In a single day, Nike misplaced $24 billion in market worth – an 18% decline in its inventory value. What can we study from such a spectacular failure by such a sterling model?
First, don’t blame the CEO for being a idiot. John Donahoe led Bain & Firm, eBay, and ServiceNow previous to Nike. He’s super-sharp. And that makes the story all of the extra instructive.
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Nike’s catastrophe stemmed from a change in technique based mostly on plenty of knowledge crunching by sensible folks. The information mentioned that probably the most loyal clients wished edgy, high-priced efficiency gear, and that market tendencies had been favoring life-style clothes. It additionally mentioned that the corporate made greater income when it offered instantly by way of its shops or web site. So Nike leaned laborious into these areas.
In doing so, it uncared for mainstream sports activities attire and pulled again from retail companions like Foot Locker, the place it offered a excessive proportion of its items. That didn’t go nicely. The corporate uncared for the centerpiece of its model identification and misplaced entry to retailers who rebounded as soon as the pandemic’s e-commerce increase light. Adidas, Puma, and lots of upstarts had been more than pleased to take the enterprise.
Beware knowledge. It’s inherently backward-looking. It misses essential subjective elements like model identification. It could be plentiful in some areas – like round what probably the most loyal clients purchase instantly from the agency – however simply because knowledge is plentiful in some areas doesn’t make these domains extra vital than others.
In fact, knowledge has essential makes use of. However additionally it is beguiling to give attention to laborious numbers and ignore what’s extra subjective and potential. Furthermore, the individuals who crunch the info are sometimes junior workers with little expertise within the smooth variables that drive a lot enterprise success.
The morals of this story are:
1) Handle a enterprise based mostly on a view of the longer term, not what knowledge says in regards to the previous
2) Make that view based mostly on each laborious and smooth variables
3) Issue some eventualities into your view of the longer term. A call like chopping off longstanding gross sales channels is a tough one to undo, and it stemmed from inaccurate assumptions in regards to the persistence of tendencies from the pandemic
4) Above all, don’t let knowledge substitute for judgment. As I acquired taught years in the past at Bain, knowledge ought to FACILITATE the dialog, not BE the dialog
Contributed to Branding Technique Insider by Stephen Wunker, Managing Director of New Markets Advisors and Writer of The Modern Chief.
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