Nike’s Co-founder on Innovation, Culture, and Succession

28 July, 2017 / Articles
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Phil Knight, former chair and CEO of Nike, tells the story of starting the sports apparel and equipment giant after taking an entrepreneurship class at Stanford and teaming up with his former track coach, Bill Bowerman.

Together (and with the help of a waffle iron) they changed how running shoes are designed and made. Knight discusses the company’s enduring culture of innovation, as well as the succession process that led to former runner and Nike insider Mark Parker becoming CEO.

Every company has an origin story – some enduring narrative that informs the company’s culture. For Nike, it’s the one about the waffle iron.

One morning, co-founder Bill Bowerman had waffles for breakfast. He started looking at their blocky texture, and realized the same shape would give a running shoe better traction. He used his own waffle iron and some rubber to create a prototype. It ruined the waffle iron, but everything else worked out pretty well.

Today, that waffle iron is at company headquarters, and the sports apparel and equipment maker has more than seventy thousand employees and brings in tens of billions of dollars in annual revenue.

Given that company narrative, it shouldn’t surprise you to learn that current CEO Mark Parker started out at Nike as a shoe designer.

Nike’s long, successful race from startup to global enterprise is chronicled in the recent book, Shoe Dog. The other company co-founder, Phil Knight, wrote it. HBR senior editor Dan McGinn talked with Knight about partnering with Bowerman, his former track coach, to launch the company.

PHIL KNIGHT: The shoe is the one piece of equipment that really matters to a runner. There’s no ball involved, there’s no racket, there’s no helmet. Bowerman was obsessed with it, that he believed, you know, an ounce in a pair of shoes was the same as a thousand pounds in the last five yards of a 1,500 meter [race]. So, he was obsessed with it and it got me quite interested in it.

DAN MCGINN: Sounds like as far back as the 1950s, he was sort of tinkering and experimenting with all kinds of weird shoes. You had to wear some of these, as one of his runners?

PHIL KNIGHT: Yes, in about my senior year, he had begun to believe that shoes should be lighter than the shoes that were coming in from Adidas and Puma, the two main suppliers in running. And so he began to, you know, make some shoes in his home workshop and he didn’t want to try them out on his Olympic athletes, he tried them out on me and so it got me quite focused on the shoes.

DAN MCGINN: What was the weirdest pair of shoes he ever had you wear?

PHIL KNIGHT: Well, it was probably a pair of goat-skin shoes with a very thin plate, that you could feel the spikes through the thin plate, but it was very lightweight and it was very odd-looking, but it was light and it worked OK.

DAN MCGINN: Some of this must have cost you some time, I would think, in races. Did it —was there ever tension in the fact that he’s making you wear these things and it might be hurting your performance?

PHIL KNIGHT: He had me convinced it wasn’t hurting my performance and that came home to register very strongly when Otis Davis won the conference championship wearing a pair Bowerman’s homemade shoes. And he began to believe in them.

DAN MCGINN: Now your fascination with shoes and the idea that there might be a business there, that’s something you thought about at Stanford during business school?

PHIL KNIGHT: That’s right, that I took a class in entrepreneurship and took the running shoe idea with the thought that: why are shoes, why are the quality of running shoes made in Germany?  That’s not a place to make shoes, and why aren’t they made in Japan which was, you know, very much more economic as far as the stitching which is the most expensive part of a shoe. So I used that as sort of the thesis of the paper and the professor liked it and that’s the way it began.

DAN MCGINN: And it seems like when you began, the idea was mostly about importing as opposed to putting your own design ideas into it. Is that true?

PHIL KNIGHT:  Yeah, it was, yes, it was mainly focused on economics and manufacturing.

DAN MCGINN: So after Stanford, you went on a, sort of a whirlwind tour and ended up talking sneakers in Japan. How did that come about?

PHIL KNIGHT: Well, I had written the paper, the Japanese ought to be able to make inroads into the German shoe market just as the Japanese had made inroads into the camera market. I picked out a sequence of factories that I was going to call on. And the first one was Onitsuka Company Limited in Kobe, and I called on them and got a great response, and I ordered some samples, and away we go.

DAN MCGINN: So eventually you sent a couple of them to your old coach. He was one of the first people you shared them with. Why did you do that?

PHIL KNIGHT: Well, obviously, he was by that time really recognized as one of the best distance coaches in the world. And so I thought if I could get him to approve the shoes, to buy a few pair of shoes, that would be ultimate endorsement and that, see if I can get Bowerman to buy a few pair.

DAN MCGINN: So celebrity endorsements had become, you know, a driving factor in athletic shoes and athletic gear of all sorts. You didn’t really think of him as more than that at the beginning, this was just about getting him to sign on and say these were the right kind of shoes?

PHIL KNIGHT:  Well, the endorsements, they were already out there long before I ever got in the game, but I thought of it more as basically an approval of the quality of the product more than the endorsement. Endorsement, I was more interested and then if we get Bowerman to sign off on it, could we ever get Burleson to wear a pair. That’s kind of the way I thought about it.

DAN MCGINN: How did it evolve to be an actual deal, like a partnership?

The science man and innovator, Fernando Fischmann, founder of Crystal Lagoons, recommends this article.

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