Nike's shoe drops
There are lessons for all innovation-minded business operators in Nike's failed experiment with an 'uncool' CEO and an ill-advised direct-to-consumer pivot.
Last week, Bloomberg News published a feature article titled “The Man Who Made Nike Uncool”. Now, just six days later, the man in question has been shown the door. John Donahoe is stepping down as Nike CEO, to be replaced by returning veteran executive Elliott Hill.
Donahoe was not a natural fit to lead one of the world’s most iconic consumer brands. His background was in management consulting — at Bain & Company — and tech, having previously served as CEO for both eBay and ServiceNow. By the time he took over eBay in 2008, its golden age of innovation was well behind it, and ServiceNow is far from the most glamorous of the tech giants.
His tenure at Nike was marred by strategic missteps. Picking up the threads of a 2017 strategy launched by his predecessor Mark Parker, Donahoe attempted to turn Nike into a digitally-enabled direct-to-consumer machine, eschewing traditional retail relationships and brand campaigns for online sales and direct engagement with customers.
It worked — for a bit. Nike’s digital sales soared by over 80% in 2020, aided by the seismic changes to consumer behaviour during Covid. But the stress fractures didn’t take long to show, and the company’s underinvestment in wholesale channels started to sting. Competitors like Adidas and Hoka were ready and willing to fill in the yawning gap on shelves at stores like Foot Locker, and many less Nike-obsessed customers were disinclined to buy product straight from the app.
