Balance Scorecard homework.

9-101-111 R E V : J U L Y 1 1 , 2 0 0 1

________________________________________________________________________________________________________________ Professor Robert S. Kaplan and doctoral student Dennis Campbell prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2001 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.

R O B E R T S . K A P L A N

Boston Lyric Opera

Mission

Loyal and Generous Contributors

National and International Opera Scene

Greater Boston Community

Janice Mancini Del Sesto, general director of the Boston Lyric Opera company, explained the writing on the white board in BLO’s conference room: “I write the three strategic themes from our Balanced Scorecard on the board before each weekly staff meeting. I want our conversations to relate to activities that support the themes. That way, we will stay focused on achieving our objectives.”

Opera and the Performing Arts

Opera was one of the fastest growing segments in the performing arts, increasing its audience from 4 million patrons in the 1970s to more than 20 million by CY 2000. Performing arts and other cultural institutions, such as museums and libraries, generated 3.5% of all jobs in the New England region and supported an annual payroll of $4.3 billion.

Over the past decade, arts organizations faced steeply rising operating costs—from salaries to building maintenance. At the same time, corporate donations for unrestricted operating funds have decreased and been replaced by company branding of specific events and programs. These trends have increased the pressure on cultural institutions to generate high donations from their board members. For example, the Los Angeles Philharmonic recently raised the annual minimum gift expected from directors from $10,000 to $25,000.1 Opera was the most expensive art form to produce. Fully-staged opera productions were multi-media, and required classically trained singers, a symphony orchestra, professional choreography, elaborate sets and costumes, and often a full chorus.

1 Wall Street Journal, May 7, 1999.

Distributed by The Case Centre North America Rest of the world www.thecasecentre.org t +1 781 239 5884 t +44 (0)1234 750903 All rights reserved e [email protected] e [email protected] centre

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Performing arts institutions generated revenue from gifts, charitable foundations, ticket sales, and individual contributions. While gifts from charitable foundations were on the rise, individual support remained the largest single source of funding for the arts in the United States—up an estimated 19% in the last 10 years to $8.3 billion.2 Also, many performing arts institutions had limited seating capacity so that price increases represented the only option for increasing revenues from ticket sales.

Opera in Boston

Opera in Boston had a checkered history. Several opera companies had come and gone, and the dominant force in Boston opera from 1960 up to early 1990 was Sarah Caldwell. Her Opera Company of Boston was known for putting on lavish artistic performances without sufficient funds. Caldwell scraped for money from show to show. When the money was not there, she spent it anyway, borrowing against the building, deferring maintenance, and not paying bills.3 Financial difficulties as well as personal illness led Caldwell to cancel entire seasons. Ticket holders often found that shows were canceled, performance dates were changed, and even entire productions were replaced without notice. A December 1999 article in the Boston Globe recalled: “It sounds ridiculous, but the simple fact that you could buy a ticket to, say, “La Boheme” and actually get to see that opera on the date printed on the ticket was an important step [for opera in Boston].”

In addition, opera in Boston existed in the shadow of the prestigious Metropolitan Opera Company, nearby in New York City. Many patrons traveled to New York or waited for the Met’s touring productions to come to Boston to satisfy their opera interests.

Boston Lyric Opera

The Boston Lyric Opera company was founded in 1976 by the merger of three New England opera companies. The BLO had a unique commitment to bridge the gap between an artist’s advanced training and his or her professional career. It featured world-class emerging singers, conductors, directors, and designers. In the mid 1990s, the BLO had launched a “Fund for Emerging Artists,” which underwrote the costs of talent search and audition expenses, coaching, travel, and housing for promising young artists. Many of the artists who debuted at the BLO—including Deborah Voigt, Lorraine Hunt Lieberson, Paul Groves, David Daniels, Gregory Turay and Patricia Racette—achieved successful careers and won prestigious national awards.

In addition to its main stage productions, the BLO operated a variety of education and community outreach programs with the goal of making opera available and accessible to communities in the greater Boston area. In 1998, it acquired Opera New England, making this youth-oriented focused opera company the BLO education and community programs division. Opera New England presented 60-minute versions of popular operas for children in grades 3-7, reaching over 24,000 students from 275 schools. In addition, the BLO actively encouraged interaction between professionals and students by, for example, bringing world-class artists to the community to give public lectures and master classes for young singers. The BLO also offered educational programs designed for adults through free pre-opera lectures prior to all performances. For the 2000/2001 season, the BLO expected to reach approximately 40,000 people through its education and community outreach programs. The BLO mission statement, adopted in 1993 (see Exhibit 1),

2 Ibid.

3 Opera News, September 1996.

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communicated the company’s three major goals of producing high quality professional opera productions, developing future opera talent, and promoting opera appreciation through educational and community outreach. The BLO, in FY2001, had a 46 person Board of Directors and a separate 51 person Board of Overseers.

Janice Mancini Del Sesto, as general director of the BLO, supervised the company’s five operating departments (see organization chart in Exhibit 2) and interfaced with its two Boards. Del Sesto had studied voice at the New England Conservatory and sang opera for several years before becoming a consultant and administrator of arts-oriented organizations. In 1992, she had been appointed general director of the BLO, shortly after another failed opera company—the Boston Opera Theater—ceased operations, with several of its board members elected to the BLO board. Del Sesto and the expanded board knew that Boston’s recent history of expensive opera productions and large losses required the BLO to adopt a new philosophy: operate in a fiscally prudent manner, and offer excellent artistic quality but not spectacular productions.

The subsequent seasons offered a good blend of traditional and contemporary operas (see Exhibit 3) and the BLO built a loyal, enthusiastic base of opera subscribers and supporters. In September 1998, the BLO made a major transition from the limited 890 seat Emerson Theater to the 1,500 seat Shubert Theater, enabling the BLO to reach a larger audience and expand the number of performances it offered. In addition to increased seating capacity, the Shubert also offered a larger orchestra pit and improved stage house amenities. One BLO board member remarked, however, that an opera company needed 1,800-2,400 seats to do standard repertory and remain fiscally solvent.

In the 2000/2001 season, the BLO offered 26 performances of four main stage productions attended by 39,000 people. Its season was broadcast regionally on a local FM radio station. The BLO audience had a median age of 45, 80 percent resided in Massachusetts, 70 percent had graduate degrees, and more than 60 percent had household incomes above $60,000. Its budget had grown from 64th in size ($1 million in FY1992) to 15th ($7 million in FY2000) out of ninety-five U.S. opera companies. With subscribers increasing more than 100% and the number of performances by 50% from 1995 to 2000, the BLO had become the fastest-growing opera company in North America. The company had operated continually with a balanced budget or a small surplus (see summary statistics in Exhibit 4).

Del Sesto’s leadership and direction were widely credited by the local media and her colleagues in the Boston opera community as the driving force behind opera’s success in Boston. Sue Dahling- Sullivan, an MBA graduate from Dartmouth’s Tuck School and deputy director of the BLO, described Del Sesto as an unusual nonprofit leader, “a visionary who ran her organization like a business.”

A New Planning Process

The main concern of the BLO Board in the late 1990s had been the company’s transition from the Emerson to the Shubert Theater. The Board wondered whether sufficient interest existed in the Boston area to fill the large increase in available seats. By September 1999, the Board had its answer. The move to the Shubert had been successfully accomplished. The subscriber base had increased to fill the new capacity and the retention rate for the following season was more than 80%. The near- term future of the BLO was ensured.

The company now faced the challenge of what it should become. Even with the higher audience base, revenues from ticket sales remained less than 40% of operating expenses. The BLO needed to convert more subscribers to donors, attract significant funding from its supporters and foundations,

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and contemplate a 2,200-seat facility that would permit even more ambitious artistic productions and provide greater financial stability through increased ticket sales.

Ken Freed, a BLO board member since 1992, was co-chairman of the strategic planning committee. He had seen BLO’s staff and budget grow rapidly during the 1990s and felt that its informal, kitchen- cabinet style governance structure was no longer sufficient. He believed that a more formal strategic planning process was essential. An active participant in several arts organizations, Freed had seen organizations fail because leaders had not actively involved the board in strategy and planning deliberations.

In September 1999, the BLO convened senior administrative staff, the Board of Directors, and the Board of Overseers for a weekend, off-site strategic retreat. They summarized the deliberations with a broader and sharper mission statement:

Boston Lyric Opera’s mission is to ensure the future of the art form by: 1) building a community that is knowledgeable about, appreciative and supportive of opera; and 2) developing the next generation of professionals, audience, supporters and volunteer leadership. This will be achieved by providing education and community programs and activities, and access to the highest quality productions of diverse repertoire of artistically excellent, musically and theatrically innovative and fiscally sound opera.

Del Sesto now faced the challenge of developing a strategy to deliver on the mission. Through the fall, she met with focus groups from BLO’s constituencies, senior staff, chairs of standing and ad hoc board committees, and key supporters.

Dahling-Sullivan had recently returned to the BLO as Deputy Director after spending a sabbatical year as Associate Director of Planning at Harvard Business School. She had seen various HBS program offices use a new management tool, the Balanced Scorecard, to set strategic objectives and measure their performance against those objectives.4 She felt that the BLO could use the Balanced Scorecard to focus its planning process. Dahling-Sullivan approached Ellen Kaplan, a new Board of Overseers member, who she knew had had experience adapting the Balanced Scorecard to nonprofit organizations such as New Profit, Inc., The May Institute, and United Way. Kaplan readily agreed to facilitate a process with the staff and the Board to build a Balanced Scorecard for the BLO.

Developing the BLO Balanced Scorecard

During a several month period in the first half of CY 2000, a group consisting of Del Sesto, Dahling-Sullivan, Kaplan, senior department heads, artistic leaders, board members and financial donors met periodically. The meetings were the first time that these diverse groups engaged in open dialogue about what the BLO was and what it wanted to become. Kaplan challenged the group to define its strategy, its competitive advantage, and distinguishing characteristics that would make the Boston Lyric Opera Company unique. Board Chairman, Sherif Nada, enthusiastically endorsed the approach:

I was on the Board of Citizens School, an organization funded by New Profit, Inc., and I had seen the Balanced Scorecard work effectively there. During our meetings, Ellen [Kaplan] brought in examples from other organizations but demanded that the audience participate

4 R.S. Kaplan and D.P. Norton, The Balanced Scorecard: Translating Strategy into Action (Boston: HBS Press, 1996), and The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment (Boston: HBS Press, 2001).

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actively in the discussion to reflect their views about the BLO, She kept telling us, “I write on the board, but it’s your plan.” She brought all the people around the table into the process.

The group’s discussions led to defining three high-level strategic themes, each relating to a key customer group:

• Develop loyal and generous individuals who feel a strong sense of ownership in BLO’s future

• Build the BLO reputation on the national and international opera scene

• Reach the Boston-area community

Loyal and generous supporters With the BLO now ensconced at the 1,500-seat Shubert Theater for the foreseeable future, and a new facility a distant vision, the planning group realized that the future of the opera company depended on continuing to receive almost 70 percent of each year’s operating budget from sources other than ticket sales. This created an intense focus on how to attract new donors and increase the support from existing donors.

Two customer objectives were created for the first strategic theme:

• Target loyal and generous contributors and prospects

• Enhance involvement and recruitment of board members

The first objective was obvious, but the second objective was not. In the past, board members had been chosen because of past or potential financial support. Now, board members would be recruited and selected for their ability to help the BLO accomplish its strategic objectives.

Del Sesto realized that the BLO already had many initiatives underway for subscribers and potential donors, but had no process for assessing the effectiveness of these programs.

For several years, we hosted a VIP room prior to a performance at a hotel near the theater where we invited individuals for cocktails and hors d’oeuvres. We had never measured the impact of the program. As our discussions progressed, I asked our staff, “are we attracting the right people to the VIP room,” and “are we converting the guests to high-contributing board members?” The staff liked running these events but hadn’t been accountable for follow-up actions to track the outcomes and demonstrate a return-on-investment from the VIP room.

The staff had invested a lot in the VIP room and were frustrated that they couldn’t answer Del Sesto’s challenge to demonstrate tangible results. Del Sesto cut the program off, but didn’t criticize the staff:

The BLO strives to be a learning organization and we attract wonderful young talent with that philosophy. That means we experiment, and it’s OK to fail. But the staff got the message that they have to be more analytical in what they are trying to accomplish and to quantify the outcomes from their processes.

It’s important with a young staff not to reject “bad ideas.” I try to question them and take them through the process so they learn to see weaknesses in their proposals and come to their own conclusions. This is a more time-consuming process for me and I have a continual tension between making the decisions myself versus having long interactive discussions with young staff to help them understand all the relevant issues. The BSC’s strategic objectives have helped the staff understand how they can contribute with their day-to-day activities to deliver value for our most important constituents.

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Another recent program was Opera Express, which had been targeted at the young, professional segment. While direct expenses had been funded by a two-year foundation grant, virtually all of BLO’s marketing resources had been committed to marketing and putting on its many events, which reached only 100 individuals. No Opera Express participant ended up as a donor or even a subscriber. Dahling-Sullivan noted that at the time of the grant, the company had no strategic basis for rejecting the money, leading to the dissipation of its scarce human resources for two years.

National and international opera scene The board and staff did not want the BLO to be just a regional producer of traditional opera for local audiences, or to define success only by subscriber renewals. Del Sesto wanted the BLO to do exciting things that would make an impact. But she and the Board would have to redefine what they meant by “world class.” The BLO, as a young, small and resource-constrained opera company, could not hope to compete with the great opera houses of the world: The Metropolitan, Covent Garden, La Scala, or Vienna State Opera. It needed, however, to differentiate itself from the many apparently similar regional companies in North America.

Two customer objectives developed for this theme reflected the BLO strategy since 1992:

• Launch a unique, comprehensive residency program that would attract the best young talent—singers, conductors, directors, production and stage personnel, and administrators— who would subsequently perform with the most prestigious opera companies in North America and the world.

• Present a diverse and exciting repertory that included popular, lesser known, and contemporary works.

The strategic discussions introduced a third customer objective for this theme, one that would further contribute to BLO’s differentiation strategy:

• Institutionalize an artistic/production style and set of standards, characterized by “crisp and clean, simple and strong, elegant” that would become identified with BLO productions.

And to leverage BLO’s limited resources, while still delivering high-quality operating productions, the group proposed a fourth strategic objective:

• Collaborate with prestigious partners to strengthen BLO’s position in the international and national opera scene.

Collaborations could include relationships with major opera companies to develop and train their best new talent, co-productions with distinguished companies, and local collaboration with other arts organizations. For example, the 1999/2000 BLO season featured an Egyptian theme (Aida, Akhnaten, and Magic Flute) in conjunction with major Egyptian exhibitions at Boston’s Museum of Fine Arts and Museum of Science, and Egyptian programming at the Boston Ballet Company.

Community The discussions on the third strategic theme, engaging and educating a diverse community centered in Boston about opera, were among the most active of all. Opera had to continually attract new generations of audiences. Few children were exposed to high-quality opera, and the art form risked obsolescence if it could not convert younger generations into opera fans. Also, community support would be essential if the BLO were to ever gain approval for a new facility. Ken Freed knew that obtaining a new facility in the Boston area was more a political issue than a financial one. Stephen Lord, Music Director and principal conductor, was eloquent in pointing out the importance of the community strategy:

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Opera in the past was for the masses. Working people came in their everyday clothes to see and hear great productions. We need to break down the image that opera is only for the elite, dressed in their finest. We should be striving to make opera part of people’s every day lives. Let’s bring opera to the Public Garden, the Hatch Shell, even Fenway Park!

The group identified two high-level customer objectives for the community strategic theme:

• Build community support for BLO as an important part of the greater Boston community.

• Develop value-added opera education programs, targeting greater-Boston children, their families, and their schools.

The discussion on community, like the one on loyal and generous individuals, forced the board and staff to address existing programs. For example, when the BLO had acquired Opera New England (ONE) in July 1998, it had agreed not to change ONE’s events for the first two years. ONE had five productions, which it rotated from year to year. In FY 2000, it put on 33 events in venues from Western Connecticut to central Maine. The former head of ONE was now a BLO board member and a participant in the Balanced Scorecard strategic process. The group discussed how ONE’s existing programs supported the BLO strategy. The discussions revealed that the New England market was probably too diffuse and expensive for the BLO. The group concluded that it would be more cost effective for the BLO to focus on communities within the Boston capture area. Freed commented on how the consensus got built:

We had a cooperative process—open, transparent and rational—that enabled our members from Opera New England to get on board with the BLO strategy and the role for ONE in that strategy. This worked much better than if a decision had been dictated by Janice or imposed by long-time BLO board members.

Starting in 2002, ONE would focus its productions on Boston city and metropolitan area schools. The BLO would continue to support interested venues outside this immediate capture area, but such events would be repriced to enable the BLO to recover its costs.

Completing the Balanced Scorecard

The group then turned to the critical internal processes that would help the company achieve its strategic customer objectives in the three strategic themes. This led to identifying three high-level business processes at which the BLO must excel and nine internal strategic objectives for the three processes:

Increase Brand Awareness

• Develop new value-added educational and community programs as well as special events that target community, supporters, and ticket buyers

• Launch a comprehensive public relations program that creates “buzz” and strengthens the BLO strategic position, locally and globally

Enhance Customer Relationships

• Streamline ticketing and gift acknowledgment processes

• Increase one-on-one contact with donors, board and prospects

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• Improve board support, communication, and education systems

• Develop web-based services and products, easy to use, that provide access to valuable information

Insure Operational Excellence

• Improve product quality by identifying, recruiting, and contracting “best-in-class” artistic, production, and administrative talent

• Develop an innovation review process that supports initiatives with strategic importance

• Increase cost effectiveness and quality assurance with departmental 3-year operational plans

These internal process objectives provided specific guidance to BLO departments and staff for what should be done to help the company achieve its mission and its constituents’ objectives.

The group then proceeded to develop objectives for three enabling Learning & Growth themes and two Financial themes (see Exhibit 5 for the full Balanced Scorecard strategy map and Exhibit 6 for description of the Learning & Growth and Financial objectives).

While most members of the group were enthusiastic about the process and the outcome, several of the board members expressed concerns. Dahling-Sullivan noted:

In times of change, people—especially those new to the organization—are looking for focus and the boundaries of the strategy. Some of our long-time supporters, however, were slower to embrace the new process.

Del Sesto also observed that some board members and artistic staff, accustomed to the financial measures, were unsure about why, all of a sudden, the company had to measure things beyond subscription revenues and renewals.

Deploying the Balanced Scorecard

After the BLO strategy map and strategic objectives had been formulated, Dahling-Sullivan asked each department—finance and administration, marketing, development, and artistic productions—to develop its own scorecard. The departmental scorecard would describe how the department would do its own work effectively and efficiently and also contribute to the high-level BLO strategic themes.

Development Office

Fundraising was clearly a major priority for an organization that obtained almost 70 percent of its annual operating budget from donations. Del Sesto, with many years of fundraising experience and knowledge, saw how the Balanced Scorecard could enhance the development function by linking the staff, the board, and donors to the company’s mission and strategy.

Earlier in my career, I owned a consulting firm that helped businesses identify and negotiate sponsorship opportunities and set clearly defined measures for their support. I have seen the development field become more professional over the past thirty years. Companies and foundations are now more strategic and focused in their grant-making and sponsorship. They are forcing organizations to deliver measurable results.

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9

Fundraising is now as much a science as an art. Yet, board and staff find it easy to slip into the comfort of measuring their success only through the attainment of financial goals even though these are just one component of a comprehensive fundraising plan. The Balanced Scorecard requires that the staff and board think strategically about the desired outcomes of every relationship-building and fund-raising activity we do. During the process of creating our BSC, the entire staff was constantly reminded that each person’s work contributes, in some way, to the overall success of our fundraising.

Del Sesto noted that many seasoned professionals in the fundraising field plan initiatives and run events that have few measures of success and little linkage to strategy. BLO’s younger development staff, however, seemed eager for the structure and framework that the Balanced Scorecard offered. With the scorecard, they could set priorities for their work and position their day-to-day activities within a larger and more strategic context. Staff could see how their success would be measured. They started to focus on initiatives and events that were likely to have the highest impact on organizational objectives.

For example, one junior staff person took the initiative to design a database application linking quantifiable donor data (gift and ticketing history) to qualitative information about donor meetings and personal information. This application streamlined information collection as well as increased the success of solicitation activities. The Corporate and Grants Manager implemented a strategy to increase one-on-one contact with corporate and foundation prospects. The development department began to work more closely with the marketing/box office department on VIP seating and donor education initiatives.

A former director of development commented:

Often, the development office is “out there,” quite separate from the rest of the organization. The Balanced Scorecard ties development into the heart of the organization. The development staff now has a much deeper understanding of the mission and priorities of the BLO. Everyone in the department understands the critical role of “loyal and generous donors” to the BLO’s success.

Production and Artistic Administration

Steve Steiner was Director of Production and Artistic Administration for the company, the department that executed the company’s artistic vision, including contracting with singers, designers, stage hands, unionized workers and trade people:

Many different and complex things have to happen before the curtain goes up. And then everything has to be coordinated to occur within the same three hour period.

Steiner’s staff were typically young people with artistic backgrounds. He explained the BLO scorecard to his staff and could see the lights go on:

It’s easy for our young artistically trained people to go off in many different directions. The scorecard gave them an understanding about both the mission and the business aspects of the company. It was eye opening to them. It gave them context and focus. They now understand how their work affects the business aspects, and we now have a common terminology for sharing ideas and communicating.

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101-111 Boston Lyric Opera

10

From these discussions, Steiner’s staff proposed an initiative to educate the Board, donors, and subscribers about what goes on behind the scenes. In April 2000, the BLO offered a guided tour of how the magic in The Magic Flute, the current production, was accomplished. Steiner believed:

The more the Board member understands what goes on behind the scene, the more loyal and committed the Board member becomes.

Melanie Muradian, a young staff member in the Artistic Productions department, told how the Balanced Scorecard helped her generate some new ideas to support the strategy.

After every production, we always have some leftover merchandise—t-shirts, CDs, etc. I suggested that we give these as gifts to the artistic staff—singers, chorus, orchestra players—as a way of saying ‘thank you.’ They were very appreciative.

Also, I decided to write an article in the BLO newsletter about a supernumerary, who had just participated in his 25th production.5 The article made him feel good about his contribution to the BLO, and, unexpectedly, helped us when the article triggered a bunch of calls from volunteers asking how they could become supernumeraries in future productions.

The Balanced Repertory

In attempting to quantify the quality of the actual opera programming, the tension among the BLO’s strategic themes would be the highest. Many existing and potential opera patrons liked the accessibility and familiarity of the classical repertory, including the popular works of Mozart, Donizetti, Bellini, Bizet, Verdi, and Puccini. But exclusive production of these classics would not appeal to knowledgeable opera subscribers and supporters, nor would it expose and educate the current audience about the wide range of lesser-known or even new works that also had significant artistic merit. In addition, seasons filled with “top ten” operas would not give the BLO much distinction or visibility in the national and international opera scene. The premieres of new work and productions of lesser-known operas not only led to international media attention, they also attracted more established singers who wished to broaden their repertoire.

Dahling-Sullivan prepared a Repertory Planning Template that would provide the basis for discussions of future year’s programming with the company’s two artistic leaders, Stephen Lord, Music Director and principal conductor since 1991, and Leon Major, Artistic Director since 1998. Del Sesto noted the need to balance across multiple dimensions:

We’ve always had to balance artistic goals with our financial goals. But our strategy requires us to also balance within artistic goals. In any season, we want different composers, different eras, and different types of operas. The orchestra and chorus could be large or small; the artists, both recognized and emerging; an experienced conductor matched with a rookie director, and vice versa. Our productions should have a mix of period and updated settings, traditional and modern approaches, and a mix of rented, co-produced and new productions.

Dahling-Sullivan proposed a points scoring scheme along each dimension of choice and established targets so that each year’s four productions could present a balance among composers, music, styles, performances and artists. Exhibit 7 shows how the FY2000 programs would have been scored according to these criteria. Del Sesto wanted Lord and Major to fill in the template as they

5 A supernumerary performs a small, non-speaking, non-singing (and often unpaid) role in operas, such as a spear-carrier in the triumphal march of Aida.

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11

formulated their plans for future years. She thought it would help them think systematically about the artistic tradeoffs and in their programming plans.

Leon Major was skeptical initially. It looked as if he were being presented with a formula to plan and evaluate seasons. Lord, with his 21 years of experience at the St. Louis opera where he had worked with a formula about the company’s operations, felt the template provided an excellent starting point for discussions:

Jan, Leon and I come from three different places. The template provides a more objective place for us to start our planning. On a scale from 1 to 10, it enables us to start at about 5. But I would not want it to be at 10, the final point. We still need to leave room for artistic judgment and not have everything in the formula.

Del Sesto concurred:

We must plan a repertory to meet the strategy. Occasionally, artistic people have trouble sticking to decisions they have already made. We need to lock in the programs 3-4 seasons in advance to get the artists they want and to do the co-producing. But I agree that we want the flexibility to incorporate emerging new talent for artists, designers and directors. So the artistic staff has to balance long-term commitments and short-term flexibility.

Lord felt comfortable with the approach as long as he could, in his discussions with Jan and Leon, say, “look, this suggestion fits within four of the five categories, so why shouldn’t we try it out.” Major felt it would be helpful to extend the new approach to a 5-7 year plan so that balance could be achieved over time, not just within a single season. Lord concluded:

The discipline from this process has been wonderful. We all have dreamy minds and strong feelings about what we like and what we don’t like. Now, we all start from the same point.

The Board

Del Sesto felt the BLO board represented her greatest challenge. As she shared the new strategy and scorecard with the board, she learned that even some long-time members were unfamiliar with the mission:

They asked, ‘why can’t we feature Pavarotti or Kiri Te Kanawa.’ I wondered how they could not know about our mission to identify new talent and launch their careers? The scorecard should help us communicate better our vision and mission to them.

Ken Freed, co-chair of the Board’s strategic planning committee, described the Balanced Scorecard as “breathtakingly clarifying.”

It forces people to think about the trade-offs that have to be confronted. If handled the right way, it should increase Board knowledge and involvement, which are the keys to success for nonprofits.

I am not sure we have the right measures, and it could still evolve into a bureaucratic process. But with Jan and Sue’s leadership, I am optimistic that our discussions will focus on ‘why are we doing this,’ and ‘how does this initiative get us to the future,’ not about the color of napkins at the next benefit. The scorecard gives me assurance that we have an approved mission and strategy. We can now build the trust and awareness in our constituencies about the BLO, and demonstrate that it is completely different from Sarah’s opera company.

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Del Sesto believed that the Balanced Scorecard would help her keep the board’s attention on its proper role:

Some of the board members come here to relax from the quantitative aspects of their business lives. They want to revel in the “art” and come to the BLO board to understand opera better. Also, boards typically have great difficulty deciding what not to do. The scorecard helps me focus the discussion back to the strategy that they, in fact, were involved in developing.

Del Sesto knew that Board members continually generated ideas about special events that they would like to sponsor. Each such event, however, required Del Sesto and senior administrative or artistic staff to participate. The Balanced Scorecard gave Del Sesto a framework to say “no” to such proposals unless they delivered a significant number of targeted constituents and had high potential for successful follow-up. The development staff was now working pro-actively to design events for targeted constituents, and, after they had been designed, search for appropriate hosts from the Board for the events.

The board had started to incorporate the Balanced Scorecard into some of its committee activities. For example, the committee to identify potential new board members developed a strategic needs chart that clearly outlined existing strengths and weaknesses in the existing board profile, and identified the gaps that needed to be filled by future recruiting activities.

Sherif Nada, Chairman of the Board, reflected on two contrasting methods for introducing the scorecard to nonprofit boards:

At Citizen Schools, the two professional leaders worked closely with their staff to develop the Balanced Scorecard. Then they brought it to the Board and Executive Committee, who reacted and modified the scorecard before approving it. At the BLO, the effort was done at a high level, with active involvement of the Board, and then cascaded out to lower-level staff.

As a board member, the BLO process makes more sense to me, though the degree of understanding of the BSC inside the organization was higher at Citizen Schools.

Not all board members, however, shared the enthusiasm for the Balanced Scorecard. Nada commented:

The Board is heterogeneous. Some were extremely involved, and loved the approach. Others were passive and reactive. A few became very concerned that the company was in danger of losing its soul. They didn’t believe you could run a performing arts organization by the numbers.

I’ve tried to run my life with a balanced philosophy represented, metaphorically, by the head, the heart, and the hand: the head, with the brain, has ideas and knowledge; the heart represents compassion and emotion; and the hand enables us to execute. The Balanced Scorecard tries to integrate all three components, but some on the board feel most deeply about the heart. They feel this component has been sacrificed by introducing the scorecard.

Next Steps

Dahling-Sullivan was beginning to develop the initial set of measures for all the objectives. These would be taken back to the Board for discussion and approval. She was also continuing to work closely with each department to help them formulate their own scorecards, and develop measures and targets for the upcoming year.

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Del Sesto reflected on the recent journey and the path ahead.

People are now thinking more strategically, and with greater clarity about our objectives. They are more willing to abandon initiatives that are not delivering on our measured objectives. I use the Balanced Scorecard to challenge people, “How will we achieve this target?” The process forces more self-assessment and more group problem solving.

But we can not take success for granted. We must remain steadfastly committed to the Balanced Scorecard, which will require continual analysis, assessment, and re-evaluation. We will applaud the little things and leverage our successes, accept but learn from our failures, and be prepared to modify strategies and measures as we go along.

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Exhibit 1 Boston Lyric Opera Mission Statement (adopted 1993)

To offer audiences productions of the highest quality, of varied repertoire using primarily young, emerging singers, and important directors and designers.

To offer opportunities that help bridge the gap between the training of performing and creative artists and the professional career.

To present seasons which offer a well-known work, a less frequently performed work(s), and a 20th Century American work.

To help build a body of American works of opera through the commissioning and production of such works and through educational and outreach programs that enable and encourage interactions between audiences and creative artists.

To extend our offerings and reach new audiences through collaborative productions with other American opera companies and cultural organizations.

To educate and expand audiences of all ages and diverse cultures through new productions of existing works, the presentation of new works, and education programs and special programs designed to build a better educated, informed, and risk-taking audience.

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Exhibit 3 Boston Lyric Opera Repertory History

1977/78 Zaide, Mozart

1990/91 The Daughter of the Regiment, Donizetti

Ariadne auf Naxos, Strauss Regina, Blitzstein

1979/80 King for a Day, Verdi 1991/92 La Cenerentola, Rossini Lost in the Stars, Weill The Tales of Hoffman, Offenbach

1980/81 Amahl and the Night Visitors, Menotti La clemenza di Tito, Mozart The Consul, Menotti The Coronation of Poppea, Monteverdi

1992/93 La Boheme, Puccini Beatrice and Benedict, Berlioz Wuthering Heights, Floyd

1981/82 Norma, Bellini The Abduction from the Seraglio, Mozart Werther, Massenet

1993/94 I Puritani, Bellini Carmen, Bizet The Postman Always Rings Twice, Paulus

1982/83 Der Ring des Nibelungen, Wagner Ariadne auf Naxos, Strauss Il trovatore, Vedi Madama Butterfly, Puccini

1994/95 Rigoletto, Verdi Il barbiere di Siviglia, Rossini Candide, Bernstein

1984/85 First the Music, Then the Words, Salieri The Impresario, Mozart

1995/96 Faust, Gounod Falstaff, Verdi Xerxes, Handel

1985/86 Agrippina, Handel Facade, Walton La Voix Humaine, Poulenc The Barber of Seville, Rossini

1996/97 Tosca, Puccini The Shepherd King, Mozart L’elisir d’amore, Donizetti

1986/87 Rigoletto, Verdi The Rake’s Progress, Stravinsky

1997/98 Deborah Voigt in Concert Lucia di Lammermoor, Donizetti The Ballad of Baby Doe, Moore Werther, Massenet

1987/88 Maria Stuarda, Donizetti The Turn of the Screw, Britten

1998/99 La Traviata, Verdi Remeo et Juliette, Gounod Le nozze di Figaro, Mozart

1988/89 The Portrait of Manon, Massenet Therese, Massenet Dialogues des Carmelites, Poulenc

1999/00 Aida, Verdi Akhnaten, Glass Die Zauberflote, Mozart

1989/90 Tosca, Puccini The Flying Dutchman, Wagner La Traviata, Verdi

2000/01 Madama Butterfly, Puccini Don Giovanni, Mozart Salome, Strauss The Daughter Regiment, Donizetti

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Exhibit 4 Boston Lyric Opera Financial Statements

Income Statement for the Year Ended May 31, 2000

2000 1999 Support:

Contributions $4,223,042 $2,619,338 Special events 372,110 218,062 Grants 205,710 393,055 Contributions-in-kind 34,970 61,438

Total support $4,835,832 $3,291,893 Revenue:

Ticket sales $1,713,389 $1,431,620 Other Income 78,313 67,117 Interest 57,088 38,663 Unrealized gain 208 --

Total revenue $1,848,998 $1,537,400

Total support and revenue $6,684,830 $4,829,293 Expenses and Losses:

Production expensesa $3,774,179 $2,685,447 General and administrative 1,520,287 1,222,965 Development expenses 610,709 472,517 Education 274,691 317,132 Bad debt 153,828 -- Loss on sale of securities 8,737 5,098 Loss on disposal of assets -- 3,301 Unrealized loss -- 624

Total expenses and losses $6,342,431 $4,707,084

Net Income $ 342,399 $ 122,209

aSchedule of Production Expenses 2000 1999 Production salaries and fees $2,082,376 $1,538,004 Other production costs 591,421 358,646 Advertising and promotion 358,775 359,298 Scenery and properties 322,928 52,491 Costumes 224,242 173,928 Theatre rental 159,052 176,421 Depreciation 35,385 26,659

Total production expenses $3,774,179 $2,685,447

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J ua

re z,

fr om

2 5-

Ja n-

20 17

to 1

0- M

ay -2

01 7.

O rd

er re

f F 28

99 60

. P

ur ch

as ed

fo r u

se o

n th

e P

er fo

rm in

g A

rts M

an ag

em en

t, at

B os

to n

U ni

ve rs

ity .

E du

ca tio

na l m

at er

ia l s

up pl

ie d

by T

he C

as e

C en

tre C

op yr

ig ht

e nc

od ed

A 76

H M

-J U

J9 K

-P JM

N 9I

O rd

er re

fe re

nc e

F2 89

96 0

101-111 Boston Lyric Opera

18

Exhibit 4 (continued)

Balance Sheet as of May 31, 2000

2000 1999 Current Assets:

Cash $1,886,090 $1,445,786 Unconditional promises to give 934,826 601,014 Inventory 7,495 7,065 Other current assets 360,993 66,013

Total current assets $3,189,404 $2,119,878 Net book value of property and equipment $ 314,091 $ 374,008 Other assets 31,575 95,901

Total assets $3,535,070 $2,589,787 Current Liabilities:

Accounts payable $290,973 $152,951 Advance ticket subscriptions 1,382,014 922,569 Payroll taxes withheld and accrued 5,613 196

Total current liabilities $1,678,600 $1,075,716

Net assetsa $1,856,470 $1,514,071

Total liabilities and net assets $3,535,070 $2,589,787

aNet assets are contributed by donors and are equivalent to owners' equity in for-profit entities.

U sa

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96 0

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-1

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n L

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ap

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as ec

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ht b

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99 60

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ur ch

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-2

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ea rn

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a nd

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L E

A R

N IN

G A

N D

G R

O W

T H

FI N

A N

C IA

L

O

u tc

om e

#1 :

St ra

te gi

c sk

ill c

om pe

te nc

ie s

fo r

st af

f. D

ri ve

r ob

je ct

iv e:

•

In ve

st i

n tr

ai ni

ng t

o d

ev el

op s

tr on

ge r

sk ill

s in

m an

ag em

en t,

bu d

ge ti

ng ,

an al

ys is

, p la

nn in

g, p

ro je

ct m

an ag

em en

t, an

d te

ch no

lo gy

a p

pl ic

at io

ns .

• C

ar ee

r pa

th d

ev el

op m

en t

O u

tc om

e #2

:

L ev

er ag

ed

ef fe

ct iv

en es

s of

bo

ar d

an

d

vo lu

nt ee

rs

th ro

ug h

ed uc

at io

n an

d fu

nd ra

is in

g tr

ai ni

ng .

D ri

ve r

ob je

ct iv

e:

• C

re at

e an

i nt

er ac

ti ve

e d

uc at

io n

pr og

ra m

t ha

t d

ev el

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bo ar

d k

no w

le d

ge

ab ou

t B os

to n

L yr

ic O

pe ra

’s v

is io

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d o

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“ op

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.”

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ev el

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ce b

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in g

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s.

O u

tc om

e #3

: In

te gr

at ed

o rg

an iz

at io

na l a

lig nm

en t w

it h

st ra

te gi

c go

al s.

D

ri ve

r ob

je ct

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: •

D ev

el op

a c

om m

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at io

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ne nt

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th e

st ra

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c pl

an t

ha t

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an

d e

ng ag

es a

ll co

ns ti

tu en

ts .

• In

co rp

or at

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ile st

on es

t o

ev al

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ar tm

en ta

l, or

ga ni

za ti

on al

, a nd

b oa

rd

pr og

re ss

to w

ar d

s go

al s.

O

u tc

om e

#4 :

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oi ng

i nv

es tm

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ro w

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na bl

in g

in fr

as tr

uc tu

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pp or

t fu

tu re

v is

io n.

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ri ve

r ob

je ct

iv es

: •

D ev

el op

a nd

la un

ch a

d m

in is

tr at

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po rt

io n

of B

L O

R es

id en

cy P

ro gr

am .

• C

re at

e a

hu m

an r

es ou

rc es

p la

n th

at f

oc us

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cr ui

tm en

t, re

te nt

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an d

tr

ai ni

ng o

f t op

-n ot

ch a

d m

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tr at

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nt .

• In

ve st

i n

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lo gi

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ra in

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th at

w ill

p ro

vi d

e co

m pe

ti ti

ve

ad va

nt ag

es .

O

u tc

om e

#1 :

Sh or

t t er

m a

nd lo

ng te

rm fi

sc al

h ea

lt h

an d

s ta

bi lit

y.

D ri

ve r

O bj

ec ti

ve s:

•

In cr

ea se

su

st ai

na bl

e ea

rn ed

an

d

un ea

rn ed

re

ve nu

e le

ve ls

th

ro ug

h ti

ck et

in

co m

e, fu

nd ra

is in

g, s

et r

en ta

l/ sa

le s,

a nd

o th

er n

ew r

ev en

ue s

tr ea

m s.

•

Sy st

em at

iz e

fi na

nc ia

l c on

tr ol

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d m

on it

or in

g sy

st em

s.

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ev el

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ul ti

-y ea

r su

pp or

t p ro

gr am

s.

• C

re at

e a

lo ng

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in ve

st m

en t s

tr at

eg y.

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u tc

om e

#2 :

St

ra te

gi ca

lly -d

ri ve

n an

d

ac cu

ra te

fi

na nc

ia l

gr ow

th

m od

el s

to

su pp

or t p

la nn

in g

ef fo

rt s.

D

ri ve

r O

bj ec

ti ve

s:

• D

ev el

op r

ea lis

ti c

pr o

fo rm

as t

ha t

ca n

be e

as ily

a d

ap te

d t

o ch

an ge

s in

t he

op

er at

in g

en vi

ro nm

en t.

• Im

pl em

en t a

m ul

ti -y

ea r

bu d

ge ti

ng p

ro ce

ss .

• In

te gr

at e

lo ng

t er

m f

ac ili

ty i

ss ue

s an

d a

lt er

na ti

ve s

in to

f in

an ci

al p

la nn

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pr oc

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U sa

ge p

er m

itt ed

o nl

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ith in

th es

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ra m

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co nt

ac t i

nf o@

th ec

as ec

en tre

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ht b

y B

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m in

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re z,

fr om

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ur ch

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to n

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p er

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p er

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20 01

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p er

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nn iv

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U sa

ge p

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itt ed

o nl

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th es

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ra m

et er

s ot

he rw

is e

co nt

ac t i

nf o@

th ec

as ec

en tre

.o rg

Ta ug

ht b

y B

en ja

m in

J ua

re z,

fr om

2 5-

Ja n-

20 17

to 1

0- M

ay -2

01 7.

O rd

er re

f F 28

99 60

. P

ur ch

as ed

fo r u

se o

n th

e P

er fo

rm in

g A

rts M

an ag

em en

t, at

B os

to n

U ni

ve rs

ity .

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ca tio

na l m

at er

ia l s

up pl

ie d

by T

he C

as e

C en

tre C

op yr

ig ht

e nc

od ed

A 76

H M

-J U

J9 K

-P JM

N 9I

O rd

er re

fe re

nc e

F2 89

96 0

__MACOSX/._Boston Lyric Opera.pdf