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Nike: from Separate Digital Initiatives to Firm-Level Transformation

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Nike: from Separate Digital Initiatives to Firm-Level Transformation 101011010010 101011010010 101011010010 A major research initiative at the MIT Sloan School of Management Nike: From Separate Digital Initiatives to Firm-Level Transformation Nike is the world’s leading units pursued digital initiatives designer, marketer and distributor in typical Nike fashion: launching Until recently, of athletic footwear, apparel, their own digital efforts to enterprising business equipment and accessories for a meet specific needs. Marketing units pursued digital wide range of sports and fitness embraced social media and initiatives in typical Nike activities. It is headquartered in the firm started embedding Beaverton, Oregon, and employs technology into products. Product fashion: launching their about 34,000 people around the Development embraced digital own digital efforts to world. Founded in January 1964 design processes and enabled meet specific needs as “Blue Ribbon Sports,” the extensive collaboration across the company created the Nike brand supply chain. name and the Swoosh trademark in 1971. Nike complemented Getting closer to always-more- its organic growth by acquiring connected consumers sport apparel companies such as Nike’s social media strategy was Converse in 2003 and Umbro in driven by changes in the way 2007. As a major global brand, consumers interact with brands. Nike has paid attention to Nike’s Global Digital Brand and emerging digital technologies Innovation Director Jesse Stollak and innovations such as mobility, explained, “the goal hasn’t social media, analytics, and smart- changed since the beginning of products since the late 1990s. Nike — we want to connect with athletes to inspire and enable Adopting digital them to be better. The rise of social media provides new ways to do technologies this.” 1 To accompany that shift, Nike has traditionally built its Nike built dozens of social sites business through a combination dedicated to specific sports or of strong innovative products, products in Facebook and Twitter, intensive brand-building through and launched a presence in social multiple media, and efficient platforms that dominated specific operational processes. As the geographies such as Orkut in possibilities of new digital media Brazil, Weibo and RenRen in China emerged, Nike was fast to and VKontakte in Russia capitalize in all three areas. Until (see figure 1). recently, enterprising business Figure 1: Nike’s corporate presence in major social platforms all over the world (date: February 1st, 2012) Orkut (Brasil) RenRen (China) VKontakte (Russia) Source: Nike, Capgemini Consulting analysis 2 In addition to joining public social Mass-customizing products: a tools instead of pen and paper communities, Nike developed its new model becoming reality to create new products. The own social offerings for the runner In the early 2000’s, Nike started transition did more than improve community. The Nike+ concept selling customized shoes under the the firm’s design capability. It includes multiple connected NIKEiD trademark. As technology also supported sustainability components: a shoe, an Internet improved in the 2010’s, the firm policies and appealed to younger platform, and a device (such as significantly improved its mass- designers who expected digital an iPod, iPhone, GPS watch and customization capabilities. As design capabilities. CEO Mark FUELband) that can geo-track a with the case of Nike+, NIKEiD’s Parker explained “Materials, runner (see figure 2). Runners can social media capabilities play a componentry, construction share their performance online dual role: providing consumers an methods, manufacturing methods, and even receive customized opportunity to engage with the the whole digital revolution. advice from coaches. Nike+ is also product online by sharing designs Knitting technology that an opportunity for the firm to and voting on them, and providing allows you to make completely improve its understanding of the Nike a rich source of consumer sustainable design and footwear consumer’s needs and tastes.2 A data (see figure 3). By listening without any cutting and stitching, Wired Magazine article described to online conversations, Nike can without any archaic manufacturing Nike’s capabilities as early as 2008, processes. We are embedding all identify the most popular designs, 5 “With such a huge group, Nike is and sense new trends.4 that thinking into the product.” learning things we’ve never known before. In the winter, people in the Designing products digitally US run more often than those in Digital technologies have Digital technologies have Europe and Africa, but for shorter transformed internal processes transformed internal distances. The average duration in addition to consumer-facing of a run worldwide is 35 minutes, processes. One major internal processes in addition and the most popular Nike+ change was moving from paper- to consumer-facing Powersong, which runners can set based to fully digital product processes to give them extra motivation, is design. In the early 2000’s, ‘Pump It’ by the Black Eyed Peas.”3 Nike started using 3D design Figure 2: The Nike+ platform leverages multiple components to connect runners to the company and each other Runner’s environment Online environment • Information Recording and Share positioning device information • Advices/coaches (Phone, watch) Portal • Etc. Linking Connection with Customers’ online Nike online “Connected” communities presence shoe • Sharing running • Promoting Nike products experience online with friends (Facebook, Twitter, • Links to events, websites or Nike’s community) social platforms animated by Nike (Facebook, Twitter, etc.) Source: Nike, Capgemini Consulting analysis 3 Figure 3: NIKEiD offers many options to design a customized pair of shoes Choose colors and some materials Add personal information and for different parts share in social media Source: Nike, Capgemini Consulting analysis Raising digital through synchronized operations. highly competitive digital world. transformation to the This enabled the company to Looking to the future, Nike plans respond to - and even shape to continuing using technology corporate level - rapidly-evolving consumer to become ever-closer to each of Recently, Nike executives preferences. Most customer- its customers. “Connecting used recognized the need to coordinate facing digital projects are now to be, ‘Here’s some product, and and integrate its digital efforts. led by this unit, which releases here’s some advertising. We hope Although digital transformation products and services under the you like it,” said CEO Mark Parker, 7 was proceeding successfully in Nike+ brand. Teams of marketers, “Connecting today is a dialogue.” silos, the firm was missing the designers and IT people work synergies between them. together to think holistically about physical and online products and In 2010, Nike created a digital develop new digital capabilities The connected products division called Nike Digital and innovations. Innovation developed under the Sport. The new unit provides groups investigate new digital skilled resources, budget, technologies and practices to Nike+ umbrella leverage and coordination across the identify potential applications vast amounts of very enterprise.6 However, executives in products and customer accurate customer data had an additional goal: create engagement. a unified consumer experience This organizational change did not just enable new digitally-enriched In 2010, Nike created products to fit customers’ tastes and needs. The connected Nike Digital Sport – a products developed under digital unit providing the Nike+ umbrella leverage skilled resources, budget, vast amounts of very accurate and coordination across customer data – a key strategic asset for marketing and product the enterprise development in the new and 4 Sources 1 http://mashable.com/2011/09/22/nike-social-media/ 2 In 2012, Nike+ had over 4 million members, the world’s largest runners’ community. http://jobs.nike.com/oregon/ product-development/sustaining-engineer-digital-sport-jobs 3 Article published in 2008 when Nike+ had 1.2 million members: http://www.wired.com/medtech/health/ magazine/17-07/lbnp_nike?currentPage=all 4 See Nike Digital Privacy Policy at http://help-en-us.nike.com/app/answers/detail/article/ privacy-policy/a_id/16378/p/3897 5 http://www.fastcompany.com/1676902/how-nikes-ceo-shook-shoe-industry 6 Adapted from http://management.fortune.cnn.com/2012/02/13/nike-digital-marketing/ 7 http://management.fortune.cnn.com/2012/02/13/nike-digital-marketing/ Authors Mael Tannou George Westerman Managing Consultant at Capgemini Consulting Research Scientist in the MIT Center for Digital Business Former Visiting Scientist in the MIT Center for Digital Business [email protected] [email protected] 5 About Capgemini Consulting Capgemini Consulting is the global strategy and transformation consulting organization of the Capgemini Group, specializing in advising and supporting enterprises in significant transformation, from innovative strategy to execution and with an unstinting focus on results. With the new digital economy creating significant disruptions and opportunities, our global team of over 3,600 talented individuals work with leading companies and governments to master Digital Transformation, drawing on our understanding of the digital economy and our leadership in business transformation and organizational change. For more information: http://www.capgemini-consulting.com/ Follow us on Facebook: http://www.facebook.com/capgemini.consulting.global
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