We were also good at keeping our manufacturing costs down. The Waffle Trainer later became the best-selling training shoe in the United States. One of Bowerman’s more legendary innovations is the Waffle outsole, which he discovered by pouring rubber into a waffle iron. Over the years, he and some other employees came up with lots of great ideas that we incorporated. Bill Bowerman, my former track coach at the University of Oregon and cofounder of the company that became Nike, had always customized off-the-shelf shoes for his runners. In the early days, anybody with a glue pot and a pair of scissors could get into the shoe business, so the way to stay ahead was through product innovation. What made you think the product was everything? Otherwise, we’ll end up making museum pieces. We have to innovate for a specific reason, and that reason comes from the market. And while technology is still important, the consumer has to lead innovation. Now we realize that everything spins off the consumer. We used to think that everything started in the lab. The design elements and functional characteristics of the product itself are just part of the overall marketing process. What I mean is that marketing knits the whole organization together. We’ve come around to saying that Nike is a marketing-oriented company, and the product is our most important marketing tool. But now we understand that the most important thing we do is market the product. For years, we thought of ourselves as a production-oriented company, meaning we put all our emphasis on designing and manufacturing the product. Phil Knight: I’d answer that question very differently today than I would have ten years ago. Is Nike a technology company or a marketing company? HBR: Nike transformed the athletic shoe industry with technological innovations, but today many people know the company by its flashy ads and sports celebrities. This interview was conducted at Nike, Inc.’s Beaverton, Oregon offices by HBR associate editor Geraldine E. Here Phil Knight explains how Nike discovered the importance of marketing and what difference that discovery has made. It commands 29 % of the market, and sales for fiscal 1991 topped $3 billion. Since then, Nike has resumed its domination of the athletic shoe industry. Instead of putting the product on center stage, it put the consumer in the spotlight and the brand under a microscope-in short, it learned to be marketing oriented. Then in the mid-1980s, Nike lost its footing, and the company was forced to make a subtle but important shift. Sales and profits were doubling every year.

Open wearing Nike shoes, Henry Rono had set four track and field records in Nikes, and members of the Boston Celtics and Los Angeles Lakers basketball teams were wearing them. And then jogging emerged as a new national pastime.īy 1978, the year Blue Ribbon Sports changed its corporate name to Nike, Jon Anderson had won the Boston Marathon wearing Nike shoes, Jimmy Conners had won Wimbledon and the U.S. Knight and Bowerman’s track connections got the shoes onto the feet of real runners. Blue Ribbon Sports’s performance-oriented product innovations and mastery of low-cost production translated into shoes athletes wanted to wear and could afford. Blue Ribbon Sports started out distributing running shoes for a Japanese company, then shifted to designing its own shoes and outsourcing them from Asia. Nike’s roots go back to a company called Blue Ribbon Sports, which Knight, a former runner at the University of Oregon, and Bill Bowerman, Knight’s former track coach, created in 1962. Ultimately, says founder, chairman, and CEO Phil Knight, the company realized that the way forward was to expand its focus from the design and manufacture of the product, where Nike had always excelled, to the consumer and the brand. All of those problems forced the company into a period of intense self-examination. After more than a decade of meteoric growth, Nike misjudged the aerobics market, outgrew its own capacity to manage, and made a disastrous move into casual shoes.

So it may come as a surprise that Nike, the consummate marketer, came to understand the importance of marketing late in its life: after it hit the $1 billion revenue mark. Its brand name is as well-known around the world as IBM and Coke. Its athletic footwear and clothing have become a piece of Americana. Its advertising slogans-“Bo Knows,” “Just Do It,” “There Is No Finish Line”-have moved beyond advertising into popular expression.

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