Tuesday, October 20, 2009

Just Doing It

An organizational culture can be formed and shaped through the founder’s vision and actions taken. Phil Knight, founder of Nike and marketing guru, has transformed the sports industry through his innovative sports merchandise. His strategy of recruiting top athletes such as Michael Jordan to wear his brand has put him on top of his competitors, Adidas and Reebok. Continuing innovation in sports apparel and equipment technology has kept Nike at the forefront within the industry. Through this vision, Knight has created a distinct organizational culture.

Yet trying to understand Phil Knight’s success as a leader is not easily done. A reclusive figure who guards his reputation and privacy, Knight started his business by selling shoes, that he bought in Japan, from the trunk of his car. With the help of his former track coach at the University of Oregon, Bill Bowerman,  Knight made adjustments to the shoes by adding “waffle soles.”  This and other innovations helped them launch an empire in sports commerce.

      In his role as the CEO, Knight has often let his employees take the lead on getting things done, choosing not to wield total control.  How has Nike been successful in achieving a company with revenue of $16.8 billion through Knight’s leadership? Knight strategically tries to employ the best talent possible by recruiting former professional and college athletes to work for his company. These former athletes, like Knight, know what it takes to play and work like a champion. Knight chose men and women that shared his same work enthusiasm which is a trait of leadership proposed by Harold Geneen (Geneen 9). He knows their passion and commitment to sports will continue to propel Nike forward.  Also, the management structure that he adopted constantly moves people around in leadership roles. Leaders become followers and vice versa. Knight seems to engage his employees in the paradigm set forth by Joseph Rost that both leaders and followers are engaged in the process of leadership (Rost 192). By allowing his followers to adopt different leader and follower roles, he is cultivating an engaged followership.

 In his research on organizational cultures, Robert Schein learned that founders often start with a theory of how to succeed and incorporate their own cultural paradigm within their businesses (Schein14). Phil Knight has achieved this with Nike. He incorporated his own assumptions on how Nike should be run through delegation of leadership positions and strategic talent management. Nike’s mission is to bring inspiration and innovation to every athlete in the world which has helped them remain the top sports retailer.

In 2004, Phil Knight resigned his position as CEO of Nike but chose to remain on the board of directors. An outsider to the organization, William Perez, was chosen to be the next CEO. Perez only lasted thirteen months before he left the organization after clashing with Knight over the direction of the company. Knight said that Perez “was unable to wrap his arms around the place” and truly realize the culture of the organization. “It is more about Phil Knight's ego than Perez's performance. It is a question about identity. Some people won’t relinquish until they die." said Jeffrey A. Sonnenfeld, an associate dean at the Yale School of Management (http://www.nytimes.com/2006/01/24/business/24nike.html). This brings up the question of why an empire that strives on innovation is unwilling to adopt this same strategy with their leadership? While Knight has created a successful business, he has also fostered an insider culture that does not seem open to outside influence. This is similar to Schein’s research on company founders that seek to employ family and primarily promote them over outsiders. It seems Knight believes that those “on the inside” of Nike or the Nike family are best for the organization. Will Knight be able accept the new CEO, Mark Parker and his new principles or is Sonnenfeld right that some won’t give up until they die? Do cutting edge innovators over time become dinosaurs in their field?


  1. Interesting story Ashley! That links in well with Schein’s article. Schein states that in an organization that has a strong, developed culture, people that are brought in from outside of that "founding family" are often viewed as being "less loyal to the original values and assumptions that guided the company and as being more concerned with the short run" (pg. 25). He also stated that they are "often mistrusted because the are not loyal to the founding assumptions." (p. 25). Maybe this is some of what Knight is experiencing as a founder, who has for so many years been able to dictate his vision and how the company should be run. It is hard to trust someone that is coming in and taking over something you have been so invested in and so opinionated about for years. It is hard to see someone come in with new ideas and new ways of thinking, even if they may be good for the company, because Nike’s ways of doing things have seemed to work well over the years.

    It sounds like it is all about Knight though, so I would wonder how the other board members felt or even how the managers and employees felt about Perez? If Knight has established such effective followers who understand and believe in Nike, as it sounds like from your blog he did, would it really matter the leader they brought in and the personal differences between the new and old leader? Wouldn’t the effective followers be carrying on the culture of Nike? Or do you think it is only the founder that can do that?

    Schein states "outsiders coming into such a community with new assumptions are likely to find the culture too strong to budge, so they either give up in frustration or find themselves ejected by the organization as being too foreign in orientation" (pg. 28). This is what sounds like happened to Perez. With Knight still on the board, I think it might be hard to find a replacement because bringing someone in from the outside will always be met with a clash in the founding culture.

  2. I think this parallel's a lot with the HP case we read and the early history of HP. There was a culture that allowed HP to be successful and the culture stayed relatively similar while the original founders were still involved with HP. Once outsiders were brought in, the culture of HP changed and as a result the company changed. I'm interested to see the progression of the Nike's culture as outsiders are brought in


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