Keeping Nike on the right track

The Knight way to manage

ccording to the old saying, there is more than one way to skin a cat. This sentiment is

A especially true in business, where a variety of management styles prevail. The key to
success obviously lies in finding one that is most appropriate to the organization.

Coaching from the sidelines

Lao-Tzu once claimed that the best leaders are the ones that people hardly know exist. Now
if the ancient Chinese philosopher is correct, then Phil Knight must have already secured his
place among the all-time greats. Because even though the long standing Nike CEO has
been a reclusive figure for over 40 years, it has not prevented his organization from enjoying
phenomenal success.
Despite this, even those closest to the man struggle to explain exactly what he does in the
organization. That is hardly surprising. After all, Knight seems to just sit back and allow
others to get on with the job. Such a method sure makes a mockery of the notion that all
leaders must lead by example. Unlike many other CEOs, he clearly does not insist that things
are always done his way. The objective might well be to get from A to B but Knight does not
prescribe the route to take. Indeed, the word ‘‘control’’ must be absent from the Nike
dictionary because the CEO is similarly content to take a back seat during meetings and
discussions – that is if he is present at all.
Knight’s only real intervention of note was to introduce a management structure that involves
regularly moving everyone around. On the face of it, this was a strange decision since one
consequence can see someone in charge one day and a subordinate the next. Likewise, the
situation often arises where individuals are simultaneously answerable to bosses in different
departments.
A recipe for chaos? In a company housing 25,000 employees, you would think so. But in this
case, it works. The clear benefits include:
B Enabling executives to acquire a broader experience of the organization and its different
roles and functions. This better equips individuals to appraise the work and ideas of
others.

‘‘ After all, Knight seems to just sit back and allow others to get
on with the job. ’’

DOI 10.1108/02580540510630687 VOL. 21 NO. 11 2005, pp. 15-18, Q Emerald Group Publishing Limited, ISSN 0258-0543 j STRATEGIC DIRECTION j PAGE 15
 B Improving teamwork.
B Helping guard against complacency.
Granting others the freedom to make key decisions obviously indicates that Knight has faith
in his people. But his faith does come at a price because anyone not capable of taking the
initiative soon finds their days at the company numbered. Indeed, this CEO has little time for
executives who attempt to pass the buck when difficulties arise. Such people face a long
wait if they expect a directive from him.
You would be forgiven for assuming that such a laid back style reveals a man who hardly
cares. However, nothing could be further from the truth. Knight is passionate about his
organization and expects others to share his fervor. In the early days, it did not matter to him
that passion sometimes resulted in drunken brawls at management meetings. At least it
showed that the participants cared. The key, then, is making sure the right people are
appointed.
That Knight appears to have consistently managed to do this might prompt accusations of
luck or intuition. While that may be true to some extent, it is hardly the whole story.

Knight and motivation

So what is the secret of the CEO’s success? Motivation. Many observers believe this is where
Knight excels, feeling his true worth lies in his ability to inspire those around him. And while
his communication is at best sporadic, a few of Knight’s passionate words can be worth a
thousand from someone less heartfelt about their cause.
It is natural that Knight should slip into this role because he owes much of his own success to
the inspiration of Bill Bowerman, his former athletics coach who subsequently became Nike
co-founder. Even though Bowerman died in 1999, Knight is still quick to remind others of his
inspirational qualities.
It certainly helps that many employees brought in have sporting backgrounds and are
already proven winners for their university, state or even the NFL. A shrewd move? Definitely.
By becoming champions in athletics or other sports, such people have shown they come
packaged with the passion, commitment and ambition that Knight demands.
Knight wants employees to feel pride in their organization. To this end, he unashamedly milks
Nike’s heritage and its ability to not only to succeed but also to bounce back, which it has
had to do several times since its 1962 origins as Blue Ribbon Sports.
But even Knight must succumb to Father Time, and now in his 60s feels his motivational
powers may be on the wane. His decision to step aside and become chairman leaves a void
that could not be filled when he resigned as CEO on two previous occasions. Only his return
prompted a change in fortunes for the company.
So, what is different this time around? His replacement, Bill Perez, has been carefully chosen
and seems a chip of the old block. He has spent over 30 years at S. C. Johnson, a family
organization similarly loyal to its roots. Knight himself is certain Perez will embrace the Nike
culture.

Management by loitering
James Goodnight is also an inspiring kind of guy, although that is pretty much where the
similarities end between the SAS CEO and his Nike counterpart. Some might say the two are
chalk and cheese. For example, while Knight is content to remain on the horizon, Goodnight
can be found right there mucking in with the troops.
Goodnight fondly refers to this as ‘‘management by loitering’’ and involves him being a
visible presence at all times. Many employees would normally feel uneasy about their CEO
breathing down their necks but it is certainly not the case at SAS. On the contrary, Goodnight
has gained the confidence of the analytical software producing company’s workforce. Being
approachable has helped him to achieve this.

j j
PAGE 16 STRATEGIC DIRECTION VOL. 21 NO. 11 2005
‘‘ Granting others the freedom to make key decisions obviously
indicates that Knight has faith in his people. ’’

Just by walking around and talking to people, the CEO is able to:
B Increase his involvement by becoming more aware of what employees are doing.
B Gain a level of insight that would not usually be attainable through formal management
procedures.
B Directly encourage ideas from the rank and file.
B Keep his hand in. An ideal example of this is Goodnight’s role in a team that wrote the
code for a new software package to compete with IBM’s data mining equivalent. Within a
year of launch, SAS had captured around two-thirds of this particular market.
In addition, Goodnight also insists that employees take time off for important family
occasions as part of sustaining a proper work/life balance. That such gestures have helped
boost the reputation of SAS is hardly surprising. And the payoff? The US company is able to
attract the best talent and can boast a turnover rate vastly below industry norms.
This management style has also helped nurture a synergistic mentality at SAS, with creativity
and innovation flourishing as a result. One outcome of this is warranty analysis software that
helps automakers identify deficiencies in advance. Improvements can then be made before
vehicles are shipped and the savings on guarantee claims are potentially huge.
SAS clearly believes in speculating to accumulate. Investing almost double what other
companies put into R&D is ample evidence of this. Few would argue that unique products
like the warranty software are just reward for its enterprise. Similarly, the organization bucked
the trend by increasing its workforce and salary levels during the economic downturn early in
the present decade. Another wise move, as it was able to snap up talent that rivals had laid
off.
Goodnight is the first to acknowledge that being private and financially sound has allowed
such decisions to be made. Free from the pressure to meet profit targets, the company is
able to take a more long-term perspective than other companies in order to remain the
world’s biggest private organization in its field. Interestingly, SAS employees have no desire
to go public because they believe it would jeopardize creativity and the friendly working
environment.

Wal-Mart’s new broom

How Wal-Mart must wish for such harmony. Instead, the US discounter’s reputation as an
employer is under attack from all sides, with lawsuits now the order of the day. It naturally
increases the pressure on new HR chief Lawrence Jackson.
But the ideal man to sweep away this discontentment could be Jackson, who broke down
barriers and earned the respect of workers and management alike during his 17 years at
Pepsico. Fighting for what he believed in saw improved conditions for black workers and the
organization’s first black managers association. No wonder Fortune recognized him as an
influential black executive.
Wal-Mart is currently big on promoting diversity, so Jackson’s track record obviously helps –
even though he has no real previous experience in HR. That said, he is a people person who
firmly believes in the importance of affording respect to all. With his new company boasting
1.5 million employees, Jackson has plenty opportunity to practice what he preaches.
The challenges ahead are unlikely to trouble Jackson. His hands-on approach is ideal for
someone who identifies goals and sticks around until tasks are accomplished. Mind you,

j j
VOL. 21 NO. 11 2005 STRATEGIC DIRECTION PAGE 17
 there must be some question mark against the in-your-face style he is renowned for. Allowing
passions to run overboard could easily inflame an already sensitive situation.
Many believe Jackson’s role is to keep unions out of the company. But his predecessor,
Coleman Peterson, argues that hiring and developing the right people will enable that issue
to resolve itself.
Fortunately, the HR chief has technology on his side. Wal-Mart has developed a program that
will allow potential employees to apply online, while also aiding career development by
matching candidates with appropriate positions. This can only be regarded as a godsend
that just might help Jackson achieve his ambition to get everyone in the company rowing in
the same direction.

Comment
The review is based on: ‘‘Dr Goodnight’s good days’’ by John S. McClenahen, ‘‘Can Nike still
do it without Phil Knight?’’ by Daniel Roth and ‘‘Man with a mission’’ by Eve Tahmincioglu.
The first piece describes how the style of management has developed the harmonious
culture at SAS, the US software developer. It details hoe CEO James Goodnight mixes freely
with company employees and the benefits than this practice brings. The author also
suggests that the management style helps to nurture the synergistic approach that marks
the company as innovative. This interesting article contains some useful strategic
implications. Roth’s article chronicles the career of Phil Knight, retiring CEO at Nike. The
author closely analyzes Knight’s unconventional style of leadership that has seen him remain
in the fringes for much of his lengthy career. The importance of motivation is emphasized and
why the issue is close to Knight’s heart. Although Knight’s role is difficult to define and
imitate, there is nonetheless plenty of value in this fascinating piece. The final article details
the problems and expectations facing new Wal-Mart HR chief Lawrence Jackson, as the US
Keywords: organization attempts to fight off growing attacks on its reputation. Jackson’s origins and
Leadership, past career are discussed, as are aspects of his character and leadership that have enabled
Management styles, him to make a real impact. While the strategic implications of this article are less readily
Motivation (psychology) apparent, it is still well worthy of a read.

References
McClenahen, J.S. (2004), ‘‘Dr Goodnight’s good days’’, Industry Week, Vol. 253 No. 12, pp. 43-5, ISSN
0039-0895.
Roth, D. (2005), ‘‘Can Nike still do it without Phil Knight?’’, Fortune, Vol. 151 No. 6, pp. 35-43, ISSN
0738-5587.
Tahmincioglu, E. (2005), ‘‘Man with a mission’’, Workforce Management, Vol. 84 No. 3, pp. 32-8, ISSN
1092-8332.

j j
PAGE 18 STRATEGIC DIRECTION VOL. 21 NO. 11 2005