Making of Nike: Phil Knight's Leadership Style,Traits and Skills
Background:
Nike, when we here this
word the first things comes to our mind is a shoe with swoosh logo on it. Well,
this popular shoe brand has created its impact worldwide, and today Nike is
worth 34.5 billion USD [1]. Philip H. Knight” Buck” born in Oregon,
was a true athlete at heart, he was also part of track runners’ team at
University of Oregon under the guidance of the coach Bill Bowerman [3].
After graduation, Phil began pursuing his management degree from Stanford Graduate
School of Business, where he proposed a paper on “Can Japanese Sport Shoes Do to
German Sports Shoes What Japanese Cameras Did to German?” [4].
That
was the point where Phil knew what the purpose of his life was, in 1962 he decided
to go on world tour and went to Japan to meet the Tiger-Brand running shoes company
Ontisuka Co., where in the meeting Phil claimed to own a company named Blue
Ribbon Sports which was worth 1 million USD [5]. This was where Phil
got the deal to sell the Tiger shoes in America. Phil received the first order
of 15 pairs from the Ontisuka Co. and gave two pair of Tiger shoes to Bowerman
who was still coaching track runners at University of Oregon [6].
Not only Bowerman liked the shoes he also offered to become partner with Phil
in his company and give his inputs on design of the shoes [6].
Bowerman
use to modify the Tiger shoes based on the compatible design which was well
suited to American athletes. The designs suggested by Bowerman were sent
Ontisuka Co. and the updated shoes according to American Athletes were imported
to Blue Ribbon Sports for further distribution. BRS did a great job in
expanding the Tiger shoe sales in USA, but Ontisuka Co. gave the distribution
rights to someone else and Phil fought back to get the distribution rights
again and he succeeded. Since then he knew Ontisuka Co. wasn’t to be trusted,
and it can abandon BRS at any point of time [7].
Later,
the Blue Ribbon Sports was launched in the market as an American based shoe
company Nike with swoosh logo in 1972. The name “Nike” was suggested by the
first full time employee Jeff Johnson which was based on Greek winged Goddess
of victory [6]. Nike used all the Bowerman design ideas and the
shoes were liked by myriad number of people. Since then Nike created a
benchmark for the sports shoe and also, Nike signed contract with popular
sports player such as Michael Jordan, Mia Hamm, Roger Fedrer and Tiger Woods to
endorse their shoes, which played a major role in the success of the Nike.
Today, Nike operates a total number of 1182 of retail stores and has employed
over 73 thousand people throughout the world [6].
When
Nike was just a proposed paper in management school, people used to call it a
crazy idea, no one believed in it. However, Phil had a vision and told himself
that he will keep going and won’t even think of stopping until he gets there
and won’t give much thought “where” is [8]. He believed in his
passion for running and running shoes and had a strong intuition that selling
quality shoes is his purpose of life.
Owing to the strong visionary and intuition
traits that Phil had, he was also good at hiring the best people who were apt
for the job at Nike. Phil never believed in micromanaging people neither he
liked anyone else micromanaging him, he rather displayed more of a hands-off
leadership style. He just shared the vision of the company and gave general
guidance and never really told employees, how to get things done. One thing
Phil had on his employees was trust and he used to love putting people out of
their comfort zone. Doing such he believed that people show their true
potential and showcased how laissez faire leadership style can bring best out
of employees. He strongly believed & followed the General Patton’s words of
wisdom “Don’t tell people how to do things. Tell them what to do and let them
surprise you with their results” [9]. For instance, Jeff Johnson the
first employee of the company, who worked diligently for Nike and did
everything to increase the sales of the shoes to make Blue Ribbon Sports a
famous. In the near future when Nike was in its rudimentary stage, Phil asked Jeff
to relocate from West Coast office to open an East Coast to run Nike’s first
American factory. Initially, Jeff was reluctant with the sudden changes, but
Phil knew that Jeff was the right person to handle the Factory and Phil wasn’t
wrong. Jeff handled the factory very well and increased the productivity of the
company [10].
Phil
has shown unconventional leadership traits, but they have successfully worked
for Nike, and his belief and values became the foundation of the company
values. Phil had successfully put together a team of trustworthy people who in
turn trusted in him. Although Phil had a laissez faire leadership style, to manage
the relationship with his employees, he would organize a team meeting few times
in a year to keep his team strong and connected, to which he used to refer as
“Buttfaces.” In this meeting employees use to yell at each other and even Phil
use to get reprimanded by his fellow mates. Again, this was the Knight’s way to
Manage People. Moreover, Phil involved his team in important decisions of the
company. For instance, in 1971, Phil and Bowerman took the decision to enter
the market with their indigenous shoe with a new brand name. Here Phil asked
his 45 employees to suggest the name for their new brand. And, Jeff Johnson the
first ever full-time employee of Phil’s organization came up with a name Nike
which meant goddess of the victory in Athens [8].
Phil
always knew that he could fail in this business, but his courage and his optimistic
outlook helped him persevere “We knew we could fail, we just didn’t think we
would” Knight said [2]. Nike is one of the companies which had faced
a lot of tribulations during their journey to the summit. The biggest trouble
he ever had doing the business was lack of money. Phil always struggled with
money, banks in 1970’s didn’t believe in entrepreneurship and were reluctant to
provide money to the people like Phil Knight. This was not the only problem Phil,
and his team had faced, the toughest battle that Nike ever fought was with the USA
government in 1977.
As Nike was rising to the top of shoe and
sports market, competitors like Keds and Converse colluded and pulled off an
obscure law called American Selling Price Law, this law stated that certain
types of shoes manufactured outside USA would incur significantly higher custom
duties. They accused Nike of violating the Custom Law and government charged
them a penalty of $25 million, which was Nike’s total profit for that year. Phil
was very calm in such high stress conditions and believed that Nike was
innocent. However, Nike was cornered, and Phil took the advice of his advisor
and settled the claim for $9 million. Phil knew that fight with government won’t
be fruitful and would hamper the goodwill of Nike. Here self-management played
an important role as he controlled his emotions, impulses and did what was right
for the given situation [8].
One
thing which Phil tries to teach everyone is failing fast, because he has a credence
that if you fail fast, you will learn more “But my hope was that when I failed,
if I failed, I’d fail quickly, so I’d have enough years, to implement all the
hard-won lessons. I wasn’t much for setting goals, but this goal kept flashing
through my mind every day, until it became my internal chant: fail fast.” Phil
said [12]. He never really told his employees how the task is to be
done, he would rather sit back and let the employees make mistake and learn. One
thing for which Phil was known to be frugal was giving praise. He believed that
if the praise has to meaningful, then it should be saved for the best moment
and even then, be cautious and not to offer much. Phil got this trait from his
father and Bowerman, among which Bowerman was more reluctant to give praise.
For instance, when an athlete from Bowerman’s team became the first American to
break the sub-four-minute mile, his response was “nice race.” And Phil carry
forwarded this trait in Nike praising people for their achievements sparingly [12].
Nike
was doing great in sales in 1980’s and soon they surpassed Adidas to become the
No.1 shoe manufacturer worldwide, hitting the total sales of 1 billion [11].
In late 1980’s Nike’s vision for shoe stumbled as they were more focusing on
the hard-edged shoe, whereas the market was demanding more aerobic shoes. This was
when Reebok took the opportunity and launched their leather shoes as a fashion
item for the trendy aerobic workout crowd. This was when the Nike suffered a
drop of 18 percent in sales. Here Nike realized that along with the performance
of the shoe, appearance of the shoe also matters to most of the customers. Phil
was a quick learner, and Nike immediately launched Nike Air-a multipurpose shoe
which satisfied both the criteria of performance and aesthetic looks and soon
the sales of Nike shoes waxed [11]. From this Phil realized that they
must stay abreast of the customers likes and dislikes and should adapt as early
as possible.
Summary and Conclusion:
To
recapitulate, Philip H. knight is a shy, courageous and passionate guy who has unfathomable
love for running and running shoes. Phil was a visionary and had believed in
his gut intuitions, and he saw truly believed in the crazy idea of selling
shoes. Phil formed a company named Blue Ribbon Sports to sell the Tiger sports
shoe with his track runner coach Bowerman. Later, launched the first American sports
shoes with the brand name Nike. Phil had a peculiar style of leadership, he
liked more of a hands-off approach and didn’t really tell his employees how to
get the job done.
He
cared about his employees and his relationship with other athletes. Phil use to
respect the votes from every employee of the company and use to call every member
to participate in the meeting, where people can share anything. Phil surely
faced some hard times from the Japan based company Ontisuka Co., American Banks,
American Government and some Competitors, but he always tackled all the
obstacles that were thrown in his way. He remained calm in stressful situations
and believed in his and companies core values. His optimism and courage persevered
the Nike through hard times. Phil believed in failing fast and learning as
quickly as possible.
The
story of Nike ignites the drive to be an entrepreneur and inspires people to
believe in their crazy ideas and stay true to their values.
References:
[1]. Nike news. Inc
reports fiscal 2018 fourth quarter and full year result. June 28 2018
[2] Nike co-founder Phil
Knight: I was told I wouldn’t make it. Here’s how I did it anyways, Aug 4, 2016
[3]. Bill Bowerman
(American Entrepreneur). Encyclopedia Britannica Online.
[4]. Krentzman, Jackie
(1997). “The Force Behind The Nike Empire”. Stanford Magazine, Retrieved May
28, 2008.
[5]. “Nike History and
Timeline”. University of Virginia, September 28, 2015
[6] “Histroy &
Heritage”. Nike Inc. Archived from the original on May 15 2014.
[7] Blitz, Matt “How a
Dirty Old Waffle Iron Became Nike’s Holy Grail”. Popular mechanics July 15,2016
[8] Leadership Journey:
Phil Knight, Leadership Book Review, November 08, 2018
[9] 18 Life lessons from
Nike’s Co-Founder Phil Knight, Ozan Varol, January 19, 2017
[10] 7 leadership lessons
from Nike Founder Phil Knight’s Memoir, Leslie Harber, June 15, 2017
[11] Philip H. Knight Co-founder
of Nike Inc. 1972, October 9, 2008
[12] 7 leadership lessons
from Phil Knight, Sean Murray, CEO at RealTime Performance. Inc, May 20, 2016
wow your writing is amazing......... superb
ReplyDeleteGreat summary! Found it useful.. :-)
ReplyDeleteGood article! Interesting stuff to read. Keep it up.
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