Nike created a once-in-a-lifetime marketing campaign that revolved around Victor Wembanyama and his...
Nike’s new CEO, Elliott Hill, is one week away from stepping into his new role and disrupting the sportswear landscape as we know it. The TCU alum has amassed a 32-year resume that most companies dream about, and his reputation has transcended both stock prices and company morale within hours of his return. But amidst this exciting news, where did Nike go wrong with John Donahoe? How were his greatest strengths Nike’s biggest weaknesses, and how did a single article break the final straw in Donahoe’s five-year run as CEO. This case study uncovers the roots to Nike’s embattled downfall, Elliott Hill’s greatest strengths, and the billion-dollar question that will determine if Hill achieves a successful turnaround for the greatest sportswear brand in the world.
Promising Beginnnings
John Donahoe was brought into Nike’s coveted CEO role in 2019 after having successful stints with companies like eBay, PayPal, and ServiceNow. His leadership quickly became an imperative factor to Nike’s corporate rise as its revenue and stock price quickly jumped during 2020 and 2021 due to covid. But Donahoe’s success wasn’t limited to bottom lines and other fiscal numbers. In fact, Donahoe cherished his employees by prioritizing the company’s mental health during unstable times. He would expand further by telling Yahoo! Finance,
“We know mental health has no offseason. It isn’t just about preparing for moments of urgent need — it’s also about cultivating a healthy mind and body for everyday life. It’s why at Nike, we’ve taken a number of steps to support our employees through enhanced access to diverse counselors, free wellness memberships, support for families (including paid parental & family leave, back-up care, childcare subsidies), and more. And as we continue to listen to our teammates’ needs, we plan to further enhance our offerings later this year.” - John Donahoe
Nike’s stock price peaked in November 2021, and the company’s mindset would quickly change from dominance to stabilization in the years to come. But what went wrong?
How Donahoe's Strengths Quickly Became Nike's Greatest Weaknesses
It wasn’t just a lack of stimulus checks that slowed down Nike’s revenue in the following years. In fact, there were multiple factors that attributed to Nike’s financial decline, primarily these dominant factors:
- Aggressive Direct-to-Consumer Strategy: While this audience drives fascination, interest, and hype around specific products, Nike put too much pressure under its direct-to-consumer (DTC) market, demanding more from its final consumers than ever before. Despite this strategy thriving in DTC spaces like eBay, where Donahoe lead for several years, this model isn’t easily transferable to sportswear, as other markets like retailers and wholesalers purchase hundreds of millions from Nike ever year.
This strategy wasn’t without reason, as this allowed Nike to increase its revenue while reducing overall inventory at its locations. Cutting out the middle man like wholesalers and selling directly to consumers meant Nike to bring in more money for selling less product.
But being hungry for the bottom line has been proven to not work for many companies, with Nike being no exception to this rule. SneakerNews expanded on this idea by explaining in one of its latest articles,
“Through Donahoe’s strategy, Nike employed a more aggressive direct-to-consumer route that allowed the brand to increase profit while reducing inventory. Although the moves may have seemed logical simply on a numbers standpoint (cutting out the “middle-man” so to speak), shunning retailers who helped build the brand’s popularity in inner cities and under-served communities was simply seen as a money-hungry play.”
- Starvation of Innovation: Coupled with an aggressive DTC strategy was a failure to innovate and produce new products to its consumer audience. Sure, going DTC can work, but if so, companies must provide its final customers with the best, highest-quality materials to keep them happy (or at least have it worth their money). Unfortunately, Nike leaned too much on its safety valves, starving its audiences with new releases and failing to provide products consumers were asking for. Even more so, the products Nike had flying off shelves in 2020 quickly became store sitters within 12 to 18 months since that was everything the brand had to offer.
- Notable Nike History - The Infamous Rise and Fall of the Panda Dunk: Nike’s most sold product, its black and white dunk low, began selling out within minutes and sold for over $300 on resell markets. However, despite being the most popular sneaker, it quickly became the most despised shoe by the masses due to its ‘cardboard like’ quality and the lack of ‘exclusivity’ that most sneakerheads and fans cherish. The panda dunk is still Nike’s most sold product in 2024, having over 68,000 purchases on StockX alone. But with a new change to leadership, it’s likely that this trend ends here in 2024.
- Disinterested in Maintaining Important Relationships: Donahoe’s DTC-heavy strategy meant turning away from popular retailers and wholesalers like Footlocker, Amazon, and others that would vessel its products to new consumers. However, failure to maintain these relationships not only lead to falling revenues, but also worsening relationships with key members of the board. Nike’s stock does more than effect its consumers, but even more so the executive team that yield high equity such as Phil Knight, Mark Parker, and many others. Yahoo! Executive Editor, Brian Sozzi, even had this to say about Donahoe and his work with Nike,
“John Donahoe will probably go down as the worst CEO in Nike’s History…I don’t think it’s a small coincidence that (former CEO) Mark Parker is the main man listed at the top of this press release.” - Brian Sozzi
Phil Knight's Stamp of Approval & Support
Yes, the writing was on the wall for Donahoe, but Nike executives weren’t as quick to throw in the towel. Phil Knight, co-founder of Nike, would continue to support Donahoe through thick and thin, and give his encouragement when needed despite receiving backlash from critical audiences and competitors. Knight would go on to say this about Donahoe to Oregon Live,
“I have known John Donahoe for over 35 years, dating back to when he worked on Nike as a consultant,” Knight said, in a statement to The Oregonian/OregonLive. “He is a proven leader whose unique talents set him apart in business. So, I have the utmost trust and confidence in his ability. His leadership puts Nike in a position to have a great future, and he has my unwavering support.” - Phil Knight
The Straw That Broke Nike's Back
After months, if not years, of customers, fans, and employees, requesting for new leadership, their wish was finally granted on September 19, 2024, when Nike announced long-time employee, Elliott Hill, would take over as President and CEO on October 14. The final straw to this situation was written days before the announcement when Bloomberg Business wrote an article titling, The Man Who Made Nike Uncool. Bloomberg not only takes shots at Donahoe, but even pairs its thoughts with a eye-catching image covering the story. Here, you can see an animated Donahoe missing a basketball shot, hinting that he missed the mark while in his role as CEO.
On the upHill Track
Nike’s press release announcing Hill’s return as CEO did more than disrupt the sportswear world. In fact, the headline shocked the world, and was reflected in drastic improvements in stock prices, company morale, and brand image. With a near 10% jump in one business day, Nike’s business stock wasted no time celebrating on a promising change. Fans, customers, and employees noted this significant jump, and wasted no time leveraging the rare, yet widely loved, meme marketing.
In addition to the light-hearted memes, Nike didn’t waste anytime by making this public to followers and investors of the brand, posting it directly to the company’s LinkedIn page. Nike’s postwelcoming Hill as CEO had one of its highest engagement rates within the past year, receiving 149 comments, 386 reposts, and over 6,300+ likes within the first week.
Finally, Hill brings in an unrivaled, rich history with the brand that stretches for more than 30 years (more on that later). His hyper-competent background of the brand, paired with his successful track record in leadership, makes Hill the most qualified Nike CEO the world has seen since Phil Knight. Yahoo! Executive Editor, Brian Sozzi, rewarded Hill with high praise by saying,
“Overall, the takeaway is this: Nike is going back to the well to someone who has the deep relationships, the deep partnerships, that respects the history of Nike. That is what you are getting with the new CEO of Nike, and I think that is why they did this.” - Brian Sozzi
Hill followed up his announcement with an exclusive message sent out to Nike employees via email. In this video, that is shown here by Complex, Hill introduces himself as the upcoming CEO, what Nike has done well, and where Nike will thrive in the future. One of the greatest lines in his video that resonated with the masses is turning to ‘hand raising instead of finger pointing.’ This simple, yet company-shaking narrative not only set the tone for Hill’s turn in the driver’s seat, but also hints at one of the root problems Nike experience under Donahoe, more finger pointing and less questions.
Hill's Greatest Strengths - Including His Perfect Resume
While it’s no surprise Elliott Hill is a company and fan favorite, there’s a reason to this madness and what made him the perfect candidate for this role.
- Hill’s Idolized Resume: By far the most memorable quality of Elliott Hill is his decorated, perfected, 32-year resume with Nike, starting at the intern level, and working all the way up to President, Consumer & Marketplace in 2020 before transitioning to CEO. The experience Hill has accumulated is at worst, finding a needle in a haystack. From a sales rep, to working with Michael Jordan in the 90’s, to leading a billion-dollar company from a sales and operations background, Hill has done it all - and his new role as CEO will undoubtedly prove it.
- The People’s CEO: In the greatest ways possible, Hill is bringing everything that Donahoe couldn’t. Yes, Donahoe is a hyper-experienced c-suite executive with decades of leading thousands of people under his belt; however, that has been proven to not be the leadership style needed for the job. Hill not only has the skills on paper, but brings a more open-minded, customer-centric mentality to his work all while ditching the brittle, corporate mantra behind - something that never really fit into Nike’s system from the start.
- His Discernment & Storytelling: Holding the CEO title is more than just making decisions; in fact, it’s even more about how to share those decisions with others through different messages, stories, and emotions. For Hill, he’s not only recognized for his storytelling (by several Nike execs), but more importantly for his discernment and ability to understand employees, people, and the business. Former Nike executive and Founder of Sports Business Ventures, Brian Davison, extended this message by stating,
“He (Hill) really understands the need to connect marketing, sales, product creation, and storytelling. That is one of his biggest skill sets: being able to storytell, motivate, and inspire people.” - Brian Davison
As we saw with Donahoe, Nike is in desperate need of a CEO who can not only push the envelope beyond the bottom line, but also wholeheartedly relate to his executive team, staff, team of employees, and stakeholders who are cheering him on each day. Elliott Hill is the perfect balance of laid-back and hypercompetitive that will keep Nike in the conversation as the best sportswear company on the market, and with a reported $27 million-dollar salary, this is a high-stakes game that Hill is more than comfortable with.
The Billion-Dollar Question
The honeymoon phase has begun for Nike, as they look to bring Hill up to speed on his new role, executive team, and other day-to-day tasks. But what happens when this kickoff phase comes to an end? Fortunately, this is easy to answer, but it must start by asking Hill this one, simple, yet monumental question:
How will Nike respond to these upstart/upcoming brands?
Since the pandemic, the sportswear scene has gotten crowded with the likes of On Running, Hoka, a resurgence of Adidas, and many other startups. On top of that, these companies have momentum on their side, with many of them growing at rapid speeds.
Take On for example. A Swiss sportswear brand that took over during the pandemic has now raked in over 1.3 billion in the first six months of its fiscal year, charting a staggering 24% year-over-year growth return. Hoka experienced more of the same, earning a 1.807 billion in net sales in fiscal 2024 with 27% year-over-year growth. These numbers don’t show by accident, and On and Hoka have found a winning system that sustained multiple years of record highs.
Should Nike make a comeback, they are going to need to take portions of On and Hoka’s market share, and it starts with how Nike was founded - running sneakers. Hill’s first project should be innovating the Nike Running Division line from top to bottom - not just its sneakers. From its clothing, to accessories, to styles, and its marketing, Nike has a substantial opportunity to take back what’s theirs, but only time will tell if Hill and his team can piece it together.
Conclusion
Nike’s long-awaited decision to bring in a new CEO couldn’t have went any better, and Elliott Hill is ready to jump in right where he left off. His 32-year resume with Nike is more than a platform to help him succeed; rather, it’s a rocket that will blast him and the swoosh well past their competitors in the coming years. Hill has turned company morale, stock price, and brand image on its head within a matter of days, and suddenly it doesn’t seem like a shock to say that the cool kid is back on the block, ready to rock.
