This article draws on research undertaken by AEA on behalf of the Museums and Galleries Commission last year and published in Creative Industry - the first comprehensive review of commercial income generation in the museums sector in the United Kingdom. Since the publication of the report, evidence continues to emerge from the sector and the general market place, allowing us to refine further some of its conclusions (1).

Looking at the museum and gallery sector?s involvement in commercial activities, one gets a mixed picture: a few high performers stand out against a field of significantly more lacklustre and unprofitable operations. There is no correlation between success and failure and size. And even successful trading operations make a modest financial impact on museum's overall financial health. They rarely contribute in excess of 5% towards museums? core operating budgets.

By comparison, charging for admission is far more rewarding - meeting up to 20% of core costs. That said, income from trading activities, whilst modest in absolute terms, is often important as an additional source of funding for activities that are threatened by deteriorating core funding - exhibitions, conservation or acquisitions. It is also important as an element is a more plural funding mix.

Ingredients for success

Looking at why certain museums do better than their peers, the following four key factors stand out:

First, commercial activities are to a greater or lesser degree extensions of the museum?s core functions (as a visitor attraction, seat of particular subject expertise) and asset base (collections, knowledge and buildings). Therefore, all other things being equal, the stronger a museum?s assets and the better it is at delivering its core functions, the greater the commercial opportunities;

Second, to the extent that commercial activities are related to the museum?s core business, their fit between with the institution?s overall positioning is critical. In marketing speak, it?s the effective stewardship and protection of the museum?s brand (its identity, ethos, ?unique selling proposition?) that is central to the success of any long term commercial strategy. Museums that have been most successful in their commercial endeavours have been those that have had their commercial activities driven by the brand, rather than attempting to use these activities (e.g. the shop or café) to develop their brand;

Third: any form of commercial activity requires both up-front investment and ongoing re-investment to grow. Those museums that have been successful have recognised that a business activity needs to be properly capitalised to develop; this means abandoning the ?hand-to-mouth? approach so typical of a sector chronically starved for cash;

Fourth, and implicit in the three points above, is the importance of entrepreneurial thinking, the ability to spot and seize market opportunities and to pursue these single-mindedly with the bottom line in mind. This is a mindset issue, but it translates all the way down the organisation into practicalities such as management structure, reporting lines, recruitment policies and the corporate planning process.

Balancing museum cultures

This is of course far less straightforward than it sounds. One reason is that museums tend to be dominated by either a ?curatorial? culture, primarily object-based and risk averse, or a ?visitor/services-oriented culture? that is not naturally entrepreneurial or bottom-line driven. We can all think of more or less extreme examples for both. Entrepreneurial thinking is often at odds with (or a threat to) museums? prevailing values. Hence the way in which commercial operations are usually kept at bay from strategic planning and decision making and put into separate boxes (the trading companies) and left ?to get on with it? (but, please, deliver!).

Fostering entrepreneurial thinking at all levels within the organisation - some of the best ideas come from curators - and making sure that the three cultures - curatorial, visitor service and entrepreneurial - co-exist and complement one another is an art more than a science. In the end, it is the top person?s job to see to it that it works.

Next page: PRIMO: BE COMMERCIAL. MA CHI L’HA DETTO?

mvwistinghausen@aeaconsulting.com
AEA Consulting web site is: www.aeaconsulting.com


(1) The volume ?Creative Industry - Generating Income for Museums? is available from a.hill@mgcuk.co.uk