The Ceo Of Culture Inc.

In 1988 New York City's Solomon R. Guggenheim Museum was in trouble. Money was tight; the museum's famous Frank Lloyd Wright-designed building was falling apart; exhibitions were uninspired; donors were losing interest. Enter Thomas Krens, armed with a degree in nonprofit management from Yale. As the Guggenheim's new director, he offered the board of trustees a stark choice: Preserve funds and run the museum conservatively, or attack. "If you want a vital institution," he said, "change has to take place on so many fronts that it's likely to be bewildering."

That turned out to be an understatement. Today the museum has projects going in New York, Massachusetts, Italy, Austria and Spain, and a Guggenheim exhibit has just wound up a four-month tour of Australia. Using aggressive financial and marketing strategies normally applied to commercial enterprises, Krens, 45, may be reinventing the way museums do business -- and in the process creating the art world's first multinational. He is the most outspoken and controversial of a growing number of museum directors who are fusing hard- edged business acumen with classic connoisseurship.

"He's really a visionary," says Arthur Levitt Jr., former head of the American Stock Exchange and a Guggenheim board member. "But he's breaking some eggs in the art community." Krens' business-school jargon and management style offend many in the traditionally genteel, nonprofit world of museums. Says Hilton Kramer, editor of the New Criterion, a monthly arts review: "Krens has so far proven himself to be a complete disaster. His conception of a museum is all about expansion. He's a perfect example of what happens to a major cultural institution when it is given over to a bureaucrat."

After a 20-year boom in the museum business, the costs of acquiring, insuring, transporting and storing art are spiraling beyond the means of many institutions. As tax breaks that encouraged the rich to donate to museums are eliminated in the U.S. (roughly 80% of all the objects in American museums are gifts), corporate and individual contributions are drying up. Public funding for art is shrinking dramatically. According to the American Association of Museums, as many as 29 states are contemplating reductions of 50% or more in art funding. And the recession has dampened Americans' interest in visiting museums, buying gift-shop tchotchkes and becoming members.

Krens' solution is a three-pronged attack that traditionalists consider radical:

% Construction and Financing.

The museum's spiral-shaped building on Fifth Avenue will reopen in May after two years of restoration and expansion. The $48 million project will increase exhibition space by two-thirds, even though critics charge that a new, 10- story annex designed by Gwathmey & Siegel detracts from the Wright building's architecture. At the same time, the Guggenheim will unveil a fully funded $5.5 million exhibition and office space in New York's SoHo district, designed by Arata Isozaki. To help pay for the flagship expansion -- and additional storage facilities -- the Guggenheim floated $54.9 million in tax- exempt bonds in 1989. Other museums issue bonds to finance projects, but typically use their endowments as collateral. The Guggenheim has an endowment of only $30 million and its loans are secured with a letter of credit from the Swiss Bank Corp.

De-accessioning.