Upload
asdf4567
View
51
Download
7
Tags:
Embed Size (px)
DESCRIPTION
All about phil knight
Citation preview
LEADERSHIP
TERM REPORT
ON
PHIL KNIGHT
Submitted to
SIR RAZA H.SYED
Submiited by HARIS AHMED KHAN
BAHRIA INSTITUTE OF MANAGEMENT AND COMPUTER SCIENCES, KARACHI
ABOUT PHIL KNIGHT
Phil Knight was born February 24, 1938 in Portland, Oregon, the son of a lawyer
and future newspaper publisher. Knight attended Cleveland High School in
Portland and then the University of Oregon in Eugene, where he was a member
of Phi Gamma Delta ("FIJI") fraternity and earned a journalism degree in 1959.
He was a middle-distance runner at the school under track coach Bill
Bowerman and ran a personal best 4:10 mile, winning varsity letters for track
in 1957, 1958, and 1959.
Right after graduating from Oregon, Knight enlisted in the Army and served
one year on active duty and seven years in the Army Reserve. After the year of
active duty, he enrolled at Stanford Graduate School of Business. In Frank
Shallenberger's Small Business class, Knight developed a love affair with
something besides sports — he discovered he was an entrepreneur. Knight
recalls in a Stanford Magazine article "That class was an 'aha!' moment" ...
"Shallenberger defined the type of person who was an entrepreneur--and I
realized he was talking to me. I remember after saying to myself: 'This is really
what I would like to do.' "In this class Knight needed to create a business plan.
His paper, "Can Japanese Sports Shoes Do to German Sports Shoes What
Japanese Cameras Did to German Cameras?", essentially was the premise to
his foray into selling running shoes. He graduated with a Masters of Business
Administration from the school in 1962.
Knight set out on a trip around the world after graduation, during which he
made a stop in Kobe, Japan in November 1962. It was there he discovered Tiger
brand running shoes, manufactured in Kobe by the Onitsuka Co. So impressed
with the quality and low cost, Knight made a cold call on Mr. Onitsuka, who
agreed to meet with him. By the end of the meeting, Knight had secured
distribution rights for the western United States for Tiger running shoes.
2
The first Tiger samples would take more than a year to be shipped to Knight,
during which time he found a job as an accountant in Portland, Oregon. When
Knight finally received the shoe samples, he mailed two pairs to Bill Bowerman
in Eugene in the hope of gaining a sale and an influential endorsement. To
Knight's surprise, Bowerman not only ordered the Tiger shoes, he offered to
become a partner with Knight and would provide some design ideas for better
running shoes. The two men shook hands on a partnership on January 25,
1964, the birth date of Blue Ribbon Sports, forerunner to Nike.
PHIL KNIGHT'S SUCCESS AS CEO OF NIKE
Phil knight was CEO of Nike for 33 years and known as one of the best business
leaders of all time. He made Nike one of the most profitable companies in the
world.
Phil Knight's success as CEO of Nike is in large part due to his tremendous
leadership skills. Welch knew how to effectively communicate key ideas to the
rest of the staff, not only by delivering messages, but persistently repeating
them over and over, and ultimately driving the messages home.
“An organization's ability to learn, and translate that learning into
action rapidly, it is the ultimate competitive advantage”.
Knight’s corporate culture is like no other; what he hated about the
organization in his early days as a chemical engineer is exactly what he
transformed as CEO: the red tape and bureaucracy of the company. He
changed that by making it an informal learning environment, which he liked to
Refer to as a "grocery store."
This informal approach allowed Knight to get to know his employees, interact
3
with them, and get involved in all aspects of the business. Knight also prided
himself on his personal touches, such as the handwritten memos sent to
employees. But while he's known as personable and persistent, he is also
renowned for being a hard and very demanding leader, which is why many
employees have coined him Neutron Jack.
During his early years at Nike, he displayed one of the qualities of a leader:
self-confidence. When he was given the same pay rise as others in his
department he threatened to leave, believing he had greater merit than the
others and hence deserved a greater rise. It is this sort of meritocratic pay that
he became known for during his time as CEO: annually giving huge bonuses to
the top performing managers and sacking the lowest performers.
During his time as CEO, Welch grew GE’s revenue from $26.8 Billion to $130
Billion and grew the company’s value from $12 Billion to a staggering $410
Billion in 2004 when he retired, making it the world’s most valuable company.
Phil knight firmly believed that top performers deserved to be handsomely
rewarded, an attitude he had retained since his first job at Nike. He established
a performance-review program to identify the top 20 percent of employees,
who were accorded bonuses, as well as the bottom 10 percent, the "lemons,"
who were typically fired and replaced. Knight supported the distribution of
wealth as far as possible throughout the company and understood when
considering bonuses that life-changing fortunes were sometimes at stake.
Besides the raw numbers measuring efficiency and profits, more personal
aspects also characterized Knight's leadership. He brought an air of informality
to the company that stemmed from his belief that Nike was little different in
practice from a small local market. Customer satisfaction and positive
relationships with both customers and employees were what ultimately made a
business successful. Whether the product for sale was turbines or apples, the
customer would determine the success of the enterprise. Thus, Knight made
efforts to cultivate relationships with suppliers, customers, and employees
4
alike. Knowing his employees had a direct impact on productivity, Knight
communicated with workers often enough for them to feel that at any moment
they could receive a note or a visit from the boss. His efforts at communication
engendered senses of value and pride in employees, in that if a task was
important enough for Knight to care about, it was important enough to perform
with the utmost effort. As a result of his person ability, everyone knew Knight
simply as "Philip."
PHIL KNIGHT’S GENERAL CHARACTERISTICS
Phil Knight's fundamental needs, values, and orientation towards life are
symbolized by the four astrological elements. Each person has their own
unique balance of these four basic energies: fire (warmth, inspiration,
enthusiasm), earth (practicality, realism, material interests), air (social and
intellectual qualities), and water (emotional needs and feelings).
Knight's "elemental make-up" is described below. Remember that most people
are "unbalanced" or lopsided, and if Jack is lacking or deficient in a certain
element (or elements), it simply means that he needs to consciously develop
that particular aspect in order to appreciate and/or work harder in that
dimension of life.
Sometimes we overestimate the element that we are least endowed with,
sensing it as a lack within ourselves, but more often we neglect or ignore it.
The qualities described below will be reiterated and explained in more detail in
the following pages.
He is a nurturer and a protector and is prone to what has sometimes been
referred to as the "Atlas Syndrome" - namely, carrying the weight of the world
on his shoulders. Phil Knight assumes responsibilities in his relationships very
conscientiously and often takes on more than his share of the troubles as well.
Though Knight appears (and indeed often is) rather passive, he possesses a
great deal of quiet inner strength and the ability to flow with and repeatedly
endure life's inevitable adversities. He is apt to be surrounded by people who
5
rely on him, and though Phil Knight derives much satisfaction from providing,
giving, and being needed, he can also let himself be drained emotionally and/or
financially by taking care of other people and not caring sufficiently for himself.
Phil Knight has a very strong need for security and he places safety first. He is
unlikely to make sudden changes or to take new directions that involve risk
and unpredictability. Any break from the past is very difficult for Knight and he
needs a great deal of support when trying to make even healthy and positive
changes in his life or habits. ("Habit" is a key word for Phil knight as he is apt to
be very attached to his!)
He is very retentive. Phil Knight holds on (and sometimes clings) to the people,
places and ways he is familiar with. He also tends to repress feelings, and he
may need to learn to express and let go of old feelings and past conditioning.
Physically, Phil Knight is apt to be hearty and substantial, with a tendency to be
stout. Unless other astrological factors indicate otherwise, he can also be
downright lazy, especially when it comes to exercise. Knight instinctively
chooses comfort over challenge. (This is true in a broader sense as well, not
only regarding physical exercise).
His strengths include depth of feeling, patience, and generosity. The qualities
that Phil Knight needs to cultivate include initiative, openness to change and
new experience, and a stronger sense of self.
He is likely to be overly humble or unsure of himself and to look to others for
inspiration, motivation, reinforcement and approval. Tending to be somewhat
passive, Phil Knight must learn how to take initiative and motivate himself.
A lack of warmth (either physical, emotional or both) may be evident in Phil
Knight and can manifest physically as a low energy level, paleness and lack of
color in the skin, or a tendency to be easily chilled. Emotionally, it can be
reflected in a marked coolness or aloofness with little spiritedness, joyfulness,
or enthusiasm for living. Eating warming, spicy foods, living in a warm, sunny
6
place, and using fire in his daily life (lighting candles, using a wood stove or
fireplace for heat) can help balance Knight. Also, spending time with warm,
cheerful, positive-minded people and developing a philosophy based on
spiritual optimism can stir up Knight's own zest for life.
On the positive side, Phil Knight is unlikely to be egocentric and has a capacity
for ample patience and peacefulness.
PHIL KNIGHT AS A TRANSFORMATIONAL LEADER
Broad and long range perspective: In 1961 Phil Knight was not
considered a leading contender for GE's top job. However, his
performance and earnings record ultimately won him the position over
six other candidates. Even though he had no formal master plan for
Nike's reorganization, he did have a vision of what he wanted the
company to be. The first step in realizing that vision was a dismantling of
the bureaucracy.
Committing to greatness: He designed to improve the quality of Nike’s
processes and products and save billion of dollars. He is proud of the
initiative that his 27000 employees have embraced the program so
enthusiastically, proud that the early indications of the program’s value
as far better as he expected.
Sense of urgency: If he likes an idea he embraces it down with financial
analysts, board members and journalists.
Guidance and feedback: Like a football coach, he moves meeting to
meeting, conveying that message and a host of other ones as well. He
does have lots of ideas on how business should work, and many of them
make great sense. And he constantly imploring his employees to
inculcate them into Nike’s business activities.
Risk taking by bringing a change: He encourages colleagues to never
stop thinking about the need for change. Start each day as if it were your
first day on the job, he tells his managers. Make whatever changes are
necessary to improve things.
7
Direction setting: He is quick to sense when ideas or activities are out
of focus or out of style or less valuable than they used to be. His ability to
figure when an organization has run out of gas with an idea is pretty
good. He always has the strength to pioneer another idea on the heels of
ideas that have been mined as far as you can go. He sets the direction by
looking at the competition.
TRAITS ACCORDING TO NIKE'S 5 ESSENTIAL
LEADERSHIP PHIL KNIGHT
ENERGY
A leader should have tons of positive Energy. He should go go, go; should love
action; and should relish change. In short, a leader should not be afraid to push
bold and far-reaching reforms, especially in our Republic of the Philippines with
a weak and frail economy, in this dizzying era of harsh global competition and
free markets.
ENERGIZER
A leader should have the ability to Energize others. He should love people and
can inspire them to move mountains if necessary. In the Philippine context,
what are the mountains that we the people should collectively work together
and move? They are the endemic culture of corruption; the deadweight of too
much foreign debt now surpassing P3 trillion; the huge government budget
deficit; and the decay of our industrial and agricultural infrastructures.
EDGE
8
A leader should have Edge, the courage to make tough yes-or-no decisions, no
maybes. On major political, social, economic, moral and other challenges, it is
imperative for an effective leader to make decisions right or wrong.
EXECUTE
Leaders Execute, they get the job done. They have a strong desire to get the
work done and they get it with better efficiency.
PASSION
Phil Knight added a fifth trait for truly great and effective leadership: "Passion,
a heartfelt, deep and authentic excitement about life and work."
PHIL KNIGHT’S ACHIEVEMENTS AND AS A CEO OF
NIKE
As 20-year-old Stanford golfer Tiger Woods fought his way to an unprecedented
third U.S. Amateur title last summer, Nike founder Phil Knight shadowed him
from hole to hole, appraising the young phenom's every smile the way a golf
coach would his swing. "I hope we sign him," Knight said at the time. "If not, I
hope he goes to medical school." Three days later, Woods called a news
conference, stepped before the TV cameras and announced that he was
quitting college to join the Professional Golf Association Tour.
"Well," he said with a big grin, "I guess it's 'Hello, world,' huh?"
An adoring sports media lapped up the young man's winning soundbite. Then,
just 24 hours later, the other shoe dropped. In a barrage of new TV spots and
full-page newspaper ads, Nike unveiled its latest pitchman: pro golfer Tiger
Woods. The Nike-crafted tag line on the ads? "Hello, World."
Woods may be the company's current star, but its controversial CEO and
founder is the real story. Nike signed Woods to a five-year endorsement deal,
reportedly worth more than $40 million, and has thrown its considerable weight
9
behind him. The company is packaging the young golfer--who is part African
American, part Chinese, part American Indian, part Thai and part white--as the
Jackie Robinson of golf, breaking down barriers each time he steps on a course.
The press savaged the ads for posing Woods as a racial trailblazer, a path long
since pioneered by black golfers such as Charlie Sifford and Lee Elder.
But the world's largest athletic shoe and apparel company had triumphed
again, creating a buzz for its masterful orchestration of Woods's coming-out
party and raising hackles with its questionable use of race to promote him. It
was pure Philip Hampson Knight: innovative, controversial and very, very
successful.
Of course, you'd expect nothing less from the man who turned a
tiny company called Blue Ribbon Sports into Nike Corp., a
multibillion-dollar enterprise and a household name. A former
middle-distance runner at the University of Oregon (he ran a respectable 4:10
mile), Knight, MBA '62, has been on a 30-year endorphin rush. He has made
more money from athletics than anyone, ever. With a net worth of $5.3 billion,
Knight ranks sixth on Forbes's latest list of the richest Americans. Blue Ribbon
Sports cleared $3,240 in its first year, 1964. In fiscal year 1996, Nike's revenue
hit a stratospheric $6.5 billion (with $550 million in income). "In a very short
period of time, Phil Knight created one of the greatest American commerce
stories of the 20th century," says sports agent David Falk, who has frequently
butted heads with Knight over the marketing and representation of athletes.
If one of those athletes weren't Michael Jordan, consumers worldwide might still
be pronouncing Nike like Mike. In large part because of that one employee with
the thousand-watt smile and springboard legs, there is no greater status
symbol among youths than Nike products.
But make no mistake: As athletically awesome and charismatic as Michael
Jordan is, he alone did not make Nike as recognizable worldwide as Coke and
McDonalds. Nor did he make "Just Do It" the slogan that best encapsulates the
1990s. Nike is a cultural icon because Knight understood and captured the
10
zeitgeist of American pop culture and married it to sports. He found a way to
harness society's worship of heroes, obsession with status symbols and
predilection for singular, often rebellious figures. Nike's seductive marketing
focuses squarely on a charismatic athlete or image, rarely even mentioning or
showing the shoes. The Nike swoosh is so ubiquitous that the name Nike is
often omitted altogether.
"Phil understands the symbolic power and attractiveness of sports," says A.
Michael Spence, dean of the Stanford Graduate School of Business and a Nike
board member. "And he helped build that connection in our culture."
Knight also understood that this lust for heroes and appreciation for in-your-
face attitude is not limited to American youth. He correctly predicted that
American culture was a marketable commodity--that teenagers from Paris to
Shanghai would be just as taken with Charles Barkley's ample attitude as
teenagers in Trenton and San Diego.
No company has put as much creative energy and resources into marketing
celebrities as Nike. If, as Marshall McLuhan famously said, advertising is the
greatest art form of the 20th century, then Nike is its Picasso, imaginatively
expanding the parameters of the medium's use of the athlete-endorser. "We
didn't invent it," Knight acknowledges in an interview, "but we ratcheted it up
several notches."
Nike engineered shoes for the top echelon of athletes to compete
and train in. At the same time, the company's mass marketing
made the shoes so attractive and desirable that they became a
de rigueur accessory to the American wardrobe and dream--even
if increasingly sedentary teens only wore them to watch TV. Thirty years ago,
American teenagers owned either a pair of Converse All-Stars or Keds. Today,
the average American boy owns 10 pairs of sneakers.
11
Understanding how Phil Knight made Nike a household name is easy.
Understanding Phil Knight is not. For someone whose empire rests on visceral
consumer reactions, Knight is remarkably self-contained.
Once dubbed the "most powerful man in sports" by the Sporting News, Knight
presents himself as affable, albeit slightly stiff and a tad shy. He unobtrusively
enters the Wimbledon conference room on the fourth floor of the John McEnroe
Building on the Nike World Campus in Beaverton, Ore. (a good hour's jog from
Portland), clears his throat, introduces himself and apologizes for being 10
minutes late. "Where should I sit?" he asks. Knight isn't wearing his ever-
present Oakley sunglasses (he's rarely photographed without them), which is a
bonus, as his pale blue eyes open wide and sparkle when a topic engages him.
Like many of the 2,700 employees on the campus, Knight instinctively glances
down at his visitor's shoes before taking a seat at the far end of the conference
table, his back to the picture window that offers a view of the campus and the
10-acre lake anchoring it. I nervously appraise my black leather, conservative
flats and kick myself for making such a boring choice for a meeting with the
man who made footwear an art form. It's like picking up John DeLorean in a
Yugo.
Knight, 58, still has the lean, almost gaunt build of a runner. Known for his
decidedly dressed-down and wrinkled wardrobe, he looks surprisingly natty. A
black linen suit drapes loosely over his slender frame. His black, collarless shirt
buttons up to his Adam's apple. With his trim beard, collar-length, wavy red-
blond hair shrouding most of the gray, he suggests a record executive who
looks and sounds remarkably like actor Donald Sutherland.
Knight has been portrayed as mysterious, inscrutable, eccentric, unpredictable,
enigmatic, idiosyncratic, shy, aloof, reclusive, competitive and a genius. But
the world may never know which adjective suits him best. Knight, who with his
wife of 28 years, Penny, has two grown sons, shuns publicity and
self-explication the way Howard Stern courts it.
12
"Genius" is the one attribute on the list that Knight questions. "Other than that,
I'm all of those things--most of those adjectives are right some of the time," he
says. That's as far as he'll go. When asked a potentially revealing question
("Have you deliberately cultivated an image for yourself, the way Nike has for
its clients?") he toys with a can of Diet Pepsi or fiddles with the watch he took
off at the start of the interview. He signals that a question is not to his liking by
deftly shifting the focus to Nike, lapsing into corporate-speak or even abruptly
cutting himself off in mid-sentence and waiting--in stony silence--for the next
question.
Knight was raised in Portland, the son of a lawyer turned newspaper publisher.
He was a middle-distance runner for the University of Oregon track team, which
at the time had one of the best programs in the country. Known as "Buck,"
Knight had more enthusiasm than talent, which made him the ideal human
guinea pig for legendary track coach Bill Bowerman's endless tinkering with
running shoes. "I was very aware of shoes when I was running track," Knight
says. "The American shoes were offshoots of tire companies. Shoes cost $5,
and you would come back from a five-mile run with your feet bleeding. Then
the German companies came in with $30 shoes, which were more comfortable.
But Bowerman still wasn't satisfied. He believed that shaving an ounce off a
pair of shoes for a guy running a mile could make a big difference. So
Bowerman began making shoes himself, and since I wasn't the best guy on the
team, I was the logical one to test the shoes."
An indifferent student, Knight graduated from Oregon with a degree in
journalism in 1959. He enlisted in the army for a year (and served in the
reserves for seven), then enrolled at the Graduate School of Business at
Stanford.
Stanford changed Knight's life. Finally, school wasn't drudgery. For the first
time, he was excited to read about something other than sports. And it was in
Frank Shallenberger's small-business class that Knight conceived Nike.
13
Shallenberger gave his class the following assignment: Invent a new business,
describe its purpose and create a marketing plan. In his paper,
"Can Japanese Sports Shoes Do to German Sports Shoes What
Japanese Cameras Did to German Cameras?" Knight developed a
blueprint for superior athletic shoes, produced inexpensively in
Japan, where labor was cheaper. "That class was an 'aha!' moment," Knight
says. "First, Shallenberger defined the type of person who was an
entrepreneur--and I realized he was talking to me. I remember after writing
that paper, saying to myself: 'This is really what I would like to do.' "
After graduating from Stanford, Knight acquiesced to his father's wishes and
secured a "real" job with a Portland accounting firm. But first, he traveled to
Japan, where he became enamored of Japanese culture and business practices.
To this day, visitors to his office must remove their shoes--even their $180 Air
Pamirs--before entering. And Knight took leave of our interview by forming a
steeple with his hands and bowing.
Much has been made of Knight's meditative, almost dreamy mien and his
affinity for all things Asian, especially Japanese. Knight refined both his
philosophy of life and business while in Japan. He studied Asian culture and
religion and climbed Mount Fuji, which the Japanese consider a sort of
pilgrimage. He also visited the Onitsuka shoe factory in Kobe, which was
producing Adidas knock-offs, called Tigers. Knight was so impressed with both
the quality and low production costs that he made a deal with Onitsuka to
distribute Tigers in the United States.
After returning from Japan in 1964, the 26-year-old Knight began peddling
Onitsuka running shoes from the back of his green Plymouth Valiant at track
meets across the Pacific Northwest. Adidas was hardly quaking in its cleats,
and Knight kept his day job as an accountant. But he persevered, convinced
that his inexpensive, high-performance shoes could beat the top "sneakers"--
Adidas, Converse All-Stars and Keds--in the market. By 1969, at the fortuitous
14
dawn of the jogging boom, Knight sold a million bucks worth of Onitsuka shoes
bearing his Blue Ribbon Sports label.
In 1971, Knight decided he could retire his accountant's wing tips. It was also
time to give his fledgling company a new name and logo. Knight favored
"Dimension Six," but his 45 employees thankfully laughed that one down. Then
Jeff Johnson, '63, a fellow running geek, proposed a name that came to him in a
dream: Nike, for the Greek winged goddess of victory. The company paid $35
to commission a new logo--a fat checkmark dubbed a "swoosh"--and the new
shoe debuted at the 1972 Olympic trials in Eugene, Ore.
Nike sold $3.2 million worth of shoes in 1972, and its profits doubled each of
the next 10 years. Nike passed Adidas to become the industry leader in the
United States in 1980, the year it went public. The company made a quantum
leap in 1984 when it signed the 21-year old Jordan to endorse a basketball
sneaker. Within a year, it seemed that every boy in America was strutting
about in the clunky, siren-red Air Jordan high-tops. "It wasn't planning," Knight
says. "We could see that he was a charismatic guy who jumps over the moon
and is very competitive, but nobody could have predicted what he would
become to our culture."
Now it seems formulaic--sign a gifted athlete to a lucrative
endorsement contract, give him his own television commercial
and shoe, blow him up larger than life and count the money.
But in 1984, it was unprecedented. By signing, promoting and eventually
turning Jordan into a legend, Nike played a pivotal role in revving up the cult of
personality that now pervades sports. (Knight still gets a kick out of telling this
story: "A few years ago there was a poll in China to name the greatest man
ever. The winner was Mao, but there was a tie for second between
[revolutionary hero] Zhou Enlai and Michael Jordan of the Chicago Red Oxen!").
Ironically, the chairman of the company that has set the standard with its
groundbreaking, creative advertising campaigns (It's Gotta Be the Shoes, Bo
Knows, Just Do It, Griffey for President) had to be talked into advertising at all.
15
"I used to believe that a good product sold itself," says Knight, who like many
of his employees sports a Nike "swoosh" tattoo, his on his left calf. "When I first
went to meet with Wieden and Kennedy [Nike's Portland-based ad agency], I
told them: 'I don't like advertising.' And I'm still uneasy with it."
Others are just uneasy with Nike's particular brand of advertising. Even though
the company's commercials have been hailed as pop art, Nike has been
denounced for turning sports stars into cartoonish überathletes and creating a
market of young consumers blinded by idolatry. And for those with
underdeveloped public personas, Nike has not hesitated to fill in the blanks.
Nothing wrong with that, Knight believes. Sports isn't about truth and accuracy.
It's the central, unifying culture of the United States and the stuff of romance
and dreams. "Sports is like rock 'n' roll," he says. "Both are dominant cultural
forces, both speak an international language, and both are all about emotions."
Some consider Nike--with its swoosh popping up on uniforms, on the lapels of
college basketball coaches, even as bus-size renderings on walls of stadiums--
responsible for the over-commercialization of sports. Nike is certainly not the
first or only corporation to wield considerable influence in the sports world, but
it is the most brazen and visible. "Nike is the prime representative of the way
we overmarket and overadvertise and overdo everything these days," says
Todd Boyd, a professor of critical studies in the USC school of cinema and
television. "The market is saturated to the point where it can be sickening. The
problem is, we now have people going gaga over a commercial, as much or
more so than they do the sport itself. Enough already."
For a time, Nike became a lightning rod for all sorts of criticism. The company
came under fire in the early 1990s when there was a spate of shootings and
knifings in American inner cities by teenagers coveting Nikes, which were just
then pushing the $100 mark. Newspaper columnists decried "Just Do It" as a
nihilistic slogan that justified or even begat these crimes. Nike was accused of
focusing its ad campaigns on children in the ghettos, although, ironically,
athletic shoes are the most cross-cultural of commodities.
16
Then, in the 1992 Olympics, the company hit its public relations nadir when the
Nike endorsers on the Olympic basketball "Dream Team" refused to wear the
official Olympic warm-up jerseys on the medal stand because they bore the
logo of archrival Reebok. Nike was perceived as demanding that its athletes
put shoe company before country. The incident became a symbol for those
concerned with the inexorable and rapidly advancing influence of money in the
world of athletics, obscuring or even warping the purity of the Games
themselves.
Also in 1992, a group named Made in America called for a boycott of Nike
products because Nike shoes (like most athletic footwear) are made overseas,
mainly in Asia where labor is cheap. Nike has been criticized for its low pay and
abusive treatment of some workers. Using independent subcontractors, Nike
makes many of its products in Indonesia, a world pariah for its well-
documented human-rights abuses. New York Times columnist Bob Herbert has
launched his own crusade against Nike. He accuses the company of exploiting
Indonesians while quietly encouraging the Suharto government to crack down
on dissent.
Over the years, Nike has also rattled cages with its penchant for signing
athletes with rebellious, even dicey, reputations, such as the outspoken Barkley
and the untethered Chicago Bull, Dennis Rodman. Not that Reebok endorser
Sean Kemp or Converse man Larry Johnson (both guilty of taunting lesser
opponents while representing the United States in the 1994 World Games) are
paragons of virtue, but Nike pioneered the trend of signing athletes who project
attitude as well as excellence.
An impenitent Knight shrugs when asked about these issues. "Our business
practices are no different than those of our competitors," he says. "But we are
bigger, and thus more visible, so we get more flack."
But it's more than that. Nike courts controversy. For instance, Nike donated
$25,000 to Tonya Harding's defense fund in 1994, in part to tweak Reebok, the
sponsors of Nancy Kerrigan. Nike's analog isn't the conservative team owner,
17
but the cocky superstar who sets the agenda and is so wildly popular he knows
he can get away with just about anything. "Nike is at times feisty, or
counterestablishment, deliberately," says Spence, the business school dean.
"That's partly Phil and partly the athletic culture Nike is modeled after."
As Nike ran away with the athletic-shoe market in the '80s, these criticisms
were merely annoying pebbles wedged in its shoes. But then the company
made a fatal mistake, one of great hubris. It forgot about the women. When the
aerobic fad hit in the mid-'80s, Nike ignored it. But fledgling Boston-based
Reebok high-stepped right in, creating a somewhat flimsy, but attractive shoe
that women bought like tickets to a Meryl Streep movie. Reebok's sales
surpassed Nike's in 1987. That struck a nerve, as it flouted, even mocked,
Knight's bedrock belief that, above all, authenticity and function sell shoes. To
this day, Knight scorns Reebok and its chairman, Paul Fireman, for its emphasis
on fashion. "We're not in the fashion business, as the Wall Street Journal wrote
the other day," says Knight, clearly still peeved. "We're in the sports business,
and there's a big difference."
Reebok's blindside tackle gave Knight pause. Until then, Nike prided itself on
being something of a counterculture corporation. Irreverence and risk-taking
were prized; the athletic establishment and corporate wisdom were disdained.
In keeping with Nike's collegiate, fraternal atmosphere, the company's
sprawling complex was officially dubbed the Campus. Employees reported to
work in sneakers and shorts, partied hard and made decisions on the run. "We
had no master plan," Knight acknowledges. "It was totally seat-of-the-pants."
As if to underscore the fact that he wasn't a typical CEO, Knight once showed
up at a company event in drag.
But when Nike was dislodged from the top, he realized that his fly-by-Knight
approach would no longer work. Knight streamlined the company (laying off
600 of the company's 2,000 employees) and reorganized Nike along more
conventional, corporate lines. Where Knight was once famous for governing by
instinct, today Nike studies reams of statistics and convenes a focus group
18
before designing a new shoelace. The marketing budget grew, and so did the
emphasis on design, Nike's euphemism for fashion.
Nike is back on top because it grew up, but Knight clearly misses his company's
adolescent days. "At first, we couldn't be establishment, because we didn't
have any money," Knight says. "We were guerrilla marketers, and we still are, a
little bit. But, as we became No. 1 in our industry, we've had to modify our
culture and become a bit more planned."
Realigned, Nike replaced Reebok at the top of the charts in 1989 and has
remained there ever since. Nike outdistanced its competitors by moving
beyond basketball, tennis and track to control the women's and outdoor
markets. (Nike also owns Cole-Haan, the dress-shoe manufacturer, and Canstar
Sports Inc., the world's largest hockey equipment company.) Nike still takes
risks and challenges the sports establishment, but much of the criticism leveled
against the company has quieted. Nike has become a major player in
promoting women's sports as well as funneling money into inner-city sports
programs.
Now, 10 years after Nike's upheaval, Phil Knight has become a sort of professor
emeritus. He has handed over the daily running of the company to Thomas
Clarke, who was appointed president in 1994. Knight, who describes his own
management style as "selectively hands-on," is still an everyday, hovering
presence and very much the man in charge. But these days he is more
interested in being an artist than a businessman. "At this stage in my life, the
creative process is of great interest to me," he says.
For Knight, that means finding new markets to dominate and new products to
peddle. Nike has enjoyed great growth in the women's, apparel and outdoors
markets. Nike is also opening up more Nike Town stores, which are as much
museum as retail outlet. (Chicago's store is one of the city's top tourist
attractions.) These towering shrines look about as much like a typical shoe
store as Dennis Rodman looks like a typical human. But the biggest push will
19
be overseas. Nike already owns 25 percent of the world market, dwarfing its
competitors. That still leaves billions of un-Niked feet out there.
Knight's overriding goal is to ensure Nike's legacy. "Phil is always thinking
ahead," says Nelson Farris, Nike's director of corporate education and a Knight
confidante for 23 years. "He once said in a speech that the worst thing he could
envision was to sit his grandkids on his knee and have them ask him, 'What's a
Nike?' "
PHIL KNIGHT’S WEAKNESSES
If I had a weakness, maybe it was a weakness and strength. I'm rather
emotional. I am passionate. I want to win and I might be load sometimes when
perhaps I shouldn't, but I can kick and hug with equal capability. I'm in the
game. (PHIL KNIGHT)
Knight's hagiographers have declared him
"The Vince Lombardi of business”
“A heroic form of CEO," "the world's greatest business leader," "the manager of
the century," and "CEO of the century." You'd almost think Knight was single-
handedly responsible for the growth of the entire global economy. Oh, wait,
he's been credited with that as well: "As the most widely admired, studied, and
imitated CEO of his time," argued Fortune, "Knight has enriched not only Nike's
shareholders but also the shareholders of companies around the globe. His
total economic impact is impossible to calculate but must be a staggering
multiple of his Nike performance."
Knight's critics (when they can be found) typically point to the massive layoffs
he has overseen at Nike or to allegations that Nike plants have polluted the
Hudson River. (Thomas F. O'Boyle's muckraking book At Any Cost is probably
the most comprehensive anti-Knight brief to date.) But these and related
20
attacks, whatever their merit, are largely beside the point as far as Knight's
boosters are concerned.
And that impact looks impressive. In 1961, the year before Knight became CEO,
Nike recorded revenues of roughly $26.8 million; in 2000 they were nearly
$130 million. When Welch took over, the stock market judged the company to
be worth about $14 billion. Today its market capitalization is roughly $490
million, making it the one of the most valuable company in the world.
But there's a difference between being a good CEO — which Knight has been —
and being the undisputed all-time champion of corporate leadership. Or, to put
it another way, think of Phil Knight as a stock. If the most sensible way to
gauge the current value of a stock is the famous price-to-earnings (P/E) ratio —
that is, the ratio of a stock's market cost to the company's actual or expected
profits — then consider Phil Knight 's reputation as "price" and his achievement
as "earnings." A stock can be overvalued, sometimes wildly so, even if its
earnings look solid. In bottom-line terms, Phil Knight's achievements are solid.
But his reputation? As a multiple of what he has actually accomplished, it's
gotten far too pricey to buy.
PHIL KNIGHT’S STRENGTHS
THE INTEGRATOR
One particular talent Phil Knight has is the ability to see various items in a
field and often organize it into something entirely new. This integrator
capacity is one of the Hallmark’s of Knight Mind. His ability to see various
sides and integrate it into a new innovative reality/system/product is one of
the hallmarks of Jacks’ mental skill and talent. He took Nike on the top.
REVOLUTIONIZING INDUSTRIES
21
Jack takes pleasure in revolutionizing a field -- questioning its assumptions
and creating replacements that turn that industry upside down while driving
it to new, unprecedented levels of success.. Jack participated in that
unfolding in part and has carried it over to his work at GE. That
revolutionary, life changing verve is one of Knight deep personal values.
ACCESSIBILITY
Perhaps Phil Knight is innovative, integrative, and revolutionizes industry is
through his deep belief in making many products. Knight created a radically
new product that would revolutionize the industry through its ease of use.
Phil Knight is deep belief in making things easy for people – i.e. the value of
Ease of Use – is one of his core personal values and beliefs, which reflects in
the innovative, even revolutionary products he has developed.
SPEARHEADS DEVELOPMENT
Phil Knight himself felt that his greatest talent was spearheading
development of new products. He saw a social or technological limitation,
had a vision of something new, and had that urge and will to drive
development of it until it came out as he wanted. He then put full force of
his energies – including innovative, sometimes revolutionary marketing
techniques – drive it into the market. It is Phil Knight’s ability to
conceptualize and actualize projects of new development that is one of the
reasons he had such great success and alter the course of his industry,
technology in general and the world.
Closely related is the fact that he led the customer rather than followed it.
One precept of modern management business management is to listen to
what the customer wants and then develop products and services based on
that. In a way Phil Knight went to a different model of looking at what was
going on in technology and society and drive new development based on
that, with the added value of creating ease of use, simplicity, and an all in
22
one experience. These are things that the customer may have never
imagined. By leading the customer, Phil Knight felt he could bring much
improved change to the world around him. It is an individualistic, creative
urge more than a collaborative one in that sense, even as he worked
collectively within Nike to bring these often-revolutionary products to
market.
RISK TAKER
Phil Knight has been willing to try radical new technologies even if it means
undercutting previous one that Nike was selling. More to the point, Phil
Knight has been willing to introduce unproven technologies. He is willing to
try new things even if they are not popularly known or have never been
accepted. Nike itself seems to in a mode of never-ending risk taking.
Perhaps that is because it has no guarantee of success like other companies
who are competing in the market.
TRUE INDIVIDUAL – THINKS FOR HIMSELF
A person who truly thinks for himself can be thought of as a “true
individual.” He or she is not moved by the herd but by something internal.
From early on Phil Knight has demonstrated that propensity. He was always
a loner, and a self-thinker.
As a result of this inner-bent, he always had a different way of looking at
things. It was his, unique way. That aspect would show up in many ways:
from the many radical new technologies he championed to his disdain for
the financial concerns and demands of Wall Street. He had a vision of an
unlimited future, unfettered by the givens of life, of what other people
accepted.
CREATIVITY, INNOVATION OVER MONEY VALUE
One of Phil Knight precepts is the notion that the journey is the reward. i.e.
that the process of doing and creating should be exhilarating. The rest will
23
take care of itself. Of course, he was not immune to being successful,
creating wealth for him and his company, and becoming the leader of his
industries, yet there was a feeling that he projected onto Nike that the
creative process was as important as the rewards it brings. For Jack, the
reward is the joy of innovation itself, of creating innovative products.
ARTISTIC, CREATIVE SENSIBILITIES
Phil Knight consistently demonstrated creative vision. He wanted products
to be beautiful in their elegance and simplicity. Phil Knight demonstrating
new products he would comment not only on the simplicity, but the
elegance of design, and other aspects of products
LEADING NIKE
In 1961 Phil Knight was not considered a leading contender for NIKE's top job.
However, his performance and earnings record ultimately won him the position
over six other candidates. Even though he had no formal master plan for Nike's
reorganization, he did have a vision of what he wanted the company to be.
LEADERSHIP STYLE
Phil Knight brought a keen emphasis on promoting functional leadership to the
organization and turned Nike into one of the smoothest run corporations in the
country. Phil Knight introduced a fresh and innovative organizational leadership
style to GE during his time at Nike. He believed in sharing decision making with
group members and working with them side by side .Being as a participative
leader he has the quality of consulting with the group members before making
a decision.
Phil Knight is all about leadership, not management. Phil Knight had always
viewed bureaucracy as the enemy, and was sick of the “bureaucracy-babble”
24
which he experienced at Nike, and he believes that in order for a company to
be excellent the managers need to
“Stop managing, and start leading”. He had the strong believe that the old
bureaucratic ways didn’t allow for managers to identify problems soon enough
or with any accuracy. Phil Knight wanted any employee regardless of their
rank-and-file to feel free to talk with him or with anyone else within the
company. Actually, he wanted to discard the term “manager” altogether
because it had come to mean someone who
“Controls rather than facilitates, complicates rather than simplifies, acts more
like a governor than an accelerator”.
Phil Knight decided that Nike's leaders, who did too much controlling and
monitoring, had to change their management styles.
“Managers slow things down. Leaders spark the business to run smoothly,
quickly. Managers talk to one another, write memos to one another. Leaders
talk with their employees, filling them with vision, getting them to perform at
levels the employees themselves didn't think possible. Then they simply get
out of the way”.
The team with the best players usually does win. And that is why; Phil Knight
invested the vast majority of his time and energy in three activities.
He has always evaluated making sure the right people are in the right
jobs, supporting and advancing those who are, and moving out those who
are not.
He spent his time to coach-guiding, critiquing and helping people to
improve their performance in every way.
And finally to build self-confidence-pouring out encouragement, caring
and recognition' Self-confidence energizes, and it gives your people the
courage to stretch' take risks and achieve beyond their dreams. It is the
fuel of winning teams.
25
TRADITIONAL LEADERSHIP TIPS PHIL KNIGHT STYLE
Phil Knight, respected business leader and writer is quoted as proposing these
fundamental leadership principles.
1. There is only one way - the straight way. It sets the tone of the
organization.
2. Be open to the best of what everyone, everywhere, has to offer; transfer
learning across your organization.
3. Get the right people in the right jobs - it is more important than
developing a strategy.
4. An informal atmosphere is a competitive advantage.
5. Make sure everybody counts and everybody knows they count.
6. Legitimate self-confidence is a winner - the true test of self-confidence is
the courage to be open.
7. Business has to be fun - celebrations energies and organization.
8. Never underestimate the other guy.
9. Understand where real value is added and put your best people there.
10.Know when to meddle and when to let go - this is pure instinct.
As a leader, your main priority is to get the job done, whatever the job is.
Leaders make things happen by:
knowing your objectives and having a plan how to achieve them
building a team committed to achieving the objectives
helping each team member to give their best efforts
As a leader you must know yourself. Know your own strengths and weaknesses,
so that you can build the best team around you.
26
However - always remember the philosophical platform - this ethical platform is
not a technique or a process - it's the foundation on which all the techniques
and methodologies are based.
Plan carefully, with your people where appropriate, how you will achieve your
aims. You may have to redefine or develop your own new aims and priorities.
Leadership can be daunting for many people simply because no-one else is
issuing the aims - leadership often means you have to create your own from a
blank sheet of paper. Set and agree clear standards. Keep the right balance
between 'doing' yourself and managing others 'to do'.
Build teams. Ensure you look after people and that communications and
relationships are good. Select good people and help them to develop. Develop
people via training and experience, particularly by agreeing objectives and
responsibilities that will interest and stretch them, and always support people
while they strive to improve and take on extra tasks. Follow the rules about
delegation closely - this process is crucial. Ensure that your managers are
applying the same principles. Good leadership principles must cascade down
through the whole organization. This means that if you are leading a large
organization you must check that the processes for managing, communicating
and developing people are in place and working properly.
Some leaders lead by example and are very 'hands on'; others are more
distanced and let their people do it. Whatever - your example is paramount -
the way you work and conduct yourself will be the most you can possibly
expect from your people. If you set low standards you are to blame for low
standards in your people.
"... Praise loudly, blame softly." (Catherine the Great). Follow this maxim.
If you seek one single most important behavior that will rapidly earn you
respect and trust among your people, this is it: Always give your people the
credit for your achievements and successes. Never take the credit yourself -
even if it's all down to you, which would be unlikely anyway. You must however
27
take the blame and accept responsibility for any failings or mistakes that your
people make. Never publicly blame another person for a failing. Their failing is
your responsibility - true leadership offers is no hiding place for a true leader.
Take time to listen to and really understand people. Walk the job. Ask and learn
about what people do and think, and how they think improvements can be
made.
Accentuate the positive. Express things in terms of what should be done, not
what should not be done. If you accentuate the negative, people are more
likely to veer towards it. Like the mother who left her five-year-old for a minute
unsupervised in the kitchen, saying as she left the room, "...don't you go
putting those beans up your nose..."
Have faith in people to do great things - given space and air and time,
everyone can achieve more than they hope for. Provide people with relevant
interesting opportunities, with proper measures and rewards and they will more
than repay your faith.
Take difficult decisions bravely, and be truthful and sensitive when you
implement them.
Constantly seek to learn from the people around you - they will teach you more
about yourself than anything else. They will also tell you 90% of what you need
to know to achieve your business goals.Embrace change, but not for change's
sake. Begin to plan your own succession as soon as you take up your new post,
and in this regard, ensure that the only promises you ever make are those that
you can guarantee to deliver.
ATTITUDE AND BEHAVIOR
28
Phil Knight’s behavior to his employees was very informal .More than half of his
time was devoted to "people issues". Most importantly, he had created
something unique at a big company - Informality. The hierarchy that Phil Knight
inherited with 29 layers of management was completely changed during his
tenure. Everyone, from secretaries, to chauffeurs to factory workers, called him
'Philip'. Everyone could expect - at one time or another - to see him. Phil Knight
gave employees a feeling that he knew them. Commenting on the informality
at Nike, Phil Knight said,
"The story about NIKE that hasn't been told is the value of an informal
place”
Informality was also standard in company correspondence. Phil Knight faxed
handwritten notes to anyone in the company who he felt deserved personal
communication, whether to motivate, correct, or congratulate, from top
management to laborers. Welch also personally reviewed everyone who
worked directly for him, handwriting extensive performance evaluations that
sometimes ran several pages. This exercise not only gave specific and ongoing
feedback to employees but was a chance for Phil Knight to reflect on the
businesses that each employee was leading. The atmosphere of informality
was perhaps most critical among NIKE's top leadership, where the confidence
that came from being in familiar company encouraged executives to openly
praise or criticize each other—or even Knight himself.
“Boundary less behavior” and the elimination of unnecessary communication
filters are the key phrases to describe Phil Knight’s attitude towards
communication. He encourages input from every employee, from the factory
floor to the executive suite. To facilitate goal setting and empowerment within
NIKE, Phil Knight needed to establish clear lines of communication in the
organization. He realized that employees come to Nike with many different
experiences and backgrounds. He did not want to take away from the benefit of
those various backgrounds, as much as reshape them with Nike philosophies.
This is not to say that he wanted a workforce of robots. Just the opposite
29
actually, he wants free thinkers. One of his objectives was to motivate people
to think outside the box and challenge the status quo. Open communication
channels between Phil Knight and his employees have been an important tool
in this regard. These channels work in both directions, giving employees the
ability to air their concerns and work towards a consensus for action. They also
help motivate employees, because once again employees feel that they are
directly contributing to the success of the company.
EMPOWERING OTHERS
When Phil Knight started Nike, he had a vision of creating an organization
where people at all levels could be held responsible for their own work, and in
the end make decisions for the betterment of their job. The goal was not to
control workers, but instead to liberate them. Phil Knight characterized this as
creating a boundary less organization in which empowered employees were
self directed and motivated to effectively reach their goals.
Thousands of Nike employees get an opportunity to get together and share
their ideas, thoughts and know-how, while building and fostering a more
creative and team oriented atmosphere. The Work-Out encourages
communication and accountability with the ultimate goal being to drive above
average team performance. By providing each team member with the
opportunity to contribute his ideas to the decision making process, Phil Knight‘s
hoped to stimulate individuals to constructively challenge their bosses and
promote a more motivated workplace. All Work- Outs included follow-up
meetings where previous commitments were discussed and accountability was
enforced. Under Phil Knight, Nike began to realize that human beings are not
machines and that each person has the potential to enhance productivity.
Knowing how to use this resource can not only give the company a competitive
edge, it can make each employee feel more important in the production
process and thus more motivated.
“The only way to be more competitive was to engage every mind in
the organization”
30
CREATING A LEARNING CULTURE
In order for Nike to continue on its successful path Phil Knight created and
encouraged a learning culture. Historically Nike followed an unwritten rule
referred to as “not invented here” (NIH). NIH encompassed the concept that if
an idea was not developed at Nike then it was completely useless. Phil Knight
did not agree with this cultural attitude. He believed that in order to for a
learning culture to form it was necessary and legitimate to plagiarize another
company or persons ideas and programs.
The learning culture paradigm shift first occurred at Nike during the Work-Out
program. The Work-Out program sparked ideas and learning opportunities that
would never have taken place if Nike’s employees were not forced to think
critically and take part in self-reflection. The Work-Out program carried over
into the every day life of the company and its employees. Ideas were
constantly free-flowing between members of the organization as well as
amongst Nike and other companies. This exchange of ideas enabled the
thirteen businesses within Nike to grow and thrive in a very competitive
environment.
In 2000, Knight was inducted into the Oregon Sports Hall of Fame for his
Special Contribution to Sports in Oregon. Knight is believed to have contributed
approximately $230 million to the University of Oregon, the majority of which
was for athletics. On August 18, 2007, Knight announced that he and his wife,
Penny, would be donating an additional $100 million to the University of
Oregon Athletics Legacy Fund. This donation is reportedly the largest in the
University's history.
However, Knight's contributions to the Athletic department at U of O have not
come without controversy. His significant contributions have granted him
influence and access atypical of an athletic booster. In addition to the "best
seats in the house" for any U of O athletic event, he has his own personalized
31
locker in the football team's locker room, and an athletic building named for
him (the library is named for his mother, the law school is named for his father,
and the under-construction basketball arena is named for his son). However,
most controversial was his successful lobbying to have his friend and former
insurance salesman, Pat Kilkenny, named as Athletic Director.[10] Kilkenny,
another wealthy athletic booster, has neither a college degree nor any
germane experience. Kilkenny attended but did not graduate from the
University of Oregon. The former chairman and chief executive officer of the
San Diego-based Arrowhead General Insurance Agency, he grew his business
into a nationwide organization with written premiums of nearly $1 billion when
he sold the company in 2006. ESPN's Outside the Lines spotlighted Knight and
his donation-backed influence on U of O athletics on an April 6, 2008 episode.
In 2006, Phil Knight donated $105 million to Stanford Graduate School of
Business, at the time the largest donation to a business school in history.[12]
Knight also provided monetary support to his high school alma mater Cleveland
High School for their new track, football field, and gymnasium.
In October 2008, Phil and Penny Knight pledged $100 million to the OHSU
Cancer Institute, the largest gift in the history of Oregon Health & Science
University. In recognition, the university renamed it the OHSU Knight Cancer
Institute.[13]
BUSINESS MODEL AND MANAGEMENT BY LEADERSHIP
"Our vision is to create the world's most competitive enterprise."
Phil Knight's goal was to make Nike "the world's most competitive enterprise."
He knew that it would take nothing less than a "revolution" to transform that
dream into a reality. "The model of business in corporate America in 1980 had
not changed in decades. Workers worked, managers managed, and everyone
new their place. Forms and approvals and bureaucracy ruled the day." Phil
32
Knight's self-proclaimed revolution meant waging war on Nike's old ways of
doing things and reinventing the company from top to bottom.
Today, Nike with its unique learning culture and boundary less organization is
one the most admired company in the world.
The techniques and ideas that Welch has employed to move Nike forward are
applicable to any size corporations, small, medium, or large.
The program followed by him for managing Nike’s success is a seven-point
management
1. Develop a vision for the business
2. Change the culture to achieve the vision
3. Flatten the organization
4. Eliminate bureaucracy
5. Empower individuals
6. Raise quality and efficiency
7. Eliminate boundaries
Other best practices and policies which contributed to the success of Nike are:
LEAD BY EXAMPLE
To spark others to perform, you must lead by example. Phil Knight mastery of
the 4 E's of leadership – Energy, Energize, Edge, and Execution – was always
in evidence. "He had great energy, sparked others, had incredible competitive
spirit, and had a record of execution that was second to none. This is a key of
the Welch phenomenon.
MANAGE LESS
Managing less is managing better. Close supervision, control and
bureaucracy kill the competitive spirit of the company
33
ARTICULATE YOUR VISION
The best leader does not provide a step-by-step instruction manual for
workers. The best leaders are those who come up with new idea, and
articulate a vision that inspires others to act.
SIMPLIFY
Keeping things simple is one of the keys to business. "Simple messages
travel faster, simpler designs reach the market faster and the elimination of
clutter allows faster decision making."
GET LESS FORMAL
You must realize now how important it is to maintain the kind of corporate
informality that encourages a training class to comfortably challenge the
boss's pet ideas.
FACE REALITY
Face reality, and then act decisively. Most mistakes that leaders make arise
from not being willing to face reality and then acting on it.
SEE CHANGE AS AN OPPORTUNITY
Change is a big part of the reality in business. "Willingness to change is
strength, even if it means plunging part of the company into total confusion
for a while.
FOLLOW UP
34
Follow up on everything. Follow-up is one key measure of success for a
business. Your follow-up business strategy will pave the way for your success.
PUT VALUES FIRST
Don't focus too much on the numbers. "Numbers aren't the vision; numbers
are the products."9 Focus more on the softer values of building a team, sharing
ideas, exciting others.
CULTIVATE LEADERS
Cultivate leaders who have the four E's of leadership: Energy, Energize, Edge,
and Execution; leader who share values of your company and deliver on
commitments.
CREATE A LEARNING CULTURE
Turn your company into a learning organization to spark free flow of
communication and exchange of ideas. "The desire, and the ability, of an
organization to continuously learn from any source, anywhere - and to rapidly
convert this learning into action – is its ultimate competitive advantage."
INVOLVE EVERYONE
Business is all about capturing intellect from every person. The way to
engender enthusiasm it to allow employees far more freedom and far more
responsibility.
MAKE EVERYBODY A TEAM PLAYE R
Managers should learn to become team players. Middle managers have to be
team members and coaches. Take steps against those managers who wouldn't
learn to become team players.
INSTILL CONFIDENCE
35
Create a truly confident workforce. Confidence is a vital ingredient of any
learning organization. The prescription for winning is speed, simplicity, and
self-confidence.
BE NUMBER 1 OR NUMBER 2
“When you're number four or five in a market, when number one sneezes,
you get pneumonia. When you're number one, you control your destiny. The
number fours keep merging; they have difficult times. That's not the same if
you're number four, and that's your only businesses. Then you have to find
strategic ways to get stronger. But Nike had a lot of number ones."
LIVE QUALITY
"We want to change the competitive landscape by being not just better than
our competitors, but by taking quality to a whole new level. We want to make
our quality so special, so valuable to our customers, so important to their
success that our products become the only real value choice."
CONSTANTLY FOCUS ON INNOVATION
"You have just got to constantly focus on innovation. You have got to
constantly produce more for less through intellectual capital.
BEHAVE LIKE A SMALL COMPANY
Small companies have huge competitive advantages. They "are uncluttered,
simple and informal. They thrive on passion and ridicule bureaucracy. Small
companies grow on good ideas - regardless of their source. They need
everyone, involve everyone, and reward or remove people based on their
contribution to winning. Small companies dream big dreams and set the bar
high - increments and fractions don't interest them."
36
Phil Knight's philosophy was that a company should be either #1 or #2 in a
particular industry, or else leave it completely. Although he was initially
treated with contempt by those under him for his policies, they eventually
grew to respect him.
At the time of his retirement, Welch received a salary of $4 million a year,
followed by his record retirement plan of $8 million a year. In 2000 he was
named "Manager of the Century" by Fortune magazine.
STRUCTURAL LEVERS
Early on, Welch replaced many top executives and built a new team, and
restructured to take out layers of management. He also opened up
communication in all directions by visiting management training programs at
Croton Ville to create give-and-take sessions with managers, test new ideas,
and preach his messages about what he expected. He introduced 360-degree
feedback, and leveraged what he later called the Nike "operating system,"
which included the planning and resource allocation processes, reviews of
managerial talent (called Session C), and quarterly communication meetings to
shape the company. Meanwhile, the vision as he articulated it was evolving
toward "speed, simplicity, and self-confidence," toward making Nike a great
place to work, then to "boundary less organization" to stretch goals, and
recently to becoming a service organization. Numerous transformation
programs were introduced, including "Work-Out," designed to eliminate
unnecessary bureaucratic work (and open up hierarchical communication), and
six sigma, using the Internet to reform processes ("Destroy your
business.com"). Over time the programs and processes evolved as conditions
changed and he learned, but from the beginning he was trying to create a
company that would have the agility of a small organization combined with the
strength of a large one.
37
HOW KNIGHT MANAGES NIKE
By the early 1970s, sales had reached $3 million, and Knight decided it
was time for Blue Ribbon to break with Tiger and start designing its own
shoes. In 1972, Blue Ribbon launched its Nike line, named after the
Greek goddess of victory. Emblazoned with a swoosh logo Knight paid a
Portland State art student $35 to design, the shoes featured a unique
waffle soles created by Bowerman that offered better traction with less
weight.
Knight’s marketing strategy was simple. Rather than rely on advertising
(which he admittedly loathed), he would get top athletes to endorse his
shoes, and then let his sales force sell the product. His strategy and the
timing of the launch couldn’t have been better. That summer, the
Olympic track and field trials were held in Eugene, Oregon, with none
other than Bill Bowerman as coach of the American Olympic team.
Knight took full advantage of the opportunity, putting Nikes on the feet
of several top finishers. When they made national television, so did the
shoes they were wearing. One of the most visible runners to wear Nikes
was American record-holder Steve Prefontaine. A cocky, anti-
establishment type, Prefontaine became the first of a team of edgy
athletes Knight recruited to endorse his shoes.
As Knight had planned, athlete endorsements played a major role in
boosting Nike sales throughout the 1970s. For instance, after tennis bad
boy John McEnroe hurt his ankle and began wearing Nike three-quarter-
top shoes, sales of that style leapt from 10,000 pairs to over 1 million.
And the sudden popularity of jogging combined with Nike’s canny
marketing created a demand where none existed before. No longer
would any old pair of shoes do for that jog around the block; people
wanted to wear what the best in the world were wearing and that was
Nike (as Blue Ribbon was re-christened in 1978).
38
Nike experienced continued success throughout the early 1980s, thanks
mostly to the tremendous sales of its Air Jordan line. Commercials
glorifying Michael Jordan’s high-flying, slam-dunking antics made the
gaudy black and red sneakers a hot item, selling more than $100 million
worth in the first year alone. By 1986, total sales hit $1 billion, and Nike
surpassed Adidas to become the No. 1 shoe manufacturer worldwide.
Amazingly, Knight stumbled only once in his stellar career. In the late
1980s, Nike strategy of focusing on hard-edged, hard-core athletes
ignored the growing market for aerobics shoes. When British shoe
manufacturer Reebok pitched their leather shoes as a fashion item for
the trendy aerobic workout crowd, they quickly overtook Nike in the top
spot.
Between 1986 and 1987, Nike sales dropped 18 percent. Knight was
forced to face the fact that while Nike technology appealed to sports
professionals, other consumers might rank appearance over function. In
response, Nike came up with Nike Air a multipurpose shoe with an air
cushion in the sole. The commercial produced to unveil the new line
featured the Beatles song Revolution.(The rights to which cost Nike
$250,000.) Nike Air may or may not have been a revolution in footwear,
but it certainly revived sales. Nike regained the lead from Reebok in
1990 and has remained there ever since.
But as Nike has grown into a huge multinational enterprise, it has
become a magnet for controversy. In 1990, it came under fire from
Jessie Jackson, who maintained that while African-Americans accounted
for a large percentage of Nike’s sales, Nike had no black vice presidents
or board members. Jackson launched a boycott that led to the
appointment of Nike’s first black board member. That same year,
stories of teenagers being killed for their Air Jordan’s sparked outrage at
what was perceived as Nike’s overzealous promotion of its shoes. More
recently, Knight has been accused of exploiting factory workers in Asia,
39
some of whom are paid less than $2 per day by the subcontractors who
manufacture Nikes. But despite this negative publicity, Nike sales have
remained strong.
USING DIFFERENT POWERS
“My main job was developing talent. I was a gardener providing water
and other nourishment to our top 750 people. Of course, I had to pull
out some weeds, too”
Jack Welch
1. LEGITIMATE POWER
Knight accepted the offer and was consequently the youngest person to ever
hold the position of CEO. He led Nike through two decades of growth, success,
and innovative change. He was in a position to tell others what to do, and has
the ability to influence subordinates in achieving the objectives of the
organization.
2. REWARD POWER
Welch inspired and motivated people by affirming their value to the
organization. He motivated his subordinates by giving them bonuses and
increasing their pays on the review of their performance and also motivated
them to overcome the challenges and reach their dreams. He played a
crucial role in attracting the talent by giving rewards and recognition to
good performers. Knight was such a leader, who celebrated the success of
his subordinates, which creates an atmosphere of recognition and synergy.
40
To reinforce the competitive environment, Knight established a
comprehensive performance evaluation and ranking system for managers.
Outstanding managers were highly rewarded while those at the bottom of
the annual rankings were routinely fired.
3. COERCIVE POWER
No one felt safe in Nike. He was not hesitating of firing anyone who does not
achieve his target goals. He was so tough with the employees and put hard
work on them which increased the stress and so reduced their innovation
and creativity.
“Control your own destiny or someone else will”
Jack Welch
He made great use of his coercive power to influence his employees on
achieving his goals. He put strategic plans and fight for achieving them (Be
No.1 or No2 or else get out of the market) this is his main objective.
4. EXPERT POWER
In 1993, the man whom The Sporting News voted the most powerful person in
sports wasn’t an athlete, a manager or a team owner. He was Philip H. Knight,
the dynamic iconoclast who for nearly 30 years has shod the feet of sports
legends and weekend warriors alike. In less than a decade, his marketing savvy
and uncompromising competitiveness had transformed the athletic-shoe
industry and made Nike one of the most successful and widely recognized
brand names in the world.
Knight first came up with the blueprint for what would become the world’s No.
1 athletic-shoe company while working on his master’s degree at Stanford
University. Assigned to write a term paper on starting a small business in an
41
area he knew well, the former University of Oregon track star naturally chose
running. He outlined a plan for breaking the stranglehold Adidas had on the
running-shoe market by using cheap Japanese labor to manufacture a cheaper,
better-quality running shoe.
Shortly after graduating in 1962, Knight decided to put his plan into action. He
flew to Japan to visit Onitsuka Tiger Co., manufacturer of an Adidas knockoff
sold in Japan. Introducing himself as the head of Blue Ribbon Sports, a
company which existed only in his mind, Knight told Tiger executives that his
firm was the ideal choice to import their shoes into the United States. He
convinced Tiger to send him some samples, promising to place an order after
his partners examined them.
He had gain experience and knowledge over the business. Through the 1980s,
Knight worked to streamline Nike and make it a more competitive company,
although many would say this was at too great a cost to individual employees
who were not treated with respect. He shut down factories, reduced payrolls,
cut lackluster old-line units. He also pushed the managers of the businesses he
kept to become ever more productive. Knight worked to eradicate inefficiency
by trimming inventories and dismantling the bureaucracy that had almost led
him to leave GE in the past.
ETHICS AND SOCIAL RESPONSIBILITY
“Giving people self-confidence is by far the most important thing that
I can do. Because then they will act”
Jack Welch
Knight is a prominent model of business leadership in the resurgent U.S.
economy of the 1990s. This "global legend" is described by Business Week as
"the gold standard against which other CEOs are measured.” The "gold
42
standard" has largely avoided any tarnish of scandal, and has achieved
spectacular results for his stockholders. The stock price of Nike shares rose
1,155% from 1972 to 1997. To achieve this success, Welch, who happens to be
a Catholic, espoused a very uncompromising and narrowly focused business
leadership model. Unfortunately, the hagiography bestowed upon Knight from
much of the business press has obscured serious ethical deficiencies.
Knight ruthlessly and, it must be conceded, effectively pursued the ultimate
end of "success" as measured by profitability, market share, etc., through a
relentless push for more productivity, the massive dismissal of employees in
less profitable portions of the company, the removal of layers of bureaucracy,
the improvement of communication between portions of the company, and the
rewarding of those who improved the bottom line. There are certainly some
worthwhile dimensions of Nike's revolutionary approaches to innovation, such
as the improved communication and openness between departments. The
instigator of change exulted in his ability to transform an institution.
Although in others view it was unethical step because he layoff his large no of
employees but from an organization point of view he believes that stretch-
goals improve performance. Although he is probably correct, there are also
costs involved. The side of stretch-goals is the feelings of stress and failure that
accompany results that do not meet the goals. If people are always working
towards stretch-goals they will wear themselves down and will likely start
showing less progress towards the goals than previously thought. A great deal
of stress will accompany the shortfall in goals. In addition, there may be
occasions when employees will feel as if they have truly reached their
maximum capacity. Unions, for example felt that Knight kept on demanding
more and more at their workers expense, basically telling them to “shape up or
ship out”, among others. In his reign employees are utterly expendable in this
world. They can be fired, dismissed, laid off, made redundant, riffed,
downsized, or whatever convenient euphemism management may use, entirely
at the whim of the company. Performance, experience, or years at the
company are meaningless in this environment.
43
In the midst of the layoffs, Nike's public relations campaign still touted a loyalty
to its employees in its "Nike is me" publicity campaign. The reality was that to
survive and thrive at the new Nike, an employee had to be "tough," "short
tempered," "almost impervious to criticism," "able to triumph in Machiavellian
maneuverings," and "completely wedded to your job." One executive confided
that going off to work in the morning at Nike was like "going off to war."
It suggests that perhaps success, and not integrity, was the dominant principle
guiding Nike. The push for success cultivated an institutional culture that was
susceptible to institutional misconduct.
But now after some 28 years in an interview with The Financial Times, Knight,
the father of shareholder value, said, “On the face of it, shareholder value is
the dumbest idea in the world. Shareholder value is a result, not a strategy.
Your main constituencies are your employees, your customers and your
products.”
A criticism of Knight’s communication style is that he is too open and too
confrontational. Observers of Nike might perceive the “higher decibel level” at
Nike to be seen as a “mugging”, or shocking. Knight strives to build self
confidence in his managers, but his communication style often caused people
to lose self-confidence in them. Open communication channels work well when
they are used to motivate performance and increase employee morale, but
when they are used to intimidate they will have the opposite end in low self
esteem.
A negative aspect of empowerment stems from people who do not want to be
empowered. Union workers are often happy to take on more responsibility, but
those who distrust management do not think they should have to do any more
than their usual assignments. Welch had assumed that all people want more
responsibility, but the fact is that many people do not want any more
responsibility. Many workers reason that if they had wanted to have more
responsibility they would have become managers.
44
He has used much of his power in leading his employees. But this idea was
ethical and he used it to achieve the company’s goals. The only comment is
that he could focus more on employees’ needs and limitations.
It is considered, his career has been devoted entirely to himself, his personal
fortune, and his media image.
The company came under increasing scrutiny for its wages and working
conditions in Indonesia, China, and Vietnam. United Nations Ambassador,
Andrew Young, released a report finding no issue with Nike's factories, noting
that facilities were "clean, organized, adequately ventilated and well lit,"
according to a Reuters Business Report article. However, human rights groups
charged that Indonesian workers were incessantly striking over low wages;
Nike workers received $2.46 per day in a nation that counted $4 per day as the
minimum subsistence wage.
Independent filmmaker Michael Moore, whose 1989 documentary Roger and
Me depicted a heartless corporate mindset at General Motors, turned his
cameras on Nike, among numerous other firms. Moore addressed the issue of
how Nike treats its workers and requested jobs for people in his depressed
hometown of Flint, Michigan. Knight countered that American workers do not
want jobs in shoe factories, but Moore was able to find a crowd of jobless
workers in Flint who would be happy to make Nikes. For his part, Knight was
the only CEO to agree to appear in the Moore film.
The uproar over the Asian workers dragged on for Nike, and they eventually
raised wages a small amount. Some American women's groups, protested that
female employees-the bulk of Nike's Asian work force-were still working 100 to
200 hours overtime at Nike just to pay their bills. They issued statements
accusing Nike of corporal punishment and sexual harassment in the shops as
well. By mid-1998, Knight announced in a speech to the National Press Club
that Nike was "dedicated to giving American consumers assurances that the
products they buy are not manufactured under abusive circumstances,"
according to a Gannett News Service article. He added that he had been
45
branded as a "corporate crook," and defended his business practices, citing
"misinformation and misunderstanding" as reasons for the media assault on
Nike. Knight noted that a number of policies were going to be implemented in
their production facilities, including raising the working age to 16 at clothing
factories and 18 at shoe factories; using safer, non-toxic glues when possible;
adopting stricter, U.S.-dictated air quality standards; instituting on-site
education programs, and more.
In addition to the Asian labor issues, many people remained outraged over
Nike's escalating costs, especially since a large market for the products are
poor, inner-city youth. One shoe endorsed by basketball player, Anfernee
Hardaway, was tagged at $180, and the Air Jordans touted by superstar
Michael Jordan had always been priced at over $100. Perhaps this combination
of issues served to cause a slump. Sales and profits fell in 1998, and Nike laid
off 1,900 employees. However, the company remained the world's largest
shoemaker. It won a lawsuit in early 1999 that had accused the firm of lying to
consumers about "sweatshop" conditions in Asian factories. Human rights
groups remained unconvinced.
When not at the helm, Knight enjoys the fruits of his success. He and his wife
Penelope "Penny" Parks have two grown sons and one foster daughter. They
live in non-ostentatious comfort in Oregon, with a gaggle of pets and Knight's
"only personal concession to flash: [a] black Lamborghini (vanity plates: NIKE
MN) and red Ferrari," as Hauser noted in People. The workplace is also the
scene of fun and comfort: Nike World Campus features three restaurants, plus
fitness center, beauty salon, laundry service, jogging facilities, a day-care
center, and other amenities.
Knight can't help but see success in Nike's future, as the company expands its
product line to include a wide range of apparel and accessories. As a Forbes
writer noted, the man who built an empire on a pair of shoes still cherishes the
words of his track coach: "Play by the rules, but be ferocious."
46
PHIL KNIGHT’S EFFORTS AND THEIR IMPACT ON THE
ECONOMY
“Giving people self-confidence is by far the most important thing that
I can do. Because then they will act”
Jack Welch
Nike made great strides under Phil Knight tenure as CEO. The company he led
since 1981 is a company that employs 27000 people in more than 100
countries. Shareholders have been rewarded throughout Phil Knight's tenure. A
$100 dollar investment in Nike the day Phil Knight took over would have been
worth over $2,000 in 1998. He also achieved his goal of making Nike the
company with the highest market value in the world. In 1997, Nike's stock
value eclipsed $200 billion.
All his great accomplishment made a profound effect on the USA and on the
world economy as a whole. Initially, when he took over as a CEO, he laid off
approximately 12000 employees which didn’t earn him a employee-oriented
manager. He restructured the whole company to improve the bottom line
profitability and maximize the shareholders value. Nike market value grew 40-
fold, to $500million between 1981 and 2001. The Nike through its profitability
paid billions of dollars as taxes to the government that helped the economy to
generate more jobs and initiate more social and economic endeavors.
REFERENCES
47
Websites
http://www.google.com
http://www.howstufworks.com
http://www.yahoo.com
http://www.leader-values.com
http://www.oup.com
Strasser, Julie, SWOOSH: The Unauthorized Story of Nike and the Men Who Played There, Harper Business, 1993.
Forbes, August 2, 1993.
Gannett News Service, May 12, 1998.
Harvard Business Review, July-August 1992.
Reuter's Business Report, June 24, 1997
Sports Illustrated, August 19, 1993..
"Nike, Inc.," Hoover's Online, March 3, 1999. Available from http://www.hoovers.com/.
http://www.brainyquote.com
Khurana, Rakesh (2002-09-13). "Good Charisma, Bad Business". New York
Times. http://query.nytimes.com/gst/fullpage.html?
res=9C02E0DD1031F930A2575AC0A9649C8B63&sec=&spon=&pagewanted=
all. Retrieved on 2008-07-06.
48