Nike, headquartered in Beaverton, Oregon, is the biggest sports shoemaker in the world. Throughout the 1990s it seemed that its founder and CEO, Phil Knight, and his teams of shoe designers could do no wrong; all their innovative design decisions led to the global acceptance of Nike’s shoes and record sales and profits for the company. As time went by, however, and its fortune soared, some strange dynamics occurred. The company’s managers and designers became convinced they “knew best” what customers wanted, and that their decisions about how to change and improve Nike’s future shoes would be enthusiastically received by customers. 

But things were changing in the sport-shoe environment. New competitors had entered the market and they began to offer alternative kinds of sports shoes—shoes targeted at specific market segments like skateboarders, soccer players, or power walkers. Nike had no shoes in these market segments. Moreover, Nike also failed to notice that sports shoes were evolving into performance shoes for more everyday uses such as walking or backpacking. It also failed to take note of consumers’ increasing preferences for dark blue and black shoes that wore well in cities and that could double as work and walking shoes. 

In the 2000s Nike’s sales and profits fell sharply as many of its new lines of sports shoes were not well received by customers, and CEO Phil Knight knew he had to find a way to turn his company around. Realizing that his designers were starting to make poor decisions, he brought in managers from outside the company to change the way decisions were made. An executive who was brought in to lead the outdoor products division advised Knight to take over and purchase small specialized companies, such as North Face, to quickly widen Nike’s product line. But Nike’s other managers and designers resisted this idea, believing that they could still make the best decisions. With sales still slumping, it became obvious that Nike would have to take over specialist shoe companies to grow successfully. One of the first of its acquisitions was Cole Haan, the luxury shoemaker, and Nike’s designers proceeded to revitalize its line of shoes by using their skills to make them more comfortable. Then, realizing it had to get into small markets, in the 2000s, Nike bought other small companies such as Hurley, the skate and surfboard apparel maker...........

Discussion Questions 

1. How did Nike change the way it made decisions and introduce new products? 

2. In what ways could Nike use the change techniques discussed in this chapter to find ways to improve its effectiveness and competitive advantage?