Nike President and CEO John Donahoe.
Source: Nike
Nike CEO John Donahoe on Friday blamed remote work for the corporate falling behind on innovation, saying that it’s tough to be disruptive when individuals are working from home.
In an interview with CNBC’s Sara Eisen from Paris, Donahoe was asked concerning the company’s lack of fresh recent products in its assortment, which had been a priority amongst investors.
“What’s been missing is the sort of daring, disruptive innovation that Nike’s known for and once we look back, the explanations are fairly straightforward,” said Donahoe.
He identified that footwear factories in Vietnam were forced to shutter through the Covid-19 pandemic but said “much more importantly,” Nike’s employees worked from home for 2.5 years.
“In hindsight, it seems, it’s really hard to do daring, disruptive innovation, to develop a boldly disruptive shoe on Zoom,” Donahoe said. “Our teams got here back together 18 months ago in person, and we recognize this. So we realigned our company, and over the past yr we now have been ruthlessly focused on rebuilding our disruptive innovation pipeline together with our iterative innovation pipeline.”
Donahoe said Nike’s innovation pipeline “is as strong as ever,” and consumers can expect to begin seeing recent product drops each season, in addition to the fresh storytelling the brand has long been known for.
The chief executive’s comments come at a tricky time for the corporate. Some analysts and investors have criticized the sneaker giant for falling behind on innovation and losing market share to upstarts like On Running and Hoka, which have won over a recent generation of runners and have grown rapidly lately.
In December, Nike announced a broad restructuring plan to scale back costs by about $2 billion over the subsequent three years. It also cut its sales guidance because it warned of softer demand within the quarters ahead.
Two months later, it said it was shedding 2% of its workforce, or greater than 1,500 jobs, so it could put money into its growth areas, comparable to running, the ladies’s category and the Jordan brand.
Donahoe insisted Friday that Nike remains to be “gaining share” and stays a dominant force in running and all things sport.
“We have done more to advance running than any brand on the planet over the past 50 years and we proceed to guide with elite runners,” said Donahoe when asked about On Running and Hoka. “Innovation has all the time been what’s marked Nike in running, as in other categories and so we’re not only going to repeat what other people do, we’re gonna bring innovation.”