Charity Finance Directors’ Group  <ul><li>Understanding strategy in times of austerity </li></ul><ul><li>Sally O’Neill </l...
Aim of presentation <ul><li>To give you an understanding of: </li></ul><ul><ul><li>How the cuts in public subsidy have aff...
Royal Opera House – facts and figures <ul><li>Established 1950 </li></ul><ul><li>Core permanent staff of over 1,000 </li><...
Royal Opera House – facts and figures <ul><li>Reduced price/ticket subsidy schemes </li></ul><ul><li>Big Screens </li></ul...
Funded Arts sector in England <ul><li>Arts Council invests £350m across 840 organisations </li></ul><ul><li>Budget cut by ...
352,908  217,672  Rest of portfolio 38% 100% 135,236  Top 9 Music 2% 5% 6,795  Welsh National Opera 9 Music 2% 5% 6,896  E...
Strategy – what’s that then ? <ul><li>Several versions </li></ul><ul><li>Different dates </li></ul><ul><li>Different audie...
Implementing strategic direction
Common organisational behaviour
Introduction of strategy
Delivering strategy
Resistance to change
<ul><li>Redefining a strategy for a rapidly changing world </li></ul>
Process started early 2010 <ul><li>Scene setting   </li></ul><ul><li>External facilitator </li></ul><ul><li>Size of Execut...
Where we were in 2007
Where we were by 2008
Key implications <ul><li>Global economy seems to have recovered but challenges and uncertainties remain, most notably comm...
Process started early 2010 <ul><li>Scene setting  </li></ul><ul><li>External facilitator </li></ul><ul><li>Size of Executi...
The Result <ul><li>We want the Royal Opera House to be a world class organization which  </li></ul><ul><li>responds to the...
<ul><li>Our  aim  is to enrich people’s lives through opera, ballet and dance. </li></ul><ul><li>Our  ambition  is to be t...
Arts Council bid process <ul><li>Four year spending review </li></ul><ul><li>1st year – equal pain for all (11/12) </li></...
The Bid Process <ul><li>ACE five 10-year goals: </li></ul><ul><li>Talent and artistic excellence are thriving and celebrat...
The Bid Process <ul><li>Two stage process </li></ul><ul><li>1. Assessment of application against the ACE 5 goals </li></ul...
ROH’s approach <ul><li>Strategy already outlined  </li></ul><ul><li>3,000 words  ->  Rigour to the process </li></ul><ul><...
ROH key messages <ul><li>Aim to be the best in the world </li></ul><ul><li>One of the key London institutions </li></ul><u...
Responding responsibly to cuts <ul><li>What is a “fair” cut ? </li></ul><ul><li>For  DCMS 15% </li></ul><ul><li>Museums an...
Where is the tipping point ? <ul><li>15% phased over four years </li></ul><ul><li>Situation already painful </li></ul><ul>...
Take one year: 11/12 season <ul><li>Season planned several years ago </li></ul><ul><li>British richness leading up to Olym...
So…..how did we all do ? <ul><li>ROH passed stage 1 with flying colours </li></ul><ul><li>Stage 2: All the big national co...
… .and what does this mean for ROH ? <ul><li>Front loading a further cash cut of 4% in 12/13 </li></ul><ul><li>Opera plans...
Comparison of ACE Grant Received against ROH Bid by ACE Financial Year Amount of Grant (£Ms)
… .is there any upside ? <ul><li>Process was very unifying of the Exec team </li></ul><ul><li>Purpose and value to our str...
<ul><li>THANK YOU </li></ul><ul><li>ANY QUESTIONS ? </li></ul>
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Understanding Strategy in Times of Austerity, Sally O'Neill, Royal Opera House

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How the Royal Opera House has adapted its strategy in times of austerity.

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  • Tamzin – can we have these bullet points “flying in” please ? Ie one by one ?
  • Understanding Strategy in Times of Austerity, Sally O'Neill, Royal Opera House

    1. 1. Charity Finance Directors’ Group <ul><li>Understanding strategy in times of austerity </li></ul><ul><li>Sally O’Neill </li></ul><ul><li>Finance Director </li></ul><ul><li>Royal Opera House </li></ul>
    2. 2. Aim of presentation <ul><li>To give you an understanding of: </li></ul><ul><ul><li>How the cuts in public subsidy have affected the arts </li></ul></ul><ul><ul><li>How the Royal Opera House has built and then adjusted its strategy in the light of these cuts </li></ul></ul>
    3. 3. Royal Opera House – facts and figures <ul><li>Established 1950 </li></ul><ul><li>Core permanent staff of over 1,000 </li></ul><ul><li>Turnover £106m </li></ul><ul><li>..of which Arts Council grant £26m (and falling !) </li></ul><ul><li>Generate nearly £3 for every £1 of grant </li></ul><ul><li>312 performances to an audience of 658,000 </li></ul><ul><li>50% of tickets £50 or below </li></ul><ul><li>Tickets start at £4 </li></ul>
    4. 4. Royal Opera House – facts and figures <ul><li>Reduced price/ticket subsidy schemes </li></ul><ul><li>Big Screens </li></ul><ul><li>Cinemas </li></ul><ul><li>Broadcast </li></ul><ul><li>Creative Partnerships </li></ul><ul><li>Mid-scale support </li></ul><ul><li>Public Benefit </li></ul><ul><li>International context </li></ul>
    5. 5. Funded Arts sector in England <ul><li>Arts Council invests £350m across 840 organisations </li></ul><ul><li>Budget cut by 27% by 2015 </li></ul><ul><li>Over 100 organisations may lose their funding </li></ul><ul><li>ROH largest recipient while smallest proportion of its income </li></ul>
    6. 6. 352,908 217,672 Rest of portfolio 38% 100% 135,236 Top 9 Music 2% 5% 6,795 Welsh National Opera 9 Music 2% 5% 6,896 English National Ballet 8 Dance 2% 6% 8,203 Birmingham Royal Ballet 7 Music 3% 7% 9,915 Opera North 6   29% 76% 103,427     Theatre 5% 12% 16,010 Royal Shakespeare Company 5 Music 5% 14% 18,436 English National Opera 4 Theatre 6% 15% 19,740 Royal National Theatre 3 Combined Arts 6% 15% 20,804 South Bank Centre 2 Combined Arts 8% 21% 28,437 Royal Opera House 1 Art form % of total % of top 9 2010/11 grant RFOs 10/11 Grants
    7. 7. Strategy – what’s that then ? <ul><li>Several versions </li></ul><ul><li>Different dates </li></ul><ul><li>Different audiences </li></ul><ul><li>No measurement </li></ul><ul><li>Clear organisation goals ? </li></ul><ul><li>High risk of non-alignment </li></ul><ul><li>Increasingly difficult to balance budgets </li></ul>
    8. 8. Implementing strategic direction
    9. 9. Common organisational behaviour
    10. 10. Introduction of strategy
    11. 11. Delivering strategy
    12. 12. Resistance to change
    13. 13. <ul><li>Redefining a strategy for a rapidly changing world </li></ul>
    14. 14. Process started early 2010 <ul><li>Scene setting </li></ul><ul><li>External facilitator </li></ul><ul><li>Size of Executive team </li></ul><ul><li>Regular meetings </li></ul><ul><li>Small core team </li></ul><ul><li>Iterative process </li></ul><ul><li>Board input </li></ul>
    15. 15. Where we were in 2007
    16. 16. Where we were by 2008
    17. 17. Key implications <ul><li>Global economy seems to have recovered but challenges and uncertainties remain, most notably commodity prices and unrest in Middle East </li></ul><ul><li>UK faces huge challenges with consumers under serious pressure from spending cuts. Restaurants and hotels and recreation and culture the two most affected areas of ‘everyday’ spending </li></ul><ul><ul><ul><li>Hence, continued focus on ‘practical’ drivers like thrift, simplicity and more straightforward experiences likely to continue </li></ul></ul></ul><ul><ul><ul><li>Consumers still have some discretion but need new offers/incentives to engage </li></ul></ul></ul><ul><li>Technology one area with opportunities for both engaging new audiences, adding new revenue streams and fulfilling broader civic/educational responsibilities </li></ul>
    18. 18. Process started early 2010 <ul><li>Scene setting </li></ul><ul><li>External facilitator </li></ul><ul><li>Size of Executive team </li></ul><ul><li>Regular meetings </li></ul><ul><li>Small core team </li></ul><ul><li>Iterative process </li></ul><ul><li>Board input </li></ul>
    19. 19. The Result <ul><li>We want the Royal Opera House to be a world class organization which </li></ul><ul><li>responds to the context in which we operate; </li></ul><ul><li>puts artistic excellence and creative risk taking at the heart of everything we do; </li></ul><ul><li>is increasingly mindful of our audiences; </li></ul><ul><li>represents good value for the UK taxpayer and the investment of all our stakeholders; </li></ul><ul><li>is closely inter-connected with our peers and the wider artistic community. </li></ul>
    20. 20. <ul><li>Our aim is to enrich people’s lives through opera, ballet and dance. </li></ul><ul><li>Our ambition is to be the best in the world. </li></ul><ul><li>In all our activities, we strive to realize the following values : </li></ul><ul><li>Creativity </li></ul><ul><li>Passion for what we do </li></ul><ul><li>Respect for one another and for diversity </li></ul><ul><li>Open-mindedness and innovation </li></ul><ul><li>Accountability and openness to feedback </li></ul><ul><li>Collaboration </li></ul><ul><li>Honesty, reliability and trustworthiness </li></ul><ul><li>Commitment to sustainability </li></ul>
    21. 21. Arts Council bid process <ul><li>Four year spending review </li></ul><ul><li>1st year – equal pain for all (11/12) </li></ul><ul><ul><li>“Transition” year: 7% cash cut </li></ul></ul><ul><li>2 nd to 4 th year bid process (12/13 to 14/15): </li></ul><ul><ul><li>2 stages </li></ul></ul><ul><ul><li>Open to all </li></ul></ul><ul><ul><li>Once in a generation opportunity </li></ul></ul><ul><ul><li>3,000 words </li></ul></ul>
    22. 22. The Bid Process <ul><li>ACE five 10-year goals: </li></ul><ul><li>Talent and artistic excellence are thriving and celebrated </li></ul><ul><li>More people experience and are inspired by the arts </li></ul><ul><li>The arts are sustainable, resilient and innovative </li></ul><ul><li>The arts leadership and workforce are diverse and highly skilled </li></ul><ul><li>Every child and young person has the opportunity to experience the richness of the arts </li></ul>
    23. 23. The Bid Process <ul><li>Two stage process </li></ul><ul><li>1. Assessment of application against the ACE 5 goals </li></ul><ul><ul><li>3,000 words </li></ul></ul><ul><li>2. Achieving a “balanced” portfolio: </li></ul><ul><ul><li>Proper range of art forms </li></ul></ul><ul><ul><li>Different sizes and strengths </li></ul></ul><ul><ul><li>Geographical spread </li></ul></ul>
    24. 24. ROH’s approach <ul><li>Strategy already outlined </li></ul><ul><li>3,000 words -> Rigour to the process </li></ul><ul><li>Facing cuts -> addressed non-alignment risk ! </li></ul><ul><li>Revisited, refined, researched </li></ul><ul><li>Distilled previous work to some key messages </li></ul>
    25. 25. ROH key messages <ul><li>Aim to be the best in the world </li></ul><ul><li>One of the key London institutions </li></ul><ul><li>World class performers </li></ul><ul><li>Best creative talent </li></ul><ul><li>Quality and variety of productions </li></ul><ul><li>Value for the tax payer </li></ul><ul><li>Cost effective </li></ul><ul><li>Leadership role </li></ul><ul><li>Accepting our responsibility to take a fair share of the reduction in funding </li></ul>
    26. 26. Responding responsibly to cuts <ul><li>What is a “fair” cut ? </li></ul><ul><li>For DCMS 15% </li></ul><ul><li>Museums and galleries </li></ul><ul><li>Arts Council hit harder – 30% - and front loaded </li></ul><ul><li>“Real” vs “Cash” </li></ul><ul><li>HMT inflation forecasts ! </li></ul><ul><li>Risk of penalising success </li></ul>
    27. 27. Where is the tipping point ? <ul><li>15% phased over four years </li></ul><ul><li>Situation already painful </li></ul><ul><li>Reduction beyond this risks long term damage </li></ul><ul><li>If artistic quality diminishes, audiences disappear, donors lose confidence </li></ul><ul><li>Virtuous circle broken and ability to play our part in the sector is undermined </li></ul><ul><li>Risk taking discouraged </li></ul>
    28. 28. Take one year: 11/12 season <ul><li>Season planned several years ago </li></ul><ul><li>British richness leading up to Olympics </li></ul><ul><li>Difficult decision to cut new productions </li></ul><ul><li>Unprecedented 23 La Traviatas </li></ul><ul><li>Make a virtue out of a crisis </li></ul><ul><li>Dame Monica Mason’s last season </li></ul><ul><li>Inflation, VAT, NIC, low interest rates </li></ul><ul><li>Income and cost control </li></ul>
    29. 29. So…..how did we all do ? <ul><li>ROH passed stage 1 with flying colours </li></ul><ul><li>Stage 2: All the big national companies were cut by the same amount to help achieve the balanced portfolio </li></ul><ul><li>Further cash cut in 12/13 of 4% </li></ul><ul><li>Total cash cut over 4 years of £10m </li></ul><ul><li>206 organisations lost their funding </li></ul><ul><li>110 organisations awarded funding for the first time </li></ul><ul><li>Funded portfolio reduced from 849 to 695 </li></ul>
    30. 30. … .and what does this mean for ROH ? <ul><li>Front loading a further cash cut of 4% in 12/13 </li></ul><ul><li>Opera plans and contracted commitments to 2016 </li></ul><ul><li>Unpalatable changes to the repertoire </li></ul><ul><li>Vital to get support of artistic directors </li></ul><ul><li>Further rounds of cost cutting </li></ul><ul><li>Stretched – not stressed – income targets </li></ul>
    31. 31. Comparison of ACE Grant Received against ROH Bid by ACE Financial Year Amount of Grant (£Ms)
    32. 32. … .is there any upside ? <ul><li>Process was very unifying of the Exec team </li></ul><ul><li>Purpose and value to our strategy work </li></ul><ul><li>360 degree approach </li></ul><ul><li>Should help differentiate core from discretionary </li></ul><ul><li>General media coverage very balanced </li></ul><ul><li>Good support for Arts Council – seen to have done a good job in very difficult circumstances </li></ul><ul><li>Personally – Young Vic and Battersea Arts Centre </li></ul>
    33. 33. <ul><li>THANK YOU </li></ul><ul><li>ANY QUESTIONS ? </li></ul>

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