The New York Times-20080129-Report Details Smithsonian Business Unit-s Problems

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Report Details Smithsonian Business Unit's Problems

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In its latest effort to right itself, the Smithsonian Institution has accepted a finding that its business unit is plagued by poor internal communication, diffuse organization and inadequate oversight.

A 70-page report released Monday by a task force charged with looking into the Smithsonian's revenue-generating activities paints a picture of an institution unnecessarily divided against itself, a division that persists despite recently improved communication efforts, said Marshall Turner, chairman of the task force and former chairman of the Smithsonian's National Museum of Natural History, in his introductory letter.

The task force was established last August by Cristian Samper, the Smithsonian's acting secretary, to review the status of Smithsonian Business Ventures, which since 1999 has overseen revenue-generating activities including Smithsonian magazine, retail stores and Smithsonian Networks.

Smithsonian Business Ventures has been the focus of criticism. In 2006, it signed a contract giving Showtime Networks exclusive access to the Smithsonian archives for some documentary purposes. Gary M. Beer, chief executive of Smithsonian Business Ventures, was subsequently the subject of investigations by Congress and by the Smithsonian's inspector general on his oversight of the unit; he decided to resign last May.

That was just two months after the Smithsonian secretary, Lawrence M. Small, resigned after an inquiry into his personal spending. His resignation prompted a re-evaluation of the Smithsonian's policies and governance.

The report issued Monday recommends improvements to the business unit's structure and organization, and ways to maximize its financial and program-related contributions to the Smithsonian.

We clearly need to restructure the Smithsonian Business Ventures, Mr. Samper said Monday in a phone interview. We want to make sure that decisions are not only driven by profit but also by the mission.

Also on Monday, Roger W. Sant was elected to the new position of Smithsonian chairman. Mr. Sant has been the chairman of the executive committee of the Smithsonian Board of Regents, the institution's governing body. The new position was created to address the Regents' lapses in oversight over the institution.

Each of us looked at what lay ahead and had to figure out if we wanted to resign or to roll up our sleeves and fix the problem, Mr. Sant said at the news conference announcing his new post.

Although the chief justice of the United States presides over Smithsonian board meetings, his position does not include active supervision of its operations.

In large part, the task force report attributes the real and perceived shortcomings of the revenue-producing ventures to a strained relationship between the Smithsonian's museums and its business professionals. This tension negatively affected working relationships and appreciation of each other's skills, and probably was detrimental to financial performance, the report says.

The Smithsonian's business ventures produced a net revenue of $26.6 million for the 2007 fiscal year, Mr. Samper said.

But the report indicates much greater potential for growth. The Smithsonian's retail operations (including stores, theaters, food and beverage services, and kiosks) brought in $14.7 million on $58.7 million in revenues.

The report also says that, had better lines of communication been in place, the controversial Showtime deal might have been avoided. Lessons were learned from that experience, it says.

Mr. Small was heavily criticized for his handling of this deal, which raised concerns about access to the collections. In the future, the report says, people in leadership roles should demonstrate a 'Smithsonian conscience,' that informs their decisions and actions. It is an amalgam of the taste, integrity, institutional knowledge and values that lie behind the name and reputation of the institution.

The report, however, does not back off from new business opportunities. It suggests the creation of a unit to better exploit online opportunities for the museums and proposes that the institution establish a unified system by which revenue is shared among the Smithsonian's constituents.