A few weeks back, Nike made headlines by announcing that Elliott Hill, a seasoned veteran with 36 years of experience at the company who had previously been overlooked for the CEO position, would be taking the reins as CEO, succeeding John Donahoe, a former Bain consultant and eBay executive. Donahoe’s leadership at Nike led the company to stray from its core competencies in favor of a newer direct-to-consumer model and multiple rounds of layoffs, which significantly impacted employee morale and hampered innovation.
This news brought to mind a memorable event from 1995, when Michael Jordan—Nike’s most renowned partner—declared his comeback to the Chicago Bulls after 17 months in retirement. Jordan went on to play three seasons and secured three consecutive NBA championship titles, solidifying his reputation as the greatest player in NBA history.
Just as Jordan’s return revitalized the Bulls, Nike is hopeful that Hill’s comeback will inject fresh energy and perspective to lead the company back to its former heights. Having dedicated his entire professional life to Nike—an extraordinary accomplishment in today’s world—Hill is re-entering a company that faces notable challenges. The primary task for Hill and his leadership team will be to steer a once-leading brand through a rapidly changing, intricate, and unpredictable landscape.
Opinions vary widely when it comes to who is better suited to guide a large organization during pivotal transitions: a CEO from within the company who has climbed the corporate ladder or an external CEO with broad, multi-industry experience.
While Donahoe’s period as CEO provided Nike with new insights and perspectives that aided the company in navigating the tough pandemic phase, these alterations resulted in a loss of market share and diluted Nike’s brand identity in a fiercely competitive athletic apparel and footwear sector. Facing new obstacles and considering Nike’s unique culture—potentially challenging for outsiders to comprehend—the company aligns with a rising trend where organizations lean towards seasoned leaders with substantial internal knowledge and industry acumen.
Institutional knowledge is a superpower
Nike’s choice to bring Hill back as CEO showcases the immense importance of institutional knowledge in leadership roles. Having grown with the company, he possesses an in-depth understanding of every facet of the business.
This comprehensive experience provides him with unique insights necessary for navigating the intricate internal dynamics that an outsider CEO might find daunting. Rebuilding trust with employees, boosting morale, and enhancing performance will be critical. For example, Hill’s detailed knowledge of Nike’s sports-marketing legacy could enable the company to refocus on athlete-driven narratives.
“The advantage of promoting someone from within is that they carry all that institutional knowledge. They’ve experienced the successes and failures firsthand,” explains Rhonda Y. Williams, a leadership expert and founder of Above the Grind Leadership. “You won’t spend the initial six months getting up to speed because you already have that knowledge. Thus, you can hopefully see rapid progress.”
Recruiting seasoned leaders to steer the organization during difficult times isn’t new to corporate America. Recently, Under Armour, a rival of Nike, reinstated its former CEO to navigate through tough challenges.
A study from the Journal of Management indicates that CEOs with extensive internal knowledge and diverse management experience are better equipped to pursue growth opportunities and can positively impact company performances. Nike’s board is strategically betting that their choice of Hill will yield significant dividends.
By exploring various roles and experiences within your organization, you can build a wealth of knowledge and experience that makes you an invaluable leader capable of effectively navigating intricate challenges.
Go back to basics by remembering your core strengths
I recall the excitement of getting my first pair of Nike sneakers. They were striking turquoise-and-black marvels that felt like a piece of art. At that time, every child with Nike gear felt part of an exclusive club of champions, just like their idols Andre Agassi, Tiger Woods, and Serena Williams, who proudly wore the iconic swoosh. From Michael Jordan’s breathtaking dunks to Serena Williams’ powerful serves, these champions, in their historical moments of triumph, embodied Nike’s core essence—athleticism, victory, and exemplary sportsmanship.
Currently, it appears that Nike may have lost touch with its core essence. “You always want to learn from history, but you shouldn’t dwell there,” remarks Mark Miller, a leadership expert and co-founder of Lead Every Day. “[The new CEO of Nike] must determine what future he envisions for the company and its culture. Perhaps it involves a return to foundational values, but there may also be opportunities for enhancements or new directions.”
Nike finds itself at a pivotal juncture in its journey. In its early days, it was an underestimated company striving to establish a foothold in the athletic market. Eventually, they succeeded by pushing boundaries and utilizing innovative marketing to spotlight emerging talent, becoming synonymous with champions. As the business looks ahead, it must forge a fresh identity that respects its past while innovating to recapture the magic that once made kids worldwide believe they could be champions by owning a pair of Nikes.
As societal values shift, consumers are increasingly interested in where their beloved brands stand on social, cultural, and political matters. While some appreciate Nike’s current bold position, others feel disconnected.
Successfully managing the internal cultural dynamics along with public perception will be a formidable challenge for the new CEO and his leadership team. They will need to revitalize the culture and formulate new messaging that honors their historical significance in sports and unites and inspires their diverse customer base.
Leverage innovation to adapt and win
“You can’t just keep reintroducing old styles and Air Jordan 1s because it eventually loses its uniqueness,” states Aaron Rapf, Founder of Advantage Sports Marketing Group and a former Nike sports marketing executive. “I don’t believe other companies have the experience to innovate like Nike can… However, if Nike starts innovating in [their key areas, such as running and basketball], they’re going to surpass everyone.”
Navigating innovation as a large organization within a fast-evolving environment is a widespread challenge. When a business grows so large and established that it no longer embodies the new and exciting, it falls into a trap of complacency and stagnation. Hill and his leadership team will need to pivot the company toward innovation in several areas, including product development and operational processes. To regain its competitive advantage, Nike must foster an environment where employees feel encouraged and empowered to take calculated risks without fear of repercussions.
Leaning on past victories and old glories will undoubtedly lead to obsolescence. Leaders must remain open to investing in ongoing innovation and stay attuned to emerging trends and shifts in market dynamics if they wish to secure their companies’ survival and success. Innovation is not a one-off event but rather an enduring process that safeguards your organization’s future achievements.
