Once upon a time (okay, it was the early 1960s), in a medium-sized college town in Oregon, two men started a shoe company in their garage. This shoe company was focused on developing quality athletic shoes, using relatively inexpensive Japanese labor and materials, which could rival the German shoe giants Adidas and Puma. This small shoe company, eventual renamed Nike, had a simple two word mission: “Crush Adidas” (Collins & Porras, 1996). This was an ostentatious mission as Adidas was an international brand with huge factories which had been doing business for nearly fifty years; Nike was an upstart in a garage. Yet, within 20 years, Nike had indeed crushed Adidas to become the top firm in their industry.
Once dominance had been achieved, Nike’s desire to “Crush Adidas” was no longer a compelling vision. Nike failed to create a new mission to enable the firm to remain at the top of their industry. Due to this, and other failures, a smaller British firm, Reebok, was able to pass Nike as the top athletic footwear firm in the early 1980s. Nike returned to their original mission, revising it to “Crush Reebok”. Through this focus, Nike was again able to become the dominant firm in the athletic footwear industry by the 1990s. In an effort to avoid another relapse, Nike pursued a new vision, which did not focus on beating their opponent, but rather on becoming the best they could be for their customers.
The current mission of Nike is “To bring inspiration and innovation to every athlete* in the world.” Nike then supplements this statement by clarifying the term athlete with a quote from Nike co-founder Bill Bowerman, who stated, “If you have a body, you are an athlete.” (Nike’s Mission Statement, n.d.)
Collins (1998) defined mission as “a clear and compelling goal that serves to unify an organization’s efforts” (p.242). Collins went on to note that for many years Nike thrived on “common enemy” mission. Nike’s first mission statement was “Crush Adidas” (Collins, 1996). Collins stated that this type of common enemy mission is typical of a firm looking to become the number one firm in an industry, but which has not yet achieved that goal. A common enemy mission can be very compelling for a firm that is facing difficulty or possible dissolution and is merely trying to survive. However, once dominance is achieved, this type of mission can cause a firm to move into a slump. Collins argued this is what occurred after Nike defeated Adidas. Nike became passive and allowed a new surprise competitor, Reebok, to pass it for a time. Nike therefore established a new mission of crushing Reebok. This new challenge forced Nike out of its slump and revitalized the company.
After Nike once again surpassed Reebok, the company moved toward its current mission. This mission statement is not a common enemy mission, but rather a targeting mission which sets a clear and defined, although in this case non-quantified, aim which the company is attempting to accomplish. As the leader in their industry, a common enemy mission is less likely to be effective than a target mission. The common enemy requires the surpassing of some other firm; while the target requires attaining certain self-imposed expectations.
The current mission statement for Nike is excellent for the current state of the company.
Change
When an organization needs to change, it must have a compelling vision to lead that change. Nike needed to change their focus from becoming the top firm in their industry to remaining the top firm in their industry. They were only successful in making this change when they changed their mission, thus providing the company as a whole with a new vision of what the company was.
Palmer, Dunkin & Akin (2009) suggested that strategic vision is generally linked to an organization having a competitive advantage, enhanced performance and sustained growth. At the same time, a lack of strategic vision can lead to organizational decline and failure.
Strategic visioning can be thought of as a synthesis process rather than an analytical process (Cowley & Domb, 2012). As a synthesis there is no one correct vision. Rather, the individual responsible for casting the vision must make a subjective appraisal of all of the information available at a specific point in time. Different people will come to different ideas of what the vision should be, but the vision owner must share the vision in some way that it will be taken up by the rest of the organization. This can be done on a voluntary basis, through persuasion, or by mandate.
The strategic vision needs to inspire, motivate, have an emotional impact, and be analytically sound. To be affective it must speak to both the intellect and the emotions of many different kinds of people, in order to garner the needed by-in from individuals within the organization.
When a vision requires change within an organization, the vision must spell out the problem that needs to be solved, the solution which the organization will pursue, and the means by which the organization will be successful. By clearly defining these areas, the individuals within an organization have an opportunity to support the proposed change. A mistake that some firms make is expecting employees to accept a change which has never been explained to them. By linking meaningful vision with organizational change, employees are given an opportunity to support the change.
A poorly constructed or communicated vision is at most worthless, and may in fact be detrimental to the long-term health of an organization. If a vision is too specific, to vague, inadequate or unrealistic it will keep individuals from within the organization from having the opportunity to support the vision and the associated change. The vision must connect the desires, feelings, and ambitions of the people with the overall intention of the organization.
Setting a vision for change and enacting that vision is not the end of the process. In order for that change to become permanent it must eventually cease being thought of as change and become the new normal. Creating a situation where this can occur requires action on the part of the organization.
External Environment
Because Nike has grown into a multi-national company it is able to withstand many economic forces which would be detrimental to a firm reliant upon only on country. If there is an economic downturn in North America, then Nike is able to rely, to some extent, on sales in other parts of the world. However, because Nike has suppliers and manufacturers in a diverse number of countries, it is forced to be constantly vigilant with regard to the exchange rate of different currencies.
Nike has used various social, cultural, demographic, and natural environment forces to its advantage. In particular, Nike has used the development and growing popularity of sports leagues throughout the world. Sponsoring or supplying product for these leagues has been a source of marketing; but, perhaps more importantly, these leagues have produced a numbers of celebrity athletes which Nike has used as spokespersons for its products.
The original success of Nike was, to some extent, dependent on its use of relatively inexpensive labor and materials available in Japan. Nike has continued to produce product in the places around the world in which political, governmental, and legal forces allow it to pay the least for supplies and labor. This has created a situation in which Nike is sometimes criticized for the low wages of the people making the products.
Technological forces are changing the ways in which products can be sold to customers. It is not longer required that a customer visit a bricks-and-mortar retail store, or that a direct sales person visit a potential customer. Customers can now directly approach Nike, customize exactly what they want, and order it online (McClusky, 2009). In addition, new technologies are allowing for the creation of better and less expensive materials out of which Nike can make products. Nike must continue to innovate in these areas.
Nike is the top firm in an incredibly competitive industry. These competitive forces allowed Reebok to become the top firm for several years in the late 1980s and early 1990s. In order for Nike to maintain its place as the top firm it must remain vigilant of potential changes in the industry. It must also pursue new product innovations, and maintain a strong sense of mission.
SWOT
Nike’s primary strength is its brand recognition. Nike has worked very hard to ensure that its symbols and products are recognized world wide. Nike has also built a reputation for being a high quality product with high value. This has allowed Nike to sell its products at a premium price. Both brand recognition and the perception of quality have aided Nike as they have sought to become a world-leader in their industry. Nike has reached the point where its worldwide sales have become a strength, buoying the company during downturns in North America. Currently, Nike also has a relatively low level of long-term debt. This lack of debt suggests that the company has considerable room to grow, has a strong cash flow, and could withstand significant economic turmoil. Finally, Nike has focused on continued innovation; constantly developing and marketing new products. Nike has used this strength to begin moving beyond the sale of footwear and into numerous other aspects of athletic wear and accessories.
Nike does have some weaknesses. While it has worked to diversify the products sold, Nike continues to be heavily dependent upon the sales of footwear. Nike has also been subject to negative publicity with regard to labor violations at the sites of the manufacturers it contracts (Carty, 2010). Additionally, as Nike is perceived as a high quality product, it is already able to charge a premium as compared to other products. Due to this, Nike’s products are price sensitive in the sense that it would be difficult for Nike to raise prices in the event that labor or supply costs increased.
Although Nike has expanded its brand considerably in the last two decades, it still has a number of opportunities available to it. Nike can expand into new trends, fashions, and accessories. Nike can develop new processes, materials, or other innovations that will allow it to reduce costs. A reduction in costs would allow either a higher profit margin or a lower priced product available to a wider array of consumers. One opportunity consistently available to Nike is the emergence of new celebrity athletes. Nike has been very effective in leveraging celebrity athletes as spokespersons for its products. As the lifespan of an athletic career is limited, there is always a new face through whom Nike can promote a product. An opportunity which Nike is just beginning to expand is forward integration. Nike has had direct sales of specialty products for some time, and has recently developed the ability to custom design and order products online. By expanding these areas Nike could avoid the costs of selling through a retailer. Finally, Nike can continue to expand its global presence. There remain many markets into which Nike could develop a stronger presence, particularly in the so-called BRIC countries of Brazil, Russia, India, and China (Kiss, 2011).
As a multi-national company and the leader in its industry, Nike is under a number of threats. The primary threat is Nike’s competition. Every firm wants to rise to the top. The only way to stay at the top is to continue innovating and engaging in the behaviors that made the firm successful. Additionally, regularly faces currency risk. Because its customers, manufacturers, and suppliers are in so many different countries, there can be dramatic swings in the relative exchange rates of currency. The diversity of suppliers and manufacturers can also create supply-chain risk; the more entities which Nike is dependent upon to create its products, the greater the possibility that one of these firms will fail in some respect. At the same time, this problem is partially alleviated by the fact that each supplier and manufacturer is responsible for a relatively small percentage of Nike’s products. Finally, Nike has a marginal reputation as being an ecologically friendly company (Memon, 2009). A threat is that Nike could lose this reputation.
Summary
Nike is a very successful company with a clear mission to innovate and inspire. Historically, Nike has used various environmental factors to its benefit. Nike was able to surpass its older German rivals by using a supply of cheaper labor and materials. Nike was able to build its brand by using the growing culture of celebrity athletes in North America. Nike was able to transfer from a mission of crushing their competitors, to a mission of innovation with only a moderate set-back. If Nike is able to stay true to its vision, focus on innovative products, and developing inspiration in its customers, then Nike should continue in its success.
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Carty, V. (2010). The Internet and grassroots politcs: Nike, the athletic apparel industry and the anti-sweatshop campaign. Tamara Journal for Critical Organization Inquiry, 1(2).
Collins, J. C., & Porras, J. I. (1996). Building your company’s vision. Harvard business review, 74, 65-78.
Collins, J. C., & Porras, J. I. (1998). Organizational vision and visionary organizations. Leading organizations–Perspectives for a new era, 234-249.
Cowley, M., & Domb, E. (2012). Beyond strategic vision. Routledge: Butterworth-Heinemann.
David, Fred R. (2011). Strategic management: Concepts and cases (13th ed.). Boston: Prentice Hall.
Financial Tear Sheet (n.d.). Retrived from http://investors.nikeinc.com/Investors/Resources/Financial-Tear-Sheet/default.aspx
Kiss, E., Bezerra, C., & Deos, L. (2011). Design for BRIC—the new frontier. Design Management Review, 22(1), 52-59.
McClusky, M. (2009). The nike experiment: How the shoe giant unleashed the power of personal metrics. Wired Magazine, 6, 2009.
Memon, Noor Ahmed (2009). Organic cotton: A route to eco-friendly textiles. Pakistan Textile Journal, 46.
Nike’s Mission Statement (n.d.). Retrieved from http://help-en-us.nike.com/app/answers/detail/a_id/113/p/3897
Palmer, I., Dunford, R., & Akin, G. (2009). Managing organizational change: A multiple perspectives approach (2nd ed.). New York: McGraw-Hill/Irwin.
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being the crazy guy with a messiah complex. It is okay to doubt if God is speaking to you. However, you need to you use that doubt as motivation to confirm God’s leading. There is no shame in acting like Gideon and putting out a fleece. But do not become dependent upon the fleece. As we grow in our relationship with God we will become more confident, but there will always be a little bit of doubt.
