The first was a thoughtful exploration of alternate structures for producing theatre, authored by Rebecca Novick, a theatre director and arts consultant in the San Francisco Bay area. In her view, the corporate structure of a non-profit corporation can hinder rather than help artists who are trying to find productive work in the theatre business. She offers suggestions to theatre artists and arts funders that would divert resources away from the operation of companies toward the people who create the onstage product. Her general thesis – that more investment in companies rather than artists might actually inhibit the art form’s growth – has an appealing logic.

The second was a light-hearted column in a local Toronto weekly which concluded that theatre companies compete in a zero sum game, played by neo-Darwinist rules. According to Carly Maga, we shouldn’t be overly concerned by the demise of the game’s losers. Her title likens these companies to fish that are struggling to stay afloat or going belly up. In the article, she compares them to dead branches falling away from trees being hacked at by axes. Whether fish or foliage, she argues that the loss of companies like Aubrey Dan’s, along with the $40 million he’s rumoured to have lost, is inevitable and inconsequential in the greater scheme of things.

Rather than contradict either of them, it would be better to see Novick and Maga reconcile their views with one another. On the surface they seem to agree that theatre companies are of doubtful value and importance, however Novick is primarily concerned with the careers of aspiring theatre professionals and their creative output, while Maga seems unconcerned about anything other than assurance that natural selection is at work in the industry and that it is indeed natural.

When Novick talks about alternatives to traditional theatre companies, she’s really talking about self-production and self-employment strategies that will advance the field by bringing new talent to the fore and by shifting funds from inefficient companies to highly productive artists. Maga should try to explain to Novick how these aspiring theatre professionals would fare in the absence of the large established companies at work in every North American city.

Maga may consider this to be inconsequential, but everyone Novick cares about would be harmed by the evaporation of jobs for actors, directors, stage managers, technicians, costume designers, set builders, designers, and musicians (not to mention the corporate unworthies in marketing and administration) that would result when the fund raising, marketing, and production capacity of large companies is diminished. Whether the companies in question are non-profit or commercial, like Aubrey Dan’s, most of the money they earn at the box office and raise philanthropically goes into fees and wages. Without these companies, competition for work in a contracted theatre industry would be much more intense for aspiring theatre professionals at all levels.

Here’s another thing they have in common: neither makes any meaningful reference to the relationship between theatre companies and audiences, or between artists and audiences. Maga is disturbingly cavalier about the whole audience thing.

First, she blurs the distinction between commercial and non-profit theatre in terms of scale. In Toronto’s commercial theatre heyday, Livent’s sales at the Pantages Theatre alone likely exceeded the combined sales of all the local non-profit companies (8 shows per week X 2,000 seats X 50 weeks = 800,000 tickets sold at premium prices). These are monster producers in terms of revenue and consequently opportunities for theatre professionals. Their mode of operation bears very little resemblance to the small non-profit theatres Maga generalizes about, and ticket sales are their lifeblood.

When she talks about the Canadian Stage Company, she seems almost hostile to the necessity of an audience. She credits the artistic director with resurrecting the company, and explains away his box office failure (along with deep budget deficits) by speculating that CSC could sell its theatre out if it only had fewer seats. Why didn’t Aubrey Dan think of that? Or Garth Drabinsky, who could have told unhappy investors that his shows were all sold out… except for the empty seats.

In every example, she lauds the companies that play to tiny or empty houses, mystified by the popular appeal of a company (Soulpepper) that offered “a canon of classic plays and reputable casts.” This company, she allows, may redeem itself by opening its current season with something that might at last dismay its audience. Like Novick, she seems to inhabit a strange world where we all might be better off without big companies and their big audiences, performing in venues with a lot of seats. Taken to its logical conclusion, success in the performing arts might be best achieved by eliminating performances altogether, since they involve avoidable risk, cost, and contact with uninformed audiences.

The importance of audiences is notable only by its absence in Novick’s analysis. Although she’s making a valid point about the unnecessary proliferation of small theatre companies, she fails to acknowledge that there are perfectly valid reasons for incorporating theatre companies in some circumstances. Companies, unlike self-organizing artist run groups and collectives, strive to acquire capacity in three corporate functions: production, administration, and marketing. A constant focus on marketing is required to build audiences over time, and this is a chronically neglected practice of project-based groups. Yet isn’t it an assumed motive of aspirants in the performing arts to perform? And to perform for audiences rather than for each other? Audience development is an indispensible function of theatre companies, yet is largely overlooked in this discussion.

I find it bizarre to imagine that big companies with big audiences are less important to the prospects of theatre artists than opportunities to work in more fluid, project-based groups or little companies with narrow audience appeal. In reality, they’re all necessary for the health of theatre in any major market.

Large theatre companies depend on a constant flow of talent from smaller companies and projects. Entry level theatre professionals depend on that flow to open opportunities for them at higher levels in the industry as their talent matures through practice.

The fact that Novick and Maga have taken this narrow view, analyzing artists, companies, and audiences as discrete elements, highlights what I think is one of the biggest problems affecting the performing arts, at least in Canada. Practitioners of the craft, once-aspiring or accomplished artists, eventually become managers by default, bringing their subjective views into positions that require flinty-eyed objectivity.

This is true of managers and executives across arts disciplines, where artistic experience is often an unspoken precondition of organizational leadership. The exceptional artistic director who diagnoses problems, strategizes well, and manages superbly, is not at all common. Despite this, the majority of Boards give them authority over their business managers in areas where their artistic experience is of little use.

NetGain was once asked to repair a music organization’s business plan. It had been drafted by a consultant who was chosen because he was an internationally renowned flautist with strong connections to government funders. When the plan was torn down and rebuilt to their satisfaction and relief, I struck a pact with the executive director: The next time they hire a flautist to write a business plan, I get to lead the wind section of the National Arts Centre Orchestra.

I play the kazoo.

Among the brutal but unspoken truths learned since the collapse of 2008 are these: Economic development is no longer a secondary function of government, suitable for rewarding faithful constituencies and burnishing political legacies. Second, “economic development” is becoming synonymous with “business development.”

Set aside your political prejudices for a moment and consider what this means. The primacy of economic development lurks beneath the rhetoric of every campaigning or elected government in the western world. Whether they’re neocons insisting that deregulation and tax reductions will spawn new commerce, or libocrats vowing to spend enough capital to bring industries back from the dead, we’re all slowly coming to the admission that both strategies are failing.

Hosing money at the problem, whether its neocon pre-tax money or libocrat after-tax money, is too crude. In both cases, the gains are more than offset by the impoverishing effect of government debt. In the misery ensuing from each dose of medicine, the public vacillates from right to left and back again in desperate search of relief.

Do you doubt it? Right wing governments cut taxes and suffer revenue shortfalls. Left wing governments raise taxes and then overspend. Debt is debt, and it doesn’t much matter where it originates or which failed remedy is currently in fashion.

Real economic development begins as ever among innovative and enterprising people who have access to resources. It happens one entrepreneur at a time, one company at a time, in real time, in a specific place, whether the initiative starts from nothing or grows from within a vast corporation. This constant renewal happens more or less abundantly across political jurisdictions, creating competitive advantage or disadvantage for the affected economy. Governments can change the regulatory and fiscal environments, but they can’t manufacture ambition, inspiration, or markets.

Business incubators are one mechanism by which governments can make strategic investments that, unlike bank bailouts and stimulus packages, return far more than they cost. It only makes sense.

“Start making sense,” is the unifying theme of Donald Drummond’s recent set of recommendations about how to cut government spending in Ontario. He’s refreshingly blunt about business development programs and incentives. They are in large part unfocused and ineffective. In his view, they are so ineffective, it’s possible to reduce the amount being spent on them while achieving better results.

Here in Toronto, the City appears to be gearing up for a more targeted investment in business incubators than in the past. This is very timely, in our view. When and where that investment occurs, and the rules of engagement between the government and its incubator partners, will determine their success.

In a previous post, I ranted about how the careless use of language has allowed piecemeal business training and coaching to be mistaken for the intense, immersive, place-based practice of readying the most promising companies for success in the marketplace. Unless I’m badly mistaken, this distinction is going to become more critical in the months and years ahead.

Aubrey Dan will wind down his theatre production company, Dancap Productions. The Star’s critic, Richard Ouzounian, claimed to regret this turn of events for reasons that seemed sentimental and vaguely insulting. I’d like to list some more substantial regrets.

Commercial theatre was once an industry that churned hundreds of millions of dollars in cultural tourism for the City of Toronto. It grew with great rapidity in the late ‘80’s and early ‘90’s as shows like Cats, Les Miz, and Phantom turned old theatres into cashboxes for clever producers and marketers like Marlene Smith, David Mirvish, and Garth Drabinsky.

There were many others that came after, some successful and some not, but every one of them brought private sector investment to professional theatre, creating employment for thousands of people on both sides of the curtain, launching hundreds of performing careers, and drawing visitors from all over the northeastern United States and Canada. The new megacity was enjoying the golden eggs of this goose even before it knew it owned a goose.

The industry declined due to a variety of factors just as quickly as it began. Its contraction became unignorable by the time Drabinsky’s company, Livent, collapsed under accusations of investor fraud and other financial irregularities.

This happened around 1999 or 2000, and I remember it well because it coincided with the pain of amalgamating five former cities into the New City of Toronto. While the administration of the new megacity struggled with the reinvention of every structure and system of municipal government, it also had to manage an amalgamated portfolio of cultural assets, including a clutch of large civic theatres, including the three-theatre complex in the former City of North York that had been leased to Garth Drabinsky and the now defunct Livent Corporation.

What I regret about the demise of Aubrey Dan’s company, Dancap, is that it offered the perfect solution to the problem created by the departure of Livent over a decade ago. Aubrey Dan cites his loss of control of the Ed Mirvish (formerly The Canon) and Panasonic Theatres to rival Mirvish Productions as a turning point in his company’s fortune.

As he said, he couldn’t put down “roots” without having long term control of a performance venue. Marlene Smith had used the Elgin Theatre, Mirvish had the Royal Alex and the Princess of Wales, Drabinsky had the Pantages and the Ford Centre in his heyday, and Jeffery Latimer had the New Yorker. Without controlling a venue, it is very difficult to compete for the rights to produce shows, and if successful in winning the rights, to secure an adequate venue for a long enough run to capitalize on your successes, or to cut your losses and mount something else quickly in the case of a flop.

We worked with the Toronto Centre for the Arts (formerly the Ford Centre and subsequently the North York Centre for the Performing Arts) when its City staff and Board of Directors were trying to evaluate an offer from Aubrey Dan to take this white elephant off their hands. Our advice, of course, was to ink a 3rd party management deal with Dancap as quickly as terms could be negotiated. After repeated studies of the Centre’s finances, we’d long concluded that only a commercial operator could make adequate use of its 1,800 seat theatre, and that the rest of the facility would languish in deficit until a successor to Drabinsky could be found.

In the years since Livent’s demise, the City has sunk about $15 million in operating subsidies into the place. When the theatre complex was first built on “Mel Lastman Square” for just under $50 million, the outrageous North York Mayor, Mel Lastman, made the audacious claim that it wouldn’t cost “one taxpayer dollar.”

Technically, it didn’t cost one North York taxpayer dollar because North York was amalgamated just before Drabinsky and Livent disappeared out the back door of the Ford Centre, along with their obligation to retire $30 million in outstanding construction debt.

All the taxpayers of the new City of Toronto absorbed this $30 million loss without apparent knowledge or complaint under the leadership of the very first megacity mayor, who was, by coincidence, Mel Lastman. The theatre complex, consisting of an 1,800 seat theatre, a 1,032 concert hall, and a 200 seat “black box” studio, was put under the control of a community board and has operated at a substantial loss ever since.

When Aubrey Dan approached with an offer to take over operational responsibility, there ensued a protracted and painful negotiation. Members of the community Board were led to believe that the facility had been built for local arts use by the good folks of North York, when in fact it had been designed, with input from Drabinsky, to serve as the home of commercially produced Broadway musicals for the Golden Horshoe and beyond. After all, it was the prospect of big audiences and long running shows that fuelled Lastman’s fantasy of gaining a major cultural facility for North York without paying for it. Nevertheless, the Board became seized with the idea that their mandate was to preserve the facility for community arts use and occasional rentals, at the cost of tax payers, rather than give it over to precisely the kind of commercial operation for which it was obviously built.

Aubrey Dan never got his theatre lease and is now out of business. The Toronto Centre for the Arts still has a badly underutilized 1,800 seat theatre. As a result, it hasn’t been able to collect enough ticket surcharges to fund future capital repairs, and returns to City Council every year at budget time to explain how it lost money and why it should continue to receive subsidy. We know that the future of this and other municipal theatres is in question under the current administration. One wonders if that would be the case for the TCA if it had a long-term agreement with Dancap.

I regret that the City wasn’t able to cut a deal with Dan at a time when it might have given him a chance to recover and stabilize his business. In previous posts I’ve discussed the in-compatibility of public and private sector motives and how mediation is required to achieve more of the potential from partnerships between them. This is a perfect example.

The City is a powerful player in the performing arts market, owning roughly a fifth of Toronto’s entire soft seat inventory. It also has a strong economic incentive to encourage renewal of the commercial theatre industry. Yet a community Board, created by the City and managing a City-owned facility, stymied a serious producer at a point in the development of his company when he was most vulnerable, resulting in a series of regrettable outcomes for everyone.

Richard Ouzounian writes that Aubrey Dan was naïve, that he was inexperienced, and that he wasn’t really cut out for the tough business of commercial theatre production. I take a more generous view. Despite the risks and errors he endured, self-inflicted as with most entrepreneurs, he saw opportunity in Toronto’s proven capacity as a theatre production centre, as a theatre destination. He also saw an overabundance of suitable performance venues.

What he couldn’t fathom, after being legally finessed out of his claim on the former Pantages Theatre and The Panasonic, was the intransigence of the Toronto Centre of the Arts, at a time when there are too many theatres with too little product to fill them. His was a perfectly rational business response to these conditions: bring investment and productions to the theatre landlords to remedy their problem and make money. Unfortunately, as I’ve argued and as he’s learned, governments aren’t businesses and don’t have to rationalize their decisions in the same way.

The saddest day for the former Ford Centre was not the day that Livent moved out, nor the day that Ford Motor Company demanded that its name be taken off the marquee. It was the day that its last suitor, Aubrey Dan, put his hands back in his pockets, shrugged and turned away.

Like illegal parking, the ambiguity of heritage laws and the inconsistency of enforcement efforts aren’t entirely displeasing to the parties affected. Police love illegal parking. If the police devoted as much manpower to dangerous crimes (no one has ever been killed by a parked car), this City would be a much safer place, but how can they afford to forego the windfall offered by parking enforcement?

I know heritage preservationists want to protect as much as possible, and developers want unencumbered access to the dirt beneath heritage buildings, but what a dreary world it would be without the crusades and incursions across the blurry lines of heritage preservation law and practice.

As land use intensifies in downtown Toronto, heritage-encumbered properties are increasingly attractive to developers because they offer opportunities for horsetrading with municipal government. A tightening of heritage laws would leave them less latitude to court favour with city councils and community leaders. If developers couldn’t work with heritage-encumbered sites as a means of placing private capital in public places, they’d only find more nefarious ways to acquire land.

On the opposite side of the table, heritage bureaucrats and community advocates are equally content with laws that let them pick and choose their battles. And with 9,600 buildings in the Toronto Heritage Inventory, dozens of which are preserved at the expense of government, there’s lots to pick and choose from. In fact heritage preservationists may be suffering from their own success, as the cost of maintaining these buildings rises faster than the funding they depend on. Whether they’re adding to this inventory or disposing of property, preservationists need the right to exercise discretion, not laws that explicitly compel them to adopt certain buildings or abandon others.

Part of the reason dysfunctional regulations and enforcement are permitted to exist is because it is public sentiment, not law, architecture, or historic pedigree, that assures a building’s survival. By making sentiment the prime consideration in the selection and repurposing of heritage buildings, the whole debate about regulation and preservation would take on a more constructive direction.

In fact we should be explicit about all the relevant determinants of success in heritage preservation projects, because they’re surprisingly consistent. The underlying idea is encapsulated in a scheme that was presented by my friend, Robin Uchida, at a culture and heritage symposium a few years ago (for which he credits William McDonough;). If we follow his direction, new resources will be drawn to the repurposing of heritage buildings, existing resources can be concentrated on the most valuable sites in our heritage portfolios, and the buildings we care most about will continue to serve us for generations to come.

As you look at his diagram, think of any old building you’re familiar with, and you’ll see the validity of this scheme. Projects that address only one or two of the points on this triangle don’t typically result in an enduring outcome. Think for example of the old bank building across from the Eaton Centre, which was once the ungainly home of the Toronto Historical Board (now Heritage Toronto) until 1998. Since then, the building has remained empty.

This year, it was purchased by MOD Developments who will save part of the building as a portal into the 60-story Massey Tower under a heritage easement agreement with the City. It’s a good example because it requires a heritage easement agreement to unlock the potential of the building for any viable use whatsoever, after this prominent building, on Toronto’s most famous street, languished for almost 15 years under our “protection.” The triumph of the preservationist, in isolation, is no triumph at all.

Projects that take all three corners of the triangle into account typically turn out better. Although there are good institutional examples, like the National Ballet School on Jarvis Street, there are more modest, commercial examples like the Tim Horton’s that replaced the 117-year old Winchester Tavern in Cabbagetown. Now I regret the loss of a tavern as much as the next person, but this was a happy outcome in terms of architecture and heritage when compared with the old Morrissey Tavern, at Davenport and Yonge, which disappeared without a trace shortly before the Winchester makeover. Both old hotels were shrines of a kind, but one is still a landmark while the other has become land-fill. One was protected and one was not. One had a neighbourhood constituency that rose in defence of it, and the other did not. And one was deemed beneficial to the financial plans of a developer and the other was not.

In the simplest terms, this scheme dictates that we don’t save buildings just because they’re old; they have to mean something to the community, they have to fit somehow in the evolving urban environment, and they have to have a make a direct or indirect economic contribution.

Translate this simple scheme into criteria for preserving heritage buildings, and Toronto would have clearer rules about the sites that truly matter, and the about the purposes they can be put to. It will help developers to spot prime opportunities and help preservationists to make intelligent choices about which among the 9,600 listed heritage buildings have any real long term prospect, and their victories will be lasting and meaningful.

Write laws around these principles, and the old game between preservationists and developers will become much more creative and constructive than it is now. New resources will be drawn to the repurposing of heritage buildings, existing resources can be concentrated on the most valuable sites in our heritage portfolios, and the buildings we care most about will continue to serve us for generations to come.

I’ve been a skeptic because DMZ seemed to be more interested in creating a learning environment than in launching businesses. I left reminded that these aren’t unrelated objectives.

For a variety of reasons, business incubators typically demonstrate rigour by setting strict terms about admission and graduation. They set time limits for the companies they bring in, and they charge occupants for space and services. But not in the Zone.

DMZ charges nothing. Rather than set fixed terms, it lets companies remain and grow until they are ready and feel like moving out. A high proportion of applicants actually get into DMZ (with some grooming), whereas other incubators demonstrate quality by citing low acceptance rates.

Yet DMZ has produced a respectable number of start-ups (8 graduates) in its first year, and after touring the facility again last week, I’d say they’ve got more in the pipeline. Congratulations to Valerie Fox and her team, and to the University that provides the space, time, funding and people to make this work.

It works in part because of the gentle treatment it gives its tenants. Generally speaking, these are very young people who aren’t about to bring anything to market soon without a lot of help. In Fox’s words, DMZ is trying to maintain a learning environment rather than hustling entrepreneurs through the familiar start-up gauntlet. She says “community” is the key to DMZ. Tenant companies must be active participants in the DMZ, whether it’s the demonstration of a prototype to visiting dignitaries of the Canadian or foreign governments (these tours happen at the rate of about 5-6/week!) or sharing ideas with fellow DMZers, or offering expertise after you’ve left.

Although this may sound very different than the conventional language of business incubators, maybe it’s not. Mentoring and coaching, which are staples of the incubator experience, seem to be more about guidance than learning, but they are forms of learning nonetheless. Perhaps DMZ’s entrepreneurs need help at a more fundamental level than more experienced entrepreneurs, but it all adds up to the same thing in the end – competently fostered companies entering the marketplace with a valued offering and a viable plan.

I left thinking that the softer language and the depressurized environment of DMZ is a very pragmatic response to feedback from its inhabitants. DMZ has learned, and continues to learn, what its users need. Perhaps this is why, after its second full year in operation, it can boast about its success and announce yet another expansion of its facilities along with the addition of pre-incubator courses and an accelerator. It has learned how to serve its student and alumni entrepreneurs, some of whom probably wouldn’t be accepted into a more conventional incubator or wouldn’t survive to graduation.

Ryerson’s DMZ is an exception to the rule in other ways too. Our research shows that most incubators are created by multiple institutions in partnership. This is usually a financial necessity, and in the best cases, a virtue is made of this necessity by bringing the standards and practices of the partners together in the design and operation of the incubator. We have argued that the resulting balance between corporate, academic, and civic perspectives produces better outcomes than what results from incubators designed with a single perspective or motive.

DMZ wasn’t dependent on such a partnership for its creation, nor is it reliant on outside institutions for its expansion. Ryerson’s President, Sheldon Levy, has insured that DMZ has the money, the space, and the personnel to pursue its objectives without the complexity, compromise, and delay entailed by partnerships with government or industry.

All of this leaves me scratching my head. Perhaps DMZ isn’t actually breaking the rules. It applies soft rigour and a purposefully broad interpretation of “digital media” in a canny effort to maintain an environment in which young entrepreneurs feel emboldened and unconstrained. It isn’t obliged to satisfy the objectives of outside institutions in its design or the operation and doesn’t dictate terms to its users. Instead it is self-consciously responsive to user feedback in the way it creates space and offers support.

Actually, I think it conforms to our research findings in most other ways, starting with executive leadership, a bricks and mortar location, an immersive experience, access to significant mentor and funding opportunities, and solid (albeit undeclared) performance metrics for the incubator and its hatchlings.

DMZ achieves its ends by unconventional means, and Ryerson is unusual in its commitment to establish and grow an incubator in prime, downtown real estate. Whether it’s the exception that proves the rule, or it’s just plain peculiar, DMZ seems to be delivering on the promise of business incubation. Perhaps this is one of the reasons Toronto was recently named the 4th best city in the world to start a business.

It appears that the executives at TIFF are surprised by how hard it is to make the TIFF Bell Lightbox into a financial success Piers Handling confesses to naively believing in the “Field of Dreams” premise (build it and they will come).

Comments on the Globe article are unsparingly direct. Taken altogether, they represent my general reaction to this “news.”

Before I commit the heresy of criticizing a cultural initiative, let me repeat the caveats that were peppered through comments on the article. I love TIFF even though I don’t participate in the festival. I think the Lightbox project was a miraculous achievement, and I applaud Handling’s entire organization for having the courage and perseverance to pull it off. The TIFF Bell Lightbox makes Toronto a better place. The spirit in which it was conceived is regrettably absent today. No one should underestimate the magnitude of this accomplishment in this time of timid parsimony.

Now that’s out of the way, let me point out some boneheaded thinking behind the trouble at TIFF:

First, all the symptoms of “edifice complex,” are evident here. Edifice complex is a disease characterized by an obsession with buildings to the neglect of other determinants of organizational success. For victims of this syndrome, building projects take on a life of their own, often to the oblivion of user wants or needs. Architectural renderings begin to have a narcotic effect, helping addicts to forget that they have programming, marketing, and development challenges that a new building will only exacerbate. In the most advanced cases, victims will be heard to cry out, “if only we had a new building, we wouldn’t HAVE a (fill in the blank) problem!”

Handling confesses to being surprised that the building didn’t vacuum people off the sidewalks of King Street and up to its cinemas. It’s as if he didn’t quite understand the marketing challenge of moving from an 11-day festival into a 365-day facility operation, requiring the marketing and provision of goods and services with which TIFF had little prior expertise. They’re smart and they’ll figure it out, and no doubt they’re right that the public is still learning how to enjoy the building, but the surprise is hard to understand and the consequences are costly.

Festival organizations like TIFF are brilliant at solving a business problem that would drive managers batty in government and industry. They know how to operate on a shoestring all year long, accumulating resources and programming their events until, at the very last moment, they ramp up temporarily and blow all their money out the door. Then they shrink back to a subsistence level and begin the cycle again.

To a greater or lesser degree, all performing arts organizations go through this cycle. It requires nerves of steel, a constant eye on cash flow, great faith in funders, creativity and pragmatism in programming, and the discipline of delayed gratification. TIFF’s international stature has been attained in large measure on its managerial skills in this wildly eccentric annual cycle.

Now put this nomadic 11-day festival organization into a huge new building. Having programmed other people’s cinemas very occasionally, they now have five of their own to fill every day. If they don’t their ancillary revenues will suffer along with their box office sales, while their operating overheads; staffing, utilities, maintenance, cleaning, security, and debt servicing, remain constant. Why is anyone surprised that the building isn’t performing as expected for TIFF?

This plan fell on its face because of overly optimistic attendance forecasts. Here too, no one should be surprised. There is a whole set of problems including visibility, signage, programming, messaging, pricing, scheduling, and other points of audience sensitivity which can be categorically dismissed under the heading, “the customer is always wrong.” Or, as Handling delicately puts it, the TIFF brand contains a promise that he is unwilling to dilute just to populate his building. It’s only a matter of time before it dawns on him that the 11-day festival premise is totally inadequate for what is now demanded of the TIFF Bell Lightbox brand.

Setting aside the organization’s self-branding issues, there is the larger problem of a retarded Canadian cinema market. Canada produces many films that are seldom screened and remain unfamiliar to most Canadians. This is because the commercial theatre chains are controlled by American producers and distributors who are dedicated to Hollywood product. Other nations develop an appreciation through film for their own stories told in their own way, while still enjoying a steady diet of Brangelina shootemups. Italy, France, Britain, Australia, Spain, all make distinct and important films for domestic consumption. In Canada, not so much, outside of Quebec, where language and culture punch holes in the smothering blanket of American product.

Once a year, for 11 days, TIFF has been able to flush out tens of thousands of people with such an interest in film as an art form that they will pay a lot of money and join long lineups to indulge themselves. The other 354 days of the year, Toronto’s repertory and art cinemas subsist on low but stable demand for film alternatives, unable to match the marketing power of new Hollywood releases in prime locations all over the city.

TIFF’s transition to year-round programming in its own cinemas is a bold step toward cultivating a larger and more sophisticated audience for film in Toronto. However the existence of the new cinemas isn’t going to make any difference unless the programming, marketing, and servicing of TIFF’s offerings brings new people in the door. As various commentators remarked on the Globe website, TIFF designed its building in such a way that its cinemas are recessed, their schedule and pricing are confusing, they have no marquee, and they offer a lot of retrospective, narrow interest, “film school” programming.

Put all of these complaints into “the customer is always wrong” bin, continue protecting the outmoded festival brand, and TIFF’s unhappy surprise seems less surprising. The organization is still serving its mandate admirably, but is now operating an entirely different business than the one they’re best at. And in what business plan were they told they could alter the structural problems in the Canadian film market after just one year of operation?

I love TIFF but lament its obstinance in the face of clear business challenges. It makes me suspect that they failed to test their plans with objective analysis, or that they felt so confident of bailout subsidies that it just didn’t matter. Either way, all signs indicate that the surprises will keep coming until some attitudes and some practices change.

]]> http://netgainpartners.com/2012/04/12/tiffs-field-of-dreams-they-built-it-but-will-they-come/feed/ 0 http://netgainpartners.com/2012/03/30/why-government-can-initiate-but-must-not-lead/?utm_source=rss&utm_medium=rss&utm_campaign=why-government-can-initiate-but-must-not-lead http://netgainpartners.com/2012/03/30/why-government-can-initiate-but-must-not-lead/#comments Fri, 30 Mar 2012 17:14:05 +0000 Doug http://netgainpartners.com/?p=898 Having gone on and on about the effectiveness of incubators as an economic development tool, some people might think I’m advocating that governments create and run more incubators. A perky little blog may not be the place to try and tighten the focus on an issue like this, but let me try: at the municipal level of government, incubators deserve more energy and investment, but city governments should not be directly involved in their operation.

Let me blunt that fine point with added emphasis. Government must initiate the development of incubators because it is in the public interest to do so. But economic development is not the mission of governments alone. Players in the other sectors have a vested interest in the creation of opportunities for new companies and new workers.

Corporations and investors like incubators because they are cost effective places to innovate, prototype, recruit talent, prospect for intellectual property, and sell services. Anyone interested in creating em-ployment in specific industries can benefit from an incubator, including colleges and universities, trade unions and industry associations.

After all, our economy’s well being depends on a sufficiency of competitive companies with a skilled work force in a regulatory and policy framework that optimizes the potential of both capital and labour. Government sets the stage on which the other actors play their parts. But I want to be clear; once the curtain goes up on a new incubator, the government should be watching from the wings, out of sight.

This sounds a bit harsh, but it’s consistent with what governments say of themselves. When we worked on the program review of Toronto’s Economic Development, Culture, and Tourism Division years ago, we kept hearing that the government should steer more and row less. That is to say, governments should influence the direction of economic development in the City, but shouldn’t duplicate or compete with what the private sector can do on its own.

Again I apologize if my tone isn’t blog-lite enough, but the details matter. Extending their own metaphor, we must be clear about where the pilot steers from. Steering from the front isn’t very helpful. The view is better, the air is fresher, and you’re more visible at the prow, but the rudder of a boat is at the back for a reason. You have to steer from the stern or you actually impede the vessel’s progress.

Here’s a quick example of municipal government steering, not rowing. During the onslaught of the 2008 global economic meltdown, Mayor Bloomberg of New York announced that the city had to diversify its economy. It was too dependent on financial services, which made it vulnerable to downturns in that industry. He named five new priority sectors for development, and the City’s Economic Development Corporation set about creating incubators and partnerships to run them. New York University’s Polytechnic incubator on Varick Street is one result. The City’s role has been limited to mod-est seed funding and brokering of the real estate deal. Putting the players together and greasing the wheels, that’s it. It’s been in operation for three years now and has already yielded an eco-nomic return to the city that is orders of magnitude greater than what the city put into it. Plus, the NYU-Poly Varick St. Incubator has a long waitlist of qualified companies waiting for entry.

Governments are unique in their power to serve the public interest. It’s why they have to lead economic development initiatives, and why they recognize the value of business incubators. The caveat is that they can inadvertently displace, discourage, or devalue the vital contributions other sectors can make to the success of business incubators.

Of all the ways that municipal governments try to stimulate economic growth, business incubators are going to become increasingly important. Every economic review by every level of government highlights a set of challenges that business incubators can address. Innovation, competitiveness, management skills, and access to capital are all central to the incubation experience. Jobs, GDP, and tax revenue are measureable outputs from a modest investment of public funds.

This is red meat economic development. Incubators foster sustainable new companies that generate lasting employment for the cities that spawn them. They aren’t just scatter-shot inducements like R&D tax credits, property tax abatement schemes, or accelerated infrastructure spending. These are all forms of foregone and rebated tax revenue that may be appropriate tools for the senior levels of government trying to create growth by remote control from national and provincial capitals. But cities don’t have the taxing powers needed to hose money at their economic problems, and cities can act with the immediacy and dexterity required to accomplish more with less.

These are lofty claims for one form of investment over many others, and in reality, many business incubators fail to meet expectation. Lately NetGain has been looking at the performance of incubators from the perspectives of clients in different sectors and evaluating success in different jurisdictions. Among the lessons we’ve learned is that most incubators don’t achieve their full potential. But even an underperforming incubator can have a more positive economic impact, dollar for dollar, than broad based tax abatement or rebate schemes.

Of course we’ve seen dismal outcomes too, but unlike other program and policy approaches to economic development, the investments are relatively low, problems can be quickly corrected, and resources can be redeployed. These too are characteristics of well designed incubators.

Business incubators have always had a solid theoretical rationale. But we feel that they are practically suited to new realities of municipal economic development in a time of budget constraint. We need cost effective schemes that work on real life business fundamentals, that grow companies and lasting employment, tradable goods and valued services, and that nurture local entrepreneurs. Blankets of incentive schemes and stimulus spending have been exposed for the debt-makers that they are. Necessary though they may be at certain times, they are different in kind from targeted investment in rigorous business incubators.

In short, we’ve learned that business incubators are good for cities in hard times. And if the hard times aren’t here, just wait for the next budget cycle.

I’m no Marxist.  In fact I went to York University when it was rife with stale socialist foment and avoided it like the plague.

I appreciate the balance of interests manifest in the economy here, even if I think the dinosaurs of the right are tipping the wrong way.  So it galls me to confess a minor revelation about the nature of social change and the upheaval ahead of us politically, even here in complacent, self-congratulatory Canada.

It’s very cold across Canada today, so the Occupy movement is not much in evidence anywhere except in the media.  This morning I watched Bill Moyers interview the authors of, Winner Take All Politics (http://vimeo.com/35039196), and was reminded of both this movement’s latent power and of the lame rearguard rhetoric of its opposition.

The power is latent because it gathers unseen, grows in strength, and will not go away because the conditions that created it aren’t capable of voluntary change.  The opposing rhetoric is lame because it insists on perpetuation of those intolerable conditions.

I’ve let the cumulative weight of this movement slip my mind over the past few months.  Like most of the rest of us in the 99%, I’ve been entertained by the protestations of both sides without becoming engaged.  Occupy has been driven by individual frustration and feelings of deprivation rather than political theory, so mainstream media lacks the dexterity to explain it.

What surprised me today is the utter inability of plutocrats to comprehend and respond convincingly.  Never mind the possibility of willing compromise, they seem incapable of strategic obstinance.

This isn’t theoretical for me.  I have heard respectable, decent friends of mine spout the reactionary vitriol of the political right, as if unaware that they have been co-opted into defense of a doomed cause.  Their historical referents are too narrow.  They ignore revolutionary episodes because they are remote in time or because they are removed from them geographically and culturally.

The message that shocked me came from a street level visit from one of the Great Swinging Dicks (a phrase popularized by Tom Wolfe in Bonfire of the Vanities - http://en.wikipedia.org/wiki/The_Bonfire_of_the_Vanities ) came down from his bank tower to address the protesters.  His basic message was that the protesters were better off than they realized, and that there would be nothing but rubble around them if unfettered capitalism hadn’t funded the public institutions that the protesters enjoy today.

In a single breath, he validated the worst criticisms of Wall Street and Washington, and made the mumbling, stumbling new movement seem more legitimate.  Of course he couldn’t hear himself that way, any more than he could hear the ring of inevitability in the demands for change being chanted at him.

http://netgainpartners.com/?p=830 Christmas for consultants is a time of desperate work and deadlines. Even non-Christian consultants suffer from the vagaries of this holiday, so it is legitimate to call it what it is – Christmas. No one has ever heard the words, “the client absolutely needs this report before Kwanza!

While other people are thinking about gifts and family dinners, stealing time away from work to catch up on personal matters, consultants are trying to meet Christmas deadlines. At least those of us with public sector or voluntary sector clients endure this seasonal rush, in part because of reporting deadlines set by government funders. Somewhere up the funding food chain, there is a bureaucrat sleeping soundly because of the reports stacked on his desk awaiting his or her attention in January. Hardly visions of sugarplums, but who would begrudge noble civil servants the rest they need?

It’s not like summer, when for all practical purposes, decision-makers acknowledge an inability to get much done. There is a basic consensus that discretionary consulting work is impractical during the long days and short weeks of July and August.

There is no such consensus about December even though, depending on the school schedule and the days on which Christmas and New Years fall, many offices shut down for nearly two weeks. Unlike the summer doldrums when work slows down, this is a virtually complete productivity vacuum in which Canadians consume – merchandise, poultry, bonhomie, and non-sacramental wine – but make no net contribution to GDP. These are good times for everyone except shop clerks, bartenders, and consultants.

As usual, I will start Christmas shopping on the 23rd and will surprise my family with an assortment of periodicals, pharmaceuticals, and prophylactics from the nearest Shoppers Drugmart. It’s open until midnight just for consultants who won’t get a break until then. After all, Christmas is a time for giving, so Christmas is really all about timing, and timing for consultants is all about deadlines. Ho, ho, ho….

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