Nike CEO John Donahoe on Friday blamed remote work for the company falling behind on innovation, saying that it’s tough to be disruptive when people are working from home.
“What’s been missing is the kind of bold, disruptive innovation that Nike’s known for and when we look back, the reasons are fairly straightforward,” said Donahoe.
“In hindsight, it turns out, it’s really hard to do bold, disruptive innovation, to develop a boldly disruptive shoe on Zoom,” Donahoe said.
So we realigned our company, and over the last year we have been ruthlessly focused on rebuilding our disruptive innovation pipeline along with our iterative innovation pipeline.”
Donahoe said Nike’s innovation pipeline “is as strong as ever,” and consumers can expect to start seeing new product drops each season, as well as the fresh storytelling the brand has long been known for.
In December, Nike announced a broad restructuring plan to reduce costs by about $2 billion over the next three years.
Donahoe insisted Friday that Nike is still “gaining share” and remains a dominant force in running and all things sport.
“Innovation has always been what’s marked Nike in running, as in other categories and so we’re not just going to copy what other people do, we’re gonna bring innovation.”
According to Nike CEO John Donahoe, the company’s lack of innovation can be attributed to remote work because it makes it difficult to be innovative when employees are working from home.
Donahoe addressed the company’s dearth of novel products in its lineup, which had alarmed investors, in an interview with CNBC’s Sara Eisen from Paris.
Donahoe stated, “When we look back, the reasons are fairly straightforward. What’s been missing is the kind of bold, disruptive innovation that Nike is known for.”.
Even more significantly, he said, Nike employees worked from home for 2.5 years, despite the fact that shoe factories in Vietnam were forced to close due to the Covid-19 pandemic.
According to Donahoe, “it turns out that developing a boldly disruptive shoe on Zoom is really difficult when doing bold, disruptive innovation in hindsight.”. Our teams acknowledged that they last met in person eighteen months ago. After realigning our business, we have been ruthlessly focused on reconstructing both our iterative and disruptive innovation pipelines for the past year. ****.
Nike’s innovation pipeline, according to Donahoe, “is as strong as ever,” and customers can anticipate new product releases every season in addition to the innovative storytelling the company has become known for.
The company is going through a difficult period when the CEO makes these remarks. The massive sneaker company has come under fire from some analysts and investors for lagging behind in terms of innovation and losing market share to upstarts like On Running and Hoka, who have attracted a new wave of runners and experienced rapid growth in recent years.
Nike unveiled a massive reorganization plan in December with the goal of cutting expenses by roughly $2 billion over the following three years. Amidst warnings of softer demand in the upcoming quarters, it also lowered its sales guidance.
After two months, it announced that it was cutting more than 1,500 jobs, or 2 percent of its workforce, to make more investments in its growing businesses, which included running, the women’s division, and the Jordan brand.
Donahoe maintained on Friday that Nike is still “gaining share” and is still the industry leader in running and sports in general.
When questioned about Hoka and On Running, Donahoe responded, “We continue to lead with elite runners and we’ve done more to advance running than any brand in the world over the last 50 years.”. “Nike has always stood for innovation, both in running and other categories, so we won’t just copy what others do—instead, we’ll lead the way. “.”.
