LEADERSHIP

TERM REPORT

ON

PHIL KNIGHT

Submitted to

SIR RAZA H.SYED

Submiited by HARIS AHMED KHAN

BAHRIA INSTITUTE OF MANAGEMENT AND COMPUTER SCIENCES, KARACHI

ABOUT PHIL KNIGHT

Phil Knight was born February 24, 1938 in Portland, Oregon, the son of a lawyer

and future newspaper publisher. Knight attended Cleveland High School in

Portland and then the University of Oregon in Eugene, where he was a member

of Phi Gamma Delta ("FIJI") fraternity and earned a journalism degree in 1959.

He was a middle-distance runner at the school under track coach Bill

Bowerman and ran a personal best 4:10 mile, winning varsity letters for track

in 1957, 1958, and 1959.

Right after graduating from Oregon, Knight enlisted in the Army and served

one year on active duty and seven years in the Army Reserve. After the year of

active duty, he enrolled at Stanford Graduate School of Business. In Frank

Shallenberger's Small Business class, Knight developed a love affair with

something besides sports — he discovered he was an entrepreneur. Knight

recalls in a Stanford Magazine article "That class was an 'aha!' moment" ...

"Shallenberger defined the type of person who was an entrepreneur--and I

realized he was talking to me. I remember after saying to myself: 'This is really

what I would like to do.' "In this class Knight needed to create a business plan.

His paper, "Can Japanese Sports Shoes Do to German Sports Shoes What

Japanese Cameras Did to German Cameras?", essentially was the premise to

his foray into selling running shoes. He graduated with a Masters of Business

Administration from the school in 1962.

Knight set out on a trip around the world after graduation, during which he

made a stop in Kobe, Japan in November 1962. It was there he discovered Tiger

brand running shoes, manufactured in Kobe by the Onitsuka Co. So impressed

with the quality and low cost, Knight made a cold call on Mr. Onitsuka, who

agreed to meet with him. By the end of the meeting, Knight had secured

distribution rights for the western United States for Tiger running shoes.

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The first Tiger samples would take more than a year to be shipped to Knight,

during which time he found a job as an accountant in Portland, Oregon. When

Knight finally received the shoe samples, he mailed two pairs to Bill Bowerman

in Eugene in the hope of gaining a sale and an influential endorsement. To

Knight's surprise, Bowerman not only ordered the Tiger shoes, he offered to

become a partner with Knight and would provide some design ideas for better

running shoes. The two men shook hands on a partnership on January 25,

1964, the birth date of Blue Ribbon Sports, forerunner to Nike.

PHIL KNIGHT'S SUCCESS AS CEO OF NIKE

Phil knight was CEO of Nike for 33 years and known as one of the best business

leaders of all time. He made Nike one of the most profitable companies in the

world.

Phil Knight's success as CEO of Nike is in large part due to his tremendous

leadership skills. Welch knew how to effectively communicate key ideas to the

rest of the staff, not only by delivering messages, but persistently repeating

them over and over, and ultimately driving the messages home.

“An organization's ability to learn, and translate that learning into

action rapidly, it is the ultimate competitive advantage”.

Knight’s corporate culture is like no other; what he hated about the

organization in his early days as a chemical engineer is exactly what he

transformed as CEO: the red tape and bureaucracy of the company. He

changed that by making it an informal learning environment, which he liked to

Refer to as a "grocery store."

This informal approach allowed Knight to get to know his employees, interact

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with them, and get involved in all aspects of the business. Knight also prided

himself on his personal touches, such as the handwritten memos sent to

employees. But while he's known as personable and persistent, he is also

renowned for being a hard and very demanding leader, which is why many

employees have coined him Neutron Jack.

During his early years at Nike, he displayed one of the qualities of a leader:

self-confidence. When he was given the same pay rise as others in his

department he threatened to leave, believing he had greater merit than the

others and hence deserved a greater rise. It is this sort of meritocratic pay that

he became known for during his time as CEO: annually giving huge bonuses to

the top performing managers and sacking the lowest performers.

During his time as CEO, Welch grew GE’s revenue from $26.8 Billion to $130

Billion and grew the company’s value from $12 Billion to a staggering $410

Billion in 2004 when he retired, making it the world’s most valuable company.

Phil knight firmly believed that top performers deserved to be handsomely

rewarded, an attitude he had retained since his first job at Nike. He established

a performance-review program to identify the top 20 percent of employees,

who were accorded bonuses, as well as the bottom 10 percent, the "lemons,"

who were typically fired and replaced. Knight supported the distribution of

wealth as far as possible throughout the company and understood when

considering bonuses that life-changing fortunes were sometimes at stake.

Besides the raw numbers measuring efficiency and profits, more personal

aspects also characterized Knight's leadership. He brought an air of informality

to the company that stemmed from his belief that Nike was little different in

practice from a small local market. Customer satisfaction and positive

relationships with both customers and employees were what ultimately made a

business successful. Whether the product for sale was turbines or apples, the

customer would determine the success of the enterprise. Thus, Knight made

efforts to cultivate relationships with suppliers, customers, and employees

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alike. Knowing his employees had a direct impact on productivity, Knight

communicated with workers often enough for them to feel that at any moment

they could receive a note or a visit from the boss. His efforts at communication

engendered senses of value and pride in employees, in that if a task was

important enough for Knight to care about, it was important enough to perform

with the utmost effort. As a result of his person ability, everyone knew Knight

simply as "Philip."

PHIL KNIGHT’S GENERAL CHARACTERISTICS

Phil Knight's fundamental needs, values, and orientation towards life are

symbolized by the four astrological elements. Each person has their own

unique balance of these four basic energies: fire (warmth, inspiration,

enthusiasm), earth (practicality, realism, material interests), air (social and

intellectual qualities), and water (emotional needs and feelings).

Knight's "elemental make-up" is described below. Remember that most people

are "unbalanced" or lopsided, and if Jack is lacking or deficient in a certain

element (or elements), it simply means that he needs to consciously develop

that particular aspect in order to appreciate and/or work harder in that

dimension of life.

Sometimes we overestimate the element that we are least endowed with,

sensing it as a lack within ourselves, but more often we neglect or ignore it.

The qualities described below will be reiterated and explained in more detail in

the following pages.

He is a nurturer and a protector and is prone to what has sometimes been

referred to as the "Atlas Syndrome" - namely, carrying the weight of the world

on his shoulders. Phil Knight assumes responsibilities in his relationships very

conscientiously and often takes on more than his share of the troubles as well.

Though Knight appears (and indeed often is) rather passive, he possesses a

great deal of quiet inner strength and the ability to flow with and repeatedly

endure life's inevitable adversities. He is apt to be surrounded by people who

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rely on him, and though Phil Knight derives much satisfaction from providing,

giving, and being needed, he can also let himself be drained emotionally and/or

financially by taking care of other people and not caring sufficiently for himself.

Phil Knight has a very strong need for security and he places safety first. He is

unlikely to make sudden changes or to take new directions that involve risk

and unpredictability. Any break from the past is very difficult for Knight and he

needs a great deal of support when trying to make even healthy and positive

changes in his life or habits. ("Habit" is a key word for Phil knight as he is apt to

be very attached to his!)

He is very retentive. Phil Knight holds on (and sometimes clings) to the people,

places and ways he is familiar with. He also tends to repress feelings, and he

may need to learn to express and let go of old feelings and past conditioning.

Physically, Phil Knight is apt to be hearty and substantial, with a tendency to be

stout. Unless other astrological factors indicate otherwise, he can also be

downright lazy, especially when it comes to exercise. Knight instinctively

chooses comfort over challenge. (This is true in a broader sense as well, not

only regarding physical exercise).

His strengths include depth of feeling, patience, and generosity. The qualities

that Phil Knight needs to cultivate include initiative, openness to change and

new experience, and a stronger sense of self.

He is likely to be overly humble or unsure of himself and to look to others for

inspiration, motivation, reinforcement and approval. Tending to be somewhat

passive, Phil Knight must learn how to take initiative and motivate himself.

A lack of warmth (either physical, emotional or both) may be evident in Phil

Knight and can manifest physically as a low energy level, paleness and lack of

color in the skin, or a tendency to be easily chilled. Emotionally, it can be

reflected in a marked coolness or aloofness with little spiritedness, joyfulness,

or enthusiasm for living. Eating warming, spicy foods, living in a warm, sunny

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place, and using fire in his daily life (lighting candles, using a wood stove or

fireplace for heat) can help balance Knight. Also, spending time with warm,

cheerful, positive-minded people and developing a philosophy based on

spiritual optimism can stir up Knight's own zest for life.

On the positive side, Phil Knight is unlikely to be egocentric and has a capacity

for ample patience and peacefulness.

PHIL KNIGHT AS A TRANSFORMATIONAL LEADER

Broad and long range perspective: In 1961 Phil Knight was not

considered a leading contender for GE's top job. However, his

performance and earnings record ultimately won him the position over

six other candidates. Even though he had no formal master plan for

Nike's reorganization, he did have a vision of what he wanted the

company to be. The first step in realizing that vision was a dismantling of

the bureaucracy.

Committing to greatness: He designed to improve the quality of Nike’s

processes and products and save billion of dollars. He is proud of the

initiative that his 27000 employees have embraced the program so

enthusiastically, proud that the early indications of the program’s value

as far better as he expected.

Sense of urgency: If he likes an idea he embraces it down with financial

analysts, board members and journalists.

Guidance and feedback: Like a football coach, he moves meeting to

meeting, conveying that message and a host of other ones as well. He

does have lots of ideas on how business should work, and many of them

make great sense. And he constantly imploring his employees to

inculcate them into Nike’s business activities.

Risk taking by bringing a change: He encourages colleagues to never

stop thinking about the need for change. Start each day as if it were your

first day on the job, he tells his managers. Make whatever changes are

necessary to improve things.

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Direction setting: He is quick to sense when ideas or activities are out

of focus or out of style or less valuable than they used to be. His ability to

figure when an organization has run out of gas with an idea is pretty

good. He always has the strength to pioneer another idea on the heels of

ideas that have been mined as far as you can go. He sets the direction by

looking at the competition.

TRAITS ACCORDING TO NIKE'S 5 ESSENTIAL

LEADERSHIP PHIL KNIGHT

ENERGY

A leader should have tons of positive Energy. He should go go, go; should love

action; and should relish change. In short, a leader should not be afraid to push

bold and far-reaching reforms, especially in our Republic of the Philippines with

a weak and frail economy, in this dizzying era of harsh global competition and

free markets.

ENERGIZER

A leader should have the ability to Energize others. He should love people and

can inspire them to move mountains if necessary. In the Philippine context,

what are the mountains that we the people should collectively work together

and move? They are the endemic culture of corruption; the deadweight of too

much foreign debt now surpassing P3 trillion; the huge government budget

deficit; and the decay of our industrial and agricultural infrastructures.

EDGE

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A leader should have Edge, the courage to make tough yes-or-no decisions, no

maybes. On major political, social, economic, moral and other challenges, it is

imperative for an effective leader to make decisions right or wrong.

EXECUTE

Leaders Execute, they get the job done. They have a strong desire to get the

work done and they get it with better efficiency.

PASSION

Phil Knight added a fifth trait for truly great and effective leadership: "Passion,

a heartfelt, deep and authentic excitement about life and work."

PHIL KNIGHT’S ACHIEVEMENTS AND AS A CEO OF

NIKE

As 20-year-old Stanford golfer Tiger Woods fought his way to an unprecedented

third U.S. Amateur title last summer, Nike founder Phil Knight shadowed him

from hole to hole, appraising the young phenom's every smile the way a golf

coach would his swing. "I hope we sign him," Knight said at the time. "If not, I

hope he goes to medical school." Three days later, Woods called a news

conference, stepped before the TV cameras and announced that he was

quitting college to join the Professional Golf Association Tour.

"Well," he said with a big grin, "I guess it's 'Hello, world,' huh?"

An adoring sports media lapped up the young man's winning soundbite. Then,

just 24 hours later, the other shoe dropped. In a barrage of new TV spots and

full-page newspaper ads, Nike unveiled its latest pitchman: pro golfer Tiger

Woods. The Nike-crafted tag line on the ads? "Hello, World."

Woods may be the company's current star, but its controversial CEO and

founder is the real story. Nike signed Woods to a five-year endorsement deal,

reportedly worth more than $40 million, and has thrown its considerable weight

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behind him. The company is packaging the young golfer--who is part African

American, part Chinese, part American Indian, part Thai and part white--as the

Jackie Robinson of golf, breaking down barriers each time he steps on a course.

The press savaged the ads for posing Woods as a racial trailblazer, a path long

since pioneered by black golfers such as Charlie Sifford and Lee Elder.

But the world's largest athletic shoe and apparel company had triumphed

again, creating a buzz for its masterful orchestration of Woods's coming-out

party and raising hackles with its questionable use of race to promote him. It

was pure Philip Hampson Knight: innovative, controversial and very, very

successful.

Of course, you'd expect nothing less from the man who turned a

tiny company called Blue Ribbon Sports into Nike Corp., a

multibillion-dollar enterprise and a household name. A former

middle-distance runner at the University of Oregon (he ran a respectable 4:10

mile), Knight, MBA '62, has been on a 30-year endorphin rush. He has made

more money from athletics than anyone, ever. With a net worth of $5.3 billion,

Knight ranks sixth on Forbes's latest list of the richest Americans. Blue Ribbon

Sports cleared $3,240 in its first year, 1964. In fiscal year 1996, Nike's revenue

hit a stratospheric $6.5 billion (with $550 million in income). "In a very short

period of time, Phil Knight created one of the greatest American commerce

stories of the 20th century," says sports agent David Falk, who has frequently

butted heads with Knight over the marketing and representation of athletes.

If one of those athletes weren't Michael Jordan, consumers worldwide might still

be pronouncing Nike like Mike. In large part because of that one employee with

the thousand-watt smile and springboard legs, there is no greater status

symbol among youths than Nike products.

But make no mistake: As athletically awesome and charismatic as Michael

Jordan is, he alone did not make Nike as recognizable worldwide as Coke and

McDonalds. Nor did he make "Just Do It" the slogan that best encapsulates the

1990s. Nike is a cultural icon because Knight understood and captured the

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zeitgeist of American pop culture and married it to sports. He found a way to

harness society's worship of heroes, obsession with status symbols and

predilection for singular, often rebellious figures. Nike's seductive marketing

focuses squarely on a charismatic athlete or image, rarely even mentioning or

showing the shoes. The Nike swoosh is so ubiquitous that the name Nike is

often omitted altogether.

"Phil understands the symbolic power and attractiveness of sports," says A.

Michael Spence, dean of the Stanford Graduate School of Business and a Nike

board member. "And he helped build that connection in our culture."

Knight also understood that this lust for heroes and appreciation for in-your-

face attitude is not limited to American youth. He correctly predicted that

American culture was a marketable commodity--that teenagers from Paris to

Shanghai would be just as taken with Charles Barkley's ample attitude as

teenagers in Trenton and San Diego.

No company has put as much creative energy and resources into marketing

celebrities as Nike. If, as Marshall McLuhan famously said, advertising is the

greatest art form of the 20th century, then Nike is its Picasso, imaginatively

expanding the parameters of the medium's use of the athlete-endorser. "We

didn't invent it," Knight acknowledges in an interview, "but we ratcheted it up

several notches."

Nike engineered shoes for the top echelon of athletes to compete

and train in. At the same time, the company's mass marketing

made the shoes so attractive and desirable that they became a

de rigueur accessory to the American wardrobe and dream--even

if increasingly sedentary teens only wore them to watch TV. Thirty years ago,

American teenagers owned either a pair of Converse All-Stars or Keds. Today,

the average American boy owns 10 pairs of sneakers.

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Understanding how Phil Knight made Nike a household name is easy.

Understanding Phil Knight is not. For someone whose empire rests on visceral

consumer reactions, Knight is remarkably self-contained.

Once dubbed the "most powerful man in sports" by the Sporting News, Knight

presents himself as affable, albeit slightly stiff and a tad shy. He unobtrusively

enters the Wimbledon conference room on the fourth floor of the John McEnroe

Building on the Nike World Campus in Beaverton, Ore. (a good hour's jog from

Portland), clears his throat, introduces himself and apologizes for being 10

minutes late. "Where should I sit?" he asks. Knight isn't wearing his ever-

present Oakley sunglasses (he's rarely photographed without them), which is a

bonus, as his pale blue eyes open wide and sparkle when a topic engages him.

Like many of the 2,700 employees on the campus, Knight instinctively glances

down at his visitor's shoes before taking a seat at the far end of the conference

table, his back to the picture window that offers a view of the campus and the

10-acre lake anchoring it. I nervously appraise my black leather, conservative

flats and kick myself for making such a boring choice for a meeting with the

man who made footwear an art form. It's like picking up John DeLorean in a

Yugo.

Knight, 58, still has the lean, almost gaunt build of a runner. Known for his

decidedly dressed-down and wrinkled wardrobe, he looks surprisingly natty. A

black linen suit drapes loosely over his slender frame. His black, collarless shirt

buttons up to his Adam's apple. With his trim beard, collar-length, wavy red-

blond hair shrouding most of the gray, he suggests a record executive who

looks and sounds remarkably like actor Donald Sutherland.

Knight has been portrayed as mysterious, inscrutable, eccentric, unpredictable,

enigmatic, idiosyncratic, shy, aloof, reclusive, competitive and a genius. But

the world may never know which adjective suits him best. Knight, who with his

wife of 28 years, Penny, has two grown sons, shuns publicity and

self-explication the way Howard Stern courts it.

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"Genius" is the one attribute on the list that Knight questions. "Other than that,

I'm all of those things--most of those adjectives are right some of the time," he

says. That's as far as he'll go. When asked a potentially revealing question

("Have you deliberately cultivated an image for yourself, the way Nike has for

its clients?") he toys with a can of Diet Pepsi or fiddles with the watch he took

off at the start of the interview. He signals that a question is not to his liking by

deftly shifting the focus to Nike, lapsing into corporate-speak or even abruptly

cutting himself off in mid-sentence and waiting--in stony silence--for the next

question.

Knight was raised in Portland, the son of a lawyer turned newspaper publisher.

He was a middle-distance runner for the University of Oregon track team, which

at the time had one of the best programs in the country. Known as "Buck,"

Knight had more enthusiasm than talent, which made him the ideal human

guinea pig for legendary track coach Bill Bowerman's endless tinkering with

running shoes. "I was very aware of shoes when I was running track," Knight

says. "The American shoes were offshoots of tire companies. Shoes cost $5,

and you would come back from a five-mile run with your feet bleeding. Then

the German companies came in with $30 shoes, which were more comfortable.

But Bowerman still wasn't satisfied. He believed that shaving an ounce off a

pair of shoes for a guy running a mile could make a big difference. So

Bowerman began making shoes himself, and since I wasn't the best guy on the

team, I was the logical one to test the shoes."

An indifferent student, Knight graduated from Oregon with a degree in

journalism in 1959. He enlisted in the army for a year (and served in the

reserves for seven), then enrolled at the Graduate School of Business at

Stanford.

Stanford changed Knight's life. Finally, school wasn't drudgery. For the first

time, he was excited to read about something other than sports. And it was in

Frank Shallenberger's small-business class that Knight conceived Nike.

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Shallenberger gave his class the following assignment: Invent a new business,

describe its purpose and create a marketing plan. In his paper,

"Can Japanese Sports Shoes Do to German Sports Shoes What

Japanese Cameras Did to German Cameras?" Knight developed a

blueprint for superior athletic shoes, produced inexpensively in

Japan, where labor was cheaper. "That class was an 'aha!' moment," Knight

says. "First, Shallenberger defined the type of person who was an

entrepreneur--and I realized he was talking to me. I remember after writing

that paper, saying to myself: 'This is really what I would like to do.' "

After graduating from Stanford, Knight acquiesced to his father's wishes and

secured a "real" job with a Portland accounting firm. But first, he traveled to

Japan, where he became enamored of Japanese culture and business practices.

To this day, visitors to his office must remove their shoes--even their $180 Air

Pamirs--before entering. And Knight took leave of our interview by forming a

steeple with his hands and bowing.

Much has been made of Knight's meditative, almost dreamy mien and his

affinity for all things Asian, especially Japanese. Knight refined both his

philosophy of life and business while in Japan. He studied Asian culture and

religion and climbed Mount Fuji, which the Japanese consider a sort of

pilgrimage. He also visited the Onitsuka shoe factory in Kobe, which was

producing Adidas knock-offs, called Tigers. Knight was so impressed with both

the quality and low production costs that he made a deal with Onitsuka to

distribute Tigers in the United States.

After returning from Japan in 1964, the 26-year-old Knight began peddling

Onitsuka running shoes from the back of his green Plymouth Valiant at track

meets across the Pacific Northwest. Adidas was hardly quaking in its cleats,

and Knight kept his day job as an accountant. But he persevered, convinced

that his inexpensive, high-performance shoes could beat the top "sneakers"--

Adidas, Converse All-Stars and Keds--in the market. By 1969, at the fortuitous

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dawn of the jogging boom, Knight sold a million bucks worth of Onitsuka shoes

bearing his Blue Ribbon Sports label.

In 1971, Knight decided he could retire his accountant's wing tips. It was also

time to give his fledgling company a new name and logo. Knight favored

"Dimension Six," but his 45 employees thankfully laughed that one down. Then

Jeff Johnson, '63, a fellow running geek, proposed a name that came to him in a

dream: Nike, for the Greek winged goddess of victory. The company paid $35

to commission a new logo--a fat checkmark dubbed a "swoosh"--and the new

shoe debuted at the 1972 Olympic trials in Eugene, Ore.

Nike sold $3.2 million worth of shoes in 1972, and its profits doubled each of

the next 10 years. Nike passed Adidas to become the industry leader in the

United States in 1980, the year it went public. The company made a quantum

leap in 1984 when it signed the 21-year old Jordan to endorse a basketball

sneaker. Within a year, it seemed that every boy in America was strutting

about in the clunky, siren-red Air Jordan high-tops. "It wasn't planning," Knight

says. "We could see that he was a charismatic guy who jumps over the moon

and is very competitive, but nobody could have predicted what he would

become to our culture."

Now it seems formulaic--sign a gifted athlete to a lucrative

endorsement contract, give him his own television commercial

and shoe, blow him up larger than life and count the money.

But in 1984, it was unprecedented. By signing, promoting and eventually

turning Jordan into a legend, Nike played a pivotal role in revving up the cult of

personality that now pervades sports. (Knight still gets a kick out of telling this

story: "A few years ago there was a poll in China to name the greatest man

ever. The winner was Mao, but there was a tie for second between

[revolutionary hero] Zhou Enlai and Michael Jordan of the Chicago Red Oxen!").

Ironically, the chairman of the company that has set the standard with its

groundbreaking, creative advertising campaigns (It's Gotta Be the Shoes, Bo

Knows, Just Do It, Griffey for President) had to be talked into advertising at all.

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"I used to believe that a good product sold itself," says Knight, who like many

of his employees sports a Nike "swoosh" tattoo, his on his left calf. "When I first

went to meet with Wieden and Kennedy [Nike's Portland-based ad agency], I

told them: 'I don't like advertising.' And I'm still uneasy with it."

Others are just uneasy with Nike's particular brand of advertising. Even though

the company's commercials have been hailed as pop art, Nike has been

denounced for turning sports stars into cartoonish überathletes and creating a

market of young consumers blinded by idolatry. And for those with

underdeveloped public personas, Nike has not hesitated to fill in the blanks.

Nothing wrong with that, Knight believes. Sports isn't about truth and accuracy.

It's the central, unifying culture of the United States and the stuff of romance

and dreams. "Sports is like rock 'n' roll," he says. "Both are dominant cultural

forces, both speak an international language, and both are all about emotions."

Some consider Nike--with its swoosh popping up on uniforms, on the lapels of

college basketball coaches, even as bus-size renderings on walls of stadiums--

responsible for the over-commercialization of sports. Nike is certainly not the

first or only corporation to wield considerable influence in the sports world, but

it is the most brazen and visible. "Nike is the prime representative of the way

we overmarket and overadvertise and overdo everything these days," says

Todd Boyd, a professor of critical studies in the USC school of cinema and

television. "The market is saturated to the point where it can be sickening. The

problem is, we now have people going gaga over a commercial, as much or

more so than they do the sport itself. Enough already."

For a time, Nike became a lightning rod for all sorts of criticism. The company

came under fire in the early 1990s when there was a spate of shootings and

knifings in American inner cities by teenagers coveting Nikes, which were just

then pushing the $100 mark. Newspaper columnists decried "Just Do It" as a

nihilistic slogan that justified or even begat these crimes. Nike was accused of

focusing its ad campaigns on children in the ghettos, although, ironically,

athletic shoes are the most cross-cultural of commodities.

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Then, in the 1992 Olympics, the company hit its public relations nadir when the

Nike endorsers on the Olympic basketball "Dream Team" refused to wear the

official Olympic warm-up jerseys on the medal stand because they bore the

logo of archrival Reebok. Nike was perceived as demanding that its athletes

put shoe company before country. The incident became a symbol for those

concerned with the inexorable and rapidly advancing influence of money in the

world of athletics, obscuring or even warping the purity of the Games

themselves.

Also in 1992, a group named Made in America called for a boycott of Nike

products because Nike shoes (like most athletic footwear) are made overseas,

mainly in Asia where labor is cheap. Nike has been criticized for its low pay and

abusive treatment of some workers. Using independent subcontractors, Nike

makes many of its products in Indonesia, a world pariah for its well-

documented human-rights abuses. New York Times columnist Bob Herbert has

launched his own crusade against Nike. He accuses the company of exploiting

Indonesians while quietly encouraging the Suharto government to crack down

on dissent.

Over the years, Nike has also rattled cages with its penchant for signing

athletes with rebellious, even dicey, reputations, such as the outspoken Barkley

and the untethered Chicago Bull, Dennis Rodman. Not that Reebok endorser

Sean Kemp or Converse man Larry Johnson (both guilty of taunting lesser

opponents while representing the United States in the 1994 World Games) are

paragons of virtue, but Nike pioneered the trend of signing athletes who project

attitude as well as excellence.

An impenitent Knight shrugs when asked about these issues. "Our business

practices are no different than those of our competitors," he says. "But we are

bigger, and thus more visible, so we get more flack."

But it's more than that. Nike courts controversy. For instance, Nike donated

$25,000 to Tonya Harding's defense fund in 1994, in part to tweak Reebok, the

sponsors of Nancy Kerrigan. Nike's analog isn't the conservative team owner,

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but the cocky superstar who sets the agenda and is so wildly popular he knows

he can get away with just about anything. "Nike is at times feisty, or

counterestablishment, deliberately," says Spence, the business school dean.

"That's partly Phil and partly the athletic culture Nike is modeled after."

As Nike ran away with the athletic-shoe market in the '80s, these criticisms

were merely annoying pebbles wedged in its shoes. But then the company

made a fatal mistake, one of great hubris. It forgot about the women. When the

aerobic fad hit in the mid-'80s, Nike ignored it. But fledgling Boston-based

Reebok high-stepped right in, creating a somewhat flimsy, but attractive shoe

that women bought like tickets to a Meryl Streep movie. Reebok's sales

surpassed Nike's in 1987. That struck a nerve, as it flouted, even mocked,

Knight's bedrock belief that, above all, authenticity and function sell shoes. To

this day, Knight scorns Reebok and its chairman, Paul Fireman, for its emphasis

on fashion. "We're not in the fashion business, as the Wall Street Journal wrote

the other day," says Knight, clearly still peeved. "We're in the sports business,

and there's a big difference."

Reebok's blindside tackle gave Knight pause. Until then, Nike prided itself on

being something of a counterculture corporation. Irreverence and risk-taking

were prized; the athletic establishment and corporate wisdom were disdained.

In keeping with Nike's collegiate, fraternal atmosphere, the company's

sprawling complex was officially dubbed the Campus. Employees reported to

work in sneakers and shorts, partied hard and made decisions on the run. "We

had no master plan," Knight acknowledges. "It was totally seat-of-the-pants."

As if to underscore the fact that he wasn't a typical CEO, Knight once showed

up at a company event in drag.

But when Nike was dislodged from the top, he realized that his fly-by-Knight

approach would no longer work. Knight streamlined the company (laying off

600 of the company's 2,000 employees) and reorganized Nike along more

conventional, corporate lines. Where Knight was once famous for governing by

instinct, today Nike studies reams of statistics and convenes a focus group

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before designing a new shoelace. The marketing budget grew, and so did the

emphasis on design, Nike's euphemism for fashion.

Nike is back on top because it grew up, but Knight clearly misses his company's

adolescent days. "At first, we couldn't be establishment, because we didn't

have any money," Knight says. "We were guerrilla marketers, and we still are, a

little bit. But, as we became No. 1 in our industry, we've had to modify our

culture and become a bit more planned."

Realigned, Nike replaced Reebok at the top of the charts in 1989 and has

remained there ever since. Nike outdistanced its competitors by moving

beyond basketball, tennis and track to control the women's and outdoor

markets. (Nike also owns Cole-Haan, the dress-shoe manufacturer, and Canstar

Sports Inc., the world's largest hockey equipment company.) Nike still takes

risks and challenges the sports establishment, but much of the criticism leveled

against the company has quieted. Nike has become a major player in

promoting women's sports as well as funneling money into inner-city sports

programs.

Now, 10 years after Nike's upheaval, Phil Knight has become a sort of professor

emeritus. He has handed over the daily running of the company to Thomas

Clarke, who was appointed president in 1994. Knight, who describes his own

management style as "selectively hands-on," is still an everyday, hovering

presence and very much the man in charge. But these days he is more

interested in being an artist than a businessman. "At this stage in my life, the

creative process is of great interest to me," he says.

For Knight, that means finding new markets to dominate and new products to

peddle. Nike has enjoyed great growth in the women's, apparel and outdoors

markets. Nike is also opening up more Nike Town stores, which are as much

museum as retail outlet. (Chicago's store is one of the city's top tourist

attractions.) These towering shrines look about as much like a typical shoe

store as Dennis Rodman looks like a typical human. But the biggest push will

19

be overseas. Nike already owns 25 percent of the world market, dwarfing its

competitors. That still leaves billions of un-Niked feet out there.

Knight's overriding goal is to ensure Nike's legacy. "Phil is always thinking

ahead," says Nelson Farris, Nike's director of corporate education and a Knight

confidante for 23 years. "He once said in a speech that the worst thing he could

envision was to sit his grandkids on his knee and have them ask him, 'What's a

Nike?' "

PHIL KNIGHT’S WEAKNESSES

If I had a weakness, maybe it was a weakness and strength. I'm rather

emotional. I am passionate. I want to win and I might be load sometimes when

perhaps I shouldn't, but I can kick and hug with equal capability. I'm in the

game. (PHIL KNIGHT)

Knight's hagiographers have declared him

"The Vince Lombardi of business”

“A heroic form of CEO," "the world's greatest business leader," "the manager of

the century," and "CEO of the century." You'd almost think Knight was single-

handedly responsible for the growth of the entire global economy. Oh, wait,

he's been credited with that as well: "As the most widely admired, studied, and

imitated CEO of his time," argued Fortune, "Knight has enriched not only Nike's

shareholders but also the shareholders of companies around the globe. His

total economic impact is impossible to calculate but must be a staggering

multiple of his Nike performance."

Knight's critics (when they can be found) typically point to the massive layoffs

he has overseen at Nike or to allegations that Nike plants have polluted the

Hudson River. (Thomas F. O'Boyle's muckraking book At Any Cost is probably

the most comprehensive anti-Knight brief to date.) But these and related

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attacks, whatever their merit, are largely beside the point as far as Knight's

boosters are concerned.

And that impact looks impressive. In 1961, the year before Knight became CEO,

Nike recorded revenues of roughly $26.8 million; in 2000 they were nearly

$130 million. When Welch took over, the stock market judged the company to

be worth about $14 billion. Today its market capitalization is roughly $490

million, making it the one of the most valuable company in the world.

But there's a difference between being a good CEO — which Knight has been —

and being the undisputed all-time champion of corporate leadership. Or, to put

it another way, think of Phil Knight as a stock. If the most sensible way to

gauge the current value of a stock is the famous price-to-earnings (P/E) ratio —

that is, the ratio of a stock's market cost to the company's actual or expected

profits — then consider Phil Knight 's reputation as "price" and his achievement

as "earnings." A stock can be overvalued, sometimes wildly so, even if its

earnings look solid. In bottom-line terms, Phil Knight's achievements are solid.

But his reputation? As a multiple of what he has actually accomplished, it's

gotten far too pricey to buy.

PHIL KNIGHT’S STRENGTHS

THE INTEGRATOR

One particular talent Phil Knight has is the ability to see various items in a

field and often organize it into something entirely new. This integrator

capacity is one of the Hallmark’s of Knight Mind. His ability to see various

sides and integrate it into a new innovative reality/system/product is one of

the hallmarks of Jacks’ mental skill and talent. He took Nike on the top.

REVOLUTIONIZING INDUSTRIES

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Jack takes pleasure in revolutionizing a field -- questioning its assumptions

and creating replacements that turn that industry upside down while driving

it to new, unprecedented levels of success.. Jack participated in that

unfolding in part and has carried it over to his work at GE. That

revolutionary, life changing verve is one of Knight deep personal values.

ACCESSIBILITY

Perhaps Phil Knight is innovative, integrative, and revolutionizes industry is

through his deep belief in making many products. Knight created a radically

new product that would revolutionize the industry through its ease of use.

Phil Knight is deep belief in making things easy for people – i.e. the value of

Ease of Use – is one of his core personal values and beliefs, which reflects in

the innovative, even revolutionary products he has developed.

SPEARHEADS DEVELOPMENT

Phil Knight himself felt that his greatest talent was spearheading

development of new products. He saw a social or technological limitation,

had a vision of something new, and had that urge and will to drive

development of it until it came out as he wanted. He then put full force of

his energies – including innovative, sometimes revolutionary marketing

techniques – drive it into the market. It is Phil Knight’s ability to

conceptualize and actualize projects of new development that is one of the

reasons he had such great success and alter the course of his industry,

technology in general and the world.

Closely related is the fact that he led the customer rather than followed it.

One precept of modern management business management is to listen to

what the customer wants and then develop products and services based on

that. In a way Phil Knight went to a different model of looking at what was

going on in technology and society and drive new development based on

that, with the added value of creating ease of use, simplicity, and an all in

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one experience. These are things that the customer may have never

imagined. By leading the customer, Phil Knight felt he could bring much

improved change to the world around him. It is an individualistic, creative

urge more than a collaborative one in that sense, even as he worked

collectively within Nike to bring these often-revolutionary products to

market.

RISK TAKER

Phil Knight has been willing to try radical new technologies even if it means

undercutting previous one that Nike was selling. More to the point, Phil

Knight has been willing to introduce unproven technologies. He is willing to

try new things even if they are not popularly known or have never been

accepted. Nike itself seems to in a mode of never-ending risk taking.

Perhaps that is because it has no guarantee of success like other companies

who are competing in the market.

TRUE INDIVIDUAL – THINKS FOR HIMSELF

A person who truly thinks for himself can be thought of as a “true

individual.” He or she is not moved by the herd but by something internal.

From early on Phil Knight has demonstrated that propensity. He was always

a loner, and a self-thinker.

As a result of this inner-bent, he always had a different way of looking at

things. It was his, unique way. That aspect would show up in many ways:

from the many radical new technologies he championed to his disdain for

the financial concerns and demands of Wall Street. He had a vision of an

unlimited future, unfettered by the givens of life, of what other people

accepted.

CREATIVITY, INNOVATION OVER MONEY VALUE

One of Phil Knight precepts is the notion that the journey is the reward. i.e.

that the process of doing and creating should be exhilarating. The rest will

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take care of itself. Of course, he was not immune to being successful,

creating wealth for him and his company, and becoming the leader of his

industries, yet there was a feeling that he projected onto Nike that the

creative process was as important as the rewards it brings. For Jack, the

reward is the joy of innovation itself, of creating innovative products.

ARTISTIC, CREATIVE SENSIBILITIES

Phil Knight consistently demonstrated creative vision. He wanted products

to be beautiful in their elegance and simplicity. Phil Knight demonstrating

new products he would comment not only on the simplicity, but the

elegance of design, and other aspects of products

LEADING NIKE

In 1961 Phil Knight was not considered a leading contender for NIKE's top job.

However, his performance and earnings record ultimately won him the position

over six other candidates. Even though he had no formal master plan for Nike's

reorganization, he did have a vision of what he wanted the company to be.

LEADERSHIP STYLE

Phil Knight brought a keen emphasis on promoting functional leadership to the

organization and turned Nike into one of the smoothest run corporations in the

country. Phil Knight introduced a fresh and innovative organizational leadership

style to GE during his time at Nike. He believed in sharing decision making with

group members and working with them side by side .Being as a participative

leader he has the quality of consulting with the group members before making

a decision.

Phil Knight is all about leadership, not management. Phil Knight had always

viewed bureaucracy as the enemy, and was sick of the “bureaucracy-babble”

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which he experienced at Nike, and he believes that in order for a company to

be excellent the managers need to

“Stop managing, and start leading”. He had the strong believe that the old

bureaucratic ways didn’t allow for managers to identify problems soon enough

or with any accuracy. Phil Knight wanted any employee regardless of their

rank-and-file to feel free to talk with him or with anyone else within the

company. Actually, he wanted to discard the term “manager” altogether

because it had come to mean someone who

“Controls rather than facilitates, complicates rather than simplifies, acts more

like a governor than an accelerator”.

Phil Knight decided that Nike's leaders, who did too much controlling and

monitoring, had to change their management styles.

“Managers slow things down. Leaders spark the business to run smoothly,

quickly. Managers talk to one another, write memos to one another. Leaders

talk with their employees, filling them with vision, getting them to perform at

levels the employees themselves didn't think possible. Then they simply get

out of the way”.

The team with the best players usually does win. And that is why; Phil Knight

invested the vast majority of his time and energy in three activities.

He has always evaluated making sure the right people are in the right

jobs, supporting and advancing those who are, and moving out those who

are not.

He spent his time to coach-guiding, critiquing and helping people to

improve their performance in every way.

And finally to build self-confidence-pouring out encouragement, caring

and recognition' Self-confidence energizes, and it gives your people the

courage to stretch' take risks and achieve beyond their dreams. It is the

fuel of winning teams.

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TRADITIONAL LEADERSHIP TIPS PHIL KNIGHT STYLE

Phil Knight, respected business leader and writer is quoted as proposing these

fundamental leadership principles.

1. There is only one way - the straight way. It sets the tone of the

organization.

2. Be open to the best of what everyone, everywhere, has to offer; transfer

learning across your organization.

3. Get the right people in the right jobs - it is more important than

developing a strategy.

4. An informal atmosphere is a competitive advantage.

5. Make sure everybody counts and everybody knows they count.

6. Legitimate self-confidence is a winner - the true test of self-confidence is

the courage to be open.

7. Business has to be fun - celebrations energies and organization.

8. Never underestimate the other guy.

9. Understand where real value is added and put your best people there.

10.Know when to meddle and when to let go - this is pure instinct.

As a leader, your main priority is to get the job done, whatever the job is.

Leaders make things happen by:

knowing your objectives and having a plan how to achieve them

building a team committed to achieving the objectives

helping each team member to give their best efforts

As a leader you must know yourself. Know your own strengths and weaknesses,

so that you can build the best team around you.

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However - always remember the philosophical platform - this ethical platform is

not a technique or a process - it's the foundation on which all the techniques

and methodologies are based.

Plan carefully, with your people where appropriate, how you will achieve your

aims. You may have to redefine or develop your own new aims and priorities.

Leadership can be daunting for many people simply because no-one else is

issuing the aims - leadership often means you have to create your own from a

blank sheet of paper. Set and agree clear standards. Keep the right balance

between 'doing' yourself and managing others 'to do'.

Build teams. Ensure you look after people and that communications and

relationships are good. Select good people and help them to develop. Develop

people via training and experience, particularly by agreeing objectives and

responsibilities that will interest and stretch them, and always support people

while they strive to improve and take on extra tasks. Follow the rules about

delegation closely - this process is crucial. Ensure that your managers are

applying the same principles. Good leadership principles must cascade down

through the whole organization. This means that if you are leading a large

organization you must check that the processes for managing, communicating

and developing people are in place and working properly.

Some leaders lead by example and are very 'hands on'; others are more

distanced and let their people do it. Whatever - your example is paramount -

the way you work and conduct yourself will be the most you can possibly

expect from your people. If you set low standards you are to blame for low

standards in your people.

"... Praise loudly, blame softly." (Catherine the Great). Follow this maxim.

If you seek one single most important behavior that will rapidly earn you

respect and trust among your people, this is it: Always give your people the

credit for your achievements and successes. Never take the credit yourself -

even if it's all down to you, which would be unlikely anyway. You must however

27

take the blame and accept responsibility for any failings or mistakes that your

people make. Never publicly blame another person for a failing. Their failing is

your responsibility - true leadership offers is no hiding place for a true leader.

Take time to listen to and really understand people. Walk the job. Ask and learn

about what people do and think, and how they think improvements can be

made.

Accentuate the positive. Express things in terms of what should be done, not

what should not be done. If you accentuate the negative, people are more

likely to veer towards it. Like the mother who left her five-year-old for a minute

unsupervised in the kitchen, saying as she left the room, "...don't you go

putting those beans up your nose..."

Have faith in people to do great things - given space and air and time,

everyone can achieve more than they hope for. Provide people with relevant

interesting opportunities, with proper measures and rewards and they will more

than repay your faith.

Take difficult decisions bravely, and be truthful and sensitive when you

implement them.

Constantly seek to learn from the people around you - they will teach you more

about yourself than anything else. They will also tell you 90% of what you need

to know to achieve your business goals.Embrace change, but not for change's

sake. Begin to plan your own succession as soon as you take up your new post,

and in this regard, ensure that the only promises you ever make are those that

you can guarantee to deliver.

ATTITUDE AND BEHAVIOR

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Phil Knight’s behavior to his employees was very informal .More than half of his

time was devoted to "people issues". Most importantly, he had created

something unique at a big company - Informality. The hierarchy that Phil Knight

inherited with 29 layers of management was completely changed during his

tenure. Everyone, from secretaries, to chauffeurs to factory workers, called him

'Philip'. Everyone could expect - at one time or another - to see him. Phil Knight

gave employees a feeling that he knew them. Commenting on the informality

at Nike, Phil Knight said,

"The story about NIKE that hasn't been told is the value of an informal

place”

Informality was also standard in company correspondence. Phil Knight faxed

handwritten notes to anyone in the company who he felt deserved personal

communication, whether to motivate, correct, or congratulate, from top

management to laborers. Welch also personally reviewed everyone who

worked directly for him, handwriting extensive performance evaluations that

sometimes ran several pages. This exercise not only gave specific and ongoing

feedback to employees but was a chance for Phil Knight to reflect on the

businesses that each employee was leading. The atmosphere of informality

was perhaps most critical among NIKE's top leadership, where the confidence

that came from being in familiar company encouraged executives to openly

praise or criticize each other—or even Knight himself.

“Boundary less behavior” and the elimination of unnecessary communication

filters are the key phrases to describe Phil Knight’s attitude towards

communication. He encourages input from every employee, from the factory

floor to the executive suite. To facilitate goal setting and empowerment within

NIKE, Phil Knight needed to establish clear lines of communication in the

organization. He realized that employees come to Nike with many different

experiences and backgrounds. He did not want to take away from the benefit of

those various backgrounds, as much as reshape them with Nike philosophies.

This is not to say that he wanted a workforce of robots. Just the opposite

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actually, he wants free thinkers. One of his objectives was to motivate people

to think outside the box and challenge the status quo. Open communication

channels between Phil Knight and his employees have been an important tool

in this regard. These channels work in both directions, giving employees the

ability to air their concerns and work towards a consensus for action. They also

help motivate employees, because once again employees feel that they are

directly contributing to the success of the company.

EMPOWERING OTHERS

When Phil Knight started Nike, he had a vision of creating an organization

where people at all levels could be held responsible for their own work, and in

the end make decisions for the betterment of their job. The goal was not to

control workers, but instead to liberate them. Phil Knight characterized this as

creating a boundary less organization in which empowered employees were

self directed and motivated to effectively reach their goals.

Thousands of Nike employees get an opportunity to get together and share

their ideas, thoughts and know-how, while building and fostering a more

creative and team oriented atmosphere. The Work-Out encourages

communication and accountability with the ultimate goal being to drive above

average team performance. By providing each team member with the

opportunity to contribute his ideas to the decision making process, Phil Knight‘s

hoped to stimulate individuals to constructively challenge their bosses and

promote a more motivated workplace. All Work- Outs included follow-up

meetings where previous commitments were discussed and accountability was

enforced. Under Phil Knight, Nike began to realize that human beings are not

machines and that each person has the potential to enhance productivity.

Knowing how to use this resource can not only give the company a competitive

edge, it can make each employee feel more important in the production

process and thus more motivated.

“The only way to be more competitive was to engage every mind in

the organization”

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CREATING A LEARNING CULTURE

In order for Nike to continue on its successful path Phil Knight created and

encouraged a learning culture. Historically Nike followed an unwritten rule

referred to as “not invented here” (NIH). NIH encompassed the concept that if

an idea was not developed at Nike then it was completely useless. Phil Knight

did not agree with this cultural attitude. He believed that in order to for a

learning culture to form it was necessary and legitimate to plagiarize another

company or persons ideas and programs.

The learning culture paradigm shift first occurred at Nike during the Work-Out

program. The Work-Out program sparked ideas and learning opportunities that

would never have taken place if Nike’s employees were not forced to think

critically and take part in self-reflection. The Work-Out program carried over

into the every day life of the company and its employees. Ideas were

constantly free-flowing between members of the organization as well as

amongst Nike and other companies. This exchange of ideas enabled the

thirteen businesses within Nike to grow and thrive in a very competitive

environment.

In 2000, Knight was inducted into the Oregon Sports Hall of Fame for his

Special Contribution to Sports in Oregon. Knight is believed to have contributed

approximately $230 million to the University of Oregon, the majority of which

was for athletics. On August 18, 2007, Knight announced that he and his wife,

Penny, would be donating an additional $100 million to the University of

Oregon Athletics Legacy Fund. This donation is reportedly the largest in the

University's history.

However, Knight's contributions to the Athletic department at U of O have not

come without controversy. His significant contributions have granted him

influence and access atypical of an athletic booster. In addition to the "best

seats in the house" for any U of O athletic event, he has his own personalized

31

locker in the football team's locker room, and an athletic building named for

him (the library is named for his mother, the law school is named for his father,

and the under-construction basketball arena is named for his son). However,

most controversial was his successful lobbying to have his friend and former

insurance salesman, Pat Kilkenny, named as Athletic Director.[10] Kilkenny,

another wealthy athletic booster, has neither a college degree nor any

germane experience. Kilkenny attended but did not graduate from the

University of Oregon. The former chairman and chief executive officer of the

San Diego-based Arrowhead General Insurance Agency, he grew his business

into a nationwide organization with written premiums of nearly $1 billion when

he sold the company in 2006. ESPN's Outside the Lines spotlighted Knight and

his donation-backed influence on U of O athletics on an April 6, 2008 episode.

In 2006, Phil Knight donated $105 million to Stanford Graduate School of

Business, at the time the largest donation to a business school in history.[12]

Knight also provided monetary support to his high school alma mater Cleveland

High School for their new track, football field, and gymnasium.

In October 2008, Phil and Penny Knight pledged $100 million to the OHSU

Cancer Institute, the largest gift in the history of Oregon Health & Science

University. In recognition, the university renamed it the OHSU Knight Cancer

Institute.[13]

BUSINESS MODEL AND MANAGEMENT BY LEADERSHIP

"Our vision is to create the world's most competitive enterprise."

Phil Knight's goal was to make Nike "the world's most competitive enterprise."

He knew that it would take nothing less than a "revolution" to transform that

dream into a reality. "The model of business in corporate America in 1980 had

not changed in decades. Workers worked, managers managed, and everyone

new their place. Forms and approvals and bureaucracy ruled the day." Phil

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Knight's self-proclaimed revolution meant waging war on Nike's old ways of

doing things and reinventing the company from top to bottom.

Today, Nike with its unique learning culture and boundary less organization is

one the most admired company in the world.

The techniques and ideas that Welch has employed to move Nike forward are

applicable to any size corporations, small, medium, or large.

The program followed by him for managing Nike’s success is a seven-point

management

1. Develop a vision for the business

2. Change the culture to achieve the vision

3. Flatten the organization

4. Eliminate bureaucracy

5. Empower individuals

6. Raise quality and efficiency

7. Eliminate boundaries

Other best practices and policies which contributed to the success of Nike are:

LEAD BY EXAMPLE

To spark others to perform, you must lead by example. Phil Knight mastery of

the 4 E's of leadership – Energy, Energize, Edge, and Execution – was always

in evidence. "He had great energy, sparked others, had incredible competitive

spirit, and had a record of execution that was second to none. This is a key of

the Welch phenomenon.

MANAGE LESS

Managing less is managing better. Close supervision, control and

bureaucracy kill the competitive spirit of the company

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ARTICULATE YOUR VISION

The best leader does not provide a step-by-step instruction manual for

workers. The best leaders are those who come up with new idea, and

articulate a vision that inspires others to act.

SIMPLIFY

Keeping things simple is one of the keys to business. "Simple messages

travel faster, simpler designs reach the market faster and the elimination of

clutter allows faster decision making."

GET LESS FORMAL

You must realize now how important it is to maintain the kind of corporate

informality that encourages a training class to comfortably challenge the

boss's pet ideas.

FACE REALITY

Face reality, and then act decisively. Most mistakes that leaders make arise

from not being willing to face reality and then acting on it.

SEE CHANGE AS AN OPPORTUNITY

Change is a big part of the reality in business. "Willingness to change is

strength, even if it means plunging part of the company into total confusion

for a while.

FOLLOW UP

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Follow up on everything. Follow-up is one key measure of success for a

business. Your follow-up business strategy will pave the way for your success.

PUT VALUES FIRST

Don't focus too much on the numbers. "Numbers aren't the vision; numbers

are the products."9 Focus more on the softer values of building a team, sharing

ideas, exciting others.

CULTIVATE LEADERS

Cultivate leaders who have the four E's of leadership: Energy, Energize, Edge,

and Execution;  leader who share values of your company and deliver on

commitments.

CREATE A LEARNING CULTURE

Turn your company into a learning organization to spark free flow of

communication and exchange of ideas. "The desire, and the ability, of an

organization to continuously learn from any source, anywhere - and to rapidly

convert this learning into action – is its ultimate competitive advantage."

INVOLVE EVERYONE

Business is all about capturing intellect from every person. The way to

engender enthusiasm it to allow employees far more freedom and far more

responsibility.

MAKE EVERYBODY A TEAM PLAYE R

Managers should learn to become team players. Middle managers have to be

team members and coaches. Take steps against those managers who wouldn't

learn to become team players.

INSTILL CONFIDENCE

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Create a truly confident workforce. Confidence is a vital ingredient of any

learning organization. The prescription for winning is speed, simplicity, and

self-confidence.

BE NUMBER 1 OR NUMBER 2

“When you're number four or five in a market, when number one sneezes,

you get pneumonia. When you're number one, you control your destiny. The

number fours keep merging; they have difficult times. That's not the same if

you're number four, and that's your only businesses. Then you have to find

strategic ways to get stronger.  But Nike had a lot of number ones."

LIVE QUALITY

"We want to change the competitive landscape by being not just better than

our competitors, but by taking quality to a whole new level. We want to make

our quality so special, so valuable to our customers, so important to their

success that our products become the only real value choice."

CONSTANTLY FOCUS ON INNOVATION

"You have just got to constantly focus on innovation. You have got to

constantly produce more for less through intellectual capital.

BEHAVE LIKE A SMALL COMPANY

Small companies have huge competitive advantages. They "are uncluttered,

simple and informal. They thrive on passion and ridicule bureaucracy. Small

companies grow on good ideas - regardless of their source. They need

everyone, involve everyone, and reward or remove people based on their

contribution to winning. Small companies dream big dreams and set the bar

high - increments and fractions don't interest them."

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Phil Knight's philosophy was that a company should be either #1 or #2 in a

particular industry, or else leave it completely. Although he was initially

treated with contempt by those under him for his policies, they eventually

grew to respect him.

At the time of his retirement, Welch received a salary of $4 million a year,

followed by his record retirement plan of $8 million a year. In 2000 he was

named "Manager of the Century" by Fortune magazine.

STRUCTURAL LEVERS

Early on, Welch replaced many top executives and built a new team, and

restructured to take out layers of management. He also opened up

communication in all directions by visiting management training programs at

Croton Ville to create give-and-take sessions with managers, test new ideas,

and preach his messages about what he expected. He introduced 360-degree

feedback, and leveraged what he later called the Nike "operating system,"

which included the planning and resource allocation processes, reviews of

managerial talent (called Session C), and quarterly communication meetings to

shape the company. Meanwhile, the vision as he articulated it was evolving

toward "speed, simplicity, and self-confidence," toward making Nike a great

place to work, then to "boundary less organization" to stretch goals, and

recently to becoming a service organization. Numerous transformation

programs were introduced, including "Work-Out," designed to eliminate

unnecessary bureaucratic work (and open up hierarchical communication), and

six sigma, using the Internet to reform processes ("Destroy your

business.com"). Over time the programs and processes evolved as conditions

changed and he learned, but from the beginning he was trying to create a

company that would have the agility of a small organization combined with the

strength of a large one.

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HOW KNIGHT MANAGES NIKE

By the early 1970s, sales had reached $3 million, and Knight decided it

was time for Blue Ribbon to break with Tiger and start designing its own

shoes. In 1972, Blue Ribbon launched its Nike line, named after the

Greek goddess of victory. Emblazoned with a swoosh logo Knight paid a

Portland State art student $35 to design, the shoes featured a unique

waffle soles created by Bowerman that offered better traction with less

weight.

Knight’s marketing strategy was simple. Rather than rely on advertising

(which he admittedly loathed), he would get top athletes to endorse his

shoes, and then let his sales force sell the product. His strategy and the

timing of the launch couldn’t have been better. That summer, the

Olympic track and field trials were held in Eugene, Oregon, with none

other than Bill Bowerman as coach of the American Olympic team.

Knight took full advantage of the opportunity, putting Nikes on the feet

of several top finishers. When they made national television, so did the

shoes they were wearing. One of the most visible runners to wear Nikes

was American record-holder Steve Prefontaine. A cocky, anti-

establishment type, Prefontaine became the first of a team of edgy

athletes Knight recruited to endorse his shoes.

As Knight had planned, athlete endorsements played a major role in

boosting Nike sales throughout the 1970s. For instance, after tennis bad

boy John McEnroe hurt his ankle and began wearing Nike three-quarter-

top shoes, sales of that style leapt from 10,000 pairs to over 1 million.

And the sudden popularity of jogging combined with Nike’s canny

marketing created a demand where none existed before. No longer

would any old pair of shoes do for that jog around the block; people

wanted to wear what the best in the world were wearing and that was

Nike (as Blue Ribbon was re-christened in 1978).

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Nike experienced continued success throughout the early 1980s, thanks

mostly to the tremendous sales of its Air Jordan line. Commercials

glorifying Michael Jordan’s high-flying, slam-dunking antics made the

gaudy black and red sneakers a hot item, selling more than $100 million

worth in the first year alone. By 1986, total sales hit $1 billion, and Nike

surpassed Adidas to become the No. 1 shoe manufacturer worldwide.

Amazingly, Knight stumbled only once in his stellar career. In the late

1980s, Nike strategy of focusing on hard-edged, hard-core athletes

ignored the growing market for aerobics shoes. When British shoe

manufacturer Reebok pitched their leather shoes as a fashion item for

the trendy aerobic workout crowd, they quickly overtook Nike in the top

spot.

Between 1986 and 1987, Nike sales dropped 18 percent. Knight was

forced to face the fact that while Nike technology appealed to sports

professionals, other consumers might rank appearance over function. In

response, Nike came up with Nike Air a multipurpose shoe with an air

cushion in the sole. The commercial produced to unveil the new line

featured the Beatles song Revolution.(The rights to which cost Nike

$250,000.) Nike Air may or may not have been a revolution in footwear,

but it certainly revived sales. Nike regained the lead from Reebok in

1990 and has remained there ever since.

But as Nike has grown into a huge multinational enterprise, it has

become a magnet for controversy. In 1990, it came under fire from

Jessie Jackson, who maintained that while African-Americans accounted

for a large percentage of Nike’s sales, Nike had no black vice presidents

or board members. Jackson launched a boycott that led to the

appointment of Nike’s first black board member. That same year,

stories of teenagers being killed for their Air Jordan’s sparked outrage at

what was perceived as Nike’s overzealous promotion of its shoes. More

recently, Knight has been accused of exploiting factory workers in Asia,

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some of whom are paid less than $2 per day by the subcontractors who

manufacture Nikes. But despite this negative publicity, Nike sales have

remained strong.

USING DIFFERENT POWERS

“My main job was developing talent. I was a gardener providing water

and other nourishment to our top 750 people. Of course, I had to pull

out some weeds, too”

Jack Welch

1. LEGITIMATE POWER

Knight accepted the offer and was consequently the youngest person to ever

hold the position of CEO. He led Nike through two decades of growth, success,

and innovative change. He was in a position to tell others what to do, and has

the ability to influence subordinates in achieving the objectives of the

organization.

2. REWARD POWER

Welch inspired and motivated people by affirming their value to the

organization. He motivated his subordinates by giving them bonuses and

increasing their pays on the review of their performance and also motivated

them to overcome the challenges and reach their dreams. He played a

crucial role in attracting the talent by giving rewards and recognition to

good performers. Knight was such a leader, who celebrated the success of

his subordinates, which creates an atmosphere of recognition and synergy.

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To reinforce the competitive environment, Knight established a

comprehensive performance evaluation and ranking system for managers.

Outstanding managers were highly rewarded while those at the bottom of

the annual rankings were routinely fired.

3. COERCIVE POWER

No one felt safe in Nike. He was not hesitating of firing anyone who does not

achieve his target goals. He was so tough with the employees and put hard

work on them which increased the stress and so reduced their innovation

and creativity.

“Control your own destiny or someone else will”

Jack Welch

He made great use of his coercive power to influence his employees on

achieving his goals. He put strategic plans and fight for achieving them (Be

No.1 or No2 or else get out of the market) this is his main objective.

4. EXPERT POWER

In 1993, the man whom The Sporting News voted the most powerful person in

sports wasn’t an athlete, a manager or a team owner. He was Philip H. Knight,

the dynamic iconoclast who for nearly 30 years has shod the feet of sports

legends and weekend warriors alike. In less than a decade, his marketing savvy

and uncompromising competitiveness had transformed the athletic-shoe

industry and made Nike one of the most successful and widely recognized

brand names in the world.

Knight first came up with the blueprint for what would become the world’s No.

1 athletic-shoe company while working on his master’s degree at Stanford

University. Assigned to write a term paper on starting a small business in an

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area he knew well, the former University of Oregon track star naturally chose

running. He outlined a plan for breaking the stranglehold Adidas had on the

running-shoe market by using cheap Japanese labor to manufacture a cheaper,

better-quality running shoe.

Shortly after graduating in 1962, Knight decided to put his plan into action. He

flew to Japan to visit Onitsuka Tiger Co., manufacturer of an Adidas knockoff

sold in Japan. Introducing himself as the head of Blue Ribbon Sports, a

company which existed only in his mind, Knight told Tiger executives that his

firm was the ideal choice to import their shoes into the United States. He

convinced Tiger to send him some samples, promising to place an order after

his partners examined them.

He had gain experience and knowledge over the business. Through the 1980s,

Knight worked to streamline Nike and make it a more competitive company,

although many would say this was at too great a cost to individual employees

who were not treated with respect. He shut down factories, reduced payrolls,

cut lackluster old-line units. He also pushed the managers of the businesses he

kept to become ever more productive. Knight worked to eradicate inefficiency

by trimming inventories and dismantling the bureaucracy that had almost led

him to leave GE in the past.

ETHICS AND SOCIAL RESPONSIBILITY

“Giving people self-confidence is by far the most important thing that

I can do. Because then they will act”

Jack Welch

Knight is a prominent model of business leadership in the resurgent U.S.

economy of the 1990s. This "global legend" is described by Business Week as

"the gold standard against which other CEOs are measured.” The "gold

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standard" has largely avoided any tarnish of scandal, and has achieved

spectacular results for his stockholders. The stock price of Nike shares rose

1,155% from 1972 to 1997. To achieve this success, Welch, who happens to be

a Catholic, espoused a very uncompromising and narrowly focused business

leadership model. Unfortunately, the hagiography bestowed upon Knight from

much of the business press has obscured serious ethical deficiencies.

Knight ruthlessly and, it must be conceded, effectively pursued the ultimate

end of "success" as measured by profitability, market share, etc., through a

relentless push for more productivity, the massive dismissal of employees in

less profitable portions of the company, the removal of layers of bureaucracy,

the improvement of communication between portions of the company, and the

rewarding of those who improved the bottom line. There are certainly some

worthwhile dimensions of Nike's revolutionary approaches to innovation, such

as the improved communication and openness between departments. The

instigator of change exulted in his ability to transform an institution.

Although in others view it was unethical step because he layoff his large no of

employees but from an organization point of view he believes that stretch-

goals improve performance. Although he is probably correct, there are also

costs involved. The side of stretch-goals is the feelings of stress and failure that

accompany results that do not meet the goals. If people are always working

towards stretch-goals they will wear themselves down and will likely start

showing less progress towards the goals than previously thought. A great deal

of stress will accompany the shortfall in goals. In addition, there may be

occasions when employees will feel as if they have truly reached their

maximum capacity. Unions, for example felt that Knight kept on demanding

more and more at their workers expense, basically telling them to “shape up or

ship out”, among others. In his reign employees are utterly expendable in this

world. They can be fired, dismissed, laid off, made redundant, riffed,

downsized, or whatever convenient euphemism management may use, entirely

at the whim of the company. Performance, experience, or years at the

company are meaningless in this environment.

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In the midst of the layoffs, Nike's public relations campaign still touted a loyalty

to its employees in its "Nike is me" publicity campaign. The reality was that to

survive and thrive at the new Nike, an employee had to be "tough," "short

tempered," "almost impervious to criticism," "able to triumph in Machiavellian

maneuverings," and "completely wedded to your job." One executive confided

that going off to work in the morning at Nike was like "going off to war."

It suggests that perhaps success, and not integrity, was the dominant principle

guiding Nike. The push for success cultivated an institutional culture that was

susceptible to institutional misconduct.

But now after some 28 years in an interview with The Financial Times, Knight,

the father of shareholder value, said, “On the face of it, shareholder value is

the dumbest idea in the world.  Shareholder value is a result, not a strategy.

Your main constituencies are your employees, your customers and your

products.”

A criticism of Knight’s communication style is that he is too open and too

confrontational. Observers of Nike might perceive the “higher decibel level” at

Nike to be seen as a “mugging”, or shocking. Knight strives to build self

confidence in his managers, but his communication style often caused people

to lose self-confidence in them. Open communication channels work well when

they are used to motivate performance and increase employee morale, but

when they are used to intimidate they will have the opposite end in low self

esteem.

A negative aspect of empowerment stems from people who do not want to be

empowered. Union workers are often happy to take on more responsibility, but

those who distrust management do not think they should have to do any more

than their usual assignments. Welch had assumed that all people want more

responsibility, but the fact is that many people do not want any more

responsibility. Many workers reason that if they had wanted to have more

responsibility they would have become managers.

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He has used much of his power in leading his employees. But this idea was

ethical and he used it to achieve the company’s goals. The only comment is

that he could focus more on employees’ needs and limitations.

It is considered, his career has been devoted entirely to himself, his personal

fortune, and his media image.

The company came under increasing scrutiny for its wages and working

conditions in Indonesia, China, and Vietnam. United Nations Ambassador,

Andrew Young, released a report finding no issue with Nike's factories, noting

that facilities were "clean, organized, adequately ventilated and well lit,"

according to a Reuters Business Report article. However, human rights groups

charged that Indonesian workers were incessantly striking over low wages;

Nike workers received $2.46 per day in a nation that counted $4 per day as the

minimum subsistence wage.

Independent filmmaker Michael Moore, whose 1989 documentary Roger and

Me depicted a heartless corporate mindset at General Motors, turned his

cameras on Nike, among numerous other firms. Moore addressed the issue of

how Nike treats its workers and requested jobs for people in his depressed

hometown of Flint, Michigan. Knight countered that American workers do not

want jobs in shoe factories, but Moore was able to find a crowd of jobless

workers in Flint who would be happy to make Nikes. For his part, Knight was

the only CEO to agree to appear in the Moore film.

The uproar over the Asian workers dragged on for Nike, and they eventually

raised wages a small amount. Some American women's groups, protested that

female employees-the bulk of Nike's Asian work force-were still working 100 to

200 hours overtime at Nike just to pay their bills. They issued statements

accusing Nike of corporal punishment and sexual harassment in the shops as

well. By mid-1998, Knight announced in a speech to the National Press Club

that Nike was "dedicated to giving American consumers assurances that the

products they buy are not manufactured under abusive circumstances,"

according to a Gannett News Service article. He added that he had been

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branded as a "corporate crook," and defended his business practices, citing

"misinformation and misunderstanding" as reasons for the media assault on

Nike. Knight noted that a number of policies were going to be implemented in

their production facilities, including raising the working age to 16 at clothing

factories and 18 at shoe factories; using safer, non-toxic glues when possible;

adopting stricter, U.S.-dictated air quality standards; instituting on-site

education programs, and more.

In addition to the Asian labor issues, many people remained outraged over

Nike's escalating costs, especially since a large market for the products are

poor, inner-city youth. One shoe endorsed by basketball player, Anfernee

Hardaway, was tagged at $180, and the Air Jordans touted by superstar

Michael Jordan had always been priced at over $100. Perhaps this combination

of issues served to cause a slump. Sales and profits fell in 1998, and Nike laid

off 1,900 employees. However, the company remained the world's largest

shoemaker. It won a lawsuit in early 1999 that had accused the firm of lying to

consumers about "sweatshop" conditions in Asian factories. Human rights

groups remained unconvinced.

When not at the helm, Knight enjoys the fruits of his success. He and his wife

Penelope "Penny" Parks have two grown sons and one foster daughter. They

live in non-ostentatious comfort in Oregon, with a gaggle of pets and Knight's

"only personal concession to flash: [a] black Lamborghini (vanity plates: NIKE

MN) and red Ferrari," as Hauser noted in People. The workplace is also the

scene of fun and comfort: Nike World Campus features three restaurants, plus

fitness center, beauty salon, laundry service, jogging facilities, a day-care

center, and other amenities.

Knight can't help but see success in Nike's future, as the company expands its

product line to include a wide range of apparel and accessories. As a Forbes

writer noted, the man who built an empire on a pair of shoes still cherishes the

words of his track coach: "Play by the rules, but be ferocious."

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PHIL KNIGHT’S EFFORTS AND THEIR IMPACT ON THE

ECONOMY

“Giving people self-confidence is by far the most important thing that

I can do. Because then they will act”

Jack Welch

Nike made great strides under Phil Knight tenure as CEO. The company he led

since 1981 is a company that employs 27000 people in more than 100

countries. Shareholders have been rewarded throughout Phil Knight's tenure. A

$100 dollar investment in Nike the day Phil Knight took over would have been

worth over $2,000 in 1998. He also achieved his goal of making Nike the

company with the highest market value in the world. In 1997, Nike's stock

value eclipsed $200 billion.

All his great accomplishment made a profound effect on the USA and on the

world economy as a whole. Initially, when he took over as a CEO, he laid off

approximately 12000 employees which didn’t earn him a employee-oriented

manager. He restructured the whole company to improve the bottom line

profitability and maximize the shareholders value. Nike market value grew 40-

fold, to $500million between 1981 and 2001. The Nike through its profitability

paid billions of dollars as taxes to the government that helped the economy to

generate more jobs and initiate more social and economic endeavors.

REFERENCES

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Websites

http://www.google.com

http://www.howstufworks.com

http://www.yahoo.com

http://www.leader-values.com

http://www.oup.com

Strasser, Julie, SWOOSH: The Unauthorized Story of Nike and the Men Who Played There, Harper Business, 1993.

Forbes, August 2, 1993.

Gannett News Service, May 12, 1998.

Harvard Business Review, July-August 1992.

Reuter's Business Report, June 24, 1997

Sports Illustrated, August 19, 1993..

"Nike, Inc.," Hoover's Online, March 3, 1999. Available from http://www.hoovers.com/.

http://www.brainyquote.com

Khurana, Rakesh (2002-09-13). "Good Charisma, Bad Business". New York

Times. http://query.nytimes.com/gst/fullpage.html?

res=9C02E0DD1031F930A2575AC0A9649C8B63&sec=&spon=&pagewanted=

all. Retrieved on 2008-07-06.

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