So that morning in 1962 I told myself: Let everyone else call your idea crazy…just keep going. Don’t stop. Don’t even think about stopping until you get there, and don’t give much thought to where “there” is. Whatever comes, just don’t stop.
– Phil Knight, founder of Nike
I recently had the pleasure of reading Phil Knight’s memoir Shoe Dog. Released in April 2016, this book is a refreshing take of the trials and tribulations of building a company and the work and determination it takes to compete against (and eventually unseat) the established industry titans. And while it is told through a first-person POV, which makes the story an enjoyable read, there are plenty of business lessons in there if you are paying attention.
Below is a quick recap of what I noticed, and various quotes that were routinely referenced. If you have read the book and took away other lessons, I’d love to hear about them in the comments.
To Compete Globally You Need a Wordly Perspective
A young Mr. Knight realized early that it would be difficult to leave a mark on the world if he did not first get out and experience it. So, in 1962 he took off on an adventure. During that year, he would experience many of the most famous landmarks in the world, including the ruins in Athens and Rome, the cafes and museums in Paris, the historical landmarks in Munich and the division in West and East Berlin.
Also, during that time period, he made his first sales pitch. During his stop in Tokyo, he asked to be an American ambassador for Tigers shoes. He knew from a research project in grad-school that Japanese manufacturing was on the precipice of being a worldwide force. And he wanted to get in on the ground floor of the shoe industry.
For that pitch, he needed to learn all he could about the Japanese customs and how they did business. How they communicated. What personality traits they valued. And how to convey and accept respect.
These lessons would prove to be valuable through the rest of his business career. They would help him as he established factories, not only in Japan but in other Asian markets as well. And they would help him in future business negotiations.
How can I leave my mark on the world, I thought, unless I get out there first and see it? – Phil Knight
Maintain a Focus On Innovation
Upon receiving his first shipment of shoes in 1964, one of the first things that a young Mr. Knight did was send a couple pairs to Bill Bowerman, then the University or Oregon Track and Field coach. The book makes it seem like this was done in some way to “impress” the coach, whom Mr. Knight had run for during his collegiate years at Oregon. However, there were benefits to having Mr. Bowerman join the pre-Nike team (the company was originally called Blue Ribbon)…
For starters, Mr. Bowerman was one of the most known and respected Track and Field coaches in America. So he gave the company instant access and credibility. Smart for a young company trying to establish itself.
Second, Bowerman was a tinkerer. He was always trying to make things, specifically shoes (but the book also touches on a hilarious story about an exploding mailbox!) better. He made note that how if you could save an ounce on a running shoe that would add up to 55 pounds saved over a mile. That type of “iterative improvement” is key for an organization’s innovative efforts. And it is one that would benefit Nike well through its IPO which would still be over 16 years away.
Grow or Die
In the early years, Nike was focused on sales growth. And they used bank loans to fuel it. Which meant that while sales were doubling years after year, their loans were also. This often put them at odds with the banks who were extending the loans. And on more than one occasion, the company found itself in a situation where it was strapped to pay them.
While I am not sure I agree with his over-leveraging approach, as it left the young company vulnerable to forces outside of their control. The company’s desire to continually push is refreshing. They looked for ways to make their shoes better. They looked for inroads into other apparel. When they noticed how unpredictable payments were, they found ways to smooth out sales. They leveraged their connections to get athletes to endorse their brands. They pushed boundaries. Every day. All day.
Circle of Trust
Patrick Lencioni wrote a book called The Five Dysfunctions of a Team. In it, he talks about five common interrelated issues that cause a team to stumble. Those issues are:
- Absence of Trust
- Fear of Conflict
- Lack of Commitment
- Avoidance of Accountability
- Inattention to Results
As far as I can tell, Nike suffered from none of these. Mr. Knight references plenty of examples where at their corporate retreats, which they took to calling Buttface meetings (you’ll have to read the book to find out why), no person or idea was safe from ridicule. Yet it was at these retreats where Mr. Knight would often recall all the “belly-laughter” that would ensue that would not have been possible if this group of Buttfaces (again, their word, not mine) didn’t put full trust within one another Or if they were afraid of conflict.
Lack of Commitment was clearly not an issue. As an example, from the time he came onboard in 1965 to the Nike IPO in 1980, Jeff Johnson moved cross country no less than three times for the company. Bob Woodell, another Buttface, moved multiple times. Knight routinely put the well-being of the company ahead of quality time with his family.
The book gives multiple examples of where the company would offer recalls for products that didn’t make their high-quality standards. Throughout the course of the book, Mr. Knight admits to multiple mistakes and things he wished he had done differently. So they took responsibility for mistakes, both privately and publicly.
And in almost every chapter there is a reference to some sales quota that they were hitting or exceeding. So they were definitely keeping score.
Know Where You’re Going
Those Buttface meetings weren’t just for stepping away and making fun of each. They were used for setting strategic direction for the company. Some of the major decisions that stemmed directly from those meetings include whether or not the company would go public (first it wouldn’t, then it still wouldn’t, then finally it would) or the American Sell Price kerfuffle (which I LOVED how they handled that — again, read the book).
Strategic direction setting is difficult in the day-to-day office environment when a new fire presents itself seemingly every hour. These retreats provided opportunities for uninterrupted planning. In the case of Nike, they were held multiple times a year. And they are invaluable to a company.
The man who moves a mountain begins by carrying away small stones.
– Confucius
Modesty is a Virtue
Mr. Knight spends a lot of the book talking about Full Time Employee #1 Jeff Johnson, and all his contributions to Nike (fun fact, Johnson was the one that actually came up with the name Nike). He talks about Bowerman. He talks about the Woodell and how successful his tenure was as Nike’s first COO. He talks about his wife Penny. And his first legal counsel Rob Strasser.
On and on he talks about the merits of his team. But rarely does he talk about his own contributions. And let’s be clear, you don’t build a company like Nike without significant contributions from its Chief Executive. If you don’t “not do anything,” and suddenly wake up after an IPO and be worth $178 million when Jeff Johnson and Bob Woodell were only getting around $6 million.
I am guessing that this writing was not by accident. I’m guessing that’s why so many people followed him and stuck with him as he built Nike.
Don’t tell people how to do things, tell them what to do and let them surprise you with their results.
– George Patton
Be Prepared for Success
Early on when Team Nike was fighting the bureau-kraken during the American Sell Price kerfuffle, they turned to their Senator from Oregon. Mr. Mark Hatfield, as all good Senators are, was ready to help his fellow statesmen out. But when he asked, “what could he do to help?” – Mr. Knight and his team had no answer.
They had spent weeks leading up to the meeting prepping for a discussion. They had points. They had counterpoints. They had documents. They were ready for everything…except the Senator saying yes. Always be ready for success.
Know How to Let Off Steam
For Mr. Knight, that was running. He recounts how when he got cut from his JV baseball team, his mother told him he was fast. So he tried track. And then he ran all the way through 4 years or Oregon.
And when he graduated, he kept running. When he was thinking through his “Crazy Idea,” he was logging miles pre-dawn. When things would get tough, he would run. When he needed to decompress from a trip abroad, he would run.
He wouldn’t run for the exercise. He would run to clear his head and gain perspective. If running isn’t your thing, that’s OK. But you need to have some activity that you can turn to that will provide clarity and help you gain perspective when things get tough.
When You Are Forced to Fight, Fight With All You Have
But if you read the book, which I can’t recommend enough, then I think the one thing that you’ll notice the most is this. The Nike team never shied away from a fight that they had to win.
And they were faced with multiple fights. Some of them stemming from their decisions on how to manage capital. Others such as when Kitami, the head of their original Japanese shoe producer, began shopping around for other partners.
Then there was the bureau-kraken and the American Selling Point issue.
There were employee mutinies.
There were banks pulling funding.
There was opportunity after opportunity where they could have chosen to quit. Where they had an easy opening to say “this has been a good run, but our time is up.”
But every time, they dug in. Gritted their teeth. And found a way to overcome every challenge. You want to grown a billion-dollar company, that’s Virtue #1.
I can answer in one word. It is victory, victory at all costs, victory in spote of all terror, victory…without victory, there is no survival.
– Winston Churchill