The Guggenheim Effect

The term "Guggenheim Effect" used to denote the positive role the brand played in Bilbao's resurgence as a destination site. It became well accepted vernacular, not only in the museum community, but among the wider community of brand and marketing experts. In recent weeks, however, the term has been re-appropriated by European media and citizens to express a much more negative and even sarcastic view of the cultural institution. The backlash has occured because in less than a month, brand Guggenheim has been rejected twice - once in Berlin and once in Helsinki.

In Berlin, the BMW Guggenheim Lab had to change location plans twice, because of vehement protests by anti-gentrification activists who denounced the Lab as a "crappy capitalist luxury project" and threatened to disrupt matters.

In Helsinki, the City Board rejected a proposal to build a $185 million Guggenheim museum on the capital's waterfront.

What happened? Quick answer:  A cavalier attitude toward community in an era of community-building. In both cases, cultural signals were woefully overlooked.

Berlin has had a long history of a strong, anti-establishment sub-culture. To put two major symbols of the establishment - BMW and Guggenheim - in the Kreuzberg neighborhood, a district known for its anti-establishment sentiments, suggests both institutions are as out of touch with the broader marketplace. And perhaps not as surprisingly, so are the politicians. Berlin's Mayor Klaus Wowereit said, "such a renowned future-oriented project as the BMW Guggenheim Lab deserves the red-carpet treatment from us in Berlin."

Finland, on the other hand, while it has been one of the best performing economies within the EU in recent years, has still not recovered from the sharp 2008-09 recession. Given this economic environment, Finnish culture minister Paavo Arhinmaki expressed on his blog what many of his compatriots may feel as well: "It is also worth considering whether Finnish taxpayers should finance a rich, multinational foundation in the first place."

Taken together, the Berlin and Helsinki Guggenheim backlash point to a broader brand issue.  According to the 2012 Edelman Trust Barometer, "citizens now trust one another more than they do established institutions." What compounds Guggenheim's situation is the aggressive brand extension strategy it has been pursuing. The formula it has developed is oddly akin to any high-end retail mall experience: all the right names (artists) in an unmistakably Guggenheim branded space. Critics have suggested for a while that Guggenheim is simply franchising the brand elsewhere like a branch of McDonalds. And, recent events and consumer reactions suggest they aren't wrong. Guggenheim seems to be emphasizing branding - the act of commercial exploitation - over brand management, the act of careful asset deployment. As a result, Guggenheim suffers from severe image and reputation issues due to overextension and a pre-recession empire-building approach of "build it and they will come." Guggenheim appears to have pushed the limits of commercialization too far.

Guggenheim may dismiss the two incidents as minor bumps in the road, but it would be well advised to take matters more seriously. This is a critical juncture in its history and these incidents offer it an opportunity to reevaluate what value-producing brand management might look like:
1. examine how it may recapture the daring spirit of Peggy Guggenheim, whose collection and Venice palace it owns.
2. assess how it may leverage the brilliant minds and ideas of the citizens to whom it awards its prestigious fellowships every year. 
3. consider new models of collaboration and urban revitalization.

These three suggestions are merely starting points, but they may help the institution reconnect with the communities it serves and recapture the positive notions of the "Guggenheim Effect."