性视界

Bring inspiration and innovation to every athlete* in the world.
*If you have a body, you are an athlete. [1]

The above statement, ascribed to the co-founder of Nike, Bill Bowerman, serves as the Nike mission statement to this day. Nike鈥檚 business model has always been to inspire people to consider themselves athletes and then provide these athletes with the best apparel, footwear, and equipment to play their respective sports. However, in 2008, Nike was seeing revenues flatten and profits decline [2]. Mark Parker, the recently appointed CEO, saw an opportunity to realign the company with the mission statement and refocus on the athlete. I have chosen to write about Nike鈥檚 subsequent operational changes and the impressive financial results that followed as an example of effective alignment of an operating model with a business model.

Nike was previously structured to develop, market, and sell based on silos of product type (footwear, apparel, equipment, etc..). This allowed them to be efficient in supply-chain and manufacturing, but it did not address the needs of their consumer, the athlete. As technological advances developed across industries and youth athletics became increasingly competitive globally, athletes of all levels wanted to be dressed head-to-toe in innovative products tailored specifically to their sport [3]. In 2008, Nike made a change to organize based on sports instead of products, an approach they called 鈥淐ategory Offense鈥�. Nike鈥檚 new categories included Running, Global Football, Basketball, and Women鈥檚 Training. This change has proven tremendously successful, as sales have grown by 70% to over $30 billion since the realignment (Figure 1 below) [2]. Although the change started with only a reorganization of key personnel and reporting structures, the benefits of Category Offense quickly propagated through all facets of the business from product development to merchandising.

The reorganization based on sport categories fueled Nike鈥檚 innovation and product teams. Product development had a renewed focus on the unmet needs of the athletes playing sport in their category [4]. Nike also increased their digital presence, bringing the athletes closer to the product development teams. By focusing on a singular athlete playing one sport, Nike鈥檚 product designers understood the consumer better than ever and innovation followed, ultimately putting Nike at the forefront of technological advancement in each category.

The marketing and sales team also benefitted from the organizational shift. As Nike moved to an increasingly Direct-to-Consumer sales strategy, Nike stores were able to change their layouts to build entire sections聽of the store around聽each sport. These sections featured footwear, shirts, shorts, and equipment tailored to each specific sport category, making the shopping experience more convenient for the athlete. With one aligned team focused on each sport category, entire collections offering the range of products also arrived to retail stores together at the beginning of the sport鈥檚 season. This allowed Nike to capture a substantial portion of an athlete鈥檚 wardrobe at their most popular and convenient time of purchase [3]. The change to more sports-specific products also led to increases in overall spending for multi-sport athletes who now had a large selection of tempting merchandise for each of their sports.

The Category Offense model has even improved Nike’s financial reporting and planning. By tracking financial performance聽by sports category, Nike is able to make targeted investments in new products or professional athlete sponsorships in the struggling categories. As Nike鈥檚 Category Offense continues its immense success, Mark Parker has made an aggressive and public commitment to increase Nike revenues from $30 billion in 2015 to $50 billion by 2020. If Nike continues to put the athlete first throughout the span of their operations, this impressive growth seems like a real possibility.

Sources:

1. Nike Corporate. 鈥淣ike Mission Statement鈥� http://help-en-us.nike.com/app/answers/detail/a_id/113/~/nike-mission-statement. December 6, 2015
2. Lashinsky, Adam. 鈥淣ike鈥檚 Master Craftsman鈥� http://fortune.com/2015/11/12/nike-ceo-mark-parker/ November 12, 2015.
3. Blenko, Garton, Mottura, and Wright. 鈥淲inning operating models that convert strategy to results鈥� http://www.bain.com/publications/articles/winning-operating-models-that-convert-strategy-to-results.aspx. December 10, 2014.
4. Wood, Urquhart. 鈥淭ake a lesson from Nike鈥檚 customer diagnosis approach鈥� http://www.bizjournals.com/bizjournals/how-to/marketing/2015/10/take-a-lesson-from-nikes-customer-diagnosis.html?page=all. October 6, 2015.