Management Models for Culture
Communication
Culture Communication for
Management Models
M. Cecchi, P. Malyzhenkov, HSE, Moscow, 7
April 2010
1
The “Economics
of Culture”
is a discipline which only recently acquired
attention all over the world in business and
political economy.
Still different scientists noticed its importance
and the strong interrelation between its main
components – economy and culture
M. Cecchi, P. Malyzhenkov, HSE, Moscow, 7
April 2010
2
John Maynard Keynes
“Our experience demonstrated clearly that such activities
cannot be accomplished if they depend on the only profit
and financial success. The usage and the eventual
distruction of the God-given talent which submits to the
aim of profit is one of the worst crimes of modern
capitalism.
The public financing must regard also the expences
(“improductive” ex-facte) but linked to the creation of the
values outside the market (which for this reason cannot be
appraised by the market in sense to assign them a price)”
(“Art and the State”)
M. Cecchi, P. Malyzhenkov, HSE, Moscow, 7
April 2010
3
Adam Smith
The production and the conservation of these goods
not only cannot be regulated by the “invisible hand”
because it needs the special cost supported by the
State, but the quota of this cost must grow while the
nation well-being grows.
William Baumol: ...the problem is not whether the
theatre or the dance must be supported by the State
but in what measure in must be realized.
M. Cecchi, P. Malyzhenkov, HSE, Moscow, 7
April 2010
4
Italian experience
“the State considers the theatrical activity to
be of relevant general interest because it is
aimed to favour musical, cultural and social
education of society” (Law n° 800 1967
art.1)
In 1985 a Common Performance Fund (CPF)
was instituted (Law n°163 1985). Its aim is to
deliver a definite and organic sistemation to
the financial interventions of the State in
favour of the performing art.
M. Cecchi, P. Malyzhenkov, HSE, Moscow, 7
April 2010
5
In 1985-2008 the CPF reduced by
64,71%,
M. Cecchi, P. Malyzhenkov, HSE, Moscow, 7
April 2010
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Public financing: partitioning criteria
CPF 2008
%
Lyrical and Symphonical Foundations
Music
Dance
Prose
Circle
Cinema
Performance observatory
Committees and Commissions
45,72
13,41
2,03
17,87
1,48
19,31
0,14
0,04
M. Cecchi, P. Malyzhenkov, HSE, Moscow, 7
April 2010
7
The cost of personnel in performing art
(2008)
Theatre
Totale Contribuits
€
Cost of
Personnel €
% Personnel
Contribuits
Comunale Bologna
18.938.349
17.938.909
95%
Maggio Musicale Fiorentino
30.953.639
27.779.000
90%
Carlo Felice Genova
26.224.210
19.398.000
74%
Scala Milano
50.170.269
64.702.000
129%
S. Carlo Napoli
41.654.379
23.685.545
57%
Massimo Palermo
37.868.599
27.317.510
72%
Opera di Roma
52.556.467
41.697.000
79%
Regio di Torino
31.917.860
22.654.482
71%
Verdi di Trieste
20.921.639
17.302.000
83%
Fenice di Venezia
26.035.727
19.690.000
76%
Arena di Verona
23.266.605
29.400.000
126%
S. Cecilia di Roma
24.804.940
21.842.900
88%
Lirico di Cagliari
29.651.093
17.395.000
59%
Petruzzelli di Bari
6.300.000
1.429.200
23%
421.263.776
352.231.546
84%
TOTAL
M. Cecchi, P. Malyzhenkov, HSE, Moscow, 7
April 2010
8
USA: Change in Unresticted Net Assets (CUNA)
Earned
Income
Contributed
income
Total
Income
Payroll
Other
Expenses
Total
Expenses
CUNA
2004
2005
2006
2007
2008
3.282.056
3.541.498
3.666.855
4.243.346
3.936.890
2.295.593
2.923.264
2.796.185
2.766.120
2.946.123
5.577.649
6.464.762
6.463.040
7.009.466
6.883.013
2.877.128
3.128.322
3.272.061
3.481.100
3.638.227
2.356.148
2.634.323
2.750.774
3.028.950
3.327.400
5.233.276
5.762.645
6.022.835
6.510.050
6.965.627
344.373
702.117
440.205
499.416
-82.614
M. Cecchi, P. Malyzhenkov, HSE, Moscow, 7
April 2010
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In Russia
In 2009 the financing of culture entities was
equal to 114 mlrd rubles, but these funds
were destinated majorly to the reconstruction
of Bolshoi Theatre and the stage construction
in Mariinski Theatre
M. Cecchi, P. Malyzhenkov, HSE, Moscow, 7
April 2010
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Performing Art and Balanced
Scorecard
The importance of this instrument derives
from:
•International crisis and the reduction of
the public financing
•Optimization of the costs structure
necessity
M. Cecchi, P. Malyzhenkov, HSE, Moscow, 7
April 2010
11
According to the data of World
Bank
Since June, 8 2007 till March, 9 2009 the financial
losses on the stocks all over the world were equal to
$ 31.000 miliards
Overall GDP of USA, China, Japan and
India
M. Cecchi, P. Malyzhenkov, HSE, Moscow, 7
April 2010
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12
Balanced Scorecard
has been elaborated on the base of research
results obtained by professors of Harvard School
of Economics Robert Kaplan and David Norton in
1990 .
The research was conducted with the only aim:
discover new ways of business efficiency
increasing and business goals achieving.
M. Cecchi, P. Malyzhenkov, HSE, Moscow, 7
April 2010
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13
Norton and Kaplan based
their research on the following hypothesis:
by means of only financial indicators the
management does not obtain sufficient
information for right and timely decision
making
M. Cecchi, P. Malyzhenkov, HSE, Moscow, 7
April 2010
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14
This hypothesis is founded
In 1978 the difference between the balancesheet and market value of american
companies was equal to 5%, in 1998 - 72%.
In Italy in 2005 the stock (S&P Mib) value of
the enterprises was three times greater than
their tangible assets value
M. Cecchi, P. Malyzhenkov, HSE, Moscow, 7
April 2010
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According to Fortune
in 2007 Balanced Scorecard was used as the
principal strategy implementation tool in 402
companies from Fortune-500 list:
Coca-Cola, BP, General Electric, McDonalds,
L'Oreal, BMW, Boeing, Samsung Electronics and
others.
M. Cecchi, P. Malyzhenkov, HSE, Moscow, 7
April 2010
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According to Balanced
Scorecard approach
The strategic development of the firm is analyzed under
four interconnected aspects:
•Finance;
•Relations with clients;
•Internal processes;
•Innovations and personnel development
M. Cecchi, P. Malyzhenkov, HSE, Moscow, 7
April 2010
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The main pricniple of
Balanced Scorecard
Which became the reason of high efficiency of
this management technology is
it is possible to manage only what you can
measure
M. Cecchi, P. Malyzhenkov, HSE, Moscow, 7
April 2010
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BALANCED SCORECARD
1. Operational volume (output)
• Public
• Production
• Production
• Average repeating per ticket
2. Economy (input and costs)
• Artistic costs impact
• Structure costs impact
• Personnel costs impact
• Revenues partitioning
• Covering with proper resources
• Revenues per spectator
• Public contributes per spectator
3. Efficiency
• Productivity of labour
• Productivity of labour
• Unitary cost per performance
• Unitary cost per spectator
= number of spectators
= number of performances
= number of tickets
= numero di rappresentazioni/numero titoli
= artistic costs / total costs
= structure costs / total costs
= personnel costs / total costs
= revenues per category / total revenues
= proper resources / total costs
= proper revenues / number of spectators
= public contributes / number of spectators
= number of performances / personnel
= number of performances / personnel
= total costs / number of performances
= total costs / number of spectators
M. Cecchi, P. Malyzhenkov, HSE, Moscow, 7
April 2010
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BALANCED SCORECARD (2)
4. Artistic dimension: success and quality
• Innovation
= number of new performances
• Rehersal average time
= number of days / number of tickets
• Filling grade
= number of spectators / max number
• Frequency
= number of performances / days
• Presences in subscription
= number of entries in subscription
• Subscription impact
= number entries in subscription / number
of spectators
• Audience variation
= spectators, subscriptions X / spectators,
subscriptions X-1
5. Fund raising
• Revenues
• Public financing
• Private financing
= Revenues from tickets / total revenues
= Public contributes / total revenues
= Private contributes / total revenues
M. Cecchi, P. Malyzhenkov, HSE, Moscow, 7
April 2010
20
Problems of BSC application in Russia:
following the fashion
Some companies announce enormous successes
after BSC introduction – turnover increased by 3550% in 2 months.
Certainly, such affirmations are nothing but PR, BSC
is the strategy implementation system and it is
impossible to expect such high operational
benefits.
M. Cecchi, P. Malyzhenkov, HSE, Moscow, 7
April 2010
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Problems of BSC application in Russia:
elaboration and implementation gap
The majority of consultants work on the
elaboration of BSC and not its implementation
and the customer is not able to realize it by his
own.
the percentage of really implemented BSC
projects in Russian companies is about 3%
Source: Managers’ Society
“Executive”, 2008
M. Cecchi, P. Malyzhenkov, HSE, Moscow, 7
April 2010
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