Nike's comeback: discussing business strategy and turnarounds

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90 min
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1

Think about these questions before watching. Share your ideas with a partner.

  1. Think about a brand you've been loyal to for a long time, whether for clothing, technology, or something else. What specific factors have kept you as a customer, and what would it take for you to switch to a competitor?
  2. Describe a time when a product or brand you once loved seemed to lose its appeal or 'cool factor'. What do you think the company did wrong, and how did it change your perception of them?
  3. If a well-known company started to struggle, what's one key piece of advice you would give its leaders to turn things around? Consider aspects like product design, marketing, or customer focus.
2

Watch the video carefully. Pay attention to the main ideas and key details.

Video script173 segments · click a timestamp to jump

We're here at the uh LeBron James R&D

lab and it's our advanced R&D center. We

opened this up in in 2020. This is

really the heartbeat of our innovation.

>> You've basically been at Nike more than

35 years and you were brought back to

fix a few missteps. How do you try to

even reinvent a company that you know so

well?

>> It can overwhelm you, anybody, if you

try to go, hey, we got to fix everything

all at once. But what I tried to do is

go back to what is essential to Nike and

that is putting the athlete back at the

center of everything that we do.

>> A year ago, Nike was in freef fall. The

company had fallen behind on innovation.

It lost tens of billions in market value

after a series of missteps. Nike's

former CEO leaned on sneaker head

culture and lost focus on athletics. But

as the company flooded the market with

shoes like the Air Jordan 1, people lost

interest. Nike slashed prices to get rid

of excess inventory. But a year later,

it's still trying to finish the job.

Your biggest franchises, Air Jordan 1,

Air Force One, and Nike Dunk. I know

you've managed those franchises before,

and I just wanted to hear what your plan

is now in making them as cool as they

were in 2022, 2023. Yeah, we became over

reliant on the three shoes that you just

[music]

uh just referenced. I think we've done a

really nice job of getting Air Force One

back in a really in a good uh inventory

position. We [music] still have work to

do on the Dunk and Air Jordan 1's

returning to the right level of

inventory.

>> I do see like the Nike Dunk on sale

online still.

>> No question. We still have work to do to

clean up the [music] Dunk.

>> Yeah,

>> we're in the process of doing that.

Analysts estimate that in fiscal 2025,

Nike made $4 billion on the Nike Dunk.

It's now being phased out and Nike is

trying to get rid of its remaining

stock. We're working with our not only

ourselves, but our wholesale partners to

get that inventory out of the

marketplace. Am I going to tell you it's

going to be huge next year? No. Do I

think the Dunk will have its moment

again? No question. Is it 2 years, 3

years, 5 years, 10 years? I can't tell

you that. But there will be a a moment

for the duck again, not unlike what

we're already starting to see with with

the Air Force One.

>> Today, I just saw a bunch of products

that you're about to release. How did

you make them happen?

>> Yeah, we have a 4 in one jacket that

we'll be launching come the Olympics and

then of course Project Amplify, the

platform to help an athlete go further

faster. And we're really excited about

the opportunities there as well. I think

the question everyone wants to know is

when's the Caitlyn Clark shoe gonna come

out? [laughter]

>> Well, that shoe's coming and uh and you

know, we're going to continue to invest

in in our women's business. We've had a

great response to the logo that we

created for Caitlyn Clark. She's been a

tremendous person to work with and we

want to make certain that we have

everything from her logo to the product

exactly the way that she wants it before

we launch it. You've been talking about

the progress the company has made in the

running category. I think the space is

more competitive than it ever was. Would

you agree?

>> Well, I think there's no question that

we've always had competition and there's

certainly competition in the running

space. We now have a general manager for

Nike running, which I think's helped us

get sharper on the product and the

storytelling, but it also makes us more

competitive. And so I think the

alignment around the sport offense,

taking our three brands, Nike, Jordan,

Converse, and then segmenting the brand

by sport is absolutely going to make us

uh more competitive and help us drive

revenue and and certainly market share

gains.

>> In 2019, you guys split up with Amazon

and now you're back to selling your

products on Amazon. How is it different

now that, you know, six years ago?

>> It's not just about opening more

distribution. Our strategy is to make

certain that wherever the consumer

chooses to shop for our product that we

show up in a really thoughtful way in

terms of the assortment for that

specific consumer because there are

different consumers that shop different

retailers.

>> After years of focusing on its direct to

consumer approach, Nike is once again

leaning on retail partners to help boost

sales.

>> You've gone back to other places like

Macy's, DSW. Recently, the Jordan brand

opened up a space [music] inside Academy

Sports. How are you making sure the

premiumness of the brand is like

protected?

>> Wherever our product shows up, whether

it's Nike Direct, digital or physical,

wholesale, digital or physical, making

certain that we have a consumer right

assortment for that shopper for that

location. Elevate the presentation,

drive sell through, try to be the most

profitable brand wherever we are. And

that's how we drive in revenue and

profit for ourselves along with our

retailers. That's how we take back

market share, right? There's a consumer

that wants to access the Jordan brand at

all price points. And the great news is

the team has the product at an elevated

price point and the distribution where

that product shows up and then in

academy they have a a consumer that we

serve there. And and it's not just about

entry level. We also have cleed and

other products there as well.

>> So the last thing I wanted to ask was

about your employee base. Last year was

a tough moment in Nike history. It was

clear that there was some discontent

among employees with the direction that

the company was taking. I wanted to know

how you've made an impact on that. I

think people know that I I care deeply

about this place that and they respect

uh the years of experience that I have

here, the knowledge that I have, not

just the company but the consumer and

the overall industry that I like to

compete. that come to the office every

single day ready to compete and that we

have shifted back to doing what we were

created to do and that is to serve the

athlete and it has really elevated uh

the morale here on the this campus

[music] the focus that we have and it's

the reason why we've been able to to

deliver the results that we've been able

to deliver over the last year. [music]

It's the team rallying and we're just

getting started.

3

Answer these questions in your own words. Support your answers with evidence from the video.

01According to the video, what was the main strategic mistake Nike made that led to its problems, and what was the new CEO's core principle for fixing it?
Sample answerThe main mistake was that the company lost its focus on athletics and innovation, concentrating too much on 'sneaker head culture'. The new CEO's plan was to fix this by putting the athlete back at the center of everything the company does.
02What problem did Nike create by becoming 'over reliant' on popular shoes like the Air Jordan 1 and the Dunk?
Sample answerThey produced too many of these popular shoes, which flooded the market. As a result, people lost interest, and now Nike has a lot of excess inventory that it needs to clear out, sometimes by putting them on sale.
03How is Nike's approach to working with retail partners like Amazon and Macy's different now compared to its previous strategy?
Sample answerPreviously, Nike focused heavily on selling directly to consumers. Now, they are working with retail partners again, but with a new strategy. They plan to offer a specific selection of products at each retailer that is tailored to the type of customer who shops there.
04In what way does the CEO believe his leadership has improved employee morale at the company?
Sample answerHe believes morale has improved because he brought back a focus on the company's original mission: serving the athlete. He also thinks employees respect his experience and that his competitive spirit has re-energized the workplace.
4

Vocabulary

Vocabulary
These expressions will help you communicate more naturally about this topic.
Examples
To right the ship — to fix a company or organization that is in a difficult situation.
Usage note: This is a common idiom in business contexts. It creates an image of a captain steering a ship out of a storm. You can say, 'The new CEO was brought in to right the ship after a year of poor sales.'
Market saturation — a situation where the supply of a product in a market is greater than the demand for it, making further growth difficult.
Usage note: This term is common in discussions about economics and business strategy. For example, 'When Nike flooded the market with Dunks, it led to market saturation and people lost interest.'
To double down on (something) — to commit even more strongly to a particular strategy or course of action, especially one that is risky.
Usage note: This phrase can be used positively or negatively. 'Instead of changing, the previous CEO doubled down on the failing strategy.' Or, 'The company decided to double down on its investment in R&D.'
To lose sight of (something) — to forget about an important idea or goal while you are busy with other things.
Paraphrase tip: This is a great alternative to 'lose focus on'. You can say a company 'lost sight of its core values' or a manager 'lost sight of the project's main objective.'
Course correction — a change made to a plan or strategy to improve it or deal with a problem.
Register: This is a semi-formal phrase often used in business and project management. It sounds less dramatic than a 'complete turnaround.' For example, 'We need to make a slight course correction in our marketing approach for the next quarter.'
5

Decide if each statement is true or false. Correct the false ones.

01The interview takes place at Nike's original research and development center, which has been open for over 35 years.
02To become more competitive, Nike is organizing its business by specific sports across its three main brands.
03Part of Nike's current strategy is to sell products through a variety of retail partners, not just directly to consumers.
04The CEO is confident that the Nike Dunk will become popular again within the next two years.
05The company is developing a signature shoe for basketball player Caitlyn Clark, but it has not been released yet.
6

Complete the sentences with words from the box. One word is extra.

Word bank
01After hiring a new CEO, the struggling company achieved a remarkable and became profitable within a year.
02The report analyzed the series of strategic that led to the company's loss of market share.
03With so many similar products available, the smartphone market is reaching a point of .
04The business became on a single supplier, which caused major problems when that supplier went bankrupt.
05To stay ahead of the competition, the tech firm must constantly and develop new technologies.
7

Choose the best answer based on what you heard in the video.

01According to the CEO, how does Nike plan to protect its premium brand image while selling through various retailers?
02What was a major financial consequence of Nike's previous strategy mentioned in the video?
03What is Nike's strategic response to the increased competition in the running shoe market?
04Which of the following is NOT mentioned in the video as part of Nike's current or future plans?
8

Business Challenges and Innovation

Test your understanding of key phrases and concepts from the discussion.

Match each item on the left with the correct item on the right.

A
B
9

Discuss these questions with a partner. Try to use vocabulary from the lesson.

  1. The video suggests Nike's main misstep was losing sight of its core mission. Do you think it's more important for a brand like Nike to double down on innovation for elite athletes or to cater to the fashion trends that drive mass sales? Why?
  2. Think about a major company in your country that had to right the ship after a period of struggle. What course correction did they make, and how successful was it? Did they face issues like market saturation or losing sight of their original values?
  3. Nike's strategy to fix market saturation involves reducing the supply of popular shoes to make them feel exclusive again. Do you believe this is a sustainable long-term strategy, or could it alienate loyal customers who can no longer buy the products they want?