Live from NIKE Inc. headquarters in Beaverton, OR, Bloomberg Television’s Stephanie Ruhle sits down with Nike Brand President, Trevor Edwards, NIKE Inc. CFO, Donald Blair and NIKE Inc. President and CEO Mark Parker in three separate interviews to talk innovation and the future of NIKE.
CFO Blair said that Michael Jordan still reigns over Lebron James and that Nike cash to be focused on “organic growth” not deals; President Trevor Edwards said when asked why they stick with some athletes while abandon others: “When we chose and athlete we spend a lot of time understanding where this athlete wants to go. Then we create an amazing product for the athlete to be better. They go through their ups and downs.”
Videos for viewing:
** MANDATORY CREDIT: BLOOMBERG TELEVISION **
Highlights for all three interviews:
Parker on being compared to Steve Jobs:
“Well first of all, I'm very flattered with that comparison, to start with. It's – I love what I do. This is an incredible company to be involved with sports and the greatest athletes in the world, and then the athlete in all of us every day, that's a dream job. So work with an incredible team, brands that are world renowned, products and innovation, which is really my epicenter and I think the foundation of our success as a company, the innovation space and design. So it's a very natural thing for me in a sense, as much as being a CEO natural.”
Parker on whether he considered NIKE a technology company:
We're an innovation company. So obviously innovation and design is at the epicenter of all we do. Design has a seat at the table at the very top of the company. One of the things I think is critical is to make sure design has that voice, which ultimately represents the voice of the athlete, the voice of the consumer. I think designers and creative people are somewhat by definition curious. They're problem solvers. They're really observing what's going on around the world and then translating those insights into incredible innovation.
Parker on where NIKE, with 600 patents, wants to go:
Well, we'll continue to push toward our potential I always like to say that we focus on our potential and the distance between where we are and our potential, not the distance between us and our competition. That's where a leader should be. And as you focus on that – that space, you're going to create some incredible things. But what's at the center of it all for us is the voice of the athlete.
Parker on the idea behind the Fuel band:
Athlete is a part of our mission statement as a company, and we have an asterisk on the word athlete. And we define athlete as being everybody. Essentially there's the potential to be an athlete in everyone. So we're not just focused on the very best athletes in the world. We're focused on the athlete in every one of us… The fuel band is a great example of actually bringing access to technology to everyday people who want to see how they're doing, how active are they, and how does that translate into how they can be more active and how they can reach their own potential.
Parker on how NIKE knows what athletes they want to get behind and stick with:
“It ultimately comes down to the athletes by sport. And we deal with thousands of athletes. So they all in their own way have some influence on the work that we do in innovation in the space, but there's personality. There's a certain flair that they might have, a passion that is – becomes very obvious. But they all provide us with those insights that really drive what we're all about, and that's innovation.”
Parker on how much of a treat smaller businesses like Under Armour are for NIKE:
“Well, I wouldn't say nobody can touch Nike. But again, we are focused on our potential and where we're going and being a leader. In a way, we are a whole combination of startups. We have what we call the category offense. So we're organized by sport category. So if I took you over to the golf division, you'd feel like you're in a golf company. If I took you over to the skate division, you'd feel like you're in a skate company, to the running company, to the golf – to the tennis company, to the women's fitness company and training. So we really break our business down and we feel like a group of startups. Even though we're a big, established company that is a strong brand around the world, we feel like we're just getting going.”
Parker on whether there are acquisitions that NIKE wants to make:
“There's no acquisitions on the immediate horizon. We are looking at partnerships and collaborations that can enhance our ability to innovate. With that, there's plenty of opportunity within our core business. The categories that we're doing business in today, the geographies that we're doing business in, from a gender standpoint, age. There's no shortage of opportunity with our core business.”
Parker on whether there is ever a risk that you can’t be nimble:
“There's always that risk for any company I think. We have a culture where we are incredibly self-critical. And I think that's an attribute. That's something that keeps us on our toes. It keeps us thinking about could we do that could be better. We don’t get comfortable with our success. We're always looking for ways that we can make things better, even when we're successful.”
Parker on whether he ever thinks, ‘maybe we don’t need to have so many brand ambassadors and endorsement deals’:
“The relationship with the athletes and the teams and the coaches and the trainers, that's really what drives the innovation here at Nike, the design. It's that close relationship across that breadth and depth of athletes that really makes us who we are.”
Parker on what he would be doing if he were not CEO of NIKE:
“I would be designing. I'd be in a creative space in some way. I'm not sure exactly what that would be. My agenda is quite full here at Nike. I'm incredibly motivated and driven. I work with some of the best people in the world with one of the best brands in the world.”
Parker on what NIKE looks like without him:
“We have an incredible leadership team. As you may know, we went through some leadership transition here in recent months and we have I think the most competitive, the most aligned leadership team certainly in our industry and really in any industry. I am incredibly proud of the talent we have, the depth that we have, and I don't think there's going to be an issue when it comes time for me to do something else.”
Trevor Edwards on NIKE’s focus:
“The real meat and potatoes of our business is really our footwear, apparel and equipment. We just do an incredible footwear business that people just love but we also see the great opportunity that we are seeing to grow our apparel business right now.”
Edwards on why only 25% of NIKE’s apparel business is women’s wear:
“As time has gone on with certain sports, we have focused on specific sports. We have actually began focusing to really helping to create better products for our women, for women’s opportunity. We believe that will be a $7Billion dollar piece business for us, and that is at wholesale and that will really demonstrate how big this business can be.”
Edwards on whether the amount of money spent on branding and endorsing really pays off:
“At the end of the day, part of it is about building a brand and really making sure that our consumers understand we are a performance brand that is about sports. And we use that point of view to extend to our lifestyle opportunity. So, for us it absolutely pays off.”
Edwards on NIKE’s Soccer value position:
“Next summer will be amazing. The world cup will be in Brazil. It’s going to be an amazing time. Where Neymar will be playing with the Brazilian team in a country that is so passionate about football. So the idea that we can continue to bring innovative product to the marketplace…Hypervenom is a really great example of innovation in the marketplace. “
Edwards on how NIKE decides on a brand ambassador and athletes to have long-term relationships:
“At the end of the day, athletes are like all of us, some days you are playing, other days you are not playing at the best of your game. For us it is about the long-term. It is about the pursuit of being the best athlete you can be. That is what drives our business, because it helps us to innovate and create products for those athletes… For us, it is always about understanding what is inside the athlete, understanding their passion and drive to be better and better and better. When we chose and athlete we spend a lot of time understanding where this athlete wants to go. Then we create an amazing product for the athlete to be better. They go through their ups and downs...For us it is always about sports. It’s really about sports. Are they the best competitive sport, athlete they can be, that is where we are going to be.”
Edwards on how much more of a competitive advantage NIKE has with wholly owned subsidiaries across the world that competitors do not:
“The fact that we have such a large global footprint really helps us. It is our ability to really focus on the sport in the marketplace. So if you are Brazil being number on in football is a really important position for us. When you go into a market like China, they love they love Basketball, they love Basketball like the United States. Those are great opportunities for us to extend our brand in those marketplaces.
Donald Blair on whether NIKE will have tempered growth:
“Not at all. We have great momentum in our business right now. We have a very broad portfolio, brands, geographies, categories tremendous strength and great ability to manage risk. $36 Billion is a big number, but we’re confident we will get there.”
Blair on whether the Lebron James Brand can be bigger than Jordan from a sales perspective:
“It’s great to dream and certainly, Michael has set the standard on that, but Lebron is a phenomenal athlete, he sells a lot of product with us and we are excited to have him as a partner.”
Blair on NIKE’s digital plan:
“That’s the great thing about innovation. There’s always something else to do with the consumer. It is about deepening the relationship with the consumer through devices and digital connections. It is making our sites easier to shop. It’s having compelling product on the site. Today we’re only in 24 countries out of our 190 with digital. We think that we can get better at digital commerce where we are today and expand around the world.”
Blair on whether NIKE’s China expansion snags affects strategy in other countries:
“No. I think in China the consumer is involving and we’re evolving with the consumer. We are elevating the product. We are elevating the retail distribution. That consumer in China is phenomenally connected to the NIKE brand. That is what we do around the world. As markets evolve we need to evolve with it. We are really excited about China.
On whether NIKE really needs to spend tremendous amounts of money on innovation or if the NIKE swoosh is worth the ‘million bucks’:
“That’s the great example. Sock is not just about the NIKE swoosh. It’s also about innovation. We brought innovation to socks. The Nike Fuelband is just the tip of the iceberg. You talk about ‘Digital is Oxygen’ It is a relationship. It’s not just a device. If the connection to that consumer who is online 24/7 and the Fuelband is just an access point. It is really that whole relationship.
Blair on whether NIKE has thought about acquiring a company like Fitbit or Jawbone:
“At this point, we do a lot of work with many companies and collaboration and we drive the innovation. Sometimes we will do an acquisition. Sometimes we will do it though partnerships. The key is how do we develop that holistic relationship? It’s not just about the device. How do we build relationship across the device, the experience, the brand? It’s really all those pieces, not just the device.”
Blair on whether he has every said ‘we’ve spend enough on endorsements, athletes, college teams and global franchises’:
“It’s not about pulling back. It’s about making sure you are continuously investing in the things that are most important to drive your business….We make choices all the time about connecting with consumers in different ways. For example, 10 years ago we might be spending a lot of money on television advertising. Today, that connection is digital. So we always make those choices about where we invest. But that investment in innovation is what drives our business model and we will continue to make those investments.”
Blair on how higher wages are affecting NIKE:
“We talk about this quite a bit, which is, engineering our products to make them in more productive ways. To eliminate waste. There are lots of ways we feel we can help manage some of that inflation. The Flyknit show is a great example. It is high performance. It is manufactured in a way that makes them more productive. That’s a great example of how innovation can help manage cost.”
Blair on whether he is worried about brand like Under Armour:
“We have a very full innovation pipeline. We are not always the first in every category, but we absolutely going to be the best and we are not concerned about our ability to compete with anybody.”