Presented by EmcArts Richard Evans, President Melissa Dibble, Managing Director

1. Engaging the Future A program supported by the Cleveland Foundation The Roots of Innovation First Workshop at the Cleveland Foundation Monday, December 12th, 9:30pm – 1:30pm Presented by EmcArts Richard Evans, President Melissa Dibble, Managing Director • EmcArts Inc. | 127 West 122nd Street | New York, NY 10027 | www.EmcArts.org

2. Opening exercise Choose one card that captures something important about a major persistent challenge in audience engagement your organization is facing Choose a second card that captures what your organization would be like if your challenge was successfully addressed Then… Return to your home team, and explain why you selected each of your cards. Your other team members offer their own perspectives on the cards, and what they see. Then review the two sets of cards as a whole in your team. • EmcArts Inc. | 127 West 122nd Street | New York, NY 10027 | www.EmcArts.org

3. Technical vs. Adaptive Challenges • Technical challenges can be solved via gradual • improvement in current practices – extensions of • business-as-usual rather than breakthrough change. • Adaptive challenges have no set procedures, no • recognized experts, and no evident responses • available to meet the challenge or solve the problem. “If you throw all the technical fixes you can at the problem and the problem persists, it’s a pretty clear signal that an underlying adaptive challenge still needs to be met.” − Ronald Heifetz • EmcArts Inc. | 127 West 122nd Street | New York, NY 10027 | www.EmcArts.org

4. Our goals today • Investigate existing assumptions underlying your audience engagement work and propose some alternative hypotheses to drive new thinking • Clearly describe and share your organization’s adaptive challenges around audience engagement • Share some of the practical lessons we’ve learned from our work supporting innovation • EmcArts Inc. | 127 West 122nd Street | New York, NY 10027 | www.EmcArts.org

5. Our time together: The roots of innovation • What is innovation? • Question existing assumptions and identify contradictory evidence • Develop new hypotheses about future success • Break • Practice describing your organization’s adaptive challenges, and decide on one challenge to work with • Outline follow-up activities you can do in your organizations • Review the ETF timeline for 2012 and introduce the Incubating Innovation opportunity • EmcArts Inc. | 127 West 122nd Street | New York, NY 10027 | www.EmcArts.org

6. A Working Definition of Organizational Innovation for Nonprofits Innovations are instances of organizational change that: 1. result from a shift in underlying organizational assumptions2. are discontinuous from previous practice3. provide new pathways to creating public value • EmcArts Inc. | 127 West 122nd Street | New York, NY 10027 | www.EmcArts.org

7. Questioning Existing Assumptions about Success Developing New Hypotheses for the Future • EmcArts Inc. | 127 West 122nd Street | New York, NY 10027 | www.EmcArts.org

8. Questioning Organizational Assumptions Edgar Schein: “Assumptions evolve as repeated successful solutions to problems. What was once a questionable hypothesis about how to proceed becomes a reality that is taken for granted…..” “In order to innovate, organizations have to resurrect, examine, and then break the frame created by old assumptions.” - from Leadership and Organizational Culture • EmcArts Inc. | 127 West 122nd Street | New York, NY 10027 | www.EmcArts.org

9. Shifting Our Underlying Assumptions What established assumptions about success for our organization are we questioning? What evidence is there that contradicts these assumptions? What new hypotheses about success might fit better with the recent evidence, and could drive new thinking? • EmcArts Inc. | 127 West 122nd Street | New York, NY 10027 | www.EmcArts.org

10. Shifts in Assumptions: Example 1 • OLD ASSUMPTION: • Having our physical campus is the only way for us to do our work. • CONTRARY EVIDENCE: • The campus is large and expensive, navigation is difficult for families, and it sucks resources into maintenance and repairs. • The campus is often under-utilized, and sometimes over-crowded. • Our small off-site programs are achieving local engagement. • NEW HYPOTHESIS: • We can achieve our mission without having a single central campus. • EmcArts Inc. | 127 West 122nd Street | New York, NY 10027 | www.EmcArts.org

11. Shifts in Assumptions: Example 2 • OLD ASSUMPTION: • Selling whole-season subscriptions is the best way to maximize our ticket revenue over time. • CONTRARY EVIDENCE: • Subscription numbers are persistently down, but single ticket sales are rising. • Feedback tells us patrons want to decide close to the event. • People are coming in large numbers to participatory events. • NEW HYPOTHESES: • A wholly new pricing structure, and focusing on single tickets, will maximize revenue. • People will become loyal if we offer them more chance to actively participate.

12. Moving from Old Assumptions: Worksheet Example Old Assumption Evidence contradicting the Assumption Selling whole-season subscriptions is the best way to maximize our ticket revenue over time • Subscription numbers are persistently down • Feedback tells us patrons want to decide close to the event • EmcArts Inc. | 127 West 122nd Street | New York, NY 10027 | www.EmcArts.org

13. Evidence contradicting Old Assumptions: Example Old Assumption Evidence contradicting the Assumption Other Positive Evidence Selling whole-season subscriptions is the best way to maximize our ticket revenue over time • Subscription numbers are persistently down • Feedback tells us patrons want to decide close to the event • Single ticket sales are rising • Our % occupancy is holding up • People are coming in large numbers to participatory activities • EmcArts Inc. | 127 West 122nd Street | New York, NY 10027 | www.EmcArts.org

14. Developing New Hypotheses about Success • To develop a new hypothesis: • Use the current evidence – either negative or • positive – to make an informed prediction • Reverse your old assumption to discover a new • possibility: does this better fit the current • evidence? • Simply identify an alternative hypothesis • EmcArts Inc. | 127 West 122nd Street | New York, NY 10027 | www.EmcArts.org

15. Our Mindset in Responding to New Ideas JUDGMENT How does the idea stack up against my past experience? MOVEMENT What can we make of the idea? Courtesy of Edward de Bono • EmcArts Inc. | 127 West 122nd Street | New York, NY 10027 | www.EmcArts.org

16. New Hypotheses to build future success: Example Contradictory Evidence Other Positive Evidence New Hypotheses • Subscription numbers are persistently down • Feedback tells us patrons want to decide close to the event • Single ticket sales are rising • Our % occupancy is holding up • People are coming in large numbers to participatory activities • A wholly new pricing structure, and focusing on single tickets, will maximize revenue • People will become loyal if we offer them more chance to actively participate • EmcArts Inc. | 127 West 122nd Street | New York, NY 10027 | www.EmcArts.org

17. Describing Your Adaptive Challenges • EmcArts Inc. | 127 West 122nd Street | New York, NY 10027 | www.EmcArts.org

18. Describing a Complex Challenge: Incompletely • “Strengthen Marketing.” • “Do more building repairs….” • “We need to Raise More Money!” • EmcArts Inc. | 127 West 122nd Street | New York, NY 10027 | www.EmcArts.org

19. Template for a fuller challenge description • A two-part sentence: • The first part of the sentence establishes the most • important factors driving the issue…. • Identifies the particular conditions or trends that are the cause • Refers to actual data (not just speculation or blaming) • Then the second part proposes a possible adaptive response that addresses the driving factors…. • Active rather than passive • Suggests something you might be able to do something about • Is not an extension of existing strategies or behaviors • Is built on a new hypothesis about success • EmcArts Inc. | 127 West 122nd Street | New York, NY 10027 | www.EmcArts.org

20. Describing a Complex Challenge, with a Technical Solution - Examples Strengthen Marketing “Because subscriptions are down and people are booking closer to the event, we therefore need to offer them better incentives to commit to the season in advance.” Do more building repairs….. “Because our campus is old, confusing and inefficiently used, we therefore need to invest in upgrading facilities and signage.” We need to Raise more Money! “As our expenses continue to grow faster than our income, and we experience persistent annual losses, so our organization must generate more income and implement stronger cost controls.” • EmcArts Inc. | 127 West 122nd Street | New York, NY 10027 | www.EmcArts.org

21. Describing a Complex Challenge, with an Adaptive Response - Examples Strengthen Marketing “Because subscriptions are down and people are booking closer to the event, we therefore need a completely different pricing system and to build loyalty through direct participation.” Do more building repairs….. “Because our campus is old, confusing and inefficiently used, we therefore need to leverage our off-campus successes into a new kind of home.” We need to Raise more Money! “As our expenses continue to grow faster than our income, and we experience persistent annual losses, so our organization must overcome its increasing aversion to risk.” • EmcArts Inc. | 127 West 122nd Street | New York, NY 10027 | www.EmcArts.org

22. Describe your Key Adaptive Challenges Because…. [EVIDENCE from Wksht #1 column 2, and Wksht #2 column 1] (establishes the most important factors driving the issue) Therefore…. [NEW HYPOTHESIS from Wksht #2 column 2] (proposes a possible adaptive response) “Because our subscription numbers are persistently down, feedback tells us patrons want to make decisions close to the event, and participatory activities attract people, we will therefore maximize revenues in the future by pricing in a wholly new way, and offering opportunities for active participation.” • EmcArts Inc. | 127 West 122nd Street | New York, NY 10027 | www.EmcArts.org

23. Criteria for selecting an organizational challenge The challenge is complex and adaptive; it does not have any standard or established solution. We either have not yet developed a response to this challenge, or our current responses aren’t proving effective. There is a sense of urgency to address this challenge. If we successfully tackle it, it is likely to have significant impact on our ability to fulfill our mission. Is there a natural sequence to addressing these challenges? If so, which one comes first? • EmcArts Inc. | 127 West 122nd Street | New York, NY 10027 | www.EmcArts.org

24. Back home after the Workshop • Enroll your colleagues to this work – repeat the exercises with others • Use techniques to generate new strategy ideas • Respond to Annabel Jackson’s evaluation survey • Take a look at our new arts innovation website (www.ArtsFwd.org) • EmcArts Inc. | 127 West 122nd Street | New York, NY 10027 | www.EmcArts.org

25. ETF Timeline for 2012 and Incubating Innovation opportunity • EmcArts Inc. | 127 West 122nd Street | New York, NY 10027 | www.EmcArts.org

26. ETF Timeline: 2012 • Jan – Feb: Next round of site visits by EmcArts; circulation of Rubric of Adaptive Capacity • Jan: Proposals for Incubating Innovation accepted • February: Incubating Innovation (Round 1) starts • February 7: First Informal ETF Participant Convening • March 6: Second ETF Workshop (The Capacity to Innovate) • April: Continued site visits by EmcArts; Alan Brown begins phone interviews • EmcArts Inc. | 127 West 122nd Street | New York, NY 10027 | www.EmcArts.org

27. ETF Timeline: 2012 • May 22: Third ETF Workshop (The Practice of Innovation) • June - Aug: Participatory interview training • July 9: Second Informal ETF Participant Convening • August: Incubating Innovation (Round 1) ends; first ETF podcast • September: Proposals for Incubating Innovation (Round 2) accepted • EmcArts Inc. | 127 West 122nd Street | New York, NY 10027 | www.EmcArts.org

28. Incubating Innovation: Resources • A specially constructed Innovation Team at each organization (~10 members), meeting 5 times • An EmcArts process facilitator for up to 15 days • EmcArts financial analysis and community interviews • $1,500 toward work with an identified Content Expert • $10,000 towards prototyping costs • EmcArts Inc. | 127 West 122nd Street | New York, NY 10027 | www.EmcArts.org

29. The Sequence of Five Stages Assessing the current situation and identifying challenges (Weeks 1 – 4) Developing innovative strategies (Weeks 5 – 8) Assessing the capacities needed (Weeks 9 – 12) Testing new strategies and learning from experiments (Weeks 12 – 18) Prototyping new strategies and planning fuller implementation (Weeks 19 – 28) • EmcArts Inc. | 127 West 122nd Street | New York, NY 10027 | www.EmcArts.org

30. Engaging the Future A program supported by the Cleveland Foundation The Roots of Innovation First Workshop at the Cleveland Foundation Monday, December 12th, 9:30pm – 1:30pm Presented by EmcArts Richard Evans, President Melissa Dibble, Managing Director • EmcArts Inc. | 127 West 122nd Street | New York, NY 10027 | www.EmcArts.org