Transcript – Episode 84

Narrator: This podcast is a project of the Mass Cultural Council. We believe in the power of culture, the arts, humanities, and sciences to enrich communities, advance equity, and foster creativity.

Max Hodges: It’s a very different question than, “What can we cut and what can we do less of?” The question is, “Where can we invest to grow?”

Anita Walker: Hi, I’m Anita Walker at the Mass Cultural Council. And welcome to “Creative Minds Out Loud.” Our guest today is Max Hodges, who is the Executive Director of the Boston Ballet. Welcome to the program.

Max Hodges: Thanks, Anita. I’m happy to be here.

Anita Walker: Now everybody knows that this is a podcast for culture nerds. And so we’re going to dive right into a nerdy topic today; how to make a business plan. Wait. Wait. Don’t turn off the radio. This is really going to be fun. Because when I had a chance to talk to Max about a new business plan that is coming together at the Boston Ballet, I thought, wait a minute, that sounds way more fun than a business plan.

Max Hodges: We had so much fun with this. We are still having fun with this. We launched in August a business plan competition at Boston Ballet, like a “Shark Tank” or a “Project Runway” for new revenue ideas at the Ballet and we engaged the entire organization more, than 500 people; staff dancers, musicians, board members in this effort.

Anita Walker: Now hold on a minute. Usually when you’re trying to get that balance sheet just right you get the scissors out.

Max Hodges: Yeah. And yeah, such a great question or a point. One of the biggest challenges for the performing arts is for revenue growth to keep pace with expense growth. We all face this. There’s always inflationary pressure on expenses, but our traditional revenue sources as non-profits, ticket sales, philanthropy, that growth may not keep pace. And we have done the expense cuts. We have done lean ops prophecies. And I would say very confidently now that our expense base is necessary for the caliber of our enterprise. We need to spend what we spend as a non-profit. And so the long-term solution is in revenue growth, new sources of revenue, increased sources of revenue. And when we thought about how to pursue that, and particularly new and energizing ways to pursue that this business plan competition came up as an idea and this is something that we’ve pursued.

Anita Walker: So you really have reached out and engaged pretty much everybody who has some sort of stake in the Boston Ballet, whether it’s board members or staff members or volunteers.

Max Hodges: Right. This idea always had two goals; first, to surface new revenue-generating ideas that we hadn’t thought of before. But second, to galvanize the whole organization in solution-seeking. We felt let’s go to the people who know us the best and find these ideas that that we haven’t heard before.

Anita Walker: And I bet they were excited to be asked.

Max Hodges: It’s a different question. To your earlier point, it’s a very different question than, “What can we cut and what can we do less of?” The question is, “Where can we invest to grow?” What are underutilized assets that we can utilize better? And that’s an– it’s an energizing question, it’s a different question.

Anita Walker: All right, so how did it work?

Max Hodges: Yeah. So first we found two people on our board who were willing to be the executive sponsors or the mastheads of this effort, two incredible individuals on our board who are both in professional fields where they spend all day evaluating new business ideas or investment opportunities.

Anita Walker: Like venture capitalists.

Max Hodges: Exactly right. And so they were the- the figureheads and the selection committee, so to speak. And we launched with a few big meetings and broad calls to action over this competition and then we had a few very fun goalposts in the middle. So we had a couple of pizza parties, an ice cream party where we invited anybody either with an idea that wanted to help refine the idea, or maybe if you were interested in being part of it but you didn’t have your own idea. Maybe somebody else was putting a team together and needed help. We invited everybody in.

Anita Walker: So this wasn’t just write your idea on a piece of paper and put it in the suggestion box. It was more engaging than that.

Max Hodges: Really well said. It was always important to us that this was more than a suggestion box. Exactly right. We felt that we weren’t going to be too persuaded of your idea if you weren’t persuaded of your idea. So we asked people to spend some time on this and to really put forward a business plan, not a huge detailed diversion. But we gave people a template of what a business plan might look like, what kind of revenue would you expect in year one, year two, year three? What investment would be necessary to achieve this revenue? What resources that are at the Ballet would be utilized to make this happen and what risks might you see? And we also provided resources to help people who maybe have never done something like this before. So in particular, the Ballet’s chief of staff, Ming Min Hui, who’s a business school grad and who, you know, has a really core ability to do this kind of thing, she had tons of office hours through the whole process where you could come in and she could help you vet and polish up your idea. But yes, we wanted everyone to put some work into these ideas and before they submitted them. One of the very fun things that happened was that it galvanized a lot of cross-departmental, cross-institution collaboration. So we had board members working with staff, dancers with board members or staff, musicians. And that alone was a wonderful thing to achieve, to open the lines of communication and collaboration that maybe weren’t as obviously open before we set about doing this.

Anita Walker: And there’s also something about the transparency of what it really takes to put a business plan together. We can all sit back and say, “Well, I don’t know why they’re not spending enough in my department,” but not even really thinking about well, there is investment and risk and all of these details.

Max Hodges: That’s right. That’s right. We had the whole organization thinking about ROI, Return on Investment. Not a conversation that often happens in the studio, but a very fun one and in a very positive, pro-active, productive way. And we did get amazing participation. So we invited more than 500 people to participate, more than a hundred did and we received 54 submissions, really thoughtful submissions. And I was deliberately kept out of some of the process early on. And so when I and the– our board members, the selection committee, received these 54 submissions, they were completely anonymized. We prioritized the idea, not the people. And–

Anita Walker: So the donor– the big donor or the board chair didn’t sort of get their finger on the scale. <laughs>

Max Hodges: That’s exactly right. Exactly right. And I have to tell you, I was about 11 minutes into reading these submissions when I said my goodness this has been an enormous success. Because these were ideas that were creative, they were positive, fun and they were ideas that we had not heard before. There were things that we as leadership of the Ballet had not considered previously, had not seen before. So we did the very difficult work of narrowing the 54 submissions into six finalists. And now, right now we are in the stage of choosing one or two or possibly more of the six that we will implement.

Anita Walker: So what was your criteria? What did you think about as you sort of had to winnow the field?

Max Hodges: Yes. So at the stated criteria when we announced this competition were that the ideas create sustainable positive margin contribution for the Ballet’s budget and that they further mission objectives and we asked people to be mindful of existing resources, context and timing, not to be constrained by existing resources but to be thoughtful about them.

Anita Walker: When you said sustainable, so you’re not talking about a one-off?

Max Hodges: That’s right. That’s right.

Anita Walker: So it’s something that could be– carry the organization into the future.

Max Hodges: A new program that would build over time. And so those were the stated criteria. When we got these 54 and sort of could read through them, we were able to articulate a few more criteria. And one of them was, “Does this idea seem fun? You know, is this something that the whole organization would really want to take on and pursue together?” And that wound up being a lens through which we evaluated some of these ideas and that helped us narrow down to six finalists. And I’m able to give, you know, I– we haven’t picked up a quote/unquote “winner” yet and we haven’t decided exactly what we’re able to–

Anita Walker: But you’re going to tell us a little bit about it. <laughs>

Max Hodges: That’s exactly right. Exactly right. I’m– I can tease one of the finalists because I do think it will give a little sense of this or make it more concrete. And so and there was real consensus around this idea, so we received a few submissions along this theme. The Ballet at our home in– on 19 Clarendon Street, we have a Black Box Theatre that seats 144 people. And we do have programming in that Black Box Theatre, in particular a series called, “BeBe at Home” that’s beloved by the Ballet’s community. But this submission, the finalist’s submission was, how could we use that space differently to achieve audience development goals? How could we change the programming and the marketing for the– for what we do in that space to bring in entirely what we call new-to- file audience members with that space and bring people into the Ballet that way, as opposed to right now where it’s programming typically for our most ardent fans? Another way to describe this idea is our Oberon strategy. So referencing another beloved Boston arts organization or Cambridge arts organization, I should say, the ART, they have their Main Stage in Harvard Square, but they also have the Oberon Theatre, a cabaret space that they’ve put very differentiated programming in like, “The Donkey Show” that brings in a totally different audience and hopefully that audience matures over time to go see The Main Stage. Well, that’s replicable. Or could it be replicable is the strategic question that’s asked and how can we use our Black Box space, like the Oberon to bring more people into dance and then into our Main Stage productions at the Boston Opera House?

Anita Walker: So this is a promising thought, isn’t it? And it’s about audience development and importantly, revenue.

Max Hodges: Exactly right.

Anita Walker: So how did you analyze the suggestions around the return on investment? Sometimes that’s something that is, should we say, more optimistic than it actually turns out to be? <laughs>

Max Hodges: Right. So one of the things that happens when you include this many voices in a process is that you don’t know exactly what you’re going to get. There’s no equal formula. And so in particular I think there’s bias where an optimistic person submits a submission with a more optimistic ROI. And maybe a more sober person, shall we say, is less willing to commit to huge numbers for the ideas. So we did to try in the evaluation process put an objective lens and put a little bit of our own back of the envelope math on the revenue expectations, the expense expectations. That’s also part of what we’re doing now as we try to narrow the six finalists into which ones will the Ballet implement first. This was an experiment. When we decided to launch this business plan competition this summer we honestly didn’t know what was going to happen and whether the organization would be interested or not. And so we’ve been so thrilled with the interest that has been generated. I can now say with confidence that this was not a one and done. So we will take one or two or three of the finalist ideas and implement them. But I fully expect that we will be revisiting the other finalists, the other submissions and that we will be holding these types of invitations, events, projects more regularly to keep surfacing these ideas. And so with any one of the finalists a million dollar idea? Absolutely not. But do the ideas change the way we work together, unlock new ideas that leadership hadn’t thought of, and then provide a roadmap for one early success to build on again and again? Yes. I hope so.

Anita Walker: It seems to me that you mentioned earlier in our conversation that let’s face it, all of our cultural non-profits are struggling with the balance sheet. I don’t know a single one that isn’t. And it feels like this adds a certain kind of optimism and confidence to organizations that always feel like they’re destined to squeeze the last bit of anything out of everybody.

Max Hodges: Yeah. I think that’s exactly right, Anita. I think every non-profit organization, big or small, the struggle for the marginal dollar is so real. How do we free up that last dollar to invest in a new program we’re excited about? Or how do we bring in that- that extra dollar of revenue? It’s really a struggle. At Boston Ballet, we have been really pleased and grateful to have had some really nice success over the past seasons. Our 2016 season broke just about every audience attendance record that we have as a 55-year-old organization. And so we like to identify these points of counter-narrative. You do hear, yes, performing arts non-profits may be struggling, our audiences are declining. And we are really grateful and proud to be able to say, “Well, actually, we see really strong metrics of audience growth.” And so I think part of this is about how to build on that momentum and how to make sure we’re always looking forward towards and reaching for success as opposed to minimizing a downside of some kind.

Anita Walker: What was the hardest part of this for you?

Max Hodges: Great question. In any wildly new project where you really put yourself out there in front of the whole organization; staff, dancers, board leadership, and this was a very public project, there’s always that risk that it’s a total dud. <laughs> You know, we announced this and we got warm reception. But then, you know, there’s that four week period where you’re not sure anyone is going to submit a single idea. And so I think maybe that moment kind of immediately after we announced this big project and this big effort and before the first submission came in there was that pit in our stomach of, are we on to something here or is this just going to <makes noise>? And then the– when the idea started rolling in or when people started coming to that the pizza parties to share ideas and exchange ideas that’s what we thought okay, I think we’ve really got something here.

Anita Walker: You know, I thought you were going to say giving up a certain amount of control.

Max Hodges: <laughs> I love giving up control. <laughs> I maybe should do it more often. But I think it’s the best possible thing when something like this takes on a life of its own and is more than we could have imagined that it could be. And, of course, you know, you carefully plan something so that it works out that way. But in Roy Burns and Tricia Patrick, these two board members who spearheaded this effort, in me and my chief of staff, Ryan another member of my team who was key on this effort, we had individuals who were really excited about this and had a vision. And so they lead this and I was confident the whole time really, that they would be able to lead this to success. And but all of us had that same fear that what if nobody has any ideas? I mean what if we just don’t get a lot of excitement about this? But we truly did.

Anita Walker: A fun way to put a business plan together. Max Hodges, Executive Director Boston Ballet, another one of our “Creative Minds Out Loud.”

Max Hodges: Thank you so much.

Narrator: To learn more about this episode and to subscribe, visit