I was sitting around on a Sunday morning a couple of weeks ago, slurping coffee, surfing the internet and I found an article stating that Tower Records was open in New York. I remember Tower Records and I also remember it going bankrupt about 20 years ago. It turns out, Tower is making a comeback with an e-commerce operation and a pop-up store in Brooklyn, New York! TOO COOL! I started to think about that organization, its impact to the music industry, the struggle they went through and now reemerging as a player in the digital age. Tower appears to be a good news story, a rebirth after an organizational decline.

Lessons from Organizational Decline: Kodak and Beyond

The stories behind organizational growth, stagnation, decline (and sometimes rebirth) are fascinating. They often highlight common mistakes made by leadership in organizations that seem alarmingly obvious. Had leadership made the correct decisions, decline may not have occurred, and failure could have been prevented. However, anyone who has worked in an organization that is going through changes, or needs to go through changes, knows the challenges leaders face and redirecting the trajectory of a decline can be very, very difficult. Kodak, as an example, was a pioneer in the photography industry and a household name for much of the 20th century. However, Kodak failed to anticipate the shift from film to digital photography and was slow to adapt to changing consumer preferences and technological advancements. Despite inventing the digital camera in the 1970s, Kodak hesitated to embrace digital photography, leading to a decline in market share and eventual bankruptcy in 2012. With the influence the organization had in the industry and inventing the digital camera, how could this have happened? As it turns out, like most organizations facing decline, there were multiple issues. While competitors invested heavily in digital technology and embraced new business models, Kodak struggled to develop a coherent strategy for the digital era. The corporate culture was characterized by a reluctance to challenge the status quo and adapt to changing market conditions. The company's leadership was entrenched in traditional ways of thinking and resistant to disruptive innovations that threatened established business models. Could this have been prevented?

Unfortunately, Kodak’s story is not unique. Private and public sector organizations always face challenges that can either motivate them to adapt and stay relevant or lead them to ignore warning signs, become complacent, and ultimately dissolve into complete obsolescence. Organizational decline may be defined as a sustained decrease in an organization's performance, viability, or relevance over time. It can lead to diminished effectiveness, competitiveness, and sustainability of an organization. Remember when Apple was struggling? It faced significant challenges in the 1990s due to declining market share, product line fragmentation, and leadership turmoil. The company struggled with a lack of innovation, limited product differentiation, and competition from Microsoft and other rivals. Apple underwent a resurgence under the leadership of Steve Jobs, who returned to the company in 1997 and refocused its efforts on product innovation, design excellence, and ecosystem integration. Apple embraced pragmatic innovation by introducing groundbreaking products like the iPod, iPhone, and iPad, revolutionizing industries, and establishing itself as a leader in consumer electronics. Apple had a rebirth after a significant decline. Why is pragmatic innovation so important to organizational health?

Pragmatic Innovation: The Key to Organizational Health

Pragmatic innovation, at its core, is about implementing practical and effective solutions to address real-world challenges and drive meaningful progress within organizations. If an unhealthy organization is like a lazy, complacent person (sitting around on a Sunday morning, slurping coffee, surfing the internet), then pragmatic innovation would basically be a personal trainer. Pragmatic innovation provides the organization with the tools, strategies, and support needed to challenge the status quo, identify areas for development, and implement positive changes that promote agility, resilience, and long-term viability.

Components of Pragmatic Innovation: A Roadmap to Success

Like a personal trainer who tailors exercise routines to fit the individual's needs and goals, pragmatic innovation tailors solutions to fit the organization's unique challenges and objectives, fostering a culture of continuous improvement and adaptability. Below is a list of key concepts, or components, of Pragmatic Innovation:

• Problem-Solving Orientation: Begins with identifying and defining real-world problems or opportunities for improvement within organizations.
• Practicality and Feasibility: Emphasizes solutions that are practical, feasible, and implementable within the constraints of resources, time, and capabilities.
• Results-Oriented Approach: Focuses on achieving tangible outcomes and measurable results that contribute to organizational goals and objectives.
• Iterative Process: Involves an iterative process of experimentation, learning, and adaptation, where ideas are tested, refined, and scaled based on feedback and evidence.
• Collaborative Culture: Thrives in environments that foster collaboration, cross-functional teamwork, and knowledge sharing among diverse stakeholders.
• Risk Management: Involves assessing and managing risks associated with innovation efforts to minimize potential negative impacts and maximize opportunities for success.
• Continuous Improvement: Encourages organizations to adopt a mindset of continuous improvement, where incremental changes and optimizations are made over time to enhance effectiveness and efficiency.
• Customer-Centricity: Places a strong emphasis on understanding and addressing the needs, preferences, and pain points of customers and end-users.
• Adaptability and Flexibility: Requires organizations to be adaptable and flexible in responding to changing market dynamics, emerging trends, and evolving customer demands.
• Strategic Alignment: Aligns with the organization's strategic priorities, values, and long-term vision to ensure that innovation efforts are integrated into broader business objectives.

Recognizing Symptoms of Organizational Decline

Organizations are frequently aware of the symptoms that may indicate decline but are often unable to address them in an effective, efficient manner. Leaders disconnected from employees, stakeholders, or market realities may make decisions out of touch with the organization's needs or priorities. High employee turnover, low morale, absenteeism, and disengagement are symptoms of a toxic or dysfunctional work environment. Declining customer satisfaction scores, negative reviews, and reputational damage may indicate that the organization is failing to meet customer expectations or address quality issues. A lack of innovation or new product development may signal organizational complacency and a failure to adapt to changing market dynamics or technological advancements. How can the decline be stopped and reversed?

Stopping the Decline: Embracing Pragmatic Innovation

Pragmatic innovation needs to be part of day-to-day operations, it is essentially an organization’s insurance policy to safeguard against decline. Perhaps the most important component to making it “real” is leadership commitment. Top leadership must demonstrate a strong commitment to innovation and create a culture that values experimentation, creativity, and continuous improvement. This is especially important when the organization is aware of a need to change the culture. Without the commitment, a culture that is resistant to change will likely continue to fester in the organization and drive further decline.

NMR's Approach to Pragmatic Innovation: Delivering Lasting Value

NMR’s holistic approach to supporting our customer base considers the importance of pragmatic innovation throughout a project life cycle. Our team works closely with customers throughout the project life cycle, providing the best possible solutions for long-lasting value. Please contact our team if you have more questions about our services. Now I’m going to follow the advice of my personal trainer and get to the gym!

Note: Kodak emerged from bankruptcy in 2013 as a restructured company focused on commercial printing. In 2019 Kodak launched a blockchain cryptocurrency platform for photographers called KODAKCoin. Today Kodak continues to innovate in various imaging and printing technologies.