October 2019 saw 172 CEOs leave their posts, setting a new high in what was already a record year for C-Suite churn. It’s tempting to acknowledge the pattern without delving into specific cases. But it’s equally important to hear the signal, not just the noise. The change of CEO at Nike matters because it raises important questions about how culture acuity serves consumer businesses.

At Nike, it isn’t quite “out with the old”

Mark Parker served as CEO since 2006, after a short tenure by an outsider when founder Phil Knight was ready to turn over the reins. Mark started as a shoe designer and spent decades inside Nike before ascending to the Chief Executive office. In resigning, he is in fact moving upstairs, where as Chairman he’ll continue to look after brand and product, whilst the day-to-day CEO work will pass to digital business boss John Donahoe.

What gap does Donahoe fill?

Evercore ISI analyst Omar Saad has been a bull about Nike for several years, even when shares were declining. About Donahoe’s appointment as CEO, Saad has this to say: “Given the rise of importance of digital throughout the business and Donahoe’s expertise in enterprise technology and digital innovation (CEO of ServiceNow, eBay, Bain), his announcement as the next CEO (vs. someone with a traditional retail/consumer background), serves to punctuate Nike’s transformation from a shoes and shirts company to its next phase as a digitally-enabled consumer platform company rooted in sport, style, and culture.”

The digital turn

The turn towards digital is well underway at Nike. In the March 2018 quarterly investor call, Parker, then CEO, said the fundamental strategy is “to be more personal at scale.” Evidence suggests that superfans spend. The finding in 2017 that app users spent triple what web users spend on Nike products was a revelation. Now serving superfans is at the heart of a strategy Nike calls Customer Direct Offense. Nike’s rising performance (which Saad points out in 2019 is “across categories, price points, channels, ages groups, genders” sits against a backdrop of upheavals in how customers shop. Amazon erodes brand equity. Brick and mortar stores report falling footfall and record store closures. So a focus on sales straight to customers makes sense.

But to work, this digital turn needs to stay close to customers; to know what superfans want almost before they do and also to listen and learn when customers signal what they wish a product line or brand could do for or with them.

Cultural empathy

Nike is known for its toxic internal culture and also for its empathy with wider culture, that world outside the corporation anthropologist Grant McCracken describes as “the body of ideas, emotions and activities that make up the life of the consumer” (2009, 1). Culture with a big “C” is, McCracken maintains, “the place to discover advantage, opportunity, and innovation” because “it is the breeding ground of cataclysmic change, a North Sea out of which commotion constantly storms” (2).

The way Nike embraced quarterback Colin Kaepernick, keeping his protest against police brutality against Black Americans in the public’s eye long after the football season ended is an example of Nike under Parker acting as a culture maker, which is to say: “experimenting with new acts of ‘meaning manufacture’. That’s when “brands find meaning in our culture and invest this meaning in brands” (142).

Company climate for creativity

A dismal interpretation of Parker’s role change sees it as a triumph of spreadsheet logic over creative courage. But a good creative leader may well have instilled practices and processes that will endure his departure. Here are three attributes of climate to assess in this next phase of Nike:

  1. Within the company, is there a willingness to take seriously the evidence that consumers make meaning with and form attachments to objects and icons, regardless of what form those meanings take?Levi’s lacked this capacity, and the adoption of oversized denim jeans by hiphop artists and fans wasn’t clocked until it was nearly too late. “While the youth market transformed, Levi’s did not,” rued business writer Hal Espen writing in the NY Times in 1999. After sales dropped 15% in a single year came the admission: ”We didn’t read the signs that all was not well,” says Gordon Shank, the 51-year-old chief marketing officer of Levi Strauss. ”Or we were in denial. A year ago, we were asleep at the wheel, sailing straight for the iceberg. We’ve woken up.”
  2. Can people within the company become comfortable with the discomfort of getting ahead of the curve?Because ahead of the curve is where you need to be if you want to see in real-time who steps forward as representatives for key cultural values, and be ready to sign them as a celebrity endorser. Nike did so when Colin Kaepernick took a knee because Black Lives Matter. The outrage their celebrity deal with Kaepernick generated proved to make their merchandise even more desirable to their core consumers. The sales uptick was not guaranteed; Nike took a gamble.
  3. Do enough people across the organisation have acuity about who the brand and the organisation is, really?Who steps up and who doubles down when the company’s own employees speak out about how company policy or company practice duplicates social harms, perpetuates prejudice or practices inequality? Now that Nike has changed its policy about dropping female athletes who are pregnant, what other out-dated practices will people transform?

Your company’s creative climate health check

If you’re not John Donahue or one of Nike’s senior leaders, you may think these questions don’t apply to you. But here are several questions to take straight to the boardroom today:

  1. Do you have a culture change dashboard or culture radar?
  2. What forms do your culture insights exist in the organisation? Who has access to them?
  3. If your culture radar lives in the heads of a few people, how committed to staying are they? What happens to your organisation if they depart?
  4. Where in the organisation are the people who connect the dots?
  5. Who in the C-suite is amplifying the voices of dot-connectors?
  6. Are those amplifiers accessing the resources they need for dot-connectors to work on meaningful projects?

Culture out there is too important to the bottom-line of consumer companies (and their industrial suppliers) to be left out of your thinking.

Words: 1079
Reading time 5.5 mins
© 2019 Kate Hammer. All rights reserved.

https://www.challengergray.com/press/press-releases/2019-october-ceo-report-another-high-record-setting-year – CEO churn
https://www.zdnet.com/article/nike-bets-on-tech-ceo-donahoe-to-accelerate-digital-transformation-will-it-work/?_lrsc=e45c8207-c2cd-4c64-93b0-5eac07239ad9&utm_source=employee-social&utm_medium=twitter&utm_campaign=employee_advocacy – Saad on Donahue quote
https://www.forbes.com/sites/andriacheng/2019/09/25/how-nike-plans-to-stay-at-the-top-of-its-game-as-stock-hits-another-record-high/#43bb74a9188f – Saad 2019 performance quote
McCracken, Grant. (2009). Chief Culture Officer. NY: Basic Books.