Blog

May 19
nike fuelband

Nike – the most innovative company in 2013

 Nike: the most innovative company in 2013

Download in pdf format

 

NIKE is one of the best examples of relentless innovation. The company might be very happy with the results it had in the past few years. Last year, Nike’s annual revenue hit $24 billion, up 60% since 2006. Profits are up 57%, and Nike’s market cap has more than doubled[1]. The company may sit on its laurels, but instead it went on studying the market and always striving to be competitive via radical and incremental innovation. Indeed, one of Nike’s fears is to become a slow, bureaucratic company happy with what it achieved. This was the mistake of many, like Blockbuster and Kodak, and Nike will not make the same mistake.

Through countless experiments and failures, the company brought to the market two very innovative products and for this, and its culture of innovation, was crowned by Fast Company as the most innovative company in 2013.

The Fuelband. Imagine a smart-looking bracelet full of LEDS that helps you measure how much “energy” you burned on a daily basis. It checks your movements and helps you keep track with your fitness. Via a wireless application, you can download the data on you Smartphone, tablet or computer and check whether you reached you daily goal. Then you can even share it with your friends. The bracelet marks a shift of the company from apparel into the high-tech service sector, a move that is extremely difficult to accept, let alone achieve, especially by a 44,000-employee multinational company that built its fortunes on the production of shoes.

The Flyknit Racer. The Racer is an extremely light shoe with a completely new technology. It is created via a knit threading, instead of multiple layers of fabric. To create this product, Nike had to completely rethink its manufacturing process.[2]

These innovations are part of a mind-set that recognizes that the swoosh might not be always the leader in the market, especially considering competitors like Adidas. Nike is observing the market carefully for the new companies in the shoe sector that are becoming popular and that, one day, may become might rivals, like Jawbone and Fitbit. According to Nike CEO Mark Parker, “companies fall apart when their model is so successful that it stifles thinking that challenges it”.

Nike reveals four rules that makes it take big risks in order to deliver successful innovations on the market.

 

Rule 1: To disrupt, you must go all-in. The Flyknit is not another kind of shoe. It is a new manufacturing process, an innovation that may disrupt the market. The shoe’s process gets rid of all excessive material, and allows it to be perfectly fit for the foot.  The racer is also an ounce lighter that other shoes and it can be micro-engineered, to improve durability and fit. [3]

It took Nike 195 iterations to reach the final result: a trial-and-error attitude that paid, even though the challenge is that of redefining part of the shoe market and the internal processes that led Nike to become so successful. Nike with this plan shows they are not interested in incremental innovation: they did not want to make a “slightly better shoe”, but to create something that made them unique. This is one of the features of highly innovative, and successful, companies: the ability to challenge their processes, strategy and even their culture, even though it led to incredible success. Because in today’s world, what leads us to be successful today, may be the reason for our failure tomorrow.

 

Rule 2: Anticipate a product’s evolution. Nike has a history of killing many ideas: once they made the Magneto, a pair of magnet that you would tape on your temples and then clip futuristic eyewear on them. First they went ahead with the idea, they decided there might not be enough market for this kind of product. Failures and errors are part of a mind-set that always thinks much ahead. In this way, you learn to look into the scenarios of the future, trying to spot soft signs that tell you what people will want, and how they will live, some years from now. This is a risky and difficult exercise, but one at which you can become proficient with training and coaching. To reduce the rate of failure, you need to learn to listen to the market carefully, and identify immediately even small changes in the behaviours of customers. Planning growth today does not mean investing more in advertising, but investing in a mind-set and attitude that strive for constant innovation. Training  and coaching your people to have this kind of attitude is essential, because innovation may come from the CEO or the sales assistant at your local store, who hears customers complaining, requesting, or praising, on a daily basis.

 

Rule 3: Direct your partners. The Fuelband was the result of collaboration and sharing of ideas of Nike and other external partners that were called to work on the product to make it irresistible. In today’s world, companies cannot have all the know-how and capabilities to create something completely innovative. It takes too much expert knowledge. Nike paired with partners like industrial design firm Astro Studios, and engineering firms Whipsaw and Synapse and a digital marketing agency, R/GA. The great skill of Nike was to direct a Team of players towards a goal: create an innovative, addictive bracelet that everyone would like to wear. In the process, everybody contributed to the final result, and everyone proposed silly ideas: the secret is to lead the team, encourage it to go forward even when the breakthrough does not come and it feels like you are hitting a brick wall. Innovation is messy, difficult, and risky. Putting together the best experts in each field, Nike was able to ensure that the Fuelband was the best product they could make. This success story though is the result of the ability of Nike to create and guide a Team of experts towards a completely new direction.

  

nike fuelband

Rule 4: feed company culture. Inside Nike, all innovation is a secret. They always let you know, when they present a prototype, that you are lucky to be one of the first few people outside Nike to have seen it. This innovation-driven culture that makes always sells their “secret” products as something to jealously keep, something so important that you need to keep it away from indiscreet eyes, makes people inside the company feel they are part of something important. And that is what makes Nike so attractive for talents and drives turnover down: if you have worked for the company for less than ten years, you are still a rookie. [4]



[1] Fast company article: http://www.fastcompany.com/most-innovative-companies/2013/nike

[2] Fast Company article: http://www.fastcompany.com/most-innovative-companies/2013/nike

[3] Fast Company article: http://www.fastcompany.com/most-innovative-companies/2013/nike

[4] Fast company article: http://www.fastcompany.com/most-innovative-companies/2013/nike

 

Leave a reply

Your email address will not be published. Required fields are marked *