Blog 2: When Museum Expansions Overshadow Internal Growth

For the past few decades, the museum field has embraced a trend to build new or expanded facilities with the goal of attracting more visitors and appearing more welcoming. So many museums, including the MoMA and the Philadelphia Museum of Art, have used this tactic that it has become the expected thing to do for those who have the fundraising capacity (Willink, Rosemary). This expectation has created a false assumption that what works for one museum will work for another (Carroll, Paul, and Chunka Mui) and that “if you build it, they (the visitors) will come.”

The trend of undertaking high-end expansion projects falls in line with the “faulty financial engineering” idea presented in “Seven Ways to Fail Big.” The faulty financial engineering idea states that “overly aggressive financial practices” focused on growth risk being flawed in the long run (Carroll, Paul, and Chunka Mui). While museum expansion projects may contribute to an initial spike in attendance, the public’s interest typically plateaus quickly leaving the museum to maintain an expensive facility without the drastically larger audience needed to sustain it (Willink, Rosemary).

In “The Coherence Premium” Leinwand warns about the risks of focusing too much on expansion and neglecting the importance of enhancing one’s capabilities (Leinward, Paul, and Cesare Maindardi). At the core of nearly every museum’s mission is building relationships with constituents as well as providing educational experiences. Expansion projects have been known to distract a museum’s leadership from focusing on internal strategies (e.g. creating programming, building cohesive teams, enhancing the visitor experience), which are vital to maintain a competitive advantage.

The Newseum in Washington, DC is a prime example of an expansion project that consumed a museum’s strategic focus and shattered its internal structures. In 2000, the Newseum’s board decided to move the museum from Arlington, VA to downtown Washington, DC in order to compete with the museums along the National Mall (“History.” Newseum). To finance the project, the Newseum’s foundation obtained $356 million in variable-rate revenue bonds from Lehman Brothers. In 2008, Lehman Brothers declared bankruptcy and the Newseum’s endowment, which was managed by Goldman Sachs, took a $150 million hit (McGlone, Peggy, and Amy Brittain). To date the Newseum’s leadership has diverted over $500 million from the foundation’s endowment to sustain the museum. They have operated at a deficit every year since opening, have laid off many staff members, and haven’t developed a strong visitor base (Yu, Roger).

While the Newseum is a victim of the Great Recession of 2008, several issues existed from the start that show that the Newseum’s leadership was focusing more on the potential quick fix of a facility expansion instead of capitalizing on the Newseum’s strategic position Arlington. These problems included plans to charge a $20+ admission fee in an area where museums are free, assembling a board with conflicts of interest, and not having a treasurer on the board ("Board of Trustees." Newseum). The Newseum failed big by not developing its internal and mission-related capabilities. The Newseum’s building was recently purchased for $372.5 million and the museum is set to close at the end of 2019 (Anderson, Nick, and Peggy McGlone).

Word count (excluding citations): 492

Sources:

Anderson, Nick, and Peggy McGlone. "Johns Hopkins to Buy Newseum Building in D.C. as Journalism Museum Plans to Relocate." The Washington Post. January 25, 2019. Accessed April 09, 2019. https://www.washingtonpost.com/education/2019/01/25/johns-hopkins-buy-newseum-building-dc-journalism-museum-plans-relocate/?noredirect=on&utm_term=.b9d16109526a.

"Board of Trustees." Newseum. Accessed October 25, 2018. http://www.newseum.org/about/board-of-trustees/.

Carroll, Paul, and Chunka Mui. "Seven Ways to Fail Big." Harvard Business Review. September 2008. Accessed April 06, 2019. https://hbr.org/2008/09/seven-ways-to-fail-big.

"History." Newseum. Accessed October 25, 2018. http://www.newseum.org/about/history/.

Leinwand, Paul, and Cesare Maindardi. "The Coherence Premium." Harvard Business Review. June 2010. Accessed April 06, 2019. https://hbr.org/2010/06/the-coherence-premium.

McGlone, Peggy, and Amy Brittain. "Heavily in Debt, Newseum Considered Risky Strategy to Improve Finances." The Washington Post. July 01, 2015. Accessed October 25, 2018. https://www.washingtonpost.com/lifestyle/style/heavily-in-debt-newseum-considered-risky-strategy-to-improve-finances/2015/07/01/b5e94286-19e7-11e5-bd7f-4611a60dd8e5_story.html?utm_term=.56f8c6575042.

Willink, Rosemary. "Expanding the Museum since Bilbao: The Influence of Architecture and Technology on Museums." MW17: Museums and the Web 2017. January 11, 2017. Accessed April 09, 2019. https://mw17.mwconf.org/paper/expanding-the-museum-since-bilbao-the-influence-of-architecture-and-technology-on-museums/.

Yu, Roger. "Newseum CEO steps down as it considers selling, closing." USA Today, August 31, 2017, 02B. Academic OneFile (accessed October 24, 2018). http://link.galegroup.com.proxy.library.cmu.edu/apps/doc/A502706772/AONE?u=cmu_main&sid=AONE&xid=882a7d90.