customer in the museum economy increased significantly. In addition, public funding is conditional upon private financing in connection with investment or, at the very least, upon the prospect of investment strengthening opportunities for private financing (Levä 2019).
According to Canadian museologist Robert R. Janes, museums are embed- ded in the business world framework, where their management is becoming shorter-term than before, and where action and investment are sought for their ability to provide a rapid and measurable impact. Money and its economic and activity indicators are a substitute for a hard-to-measure and slow-moving so- cial mission. This is one reason why business experience is increasingly being emphasised as a prerequisite for museum directors and members of governing bodies (Janes 2012).
Another indication of the emergence of corporate leadership in expert organi- sations in the 2010s was the introduction of the Lean Management philosophy, developed in the 1980s to meet the needs of the Japanese Toyota car manufac- turing company in terms of streamlining the workflow and eliminating waste.
Lean management is based on the concept of continuous improvement, a long- term approach that aims to bring about incremental changes in processes in order to improve overall efficiency and quality in an organisation (Torkkola 2015, pp. 22–27).
The Top Priority for Museum Management – Ensuring
the activities of many museums also changed significantly as a result of mergers.
In the case of the latter, the change has focused on reorganising operations and bringing working community cultures together.
From plans to strategies
The Museums Act requires a museum to formulate a multiannual economic and operational plan that sets out how it will maintain its activities and finances in the coming years. The Act does not require a strategy as such. Semantically, one can examine the distinction from the point of view of how activities will be man- aged. The “Economic Action Plan” is in line with long-term planning thinking, where changes in the operating environment are seen as linear or reflective of a trend, and a museum can make fairly detailed decisions on how operations and finances will be structured in the coming years.
Strategic management, on the other hand, is based on the assumption that the operating environment is constantly changing and partly unpredictable, especially as a result of changes in the competitive situation. Mika Kamensky, who has written several books on strategic management, has identified three different tasks or goals for the strategic process:
1. A strategy is an organisation’s conscious choice of key objectives and guidelines for action in a changing world.
2. A strategy allows an organisation to control its environment, either by adapting to changes in the environment, modifying and influencing its environment or choosing the best environment for itself.
3. Through its strategy, an organisation purposefully manages external and internal factors, and the interrelationships between them, so that the organization’s profitability, continuity and development goals can be achieved (Kamensky 2014, pp. 13–21).
Arguably, a key difference between planning and strategizing is that the focus in a strategy is always on the outside of the organisation, and one has to be pre- pared to change the operation quickly, in accordance with signals coming from customers, financiers, owners or the operating environment.
In the museum branch, there is justification for referring to both a plan and a strategy. The use of the word plan is underpinned by the fact that 80% of the funding for museums comes from grants, as a result of a political decision.
In this kind of operating environment, changes have traditionally been minor and predictable. There is also no recognisable competitive framework among museums in terms of this type of funding.
The grounds for using the term strategy arose in particular from the development that took place in the 2010s, a decade in which the predictability of political decision-making weakened as populism intensified. The risk that the public administrative environment will change dramatically has increased accordingly.
Moreover, the need for strategic thinking and strategic management has been heightened by the change in museum funding, an increasing proportion of which is derived from consumer service revenue and hence from competition in the market. This has marked a significant change. In 2010, 14% of museum expenditure was covered by consumer service income, but by the end of 2019, that figure had risen to 20% (Museovirasto 2020).
In addition to direct service revenue, the extent to which public funding is con- ditioned upon private sector involvement and investment has grown. The game changer in this respect was the Guggenheim Helsinki project in the early 2010s.
In this context, public funding was conditional upon substantial private invest- ment. The Guggenheim project did not come to fruition, but the funding model for museum investment survived.
In light of the developments that took place in the 2010s, it is evident that the level of planning laid down by the Museum Act for successful and long-term museum management will not suffice. Museums must monitor the development of the operational and competitive environment, and be as proactive as possible in preparing to make the necessary changes to their activities.
Museums need to understand the effects of change on the operational environ- ment and be prepared to adapt their activities in order to seize opportunities and turn threats into advantages. The need for foresight in strategic manage- ment is highlighted by the economic structure of museums, with their low level of flexibility and risk tolerance, which allow for neither quick responses nor significant losses.
When making changes, museums must also take into account the rigidity of the museum economy in terms of investment. In practice, investment will never increase service revenue as much as it correspondingly pushes up fixed personnel and real-estate costs. Hence, in order to avoid the problems of the post-investment business economy, a museum must ensure that grant funding also increases before an investment decision is made.
A sustainable investment plan is based on a calculation in which grants cover 80% of the increase in investment costs on average. This is essential because of the structure of the museum economy mentioned earlier. The 80% fixed costs, 80% fixed income structure does not vary significantly, irrespective of the size of the museum. Any increase in the volume of service revenue as a result of investment will invariably increase the need for grant funding. This differs from the corporate investment philosophy, where the premise is that an investment will always pay for itself in terms of service revenue from consumers or corporate clients.