Story of Nike

Everyone connects the catchphrase Just do it with Nike, the amazingly popular footwear manufacturer.

It reflects the initial boldness of Phil Knight, one of the founders of Nike.

This article shows how Knight found his way to success connecting with entrepreneurs around the globe in order to manage his shoe business without the necessary background.

There is information on his team of outcasts, who have managed to pull through two big lawsuits and a notorious scandal. In the meantime, they created a great brand, the most influential one to ever exist in the global market.

Nikes path to success started with a crazy idea and a trip around the world.

In 1962, Phil Knight graduated business school. He was a timid person and a bad salesman.

However, it didnt discourage him from realizing his ambition. Knight wished to buy Japanese running shoes and sell them in America. In particular, he was interested in the Tiger brand that was produced by Onitsuka, a Japanese company.

He came up with this idea during his time at Stanford Business School. He didnt receive the approval or support of his teachers, fellow students, or family back then.

However, Knight wasnt discouraged and instead crossed the ocean to present his offer to a number of Japanese entrepreneurs.

Knight was sincerely surprised when instead of rejection the CEO of Onitsuka inquired about his companys name saying that it was an ideal time for him to come.

Being taken aback by the question, he said Blue Ribbon without thinking. Onitsuka accepted his offer and gave him 300 pairs of Tiger shoes to take back with him. Thus, Knight spent the next few months selling those shoes out of the back of his car.

Having got the Onitsuka contract, Knight traveled around the world. That experience provided him with motivation and spirit.

What he came to know about different cultures he encountered had a certain impact on his life later on. For example, Knight found special inspiration in the Greek Acropolis. He spent a lot of time in front of the temple of the Greek goddess of victory, Nike.

Some years later, Phil found a play titled The Knights, which was written by an ancient Greek playwright, Aristophanes. One of the episodes features a warrior presenting the king with a new pair of shoes in the Temple of Nike.

Phil Knights former running coach modified the early Tiger shoes they received and put Blue Ribbon in play.

Many of us get inspired and motivated by some special people whom we value and respect. His former running coach, Bill Bowerman was such a person for Phil Knight.

Bills support made Phil confident enough to go on with his ambition. In turn, Bill became a true veteran of the shoe industry, a so-called shoe dog.

A shoe dog is an industry slang name for someone who is obsessed with shoes. Shoe dogs realize how important shoes are for people, who want to walk the time lane confidently.

When Bill was Phils couch, he used his student to determine how small changes in shoes were reflected in the performance of his runners.

For his unofficial experiments, he would take the shoes apart and then get them back together with the help of any available materials that, in his opinion, would improve and make them helpful.

His main aim was making shoes as light as he could, which would be a typical feature of the Nike footwear. Bills obsession went so far as taking cod fish skin rather than leather to produce lighter shoes!

Upon his arrival from Japan, Phil proposed Bill partnership at Blue Ribbon. Bills agreeing to it contributed to Phils confidence. In fact, he started to believe in the potential of the crazy idea. Truly, the endeavor succeeded.

The right time was crucial once more. When Blue Ribbon was its initial stage, Bills career as a coach was becoming more successful. In fact, he went so far as to train future Olympians. Bill modified Tiger shoes for his best athletes, thus helping the brand attract more attention, which allowed Phil to sell more footwear.

Moreover, Phil passed Bills first prototype, the Cortez, on to Onitsuka and offered them to produce these new shoes, the performance of which had been tested.

Onitsuka said yes making Cortez the first sales achievement of Blue Ribbon.

Thus, Bill contributed to the development of the start-up. Yet, Blue Ribbons ongoing success owes a lot to Phils original and bright team of employees.

Talented eccentrics made up the early Blue Ribbon team, and they all helped make key decisions.

While Blue Ribbon was expanding, Phil gathered reliable individuals who could also rely on him.

However, the employees of Blue Ribbon werent ordinary white-collars. In fact, they were a group of smart outcasts who worked great as a team.

The reason for such productive teamwork might have been them being outcasts, which enabled them to ignore each others oddness and see their talents. There were not limits.

From the start, all of them had faith in Phil and his idea. Jeff Johnson, the first full-timer at Blue Ribbon, spared no time or effort developing novel shoe designs with Bill Bowerman.

To maintain the strength of Blue Ribbons team, a couple of times every year, Phil would organize Buttfaces, his variant of team-building weekends.

At those gathering, the team had shouting matches while drinking, screaming at each other everything they could think of, which reminded them that they were just people. However, there were other techniques Phil used to keep up morale. A lot of company decisions were made with the teams involvement.

Regarding daily routine, Phil was guided by General Pattons words: Dont tell people how to do things. Tell them what to do and let them surprise you with their results.

For instance, Phil never interfered with Jeffs work or reprimanded him for tons of emails, work-related and not so much.

Phil consulted his team on more important decisions as well. In 1971, the enterprise decided to start making their own shoes instead of selling Onitsukas. Yet, since the Blue Ribbon brand couldnt be used for such change, a new replacement company had to be created. So, Phil suggested his team name it instead of doing it himself.

Strangely, Jeff dreamed about the Nike name, which Phil accepted remembering the Temple of Nike in Greece and the impact it had on him all those years ago.

Lawsuits brought by Onitsuka and the government threatened Nike, but the company persevered.

Every successful business person knows that glory and money are closely followed by challenges and risks.

In the case of Phil Knight, two major lawsuits put his career in danger.

In 1973, he was sued by Onitsuka in Japan, who justified their position by stating that Blue Ribbon breached the contract, which resulted in the Japanese company incurring costs. The breach happened when Blue Ribbon began manufacturing and selling Nike footwear.

In defense, Blue Ribbon filed a suit against Onitsuka in the U.S. for breaching the contract and trademark infringement. While Blue Ribbon was the only distributor of Tigers line in America, Phil received information from an insider that Onitsukas executive planned a trip to America to look for someone to replace Phils company.

On the basis of this information, Phil directed his attention toward a new enterprise, Nike.

In the end, Blue Ribbon won the lawsuit. The judges decision was reportedly based on the honesty of the companies with Blue Ribbon being the most honest party. Thus, Onitsuka had to pay damages.

While this was the first time Phils work was threatened, the second happened in 1977: Nike accused of owing the government $25 million.

Everything began with Keds and Converse, the American competitors of Nike, who collaborated in discovering somewhat arcane American Selling Price law. It stated that certain types of shoes incurred much higher customs duties, and Keds and Converse accused Nike of breaking this law.

Nonetheless, that didnt break Phil so easily, and he continued to believe in Nikes innocence, which helped Phil through the difficult times.

Phil tried to persuade the government to drop the charges but in the end, listened to a trusted advisor to settle the claim for $9 million as a so-called diplomatic token.

He thought that fighting the government so hard would make his company fall out of its favor, and he would need governments help in the future.

Phil Knight feared an IPO would taint the unique culture at Nike, yet its spirit stayed strong.

Obviously, there were some challenges on Phils way. He had to try hard to overcome every obstacle.

But how did Nike manage to achieve such success?

Phil didnt know what, in his opinion, winning was, but he was sure that losing wasnt an option.

He was afraid to let down his father, which was one reason, the other being his belief that work has dual nature: fun and meaning. Such combo prompted him to stay active so that life wouldnt simply pass him by.

Therefore, despite knowing that publicity would solve a few of Nikes financial problems, Phil wanted to maintain playfulness of his business and did not go for it.

In essence, Phil adhered to the grow or die credo in business. It presupposed putting all the profits, apart from moderate salaries for him and workers, into expansion.

Phils strategy showed his reliance on banks, which frequently were reluctant to loan him a lot of money. However, Nissho, a Japanese trading company, contributed to Nikes financing.

In the end, though, the governments lawsuit of $25 million forced Phil to go public with Nike. However, he was anxious about the possibility of an IPO costing him the control over his business and its uncommon ethics code, which could potentially result in Nikes becoming just one more corporate machine.

Luckily, Phils colleague proposed a new structure of shares in the company in order to allow Nike continue to be in charge and avoid the dreaded scenario. Even today, the company continues to value its honesty and principles, which it believes to be one of the reasons behind its global recognition.

Through improving factory working conditions and treating sponsored athletes well, Nike strives to stay true to its values.

Starting from its creation, Nike tackled the obstacles adhering to the same principles and with the same attitude that Phil always asked from all the workers. That was what ensured the faithfulness of their customers all that time.

Today, Nike tries to establish better standards for its workers in terms of labor. In the 1990s, they found themselves in the middle of a scandal connected with the horrible working conditions in their sweatshops in Asia.

Similar to other businesses, Nike rented workspace there. However, the person behind the story was aware that Nikes fame would attract a lot of media; thus, Phils team became the target.

The company put considerable effort to improve the salaries of its workers, but the government of one country opposed their move stating that factory workers earning more than doctors would hinder their economy.

However, the scandal showed Phil and his team that they should put more effort into it.

Among the main improvements that the company implemented in the factories was the introduction of a water-based bonding agent used for attaching shoe uppers to the soles.

It proved to be a big contribution. So-called rubber rooms were the most carcinogenic factory areas prior to the invention. The new bonding agent eliminated 97 percent of the toxins that were present in the one Nike used before.

Moreover, Nike shared the newly invented glue with its rival, who introduced it in their factories.

In fact, Nikes integrity goes further than factories since Phil views Nikes sponsored athletes as real individuals and not the means to profit. Such treatment and respect allowed Phil to make good friends with a number of the athletes Nike sponsored.

For instance, Phil got genuine sympathy from Nikes athletes when his son died in an accident while scuba diving. Tiger Woods become an especially close friend of Phils.

To conclude, Nike is one of the very few who have heart in the world of business.

Final Summary

Niles success story in the footwear industry begins with a bold idea, ambition, and modesty. Its achievements in the global arena prove that keeping faith in your idea, being brave enough to think unconventionally, and sticking to your principles are all that you need to achieve your goals and believe that the sky is the limit.

A piece of advice:

Get believers on your team.

Its essential for a start-up to have a team who believe in the idea and in you, of course those people shouldnt be there because they want to profit only. Those individuals who are passionate about it prove to be the best workers you can enlist and the most loyal ones remaining by your side even in the darkest times.