Tag Archives: Digital Transformation

A digital takeaway from “The Nike Story”

Photo by Goh Rhy Yan on Unsplash

Nike, a company that once owned 38% of the shoe market, a company that always focuses on athletes and innovations. But if you look at the sales for the last quarter, they are falling. It’s the lowest since the 1990’s. Because of this dip in sales and to drive innovation, Nike has fired 2% of its workforce. Nike and the analyst are looking into the reasons for this downfall and they are coming up with various reasons for this. One such reason is “digitization initiatives in Nike”. We are going to look at this factor.

John Donohoes became the president and CEO of Nike in 2020. He has been on the board since 2014. He came to Nike with the experience of leading digital product companies like eBay, Paypal, ServiceNow etc. His presence on the board and becoming the CEO were some of the major reasons for the digital focus of Nike.

This was the time when Nike started focusing heavily on digitization and digital innovation. Nike started bidding on the “Direct To Customer” strategy by leveraging their Digital innovation and products like apps, websites, etc. During the same time, Nike started investing in its Global store concepts and four mobile apps.

Soon the sales numbers started responding positively to this strategy. 

By the end of 2020, the digital initiatives started paying off and the sales from the app doubled and 20% of Nike’s sales were through digital channels.

The Strategy and investment boosted during the time of the pandemic. During the pandemic time, the competitors were struggling to reach out to their customers using their below-par digital presence and products. Nike was able to capitalize on this gap and as a result, the digital sales went up 30%, and the membership of Nike apps went up to 160 million.

This became an eye-opener for its competitors and many other retailers.Suddenly all of them started investing in digital. 

During this time in one of the meetings Nike claimed that “Consumers today are digitally grounded and will not reverse back” and they predicted 50 % sales through online channels. They started production based on these projections. 

By this time the lockdowns were lifted globally and people started returning to the stores, the digital story slowly began to reverse the online sales started going down, not just for Nike but in general for all the retailers. As customers walked into stores they started realizing what they were missing out on while they were in the digital world. They started seeing innovation and fashion created by other brands. People started trying out new products and they started appreciating the new styles and innovations created by other brands.

No one thought this could happen nor Nike. They ran into an inventory nightmare as the products started piling up in the warehouse at the same time sales were going down.

So post-pandemic the competitors and retailers got another key takeaway from Nike, “You should always focus on your core products and never stop innovating”. Nike made this mistake with their digital-focused initiatives.

Don’t get me wrong I am not saying don’t invest in Digital. Instead what I am saying is, “Use digital strategies to innovate in your core business, and don’t try to create a new digital product”.

Never forget that the customers are sticking with you because of the product innovation, or because of the style you are bringing to the products. The experience you provide is only a wrapper. Tomorrow someone else can easily come up with a better wrapper but it is not easy for them to continually innovate like you do with your products. Hence innovative products should be the primary reason for customer acquisition and retention. Digital should be only a complementing or supporting factor for that.

The key takeaway from the pre and post-Nike story is “ Digitization is needed for all brands. While doing so, it should not become your core focus of innovation instead, use digital to drive innovation in your core business”

From Awareness to Acceptance = Digital Transformation

Adapting to the new world and its ways of working is always a challenge. Especially for the organization that is still in the old Brick & Mortar ways of working. As a leader when you take up the task of Digital transformation, it is not always easy because you have a group of people & systems who still work in the old ways, on the other side you have technologies of the future and new ways of working.

“A man who wants to lead the orchestra must turn his back on the crowd, at the same time make sure his team is entertaining them”… Leading digital transformation is almost like this.

You have to lead and implement the new ways of working and system at the same time entertain, encourage, onboard the old systems, People, Processes, and ways of working.

In order to take the people to a new level, you have to first make them realize where they stand. Then you have to teach them how they have to change and why they have to change. So the first step is “Awareness”. Awareness of the current people, systems, and processes. Then we have to make them realize where they are and the changes you will need in people, processes, and systems.

Let’s look at some steps by which we can do this:

1. Vision

Don’t create a vision without knowing where you are. There is saying 

“ Vision is the art of seeing what is invisible to others”, 

in order to create a vision you have to first see what others see. That means understanding the strategic gaps, technologies, and processes used by the people. 

This will help you in seeing what they see and in creating a clear “Vision”. Even though that vision is invisible to others, it will be easy for you to make them understand and accept.

2. Get the right people involved

Once you have the vision the next step is to start selling it. But the question is to whom?

“ In a hierarchy, every employee tends to rise to his level of incompetence”. 

Most of the old organizations will be heavily hierarchical. So get the leaders on board and make them realize the vision. If you are able to align with the leaders the success rate will increase more than 1.5 times.

3. Culture

“People without the knowledge of their past history, origin and culture is like a tree without roots”

Before you start transformation understand the culture. Because as part of the digital transformation you have to create a new culture and that culture has to take inspiration and learning from the past. This way you are aligned with the leaders and you are not stopping there instead, you are touching the roots and slowly transforming the culture.

4. Gather the Right people

“ With the right mindset, with the right people, with the right tools, and with the right support, things happen”. 

You have to look for the right qualities in those people. Like willing to learn, willing to adapt, team players, open to challenges and changes. This will help you to evolve continuously.

5. Choose the right Technology

“ Technology has to be invented or adopted”. 

There are certain systems and functionalities which you can achieve by adopting the right technology platform. At the same time, every organization needs a certain amount of innovation. For those innovative ideas or exceptions, you have to build something of your own. This adoption will also include embracing legacy systems. 

The better way to transform is not just by changing everything which is old. Instead, it is done by embracing legacy. So invent and adopt.

Don’t think with these four-step we are done with digital transformation. It’s just the beginning of a journey in the right direction.

“Digital transformation is a Direction and not a Destination”

https://bivekrenuji.medium.com/from-awareness-to-acceptance-digital-transformation-c9f49d6e4a84

Photo credit:

https://unsplash.com/photos/M2Kxb80gqcc