Becoming a data-informed cultural organization may mean realizing that sometimes the blind have led the blind within the industry – but there are now resources to turn on the lights.
Unintentional collusion is a topic that has come up with some frequency in my work within the last few weeks. I think that the phenomenon is worth sharing and revisiting if for no other reason than making top-of-mind an accidental business practice that may be holding back cultural entities.
What is unintentional collusion?
Unintentional collusion – as we call the phenomenon at IMPACTS – is what happens when an organization follows a “leader” thinking the leader knows something that the following organization does not know. Other organizations then observe the behaviors of both the leader and the original follower, and then follow both organizations’ decisions as well. As it may turn out, the “leader” was making a guess…and now that guess is “the way cultural organizations are run.”
Unintentional collusion takes place when one organization makes a guess about the best way to do something and other organizations copy that guess… until that guess becomes “the way we do things.” When organizations do this, they reaffirm one another’s unscientific or ineffective strategies, ingrain them, and sometimes make them difficult to correct.
Unintentional collusion is not at all unique to visitor-serving entities. That said, it’s very common within this industry.
How does unintentional collusion work?
Here’s a theoretical example: Let’s say that an art museum opens up in a city that doesn’t have many museums. They aren’t sure what to charge as an admission price so they make a guess. They decide to charge $20. They aren’t sure if this is the optimal price point, but they decide to try it out for a little while.
Then a science center opens up down the street. They also aren’t sure what to charge for admission, but they see that the art museum is charging $20. They assume that the art museum must have a good reason for this admission price, and, hey, they want to be competitive. The science center charges $20 admission as well.
Then a zoo opens up on the other side of town! They see that the art museum and the science center are charging $20 and assume that these entities must have a strong basis for this admission price. They decide to charge $20 as well.
All the while, the art museum’s decision to charge $20 is validated by the other entities charging the same price. They may think, “Wow! We made a really smart guess! It looks like our guess aligned perfectly with both the science center’s and the zoo’s price reasoning!”
In this situation, all of these organizations are reaffirming one another’s unscientific pricing strategy – and making it more difficult for any of them to find and charge their optimal price point. If it’s lower than $20, then they may suffer financial loss. If it’s higher, they may fear negative publicity and be doomed to continually “leave money on the table.”
All of these organizations are stuck in a “guess” strategy – and they are stuck there together. They’ve created an environment wherein it is hard to break away or, in the case of admission pricing, adjust for inflation, without public backlash.
When does unintentional collusion happen?
Unintentional collusion can happen in many situations – and not just within the cultural industry. Here are two, broad areas wherein unintentional collusion is most prevalent and potentially damaging.
In an aim to be “competitive” organizations may overlook the value of their own brand equities and unintentionally identify themselves as a “type” of organization rather than a unique visitor experience with a worthy mission – and this can cause visitor satisfaction problems.
Pricing is probably the most damaging area wherein unintentional collusion rears its ugly head. And it makes sense! In the past, it was difficult to gather the research required to determine optimal pricing! By the time this kind of information was more readily available, organizations may have already found themselves in unintentional collusion pricing traps.
A fascinating example of price-related unintentional collusion today may have been underscored by the recent admission fee at the Met. The Whitney, Guggenheim, MoMA, and now the Met all have admission fees set at $25. All four of them! They are gridlocked, trapped in a case of comparative economics that perhaps doesn’t sufficiently contemplate the unique value propositions that each of these individual organizations offer their audiences.
As organizations with their own reputational and brand equities, it’s unlikely that the data-informed optimal price point (i.e. the price that optimizes earned revenues but does not negatively impact visitation) is $25 for all four of these organizations. But because they have fallen into economic lockstep together, they may not be able to get out of it independently – and that’s a problem. It may now take added effort, strategizing, and added price-related market research for any of these organizations to correct their potential pricing inefficiencies. In the meantime, these organizations may be stuck – potentially leaving money on the table and fueling future analysis for economic researchers.
Some may be thinking, “Good! They are stuck! None of them can raise their prices!” If that’s your reaction, please think again. Just the mere existence of inflation makes that argument shortsighted. Inefficient pricing challenges the operational viability of an organization and, in turn, challenges an organization’s ability to best serve its community.
The situation could almost pass as amusing and something to observe with simple interest… if it didn’t also potentially mean that some of these organizations may be losing millions of dollars in revenue (without significantly impacting attendance) that could be used to better educate, inspire, and create effective affordable access programs for those who cannot afford the admission fee.
Unintentional collusion happens in regard to pricing very often throughout the world, and it can happen between completely different cultural organization types. It happens with less frequency than in the past as cultural entities grow more data-driven and economically savvy, but it still happens. It’s still common.
Another area in which unintentional collusion can accidentally fuel would-be strategic decisions is in individual initiatives inspired by other organizations in the industry.
Unintentional collusion can be the result of case study envy that stems from excited staff members being perhaps a wee bit too enthusiastic about a different organization’s initiatives and forgetting to consider strategic questions as a result. And then they copy these initiatives…and then another organization copies it again… and then another…and then there’s a popular and ingrained practice that is far from a best practice.
Case study envy can cause organizations to adopt new initiatives that don’t actually help them meet their engagement goals at all… and then make those relatively fruitless initiatives prevalent.
One of the most straightforward examples of this is the mass development of mobile applications for cultural organizations that don’t actually solve a problem for cultural organization visitors. Case study envy bred with unintentional collusion seemed to birth an accidental and largely unquestioned belief that building an app for the sole sake of having an app was a good idea. The spread of this may have damaged the potential of the mobile application (as a medium for use by cultural organizations) dearly.
In and of themselves, mobile applications do not generally increase visitor satisfaction. And while app builders might have us believe that downloads mean something like “this many people love it and use it,” that’s far from the case. The number of downloads is the ceiling. Interestingly, more people generally use a cultural organization’s mobile apps before a visit (5.5% of visitors), than they do onsite (4.1% of visitors), but many of these applications are intended for onsite use! This finding suggests that folks may be downloading the app at home prior to their visit, saying, “meh…” and not using it onsite.
There are successful mobile applications! This can be an effective engagement medium for the right initiative! Simply, it seems that the market may have downloaded one too many cultural organization apps that they considered “meh.” As a result, encouraging engagement on mobile applications is harder. (“This museum has an app? I’ve downloaded a museum app before so I know what those are like. Pass!”) As an industry, our unintentional collusion may have created its own barrier to engagement for mobile applications that are engaging and effective.
Unitentional colluision can go beyond these two categories of pricing and special initiatives, which in itself is broad. It can occur with regard to local audience discounts, access programs, optimal marketing strategies, and fundraising best practices.
Certainly, many institutions do not make blind decisions! But consider that cultural organizations occasionally benefit by taking smart risks or testing programs to assess opportunities and figure out what works. That’s a good thing!
What is not a good thing is when other organizations see the experiment and automatically consider it a verified, surefire success. What’s even worse is when case study envy takes place and experimental failures are shared as successes to “save face.” The result can be that other organizations believe this “reframing” and promulgate the not-so-great practice.
These aren’t reasons to berate cultural organizations. These may be reasons to celebrate them. These are growing pains.
As the cultural industry evolves from an “I think” industry into an “I know” industry, organizations may naturally hit some bumps. And that’s probably good! It’s how we learn. The trick, perhaps, may be two-fold:
- Making sure that we are communicating honest lessons with our partners and friends working toward similar goals at other institutions.
- Continuing to be curious. To gather ideas and thought-fuel, and think critically about potential outcomes without making the assumption of success.
Unintentional collusion certainly isn’t unique to cultural organizations, and we’re arguably getting better at spotting it! But if we’re all a bit more aware of it, perhaps we can all stay on the lookout and move a bit more forward.