When one thinks of Nike, the ubiquitous swoosh and the “Just Do It” slogan spring to mind, conjuring up images of will-driven athletes moving with astonishing speed and grace, and seeking to achieve what was thought to be impossible.
“‘Just Do It’ is a corporate attitude too,” said Nike vice president and CFO Don W. Blair in a recent talk at Wharton. From Nike’s early days in 1968, when cofounders Bill Bowerman and Phil Knight sold running shoes from a car trunk, to its current position as the leading athletic and fitness company worldwide, the corporate side of Nike has tried to reflect the same freewheeling philosophy that its slogan promotes.
Blair has been instrumental in restoring financial credibility and stability to a company with a boom-bust history. Since he joined Nike almost six years ago, its financials have improved. From 1999 to 2004, revenues increased from $8.7 billion to $12.2 billion, profitability rose from $451 million to $945 million, and share price increased from $60.9 to $71.1.
Nike’s maverick attitude towards the business world extends to its leadership style which, said Blair, “is based around three broad principles. The first is that Nike reflects brand positioning. Perhaps it’s really the other way around. We have a passion for athletics and strongly believe in the power of athletics to change people’s lives.”
This authenticity plays out in Nike’s corporate values and in the way it runs the business. When Nike began under the name of Blue Ribbon Sports, it was structured around University of Oregon coach Bill Bowerman’s work with a team of average track and field athletes. His approach was to develop the talent at hand through motivating, inspiring, challenging, and teaching. It worked. Bowerman created star athletes, including renowned long-distance runner Steve Prefontaine. This talent-development method has its parallel in Nike’s corporate environment.
“You look for pockets of excellence, and where you don’t find them, you create them,” said Blair. The first Nike employees were not selected on the basis of excellence. Most of them were friends of friends, but once they were hired they were transformed from average people to outstanding performers who helped shape the company. To achieve these kinds of results, Nike focuses on innovation, creativity, and energy which are now “part of our brand and our organization,” said Blair. “The athletes we have worked with, like Prefontaine and John McEnroe, are in many ways counter-establishment athletes. Nike embodies much of that same spirit. We cultivate a culture of the rebel and celebrate those who go off and do what some say can’t be done.”
Second Principle: Like Riding a Horse
Nowhere is this more evident than at the footwear design building at Nike’s Beaverton, Oregon headquarters, where Nike fosters a collegial atmosphere. “The building is impressive, there are athletic fields, and it’s a work-hard, play-hard environment,” said Blair. “We strive to reinforce that through every element of our business.” For example, the company hosts twice-yearly design inspiration events — such as bringing in the manufacturer of a foreign car with a unique design for the team to contemplate. Some interesting, sleek, innovative aspect of that car might find its way into the shoe design. We seek to create the milieu that builds organizational capacity to keep us competitive.”
The second leadership principle is that “Nike is not a company; it’s a movement, or maybe it’s a horse,” states Blair, earning puzzled looks from the audience. Nike uses a distributed, non-centralized, collaborative leadership model that celebrates the success of the team. “Leadership is situational,” explained Blair, who came to Nike from PepsiCo. “What works in one company doesn’t necessarily work in another. When I joined, I was told to do nothing for six months. It wasn’t an inactive time. Establishing one’s ability to lead is more like riding a horse and less like driving a car. To be effective, a leader must learn how to ride that particular horse and the horse must learn how to be ridden by that particular rider. If one tries to go too far too fast, it’s easy to get thrown off. One has to build relationships by understanding what people are trying to accomplish and moving that agenda forward.”
Nike’s view of itself has served as the basis for an effective marketing strategy: creating product need by promoting athletics as a movement, as a social good. One of the television ads Nike ran 20 years ago was focused not on Nike itself but on the value of athletics to girls and women. In the ad, one girl after another makes a plea (presumably to her parents) that she be allowed to get involved in athletics. “If you let me play sports, I will like myself more … I’ll be 60% less likely to get breast cancer … I’ll suffer less depression … I’ll be more likely to leave a man who beats me … I’ll be less likely to get pregnant before I want to …”
Nike has also ridden on the back of its sponsored athlete Lance Armstrong, who made a miraculous recovery from advanced cancer and went on to win a record number of Tour de France bicycle races. Nike co-developed with Armstrong the popular yellow wristbands that sport only the words “Livestrong Campaign.” Sold at a price of $1 each, the wristbands have produced approximately $20 million to date for cancer research. The bands have no Nike branding, but it’s common knowledge that Nike is behind it — another effective use of the “Nike as movement” premise.
Third Principle: Branding with Discipline
The third broad leadership principle centers around marrying branding with functional excellence and operating discipline. “This is one of our challenges as we move forward,” said Blair. “Our aim is to build Nike into a $20 billion corporation, and this will require bringing an even more disciplined approach to our work. It’s important to keep one’s sights on the long term and to create value over time.” The long view applies to Nike’s labor issues in Asia. Beginning in 1996, ethical questions surfaced about Nike’s practices concerning child labor, fair wages, the environment and the safety of its Asian workers. In response, Nike developed and began implementing a Code of Conduct, which involves working with government and non-government organizations to bring about change. There is still room for improvement. “We have gotten better; we are not complacent, and we continue to work to raise work standards,” stated Blair.
He extended Nike’s leadership principles one step further by discussing his own take on the subject. “There is nothing extraordinary in my approach, and you can take from it what makes sense for you, what makes it real for you.” He began with leadership identity. “If you think you can change the world, you can.” Leadership identity is embedded in both how one thinks and the words one speaks. “Instead of saying ‘they need to do this,’ a leader says, ‘this is how we can do this.'” Getting the right people on the team and helping them succeed is the next principle. Blair contended that team success and employee productivity mean such things as recognizing, listening to, and believing that employees have impact. “It’s like building a basketball team instead of a track team, which is individualistic. While there are set plays in basketball, the game is very fluid and you can’t set execution from the center. Sometimes one has to make difficult decisions about who is on the team and change team composition on the basis of what works best for the individual and the team.”
Blair’s third personal leadership principle is to focus on goals and outcomes and not get lost in the process. “In a large organization, it’s easy to be working in an area that is urgent but not important. Don’t get stuck on process and lose focus on the big issues.” Mastering the fundamentals is key to achieving goals, he added. It’s not possible for one person to have in-depth expertise in all areas of a corporation, but one can create an organization where at least one person is focused on each particular detail. In building his team, Blair looks for broad thinkers who are also functionally deep in a particular domain.
It can be challenging to maintain perspective in any corporate milieu, particularly one so conscious of its brand, said Blair. Yet, the ability to maintain objectivity is a critical aspect of an effective leader. “One has to be willing, always, to have the objectivity to see and say that ‘the emperor has no clothes,'” he noted. “People don’t sell out because they’re afraid to disagree; they buy into ‘group think.'”
Finally, Blair advised his audience to focus on learning from past experience. Mistakes are inevitable; what one does with them is what matters. “Take time for explicit self-education,” he said. “Make mistakes, codify them, and learn.”