Brand Course for International Students
The frames aren’t just around the artwork anymore at the Museum of Modern Art (MoMA) in New York City. As the museum began a major remodeling and expansion construction project, the wisdom of that decision was raising questions.
MoMA (www.moma.org), a not-for-profit educational institution, is supported by admission and membership fees, sales of publications and services, and of course, contributions from wealthy donors. It was founded in 1929 by three private citizens who were determined to make modern and contemporary art available to the public. MoMA was the first museum to devote its art program and collection entirely to the modern movement. And the quality and diversity of the museum’s current collection offers visitors a unique and unparalleled overview of modern and contemporary art.
Early in the 1990s, museum director Glenn Lowry and museum trustees decided that MoMA should not be “a shrine to the twentieth century but rather a vital, forward-looking institution committed to the art of the present as well as to the great achievements of the modern tradition.” With this guiding philosophy, the decision was made to expand the museum’s facilities and radically alter its exhibit space. Their rationale was that the museum needed more and better-designed space to accommodate its various existing functions as well as new and different space to meet the challenges of the future and to better articulate its programs devoted to education about and celebration of modern art.
To accomplish these lofty goals, MoMA’s decision makers directed that the planned expansion and renovation result in a building that would showcase the best of modern art in the most compelling way possible, respect the work of a diverse professional staff, and make judicious use of the institution’s resources, both in the long run and in day-to-day operations. They wanted a building that would be both an example of great architecture and a great museum as well. With the completion of the new space in late 2004 or early 2005, they hoped to attract a million more visitors, or 2.5 million total, annually. Fulfilling this dream wouldn’t be easy.
Since the decision to expand was made in the early 1990s, costs of everything from real estate to construction have skyrocketed. (Costs for the entire project are estimated at $650 million.) Since MoMA’s endowment is relatively small (a mere $387 million as compared to the Metropolitan Museum of Art’s endowment of more than $1 billion), managers have had to look for alternatives. One decision they made was to pursue a for-profit joint business venture——a Web site selling everything from coffee cups to furniture——with the Tate Gallery in London. Some people felt that the move demeaned the integrity of the museum and created controversy among staffers, an allegation that MoMA officials, of course, denied. And then there’s MoMA’s relationship with its “trustees”——individuals who donate large sums of money and are “rewarded” with a seat on the prestigious museum board. To fund the expansion, museum officials have sought contributions from current and potential trustees, a common practice for not-for-profit organizations during a major fund-raising campaign. Despite the concerns, MoMA does have a solid financial history and had a budget surplus for five years in the last years of the 1990s. However, wealthy donors will be paying off their pledges for years and if the museum needs additional cash for any reason, it’s not going to have many places to turn.
The construction project itself has turned out to be more complicated than originally planned. When the project was first proposed, its cost was a modest $200 million for about 30 percent more space, and the museum itself was expected to remain open throughout the entire process (estimated to be about 18 months). However, initial blueprints were quickly shoved aside for more aggressive plans. The architectural design by influential Japanese architect Yoshio Taniguchi increases the museum space by 50 percent and is slated to take 48 months to complete. Rather than staying open throughout the process, managers decided to temporarily transfer a major portion of the museum’s operations to a former Swingline stapler factory in Queens. Being in a section of the city not considered as glamorous as its midtown location, attendance (and revenues) could suffer, and after completion, there’s no guarantee that the new facility will attract the hoped-for additional visitors.
Concerns about the viability of the proposed project led MoMA’s managers to cut some costs——$50 million from the architects’ budget and by using lesser-quality construction materials. However, Director Lowry says that MoMA is not taking on too much with this expansion. His goal unapologetically remains, “To be the No.1 modern museum in the world.”
Sources: Information from MoMA’s Web site (www.moma.org), August 28,2000; and D. Costello, “Museum of Modern Art’s Ambitious Expansion Plan Faces Trouble,” Wall Street Journal, June 7, 2000, pp. B1+.
QUESTIONS
1. What types of problems and decisions do you see MoMA managers dealing with in this story?
Explain your choices.
2. Explain how each of the following might have been used in the decisions that had to be made in
pursuing the museum expansion: (a) perfectly rational decision making, (b) boundedly rational
decision making, (c) intuition.
3. Would you characterize the conditions surrounding MoMA’s expansion decision as conditions
of certainty, risk, or uncertainty? Explain your choice.
ANSWERS
1. What types of problems and decisions do you see MOMA managers dealing with in this story?
Explain your choices.
The problems that the managers are dealing with in this story have characteristics of poorly structured
ones. They’re poorly structured in that the problems are new or unusual and for which information is
ambiguous or incomplete. The museum personnel have not undergone a project of the size and
complexity such as this expansion. And even just since beginning the project, many previously
agreed-upon aspects of the project, that is, architectural design and construction costs, have
changed dramatically. Because the problems are poorly structured, managers have to use
nonprogrammed decisions.
2. How might each of the following be used in the decisions that had to be made in pursuing the
museum expansion: (a) perfectly rational decision making; (b) boundedly rational decision making;
and (c) intuition?
Perfectly rational decision making might be used as the company decided on quantifiable problems that
had a limited number of possible outcomes, such as what admission price to charge after the museum
reopens with its expanded space. Boundedly rational decision making might best be used as managers
made construction, relocation, or funding procurement decisions. Intuitive decision making might best
be used as the company’s decision makers decided on a whether or not the museum clientele will
support a museum whose stated mission is “To be the No. 1 modern museum in the world.”
3.Would you characterize the decision conditions surrounding MOMA’s expansion decision as certainty,
risk, or uncertainty? Explain your choice.
The decision conditions surrounding the MOMA expansion are best characterized as uncertainty. In
other words, the managers face decisionmaking situations where the choice of alternatives is influenced
by the limited amount of information available.
