High Overhead Can Warp any Organization

What nearly killed General Motors was not so much the core business of producing decent cars and selling them profitably. They did that OK. (Not great, but OK.)

What nearly killed them was that in addition to all that, they had legacy and overhead that dwarfed the rest of the operation. At one point, nearly one million people were due a pension from General Motors at a time when they employed more like 100,000. I remember someone calling them “a pension program that happens to make cars.”

The point is that excessive overhead, including, as Annah Feinberg points out in this HowlRound article, physical infrastructure, can make an organization permanently untenable, either financially or, as she makes the case as it relates to theaters, artistically.

A big, shiny building can be an asset, but it has a lot of qualities of a liability, too. Expensive to run, maintain and fill, it sets expectations of an organization higher than it might naturally want to go. The “needs” of the organization can ratchet upward ’til they can’t be met, and then things can get a bit weird.

Also, big buildings and other fixed assets have a tendency to stay where they are. Don’t need a big building for the next production? It’s hard to tell it to take a couple of months off.

Organizations should add overhead grudgingly. We used to say at Goldstar that we knew it was time to upgrade our server infrastructure when the current server broke down from overuse. We’ve modified that a little (we stay ahead of the usage without overinvesting), but the main idea is the same. Overhead doesn’t just cost money; it changes an organization. Sometimes these are good changes, and sometimes they are changes that warp the organization itself.

I don’t fully buy Annah’s premise that theater organizations shouldn’t worry about sustaining themselves or growing, nor that people shouldn’t try to make a living doing theatrical work. There’s no special exemption on human behavior for theater or any other field, but I do agree that physical impermanence can often be the right call.

Value creation should lead overhead, not the other way around.

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