Four big strategic mistakes Nike needs to reverse

Outgoing CEO John Donahoe set Nike on the wrong trajectory, thanks to bad assumptions about product and distribution, and an insufficient focus on brand.A few words of sympathy for John Donahoe, the soon-to-be former CEO of Nike. Six months ago, he was the feted boss of one of the biggest brands in the world. Now he’s the corporate bogeyman in every LinkedIn post you read over the weekend. If the blogosphere is to be believed, Donahoe is guilty of every business sin ever conceived, from hiring consultants to wearing a suit too much.The ex-Bain Stanford MBA, previously a successful eBay CEO, appeared the ideal candidate when he took the helm in 2020. But the end was nigh in March when Nike shocked the market with a revenue downgrade. And it was super fucking nigh when Nike lowered expectations further in a dismal earnings call in June. The company’s share price plummeted 20%, wiping out £21bn of value overnight.Last week’s announcement that Donahoe would retire came as no surprise. He was the man to blame for messing up Nike.And, for once, this simplistic explanation does appear to be the valid one. Donahoe got his strategy wrong. Plain wrong. It might have taken four years to reveal that fact, but such time lags are to be expected. Nike provides marketers with four salutary lessons in what not to do. None of the lessons are especially surprising, but as Nike so deftly demonstrates, that does not stop them from being true or enormously damaging when ignored.

Error 1: Product matters

It’s easy to miss the central point of any marketing success or failure – the product itself. Ignore those marketers who tell you it’s all about advertising or disruption or mental availability. All those roads still pass through the product crossroads. And Nike’s product was losing its appeal.Under Donahoe, Nike cut back on radical products and heavy R&D, and began to look too closely at existing products and current customer demand for its product development coordinates. “If you drive a car just by looking in the rear-view mirror, that’s not a good thing,” Nike’s chief design officer Martin Lotti observed recently. “The bigger opportunity is the windshield.”To make the situation worse, Donahoe initiated his Consumer Direct Acceleration (CDA) strategic plan: previously specialised sporting teams were generalised into men’s, women’s and kids’ divisions. It was an attempt to “create a more premium, consistent and seamless consumer experience across Nike’s owned and strategic partner ecosystem”. But it effectively removed the killer specialism at the heart of Nike’s product success – one that saw an occasional hot new product eventually trickle down from professional sport to everyday fashion. Nike also provides further evidence, if it were needed, that any plan that contains the word ‘ecosystem’ is always, and I mean always, a signal of sloppy thinking.

Error 2:..

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