
7.6 “Cultural tourism is now popular tourism” Prentice (2001) states, with three out of five overseas tourists visiting at least one museum, art gallery or heritage centre during their stay, and an even higher proportion in Edinburgh. The Museums Service must therefore reposition itself as part of the culture and leisure industry and meet (or preferably surpass) the expectations and demands of its users. If the project strategy is realised, the offer will be substantially improved for visitors. The service will gain competitive advantage as the only museum which delivers multiple stories of the City and its people, in a purpose build environment with impressive visitor facilities. This repositioning of the service aligns with the strategy of both City Development and VisitScotland, allowing for further synergies and partnerships to develop. The venue will become a “must-see” attraction, instead of the 3-star venue it is currently.
Capital Project Funding
7.7 Adequate funding will be the biggest barrier to implementation of the strategy. Initial costings for the Museum of Edinburgh project showed it was unlikely to come in under £ 10 million (City of Edinburgh Council 2004). Whilst it is anticipated that capital funding will include “a significant contribution” from City of Edinburgh Council and Heritage Lottery Funding, the substantial shortfall (likely to be at least 25%) will need to be raised through public sector grants, company sponsorship and donations from Trusts and individuals.
7.8 Recent successful “big gift” campaigns have included those for the Playfair Project and Kelvingrove Museum. Fundraising by local authorities for substantial, high-profile capital projects is now accepted and Kelvingrove is an excellent model.
7.9 Roper and Beard (2001) highlight how identifying risks and opportunities offered by “the current facility asset portfolio” can create significant savings, profits or investments for the service by being better utilised, leased or sold. Confirming status of service properties enabled consideration of a rationalisation of the City Centre museums for the Museums Hub. Receipts from the sale of the Museum of Childhood building and disposal of other properties will add to the civic contribution.
7.10 Given the current economic climate and Council budget shortfall, the option of Prudential Framework loans should be approached with caution. Repayment could put unrealistic pressure on income targets and inability to pay damages Council budgets.
7.11 Funding opportunities through partnerships, relationship building with businesses and via other agencies where the project meets mutual strategic objectives need to be explored. Targeting the Edinburgh and Scottish diaspora should also be considered. UNESCO funding may be possible, as the project is key to Edinburgh’s position as a World Heritage Site.
Commercial Opportunities
7.12 Lennon and Graham (2001) have highlighted financial limitations, resource requirements and increased visitor expectations within the public sector. Project research has identified development of commercial opportunities to help support capacity building as a key strategic policy for the Museums Hub. The Project Team also aligned plans for more commercial ventures to the Corporate Strategy of social inclusion, access, tourism, civic pride, community involvement and making savings. Development also provides added value, grows the “brand” and brings in people who would normally never visit museums. Falk and Dierking (1992, p. 90) attest that “the average visitor deems the quality of the gift shop and food service to be as important, if not more important, as the quality of the artifacts or exhibition design”.
7.13 The main opportunities for income-generation are likely to be:
7.14 Additional pressure exists to create and sustain competitive advantage on a High Street with other retail and catering establishments nearby. Delivery of these services must therefore tie in with the Museum’s Unique Selling Point to differentiate them and to enhance the visitor’s museum experience.
7.15 (Davies 1993, p. 63-64) shows museums managers often look to increasing income as solutions for funding gaps, rather than reducing expenditure. However, the belief in ability to generate more income without investment or increased capacity is at best over-optimistic, given the aversion to introducing admission charges. Table 5 shows that even in the largest, most commercially-focused museums, earned income is unlikely to exceed 20% of net receipts. A recent survey in London discovered that most museum catering facilities have a turnover of less than £ 50,000 per year and almost 40% make no profit (MLA London, 2008). Franchising the catering and events management, to reduce the risks involved by delivery in-house, might be recommended. The current retail operations for the city centre museums are shown in Appendix 2. Improved facilites, shopfitting and ambience can only enhance sales, and figures based on projected visitor numbers look promising.
7.16 There are undoubtedly opportunities to make money from commercial services, providing they are managed well. The success of the new Glasgow model is due to recruitment of professional staff to run the operations, turning a £ 250,000 deficit into profit within three years (Grant Thornton 2006).
Staffing Structure
7.17 The staffing structure envisioned in the City of Edinburgh Council 2004 Project Plan drew attention to the need to be more flexible in order to meet staffing requirements. Additional opening hours in the evenings and at weekends will require the deployment of more part-time and casual staff, both for front-of-house and exhibitions and outreach work. Greater use of volunteers is also anticipated, as is drawing upon the skills of “experts” whose professional skills are represented in the collections. Additional training will be needed to build capacity and skills, with greater interaction between staff and visitors. Operations will be managed more effectively by a specialist manager, allowing curators to concentrate on collections management. A new position of Development Manager – to identify funding, generate sustainable income sources and develop future strategy - would underline commitment to future development and confirm that strategic development is a continual process.
8. CONCLUSIONS
8.1 The Project Team has identified the necessity of re-defining the Museums Service for Edinburgh. Opportunities to maximise the potential have been defined. A planning process to develop strategy to realise that potential has been adopted.
8.2 Development of strategy requires long-term thinking to meet both service and corporate strategic objectives. The process has included stakeholders from an early stage. Analysis of environment and building of relationships has enabled the Project Team to identify, challenge and overcome internal and external barriers and demonstrates a more creative, less bureaucratic approach to change management within a rigid culture.
8.3 There is recognition that strategic planning and management is an ongoing process. Incremental change is being used to achieve substantial change and continual improvement in service offer. This will build capacity and deliver competitive advantage.
9. RECOMMENDATIONS
9.1 Engagement with local residents and with Edinburgh citizens is crucial in determining the success of the project. It is also a key principle of Corporate support which seeks to engage local people as much as possible in planning initiatives and implementation
9.2 The expectations of revenue from income-generating activities need to be realistic, and discriminate between turnover and profit. Failure to meet projections would have a serious impact on any funding gap. At best, commercial activity should seek to cover basic running costs in the first five years and any profits allocated to (re)investment in future development.
9.3 As events and after-hours opening are a key component of service development, possible environmental barriers, legislation and licensing issues must be investigated as soon as possible.
9.4 The present economic climate presents challenges to those seeking funding or favourable lending terms. It is therefore essential that a fundraising professional be appointed to seek sponsorship and donations and to develop long-term funding solutions. Relationships with local businesses and new sources of financing should be explored, using the services of Arts & Business Scotland. Alternative options should be considered should full funding not be achieved.
9.5 The Project Team must continue to align their strategy with that of the Council and other City stakeholders, especially those with a heritage, conservation, culture and tourism remit, for support and partnership/funding opportunities
WORD COUNT: 4375
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