COVID-19 | 3 Ps: A Planning Framework for Uncertain Times - PART 2

In my last blog I described the 3 P's approach to proactive planning - these being the Paths, Positions and Processes of the Dynamic Capabilities framework (originally developed by David Teece). This approach provides managerial and strategic control of the organisation by describing the current shape and strengths of the org and what the next iteration should look like, but allowing individual teams and managers to interpret the best way to get there - this is genuine strategy.Good strategy and strategic planning is not deciding from “on high” the operational details, and then simply commanding the manager or team to implement them. Nor is it developing an engaging and consistent vision, but with no clear criteria for measuring progress toward that vision. The fundamental goal has to be providing a clear definition of the value that the organisation wants to provide, and the measures that will demonstrate that the value is being delivered. In times of change, what we’re really facing is a need to change the value we provide or the mechanism through which we provide it - whether that’s pivoting to digital or adapting from a low frequency high volume audience proposition to a high frequency low volume one. An agile approach decides on the next best steps (process) according to the value that can be delivered with the resources at hand (positions and paths). Organisations often struggle to adopt agile processes at a strategic level, which can bring them into conflict with those teams or managers who are acting in an agile and entrepreneurial approach, but if we’re going to manage and thrive through this huge uncertainty, then we have to find a way.

Getting practical

So far, so much a recap. I’m going to assume for now that you’ve read my previous post and that the organisation has a strong enough vision/mission for you to get into the detail of analysis and planning. If I was to sit down now as a senior manager in an audience-facing organisation and trying to work out what to do next, I would start with an analysis of the positions at hand. Positions are the assets, resources and capabilities of the organisation. The chief operating officer or similar may already have done a lot of the work on this from a largely financial and HR perspective, but there are many other assets. Our positions are key because they are what a manager has most control and influence over. A classic business school method for analysing these is to break them into tangible (including financial, physical, technological and organisational) or intangible (human, innovation, reputation). See a textbook example below:

From “The Resource-Based View (RBV): Issues and Perspectives” Dr. Pankaj M. Madhani, 2010.

This is great, but let’s assume we all lack time and want specificity to our given context - arts, culture, entertainment, events. The things that bring us together and that we share as creative public-facing organisations. If you have the time and the inclination, do go through all the classes of position and assess the current state of play and how they can be leveraged. But if you don’t feel you have the time, and assuming that the physical assets are currently liabilities for most organisations right now (though see this case study for a rapid pivot) and that access to finance is going to be limited at best, I would be focusing on the following key classes of position:

Intellectual Property (IP)

IP is the primary resource for a creative enterprise. The great thing about starting the process of mapping or auditing your IP (if you haven't already) is that it can be a gold mine. Plus, it sets you up for developing an IP Management policy in the future. Few organisations are like the Met in NY or the National Theatre and Royal Opera House in London, with a library of recorded performances to start streaming (and competing against these juggernauts is a nightmare because of the brand power they have and because it’s free). However, think of all the materials created in developing and promoting the events and activities that end up on stage. How can you utilise these in a content strategy to maintain engagement whilst physically closed or for merchandising through an e-commerce strategy? From a skills and capabilities perspective, is this a capability that needs to be developed. The ability to spot business opportunities through the exploitation of IP is going to become increasingly vital not only now, but as we see the speeding up of digital transformation driven by the pandemic. The low hanging fruit can seem deceptively easy - such as design assets from shows - but the other positions need to be leveraged in order to make an impact such as:

The skills to research and analyse what is the likely market in an existing audience for purchasing branded merchandise? (The Audience Agency’s Digital Audience Survey can help with this).
What is the cost of implementing a web shop and do we have the financial capital to invest in the marketing and inventory in the period before it becomes profitable? If you choose dropshipping is the quality high enough not to undermine the organisational brand?
Does our website have the capability to host a shop that is visible and easy for customers to find/use? It’s no good having a shop if nobody knows it exists.
Is there a market beyond our current audience? Perhaps the best way to monetise your IP is to license it or sell it?

The point of this article isn’t to provide a checklist for an IP strategy (or any other strategy), but to encourage you to really dig into the assets you have and think about them as levers for change not just bodies in a team or items on a list. If you want to skip to a method for assessing the value of the identified assets skip to the next section.

Relationships

Before you yawn and say “yeah, that’s obvious” - I just want to touch on a few points. The idea of CRM has been around for ages, but the problem is that in the performing arts, these tend to focus on booker relationships and whoever else happens to have got onto a mailing list. This narrow scope of CRM is less than ideal - and is one of the reasons why solutions such as Activity Stream and Peppered are so great for expanding the scope of relationship management to include those generated not only through purchase transactions (e.g. tickets) but also through other touch points such as website and even (especially) channels that you don’t own such as social media. The question implicit from the above thinking on IP is that a relationship that gains value from access to IP is an opportunity for revenue if delivered and monetised through the right channel.

Having said that, bookers are important and yet I’m always astounded at the low volume of repeat attendance in most ticketed institutions. This low frequency makes other strategies (e.g. e-commerce) difficult because it questions the strength of the relationship that you have with a large number of people that walk through the doors. Furthermore, people are creatures of habit and therefore the recency of your last engagement with an audience member is also vital, and for many orgs that time since last visit is uniformly going down. Arts and culture is never going to be (at least not as it’s currently structured) like sporting clubs where week after week fans can turn up to buy into the brand. However, the flipside of the low frequency and low recency coin is that “the only way is up, baby” (one for the Yazz fans) and more frequent digital engagement using IP curated from the audit process could increase frequency and recency of engagement with your brand even if it isn’t buying a ticket or a t-shirt. For younger audiences in particular, the expectation is that you have to give something first, before they give something back, so the value returned to you has to come after you have given the value to them. This trend has been around for years, but it’s going to be significantly accelerated by the pandemic.

The other key relationships to remember are the many creatives (also suffering at this time, and frequently freelance) who, given the right incentive, could help you adapt the IP identified above into formats more suitable for digital engagement, merchandising or whichever strategy you take to leverage them. Getting them involved demonstrates to your community, your stakeholders, you customers that you are part of an ecology and keeps you in their mind ready for when the time might be right to return. Plus it has the added benefit of an opportunity to amplify the promotion of any digital pivot. Audience Finder’s new Beta product is working on some helpful insights to help you consider these recency frequency and value questions with your audience relationships. If then combined with some research into the needs and desires of the people on the other side of those relationships you could have a new strategy to leverage your relationship assets very quickly - then it’s all about testing and learning.

Channels

Now is the time to put the stage, podium, floor, stand, hall, and other physical manifestations of the institution in their (in my opinion) rightful place as just one of many distribution channels - an important one, but only one - next to the website and socials for the aforementioned relationship management and value exchange. Technology is going to have to become more integrated into the operational processes of our customer interactions, especially onsite. This is going to give us all a huge amount of extra information if done properly and is also going to make life for the customer easier. The key resource position is going to be your ‘phygital’ capabilities in terms of both skills and infrastructure. If you’re wondering what I mean by ”phygital’, it’s a delightful portmanteau of physical and digital meaning how the two should be fully integrated across all touchpoints for your customer. Museums and galleries - which are generally opening sooner than performing arts and other entertainment - are about to go through the sort of behavioural insight transformation that theatres and other venues have already experienced. I would be assessing now whether your ticketing, web, front of house and point of sales technology is going to work together to make life easier for you and your customers. There’s never been a better time to implement or switch systems (if necessary) whilst the venue is largely dark.

And of course, take stock of the digital channels - website and social - to consider whether you’re using the right ones in the right way. I can save you some time here, by linking you to some work with my colleague Katie Moffat at The Audience Agency.

Given that you are likely now grappling with selling different products at different times to different people under different conditions, your entire marketing mix (product, price, place, promotion) has changed. Using the framework that we prototyped can jump start your analysis of the position of your digital channels in the mix and what’s going to drive value for you as an organisation in the new normal.

How to analyse your positions

In this final part of the article I’m going to leave you with a method for going beyond a simple listing of your positions, to an analysis of the value to the organisation. VRIO analysis has been around for a long time, and is very much embedded in the idea of the 3 P’s or dynamic capabilities. I’ve used it myself for business analysis because it brings a refreshing view to sometimes seemingly intractable problems. I find it’s particularly good at bringing clarity to questions of what is really vital that the organisation does (core) and what is really something the organisation does either in support of those activities (non-core) or simply because it feels it should, or it always has - oftentimes a hangover from previous decisions (a type of path dependence). VRIO, originally developed by professor of strategic management Jay Barney, stands for:

Valuable - it is of direct benefit to the audience/visitor/customer, if not, it is not core to your organisational success. You may still need it, but it is not a strategic asset.
Rare - is it difficult to acquire, traditionally this has been considered in comparison to competitors, but it can also be considered in terms of customers... a valuable position for the customer that is equally valuable when the customer acquires it elsewhere leaves you with little in terms of a unique position.
Inimitable - how difficult is it to copy. I personally believe we tend to overweight the fear of replication in the arts world, partly because supply of product is so restricted by the physical infrastructure and there are only so many theatres, concert halls and so on. However, building demand is costly (which is why we should value our relationships) and digitalisation makes imitation much quicker and cheaper.
Organised - is it recognised as being a valuable position of the organisation? This brings me back to the key premise of this whole series, that is: it is only the organised and strategic leveraging of positions (assets, resources, capabilities) that creates sustainable value. And if the position of the organisation has to change in response to a global pandemic or reopening thereafter, the organisation needs to understand deeply where it’s moving from and to - plus the constraints (paths) and how it’s going to get there (processes).

From “Using VRIO Analysis for Strategic Planning”, BSCDesigner.com

The above flow chart is a great visualisation of the VRIO process. Use it as a guide for the process of analysing a big list of asset/resource positions. Most helpfully, this whole process should make it really clear what your positions are, what you’d like them to be and which are the most important.

Written for WeWillRecover, an initiative designed to help organisations get back on track during these unprecedented times, in which The Audience Agency is a leading partner.