Nike President and CEO John Donahoe.
Source: Nike
Nike Chief Executive John Donahoe on Friday blamed remote work for the company’s lagging in innovation, saying it was difficult to have a disruptive impact when people were working from home.
In an interview with CNBC’s Sara Eisen in Paris, Donahoe was asked about the lack of fresh products in the company’s product assortment, which has been a concern for investors.
“What Nike lacked was bold, disruptive innovation, and when we look back, it’s pretty simple why,” Donahoe said.
He noted that shoe factories in Vietnam were forced to close during the Covid-19 pandemic, but said “more importantly” Nike employees have been working from home for 2.5 years.
“In hindsight, it turns out that it’s really hard to do bold, disruptive innovation and develop a bold, disruptive shoe on Zoom,” Donahoe said. “Our team came back together 18 months ago and we recognized this. So we realigned our company and over the past year we have been working to rebuild our disruptive innovation pipeline as well as our Iterative innovation pipeline.”
Donahoe said Nike’s innovation pipeline is “as strong as ever” and consumers can expect new products every season, along with the fresh storytelling the brand has long been known for.
The CEO’s comments come at a difficult time for the company. Some analysts and investors have criticized the sneaker giant for lagging in innovation and losing market share to upstarts such as On Running and Hoka, which have grown rapidly in recent years by winning over a new generation of runners.
In December, Nike announced a broad restructuring plan to cut costs by about $2 billion over the next three years. The company also lowered its sales guidance as it warned of weaker demand in the coming quarters.
Two months later, the company said it would cut 2% of its workforce, or more than 1,500 jobs, so it could invest in growth areas such as running, the women’s category and Jordan Brand.
Donahoe insisted Friday that Nike is still “earning share” and remains a dominant force in running and all sports.
When asked about On Running and Hoka, Donahoe said: “We have done more to advance running over the past 50 years than any brand in the world, and we continue to be the leader among elite runners. “Innovation has always been Nike’s hallmark in running, just like in other areas, so we’re not just copying what others are doing, we’re bringing innovation.”
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