And That is Why Nike Shed $25B in Market Cap in One Day...MAYBE!
I recently read two articles saying the same thing…The reason Nike’s share price dropped by one-third is the fault of its CEO, John Donahoe (WHO)…MAYBE!
And the reason it was the CEO’s fault is that he was formerly an outside consultant from Bain, therefore he didn’t understand the Nike brand…MAYBE!
BTW — Wasn’t Lou Gerstner, an outside consultant from McKinsey, who became CEO of the downward spiraling IBM and orchestrated one of the most amazing company turnarounds in the 20th Century? Hmmm.
“Yet, we act as if simple cause and effect is at work. We push to find one simple reason things have gone wrong. We look for one action, or one person, that created this mess. As soon as we find someone to blame, we act as if we solved the problem.”
After the “Blame the CEO” article came out, another came out saying the reason for the mess at Nike was a problem of what they were selling. They were selling Sneakers and not true Athletic Performance shoes (WHAT)…MAYBE!
Or MAYBE, we are dealing with complex living systems, called organizations, and trying to analyze the problem with linear, cause-and-effect mindsets.
Maybe Nike’s issues deserve a more whole system understanding.
Maybe we should at least consider:
· WHO (leaders)
· WHAT (products & innovation)
· WHERE (to play…DTC vs through retailers)
· WHEN (being attuned to Customer/Zeitgeist timing)
· HOW (to win…through our culture and processes)
Now, using this same thinking, look at the messes in your organization and take a Zoom-out/Zoom-in approach to give a whole systems understanding of the mess (Who, What, Where, When, How).
If you find your organization is perfect (mess free), please send me your name, so I can ask you a few questions…MAYBE, just MAYBE, you may discover something you hadn’t considered before.
So, what can we maybe learn from Nike’s recent changes?
When John Donahoe took the role of CEO in 2020, he was seen as a hero before Nike’s stock dropped in value to over $60B.
As a former Bain Consultant and expert in the digital space, Donohoe set a goal of making Nike’s revenue 50% e-commerce. That was smart just before the Pandemic–Nike was held up as a high performing brand to be admired.
However, in the process of digital transformation, Donohoe also cut costs and innovation, dropped and angered many retailers, cut Street Influencers, lost a lot of support of Athletic Performance enthusiasts, and didn’t provide consumers with innovative newness.
“They are just selling Sneakers, even old-style sneakers.”
And when recovery from the Pandemic changed things, consumers shifted again and all of the above actions, and more, brought on the downturn that made the business drop like a badly aimed “air ball”, completely missing the hoop.
Now Nike has brought out of retirement Elliot Hill, a long-time employee/leader of Nike, who some are calling the “Re-founder of Nike”. He is already making great strides to bring Nike back to its vision, brand essence, cultural norms, revolutionary innovation, focus on Athletic Performance, and caring for people and retailers.
So, where did the previous CEO Donohoe and Nike (he was not alone), go wrong? How did Nike start to become “uncool”?
You can glean your own insights from the summary above of what happened. Your list will be correct but, of course, not complete. The Nike challenge is a “Wicked one” that has many dimensions to it.
We could do a more exhaustive list and explanation of what went wrong at Nike, but we have a better way for you to analyze the Nike mess (and any messes you might have in your enterprise).
Our new Book has now come out: FUTURE SHAPING: 15 KEYS TO STANDOUT SUCCESS
Look at Nike through the lens of this approach to Future Shaping and you will see the many ways Nike put up an “air ball”.
When we analyzed Nike’s downfall, we saw that they violated every one of the 15 Keys to future success to various degrees.
“The future ain’t what it used to be.”
If leaders don’t deeply understand what “Shaping the Future” is about in this next era, their enterprises could find themselves joining Nike in its struggle to reclaim its standout leadership place in the market.
The choices we make today about the future… will shape our future.
Article by: Dan Beam CEO of BEAM,Inc.
Illustration by: Drew Beam CCO/Partner of BEAM,Inc.