Strategy Work in Boards of Directors
Strategy is described as a “comprehensive master plan that states how the corporation will achieve its mission and objectives.”[1]
Strategy is not limited to drawing the map for the future; it also involves strategic control in ensuring that a chosen strategy is implemented and assessed.
The strategic involvement of boards ranges from mere rubber-stamping to boards that contribute to shaping the context, process and content of strategy. Boards that make strategic decisions “accept, reject or refer” management proposals at the end of the decision process.
Boards that “test ideas, raise issues, question assumptions, advise caution and offer encouragement” early in the decision-making process shape strategic decisions.
Shaping the content, context and procedure of strategy means that the board “develops the context for strategic debate, establishes a methodology for strategy development, monitors strategy content and alters the conduct of the executive in relation to strategy.”[2]
Boards’ Strategy Work in Arts Organisations
The research on the board’s role in strategy work in arts organisations highlights the board’s contribution to arts organisations’ long-term development and survival. However, the size and complexity of arts organisations differ, and this may be reflected in the boards and the relationship between the boards and the management of the organisations.
It has become common to clearly differentiate between the artistic responsibilities and the administrative management of arts organisations by assigning both an executive director and an artistic director to ensure artistic autonomy and quality (artistic autonomy refers to freedom and independence from politics and bureaucracy). The larger the organisation, the more likely that there are managerial capacity and competence to drive strategy processes and implement strategy.
Size and complexity apart, the dual rationalities of art and business draw a particular context for board work where the objectives and values of audience, artists and funders co-exist but may be competing.
People having a meeting at the office. Credit: Kampus Production on Pexels.
Institutional Logics as a Lens to Understand the Board’s Strategy Work in Arts Organisations
An institutional logic is “the socially constructed, historical patterns of cultural symbols and material practices, assumptions, values and beliefs by which individuals produce and reproduce their material subsistence, organize time and space, and provide meaning to their daily activity.”[3]
Boards of arts organisations are interesting examples of boards that need to handle diverse institutional logics.
The “art logic” dominates arts organisations. This follows from the mission of arts organisations and artistic autonomy. However, art production depends on audiences and funding and arts organisations, like any other business, are influenced by a “commercial logic” focusing on expanding markets, cost control and revenues. Funding enables the organisation to develop artistic strategies that involve more risk and do not require full houses. Boards of arts organisations that receive government funds must comply with a “public logic” in relation to the government funding agency’s broad political objectives of making high-quality culture available to the public, which implies that the arts organisation needs to ensure that the money is spent to this end. The board of directors is responsible for overseeing that the operations and strategic development of the arts organisation are aligned with the commercial and public logics. In addition, several arts organisations play an important role in their local community, both in terms of offering art experiences to an audience and also by giving local artists an opportunity to present their art (the “community logic”).
Board members navigate between institutional logics of artistic autonomy, commercial interests, the public purpose and community expectations to maintain legitimacy among important stakeholders when working with strategy.
Research Setting and Research Methods
Our case was a well-established Norwegian arts organisation that operated as a foundation. The organisation was responsible for an annual one-week festival that included several art forms. It received government funding, amounting to about half of the total budget, and faced political expectations to fulfil a societal mission. The board consisted of six directors appointed for a period of four years.
To capture how this board worked with strategy, we focused on the board processes and the board members’ understanding of their strategic contribution.
Findings
Our findings are summarized in table 1.
What are the Board’s Strategic Tasks?
The board’s strategy work involves four different tasks: strategic decision-making, strategic development, the utilisation of board members’ external networks, and strategic control.
Our study shows how one board of an arts organisation acknowledged artistic autonomy as the dominant logic and distanced itself by being involved in strategic control rather than strategy development.
In addition, the board tended to emphasise the public and commercial logics when working with strategic control. In other words, the board had no substantial influence on strategy development because the art logic allocated that responsibility to management. The art logic is therefore likely to encourage passive board behaviour where management’s strategy proposals are accepted without discussion. This is likely to be reinforced in arts organisations with dual leadership where board relationships with the executive and the artistic directors are more complicated.
Ranking Institutional Logics in the Boardroom
We found that the board directors acknowledged artistic autonomy and that the art logic dominated and shaped how the board members involved themselves in strategy development, or more accurately, how they limited their involvement and trusted artistic autonomy with management. However, the board of directors insisted on a role in strategy development and founded their arguments on other, but lower ranked, logics: the commercial and community logics.
We found that in the board’s strategic control, the ranking of logics was different. In strategic control, it was the public logic that had priority as the board evaluated achievements in relation to the stated objective of the public funder. This was supplemented with a commercial logic ensuring that the organisation complied with reporting requirements and enhance financial viability.
The art logic was not visible in our data about the board’s work with strategic control. An explanation for this may be that the board members did not consider results related to art to be one of their control tasks due to artistic autonomy.
Practical implication
A practical implication of our study for board directors in arts organisations is that context matters, and they should discuss the characteristics of this context and the implications for their board’s strategy work. For example, boards of arts organisations with government funding should discuss how to understand artistic autonomy and how the board could provide different competencies and resources to complement those of the administration of the organisation. Further, they should discuss how the board could use strategic control to provide an overall perspective of the factors affecting the successful implementation of strategy.
IMPORTANT: note that this article contains scientific references that we have omitted to lighten the text. Please consult the original article if you wish to quote excerpts.
Contact us at mmiam@hec.ca to request a free copy of the full article published in the International Journal of Arts Management, Volume 27, Number 1, Fall 2024.
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[1] Thomas L. Wheelen and J. David Hunger, Strategic Management and Business Policy: Achieving Sustainability (Upper Saddle River: Pearson, 2010), 67.
[2] Terry McNulty and Andrew Pettigrew, “Strategists on the Board,” Organization Studies 20, no. 1 (1999), 55.
[3] Patricia H. Thornton, William Ocasio and Michael Lounsbury, The Institutional Logics Perspective. A New Approach to Culture, Structure, and Process (Oxford: Oxford University Press, 2012), 51.