Leadership 5th Edition by Larry Siegel, Robert Lussier, Robert Lussier, Christopher Achua, Christopher Achua

Exercise 36

In late 2004, when Nike was looking to fill the CEO position after Phil Knight offered to step down, Mark Parker, a seasoned 27-year veteran of the company, was passed on in favor of William Perez, an outsider. Many at the time quietly wondered if Mr. Knight's action was an indication that he was not confident in the leadership abilities of Mark Parker. Then in 2006, just 13 months into the job, Phil Knight and the rest of the Nike board decided to replace Perez with Mark Parker. Why Mr. Parker was passed on in the first place was baffling to some because of his past track record at Nike. Parker, 54, joined Nike in 1979 and has served in various management capacities in product design, development, marketing, manufacturing, research, design and brand management. He is widely recognized as the product visionary for the Nike Air franchise and many other industry-leading product design and performance innovations. Mr. Parker was appointed divisional Vice President in charge of development in 1987, corporate Vice President in 1989, General Manager in 1993, Vice President of Global Footwear in 1998, and President of the NIKE Brand in 2001. 121 Even Phil Knight described him as an experienced, talented executive who has played an instrumental role in building and making the Nike brand as strong as it is today. So why was he not selected in the first place was the question many people had in mind.
Given the way Mr. Parker came to the job, there has been interest in how well he will perform as CEO. It is worth looking back to see how Mr, Parker has defied the odds and surprised those who doubted his readiness for the job in the first place.
Since assuming the role of CEO of Nike, Parker's team has overhauled the way Nike runs, shifting the brand away from the previous sub-brand and product-based structure to a customer-driven structure. He has structured Nike into six "customer-focused" categories, such as running, basketball, and women's fitness. Parker has personally shaped Nike's innovation processes. For example, even before becoming CEO, he established a group for pursuing long-range innovation, called Explore. He described Explore as a multidisciplinary group pursuing "deep space" innovation possibilities with academics, inventors, and other companies. Explore, he pointed out, was chiefly responsible for the cooperation with Steve Jobs and Apple that led to the launch of the Nike Plus program in 2006. The Nike + iPod is a wireless system that allows Nike + footwear to talk with your iPod nano to connect you to the ultimate personal running and workout experience. According to most analysts, Parker's biggest strength is his ability to key into consumer trends.
Mark Parker took the helm of Nike at the time when the stakes in the U.S. market were particularly high, especially as Adidas was becoming more powerful with the acquisition of Reebok. Parker said at the time that he believed he was the right person to lead Nike through the challenges of the future. He said it was his job to help carry the torch into the future. He has always maintained that all Nike employees work for one boss-the consumer.
We discussed the concept of globalization and environmental sustainability. Nike has what it calls "Nike Sustainable Business + Innovation" program. Nike believes it can use the power of its brand, the energy and passion of its people, and the scale of its business to create meaningful change. Nike believes the opportunity is greater than ever for sustainable principles and practices to deliver business returns and create a positive social and environmental impact in the world. 122
Parker isn't an attention-seeking sort of CEO, so until now it has been hard to get a sense of him. But the imprint he is making as CEO is turning out to be as meaningful as his design work. Putting his stamp on Nike as forcefully as the much splashier cofounder Phil Knight did, Parker has reorganized the company into units based on particular sports, "a conscious decision to sharpen each piece of the business so we're not some big fat dumb company," he says; reshuffled its regions to put new emphasis on China and Japan; streamlined the reporting process and removed regional middle management; handled a rare round of layoffs; and weathered yet another scandal involving a high-profile endorser. He describes this set-up as more of a framework than a process. 123
On June 27, 2011, Nike reported financial results for its fiscal 2011fourth quarter and full year ended May 31, 2011. Revenues and earnings per share (EPS) for both the quarter and full year hit record highs. Significantly better than analysts expected. Commenting on the results, Mark Parker said, "We delivered exceptional results in extraordinary times." Forbes has described Parker as an effective leader of NIKE.
For the future, Parker has set some big goals for Nike: increase sales by more than 40 percent, to $27 billion by 2015; meet a set of equally ambitious sustainability benchmarks; grow earnings 7 percent a year; and keep 33,000 employees thinking as nimbly as possible. 124
Today, Nike's passion for real innovation continues to thrive. Nike is still the world's largest sportswear company with over $20 billion in annual sales, employing more than 30,000 employees, and operating in more than 160 countries. Nike's mission is to bring inspiration and innovation to every athlete in the world. It is evident by the goals Mr. Parker has put out that he intends to push forward with this mission and continue Nike's leadership in the industry.
GO TO THE INTERNET : (http://www.nike.com) Support your answers to the following questions with specific information from the case and text or with other information you get from the Web or other sources.
1. What external and internal pressures did Mark Parker face when he assumed the leadership of Nike, and how did he respond to these challenges?
2. Strategic management is about formulating strategies that align an organization's internal capabilities with external opportunities while avoiding or minimizing threats. How effective has Mark Parker been as a strategist so far?
3. What is the evidence that Mark Parker and Nike understand the impact of environmental sustainability on their business practices?
4. As revealed in the text, an effective strategist develops strategies that (1) enhance value to its customers, (2) create synergistic opportunities, and (3) build on the company's core competencies. What evidence shows that Mark Parker is pursuing this course or shares this viewpoint?
C U M U L A T I V E C A S E Q U E S T I O N S
5. According to the Big Five Model of Personality, what traits would Mark Parker consider critical for his managers to possess (Chapter 2)?
6. The interactions among power, politics, networking, and negotiation are a common occurrence in organizational life (Chapter 4). CEOs have to deal with various stakeholders (shareholders, employees, board of directors, customers, suppliers, unions, government and state regulators, and so on). Describe how a CEO like Mark Parker would employ power, politics, networking, and negotiation as effective tools of leadership.
7. Communication, coaching, and conflict management are said to be skills that have a direct and significant impact on a leader's career success (Chapter 6). Given the weak market and financial position that Nike was in prior to Mark Parker's appointment, how critical are these skills in his efforts to reposition the company and address its weaknesses?
C A S E E X E R C I S E A N D R OL E - P L A Y
Preparation: Assume you are part of the leadership of an organization or organizational unit that is in need of training the management team of its foreign subsidiary to embrace and practice diversity at the highest levels. Under Mark Parker, Nike is leading the way in diversity. Nike's vision is for every team to be high performing, diverse, and inclusive.
To achieve this vision, Nike strategy is to:
• Cultivate diversity and inclusion to develop worldclass, high-performing teams
• Ignite change and inspire critical conversations around diversity, inclusion, and innovation
• Create venues and environments for open dialogue, diverse opinions, and a multitude of perspectives
A multinational corporation like Nike wants to ensure that all its subsidiaries around the world have high diversity standards (visit Nike's Web site at www.nike.com for more information). Your task is to help your foreign subsidiary develop diversity standards for its respective units that are in congruence with the overall diversity standards of the parent corporation.
Role-Play: The instructor forms students into small groups (representing top leadership of the foreign subsidiary or partner) to develop a diversity statement of no more than 100 words. Here are some guidelines:
1. Make a case for diversity by identifying key benefits of a diversified workforce.
2. Create a list of core values that your organization now holds or you would want it to have, and incorporate them into your diversity statement.
3. Share your diversity statement with other members of the class, and vote on who has the best diversity statement.