Transformation – Trooming

A digital takeaway from “The Nike Story”

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”

An object in motion will always tend to stay in motion.

Newton’s first law of motion states “ If a body is at rest or moving at a constant speed in a straight line, it will remain at rest or keep moving in a straight line at constant speed unless it is acted upon by a force “

This is the same in psychology also “ If we taste victory then we tend to do the same thing again and again. And for some in rest or in a different path and they will continue in their path unless someone forces them to change”

I have felt this resistance when I engage with companies for their transformation projects.

Let break it down and see why this is happening and how you can overcome this.

Comfort Zones:

As Newton’s first law states the object will continue in its state as long as a force is being applied on it. It’s because we look for comfort zones. Because we all have weaknesses and we don’t want to expose that to the world. So the best way is to find a comfort zone and hide inside that.

But when you look at the people who achieved great heights we will find that they never cared about these comfort zones. They expose themself to new environments and changes. That allowed them to learn and adapt.

Adapting to changes it’s there in our blood but are we are trying to run away from that instinct. The first step is for companies and individuals to come out of their comfort zones.

2. Fear of Failure

When I was talking to one of the senior executives of a company he was asking me “ We are not doing bad now, we know we have issues but somehow we are delivering results. Then why should we change the way we work? And what Guarantee we have that your approach will work.’’

Instead of answering that I asked him a counter-question “ Nokia as a company was doing great and they didn’t want to change the approach based on what is happening in the industry, at the end what happened?”

We always have to look outside and see what is happening and change our course according to that. You are like a captain of your ship, you have to constantly observe and change the course of your journey else the old route which you have taken might not take you to shore.

Do not fear for change embrace it and change according to it.

3. Busy in creating an Image

When we work in projects and teams, you will notice that some will be busy creating an image for themselves. It is needed but when we overdo it then it becomes a problem.

Why people tend to over to it? Because they lack the knowledge in that area and it becomes a necessity for them to create an image that is larger than themselves. This image creating will result in unnecessary politics in the office environment.

Companies and individuals have to identify these big images getting created in the echo system which is going to eventually throw the balance off.

We should also look at why they are getting created:

a. There is a lack of knowledge in the group so that the one with little knowledge will be considered as the champion. This also means that there is no one capable at the leadership level to identify and correct this.

b. Leaders themself creating a picture- I have seen this happening a lot of times, leaders will be busing in portraying and creating a bigger picture of their projects. But when you dig deep into it, you will realize that the leader is not having a good understanding of the project. These leaders will eventually become toxic. One of the common things I have noticed is that this leadership will support favoritism because that is one of the ways for them to protect the bubble they have created. Most of the time this bubble and project will fail together.

4. Force the change

The last one is the force. As Newton said if you have to change the course of movement then you have to apply force. Only a force can make a change.

It’s the same in our case if we want to change we have to force ourselves and companies have to force the change into the organization.

You can bring this change in two ways, for the first approach is to force the change across the organization. This means those who cant change will get frustrated. It is like shaking a fist tank, it will take a little time to settle down. Management has to force the change and appoint the right people to drive the change so the echo system can be rested based on the vision of the company.

The second method is to be a servant leader and force the change along with others. To do this these leaders should have a great understanding of the full echo system and also a clear view of the end goal. In this case, the disturbance is less because everyone will get a view of what they are doing and why they are doing it.

In both the approaches one thing is mandatory “ The vision’’

There are many microelements that result in a successful transformation. Because when you change a moving engine all the parts of that engine have to work together for that change. Else it will be catastrophic and will result in a big failure. So create that vision and let that vision be the force to make that change.

https://bivekrenuji.medium.com/an-object-in-motion-will-always-tend-to-stay-in-motion-4a1e90088473

Innovation is “Passion” driven & Not “Dollar” Driven

I recently had a session with a CEO of a digital commerce company, with around 300 plus employees. As part of the new initiatives, the company is ready to pump in money for innovation and build new products in the e-commerce space.

He wanted to explore the ways by which he can start the product culture in the company and also he wanted to discuss the failures they had in building some of their products.

That meeting actually triggered me to write about this.

Why innovation hubs of many of the companies fail in spite of having the best talents and unlimited funding?

Innovation is driven by passion and not via Dollars. So what is the trait of passionate people and companies? Being passionate requires hard work, dedication, willingness to fail over and over again, more than everything you have to be empathetic.

Because every innovation is solving some problem of a user. You can’t solve it unless you understand it. We have to be empathetic to find that “Why”.

So for creating empathy you have to put aside your own viewpoints and start seeing and feeling things from another person’s perspective.

Then you will be able to analyze the emotions, pains, and reactions of the other person.

In order to be innovative you have to Empathetic, both the company and every employee in the company have to be empathic to understand the pain of your users.

So you need to build this culture in the company, when you start practicing then you will realize that it is not easy to create an empathy culture. This has to come inside out because you cant call all your employees and declare that “ from today onwards we are an empathetic company, so from today we will be empathetic”. It is not possible.

When I ask the leaders and management team they all will say that they are empathic. But first, the employees should feel that management is empathetic to them and the leadership team should also have empathy and vision towards “why they are building what they are building”.

That empathy and vision should flow to all the employees. This is not an easy process it takes time, patience, and practice.

Once this is done then you have actually laid the foundation for innovation. Because once you feel the pain of the users you will think about innovative ways to solve that.

Till this point, “you are a group of people who are implementing a solution based on customer’s needs”.

This is the same point where you will transform yourself from a service mindset to a product mindset. That mindset is the key driver for innovation. As I said earlier this is only the foundation and then you have to build on top of this.

So, It’s not the dollars and manpower you need to build a product instead you need “Passion and Empathy”.

https://bivekrenuji.medium.com/innovation-is-passion-driven-not-dollar-driven-8333c07a97a5

Transformation = Embracing New Ways of Working

How do you change something that’s at the heart and soul of an organization? Cultures that took years to shape are certainly not going to change overnight or as a result of a re-written mission statement and an hour-long speech from the CEO. Cultural evolution takes time. Lots of time.

Transformation initiatives surrounded by the wrong organizational culture and DNA results in an unsatisfied workforce, chaos, confusion, and political collusion.

If an organization’s leadership is unable to inspire its people, how can those leaders expect their workforce to bring initiative, imagination, and passion to their work every day?

A strong, shared sense of purpose also removes many obstacles, and this has to be communicated from the top.

I can suggest you to explore ‘The Persuasion Cycle’ from Mark Goulston. It involves taking people through five stages

From resisting to listening
From listening to considering
From considering to willing to do
From willing to do to doing
From doing to, glad they did and continue to do.

“Ironically, the key to gaining ‘buy-in’ and then moving people through the rest of the cycle is not what you tell them, but what you get them to tell you — and what happens in their minds in the process,” says Goulston.

As he rightly said for any organization the transformation is not what to tell your employees but it’s how you listen to them. It also requires hearing what is unspoken yet conveyed through tone of voice, eye contact, and other body languages. This requires you to be curious and using all of your senses to truly tune into the other person.

Many of you might say you are a good listener, but the reality is we are not. If you analyze yourself you will have to admit that “ you were not actively listening instead, distracted of thinking about what to say next”

This becomes a crucial point when you undergo transformation because you will have to talk to your employees and they will have questions and complaints. You would start the conversation in an active listening mode but it will eventually turn into a defensive and justification mode. This is going to shut the other person’s minds and he will never open up. If your employees don’t open-up then you cant successfully do the transformation. Both of these actions are physiological. You are defending yourself because you yours self is not ready to accept the past, which in-turn will shut the doors to your employees minds.

Why is it important to listen to people: Everyone has their own challenges, needs, desire & agendas( Political & Personal). They have secrets they are hiding from you, they are stressed, busy, and often keeping all of these in their heads.

They put up a mental barricade to cover up all these. You can communicate and transform only if you can overcome this barricade. One of the first steps is to identify these barriers. For that you have to be an active listener with a clear vision of what you want to achieve.

The first step for companies and leaders who are trying to transform is to improve your ability to truly listen. Because the more you know them the more you know the problems. Which will help you in communicating the change you want and you will be able to implement the changes more effectively.

https://bivekrenuji.medium.com/transformation-embracing-new-ways-of-working-2d7d55957762