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Exterior shot of Watershed front door with murals of people across the glass front.
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Clare Reddington CEO

on Thu 18 April

Watershed and The Art of The Turnaround 

Posted on Thu 18 April

In light of the huge challenges that so many arts and culture organisations have faced in recent years, Clare Reddington , Watershed's CEO, shares five ‘rules’ for turning your organisation round.

This time last year things were looking pretty bad for Watershed’s bottom line. Covid had taken its toll, audiences were still down, public funding was at a standstill and the cost of everything was going up. We began the year with a deficit budget and were looking at losing over £250,000.  

Thankfully our reserves had been topped up by the Cultural Recovery Fund, so these losses were temporarily possible but definitely not sustainable, and things had to change fast.

So, we began working closely with our board and staff on profitability, and we turned to a culture sector classic The Art of The Turnaround by Michael M. Kaiser, for inspiration. What we found was a text full of wisdom but one that also felt outdated in parts.

Kaiser’s book begins with ten rules for a successful turnaround, which includes restructuring your board to boost philanthropy, focussing on large donors and only using positive messaging. These ways of working are at odds with Watershed’s focus on inclusion, togetherness and authenticity. But discussing the rules together gave us confidence to follow our instincts and I am pleased to say, this year we will close our books somewhere closer to £150,000 in profit.

You can call us the TURNAROUND QWEENS (jokes).

There is still lots of work to do, plus this success isn’t just down to us - there were external factors at play and of course we couldn’t have done it without our audience’s support and loyalty. However, we thought we would share our own ‘rules’ or guiding principles, that have helped Watershed’s approach to the turnaround.

  1. You cannot save your way to health. This is one of Kaiser’s OG and remains true and vital. The pandemic came at a time when the sector had already navigated years of under investment. We had made all of the cuts and savings that could be made. Instead of savings we needed ambition and vision to navigate uncertainty and build momentum. This is why we invested in AWARD WINNING TOILETS and have announced the launch of Undershed – a new immersive gallery. Careful investment gives people something to get excited about, builds new opportunities for income development and creates a buzz.  
  2. Centre your values. It is really tempting to cut back on work that doesn’t immediately contribute to the bottom line like inclusion, access or climate work. This is a terrible idea in both the short and the long term. Values are what makes an organisation distinctive, they bring in new audiences and make the future possible. So, during the hardest of times, we became an accredited Real Living Wage employer, a vital part of running an inclusive organisation. Kaiser encourages organisations that are facing challenges to relentlessly and single mindedly share good news – and I get that you don’t want to undermine people’s trust in you, but being honest is part of Watershed’s values. When we shared the fact that times were hard with our audiences, they helped out – with messages of love and with financial support.  
  3. Think in three horizons. In times of challenge it is really easy to get stuck in an operational, fire-fighting mindset and to forget about tending to the future. Kaiser states that leaders must have a plan – we would add that the plan needs three horizons. We have worked with International Future Forum’s Three horizons model for many years and find it really useful to help guide conversations about the future towards meaningful action. The framework acts like a map, helping us work out where we are, where we want to be, and how to get there. It helps build common language and vision around the future and helps us to avoid a Business As Usual mindset creeping in.  

    Alongside honesty, it is important to share the things you are hopeful about. Thinking in Three horizons has helped us to develop Watershed Wild and Generous– and given us a future-orientated vision to share with our audiences, alongside the challenges of short term sustainability.  
  4. Focus on increasing profit not just revenue (and make sure staff know the difference). When you need to increase audience numbers its quite tempting to give a lot of things away, but you can end up giving discounts to people who would absolutely be happy to pay full price. So instead of discounting we took an intentional approach to increasing margins. A cross organisational working group empowered all staff to come up with ways to achieve our aims and took on everything from how products are displayed to SEO. For instance, we wanted people to spend more money on snacks and drinks in the cinema. For the last few years we had been selling bagged popcorn, but it was displayed like we hardly wanted to sell it all – in part because cinephiles don’t love the sound of rustling in a film. However, popcorn is synonymous with the cinematic experience and a potent signifier for new audiences. A thorough analysis of the potential gross profit of popcorn by our Front of House Manager resulted in the purchase of a popcorn machine, taking our profit margin from 70% on bought-in bags (which we didn’t sell many of) to 90% on boxes which we sold 5500 of and which contributed around £15,000 of profit to the bottom line.  
  5. Test out ideas with clear goals and parameters. Taking an experimental approach to business development is vital but you also need to understand if you have been successful and stop if you haven’t. Screening Barbie might have seemed like a no-brainer for most cinemas last year, but it was unusual for Watershed as commercial films like this are already well served by multiplexes AND they cost around 20% more to screen than we would usually pay. Our goal was that Barbie would increase trade during quiet summer months, bring in new audiences and increase the sales of cocktails in the bar. A queer-centred launch party with love song karaoke was an added bonus. The Barbie experiment was a great success, we attracted BBC Points West to cover our launch event which raised our profile in the city and 46% of bookers were new to Watershed. It provided a brilliant kickstart for our cocktail menu, which went on to generate over £45,000 in the year. But a more permanent pivot to the commercial mainstream would not give us the margins on cinema tickets we need and would reduce audience choice. Instead the experiments gave us the confidence to think about ‘eventising’ more of our core programme - we went on to produce an immersive Rocky Horror Show and  Stop Making Sense the Gig Edition and have some extremely special events planned for the forthcoming Love Lies Bleeding.  

    Photo credit - Barbie opening party - Watershed Café & Bar  - photo by Charlie Wiliams

    I can’t say that Watershed has all the answers – this year’s budget is back to deficit (due to inflation) and there is a lot of work beyond tweaking margins to do. But we have settled into the knowledge that we will probably be able to stay in business as long as we stay focussed, keep communicating and doing what we think is right.   

What rules or guiding principles would you add to these?  Let us know.



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