CEO Talks: John Donahoe on Managing Through Crises and His Road Map for Nike’s Future
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John Donahoe was already a highly seasoned executive when he took over the helm of Nike Inc. in January 2020.
He had served as president and chief executive officer of eBay as well as ServiceNow and spent eight years on the Nike board of directors before being tapped to succeed Mark Parker as Nike’s CEO. But no matter how much experience he had, no one could have been prepared for the challenges he had to face, which included a global pandemic, social unrest, serious supply chain disruptions and polarizing diversity and inclusion issues.
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Donahoe has managed to navigate through the challenges, with the corporation reporting sales of $10.8 billion for the three-month period ending Feb. 28, up from $10.3 billion the same time last year. And although earnings still lagged, hitting $1.39 billion, down from $1.44 billion a year ago, the direct and digital businesses continued to shine as the firm pivoted to place more emphasis on its direct-to-consumer channels and less on the more volatile wholesale operations.
During a visit to Nike’s Beaverton, Ore., headquarters, Donahoe addressed how he has managed through the crises, how he motivates his team, Nike’s 50-year legacy and his vision for the next half century.
WWD: You were named CEO at a time where there were myriad challenges at Nike including the internal controversies surrounding women, drugging allegations, the whole Black Lives Matter movement. How did you settle in and manage through all of this?
John Donahoe: I joined Nike because of our purpose and mission, I had a chance to see it when I served on the board. And when Phil [Knight, cofounder] and Mark [Parker] on the board invited me to join the company, that was the single reason that I joined at this stage in my life. As you know, our mission is to bring inspiration and innovation to every athlete in the world. And if you have a body, you are an athlete. As I reflected, I felt like the world needs sport more than ever before. I’m 61, and we have a more divisive world than at any time in my adult life. There’s polarization in so many different institutions, both within this country and around the world. And if you think about it, sport is one of the few things that still brings people together — within countries, across nations, whether it’s the World Cup or the Olympics.
Sport is the ultimate diversity and inclusion environment because sport brings people together on a level playing field. And perhaps most importantly, in this day and age, in sport, you can hate your competitors, you can have an archrival. But you play with a simple set of rules. And you shake hands when the match is done.
WWD: You obviously believe in the power of sport.
J.D.: I deeply believe that the world needs sport more than ever before and Nike is synonymous with sport. Our core reason for existence is to serve sport and serve athletes and create a sense of hope and inspiration for people. So during the pandemic, we just fell back on those core values.
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WWD: What were some of the key strategies you employed during the health crisis?
J.D.: Early in the pandemic, when retail closed, we gave pay continuity to all of our retail distribution center employees. We invested at the end of the day, between $500 million and $600 million, telling our retail employees, you will be paid even if retail is closed. And we’ve continued that anytime there’s a start/stop closure. When the George Floyd incident happened, we got out front with a $140 million commitment to racial and social justice. That was $40 million from Nike and $100 million from Michael Jordan and Jordan brand.
WWD: How have you advanced that recently?
J.D.: Since that time, we’ve just fallen back on what our guiding principles are, which is: how do we serve the future of sport and the future of athletes — it’s all about the future. We do that by leading through a deep culture of innovation. I am just blown away at how deeply innovations are woven into everything we do. We’re trying to lead the expansion of sport for a new generation — a younger generation, whether it’s dance, whether it’s skate, whether it’s yoga — we’re expanding the definition of movement. We really saw that in the pandemic. Going into the pandemic, to do sport, you had to have a soccer pitch or a basketball court or a tennis court. But what we learned is you can do sport in your daughter’s bedroom. Then we tried to take action to create a better world. And that’s all around our purpose. It’s those guiding principles that have led us for the last four years. You started seeing us bringing hope and inspiration through our messaging and marketing and we’ve continued the flow of innovation. Innovation has not let up, which is an incredible testament to the team here.
WWD: What are some of the recent innovations you’ve introduced?
J.D.: One example is the Fly Ease. This was originally created for people with disabilities but then we realized [it could help a lot of people]. Take kids, what’s the biggest challenge kids have? Tying their shoes. And then there are older people who don’t really want to tie their shoes. So we’ve taken this technology and put it into a huge number of models. And what’s so interesting is that our designers and our product creators have been doing this while working from home. So it’s just been remarkable how they’ve maintained the the sense of innovation throughout this period of time,
WWD: It’s interesting because all the professional sports were shut down initially. So where you usually would have had your messaging was taken away from you and people were working out in their daughters’ bedrooms.
J.D.: We made the Nike Training Club free. We started posting [on social media] and encouraged our members to post on how they were doing sport. I’ll never forget my favorite: It was an elderly Indian man who was in his kitchen wearing a T-shirt and pants and he takes some dish soap, squirts it on the floor and created a treadmill. It blew up. But there were so many of the videos of kids, parents and kids doing all sorts of things. It brought a sense of hope and inspiration at a time when it was pretty dark and uncertain. People were confined to their homes, everyone was scared early on in the pandemic, we weren’t quite sure which way it was going. And so we viewed our purpose while elite professional sport was closed — and frankly, all sport was closed — as expanding the definition of sport.
WWD: You’ve talked a lot about Nike’s purpose and mission. How have you put your personal mark on this heritage and this company?
J.D.: I’m a disciple of servant leadership. And I have leadership role models, people like Coach John Thompson, who was on our board for many years, he was a coach at Georgetown. Coach K. [Mike Krzyzewski, who recently retired as head basketball coach of Duke University], Tara VanDerveer [the head women’s basketball coach from Stanford]. It’s not a coincidence they’re up on the walls here along with Phil and Mark. The role of a leader is to serve our purpose — our consumers, our athletes, our teammates, our employees and the communities in which we operate. So I came into this with a very strong servant mind-set. The most important thing that we tried to do over the past couple of years is accelerate the things that we’ve been talking about.
WWD: Does that include enhanced digital offerings?
J.D.: As consumers engage in a more digital environment, we’ve asked ourselves how do we accelerate our ability to serve them. We have our CDA, Consumer Direct Acceleration, which is all about getting closer and directly connecting with consumers and giving them a more personalized, a more engaging, experience, a more direct connection to Nike. We’ve also tried to accelerate our purpose. We talk about better people, better planet and better play. So with diversity and inclusion, we’ve always been a leader on diversity externally, which you can see from what we’ve done with Colin Kaepernick and others, but we also want to make sure we’re leading internally, and having the most diverse and inclusive culture and company. We’ve clearly set that goal. We’re not there yet and we have the opportunity to get better, and that’s going to continuously be the case.
WWD: And the other missions?
J.D.: On better planet, we’ve really stepped up and believe we’ve got to lead on sustainability in our industry because 75 percent of our carbon emissions come from our materials and methods of make. Think about what goes into a shoe: some have leather, rubber, foam, cotton. Our facilities are good, so a lot of things other companies can do, we’re doing, too. But if we don’t fundamentally innovate around the materials and the methods as the world’s largest footwear and apparel company, we won’t achieve our goals. So we’re doubling down on alternative materials that go into the world’s most iconic shoes. And you’ll see that with our APCC [Advanced Product Creation Center], diversity, inclusion, sustainability are deeply woven into everything we do.
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WWD: Does that follow through to your clothing as well?
J.D.: We have some really revolutionary apparel, materials and methods of make from a sustainability standpoint that we’ll be launching.
WWD: You’re also focused on young people. Can you tell me about that?
J.D.: The third dimension of our purposes I’ll call youth sport. And that’s an area of real concern. Because one of the implications of the pandemic is that youth have been less active in sport and so many sport programs are being cut out of school budgets. And we fundamentally believe that kids that are able to be active and play sport lead to a healthier lifestyle. So our efforts are around how we invest in communities that don’t have access to other resources to create access to sport. There are some great examples, but one that I can share is that, before COVID-19, I went to Chicago for the NBA All-Star Game and went out to a YMCA in East Chicago that we had invested to rebuild. It was the beacon in an otherwise fairly dangerous neighborhood. But it was the one place kids could come after school; they could be walked there from their schools or walked home if they needed to be. [For the dedication,] we had LeBron [James] and Anthony Davis and Virgil Abloh was there that day. That shows what we can create, but the most important thing is we’ve invested millions of dollars rebuilding that YMCA so that the kids had a safe place. There are many examples of this — taking parks and inner cities and putting a basketball court in or creating a soccer pitch, just places where kids can access sport.
WWD: Anything else?
J.D.: In addition to the spaces, we’re also investing in resources and coaches — with the coach being a really integral part of the recipe — particularly for girls, which was a place that was really lacking. We’ve invested a lot in and training coaches for girls.
WWD: You mentioned Colin Kaepernick, who is very controversial but you stuck by him. And he’s not the only one. You also have Tiger Woods and others. Why have you felt such loyalty and stuck with athletes when there has been controversy?
J.D.: This goes back to our founder, Phil Knight, who believes we exist to serve athletes and bring hope and inspiration to those athletes. And that’s both elite athletes and everyday athletes. Athletes are human beings. They’re in the spotlight every single day, particularly in today’s world. We try to sign athletes that not only are extraordinarily gifted and talented in their particular sport but are also extraordinary people. And part of being people is you have ups and downs. And you work through the downs, you can work through a slump. Or you can make a mistake at some point of your life. The question is, how do you handle it? Do you pick yourself back up? Do you apologize if appropriate? Redemption is a really important part of the human experience. And that’s true for everyday athletes and elite athletes. They inspire us and we try to stay loyal and true to them. It’s a little like a marriage.
WWD: There was a change recently with college athletes being able to capitalize now on their name and likeness. Have you begun working with college athletes?
J.D.: We are by far the market leader in sponsoring college programs in this country. So when we sponsor a University of Alabama, for example, we’re not just sponsoring the football team. We’re sponsoring every men’s and women’s sport. So whether there are 100,000 people in the stands, or four people on the sidelines watching the game, they’re outfitted with our footwear, apparel, our service. So we’re going to continue that as our primary focus at the collegiate level, but we will, selectively in certain sports, find an athlete while they’re in college. A nice example is Reilyn Turner, a woman soccer player from UCLA. But that’s going to be selective because we think that there’s more equity in sponsoring programs because that serves all the athletes.
WWD: As the contracts get bigger and bigger, when does it become untenable? When is it not really worth the reward that you get?
J.D.: We try to be very thoughtful and selective on who we sign and what impact they have. Naomi Osaka is a wonderful example with what she has represented in the past couple of years, and how important she has been — not just as a champion tennis player on the court but by lighting that torch at the beginning of the [Tokyo] Olympics representing a multicultural role model, and her openness and willingness to be vulnerable on mental health and her courage to talk about that. Remember, she’s 24 years old. Think about when you and I were 24 years old, we weren’t in the world spotlight. Her grace and courage and humanity are an inspiration to many people who aren’t even athletes.
WWD: Nike is so often associated with elite athletes. How do you connect with weekend warriors, older people or somebody who may not have that aggressive mind-set when it comes to sport?
J.D.: We want to expand the definition of sport to new generations and to all. The model is relatively simple and we start focusing our innovation on elite athletes. Let’s take running. We focused on Eliud Kipchoge to break the two-hour mark in the marathon. We created a technology that allows you to run faster with less injury. Then we take that technology and bring it to everyday running shoes. Take The Invincible: it’s a running shoe that has measurable reduction in injuries for everyday runners. So if you’re a first-time runner, the technologies we developed for the elite get pulled into the everyday.
WWD: You’ve made a big push to attract and engage with more women, but recently, Lululemon was rated as the top brand of choice among women. That must have been an eye opener for you. How do you get back on top?
J.D.: Well, first of all, we’re the largest by far. So by size, it’s not even close. Over the last couple of years as part of the CDA, we’ve increased our investment in the women’s business. Sixty percent of our sports science investment and insights are centered around women athletes. There are some exciting things coming out around injury reduction, because injuries for women around ACLs in soccer and basketball are higher. So we will have technologies and shoes coming out that will help address that. I think there’s a seven times increase in design around women’s product and apparel. The investment is significant, the commitment is real. And it’s been long term — we didn’t just get to where we are today, the world’s largest in order of magnitude, and we’re [still committed] to bringing more women into sport, whether that’s through dance, yoga — things that 10 years ago may not have been considered sport. But today they are sport for the modern girl and the modern woman.
WWD: Is this focus reflected in your athlete roster as well?
J.D.: We have the largest roster of female athletes and we look at athletes beyond just the elite roster. Who are the yogis that connect with consumers? Who are the females that are leading from a dance perspective? We have relationships there and invest in these communities that are important to our consumers. In certain cultures, girls are not encouraged to do sport. So we use our voice there. And we’ve done some great things in [South] Korea and Japan in the last couple of years to give voice and encouragement and inspiration to girls to be able to participate in sport. You also can see that in the swim hijab, or our Victory Swim. We’re really getting out there and trying to empower women to have competence through sport, give them permission to play and let them be seen as athletes. When I got here, the Victory Swim had just come out. I was blown away by that and the investment in technology and innovation to create it. It’s not a massive market but it’s not about the size of the market. It was a distinct consumer need for her in a certain part of the world that served as an example for what’s possible.
WWD: What about collaborations? How important are they to the overall picture?
J.D.: Nike sits at the intersection of sport and culture and increasingly, sports are influencing culture and vice versa. So while we have 12,000 elite athletes, teams and leagues that we have relationships with, there are also a fairly small but important number of purpose-driven collaborators. And whether it’s Drake and the Notca collection, Virgil was a really important partner with Off-White, Sacai, Rosalía, G-Dragon and Billy Eilish who cares deeply about sustainability. We have examples in China, in Europe, and each of them has a message. With Billy Eilish, she wants our collaborations with her to highlight and spotlight sustainability and [reinforce] that you can look good, feel good, do good. So with each collaboration, they each play a distinct role, and reinforce that connection between sport and culture.
WWD: A couple of nuts and bolts questions. How does your mix break down between apparel and footwear? And where are the growth opportunities?
J.D.: We talk about four major areas of growth going forward. One is women’s and bringing more women into sport, both on and off of the sport environment. Two is apparel. We just think apparel is an enormous market. And sport-inspired apparel is a trend that is here to stay. Think about athleisure: People want to look and feel comfortable. Now coming back to the office, I don’t think you’re gonna see a lot of coats and ties, people are used to wearing comfortable clothing. Third is Jordan Brand. We think the Jordan Brand is an enormous opportunity. It is connected to streetwear. It is connected to culture. It’s not just the Air Jordan 1s and the retro trend, there’s also an opportunity for women’s and apparel. And then lastly, digital is just an enormous accelerator of all the above. Part of what digital does is it gives people access to the full breadth of what Nike does. Not one store carries everything. Even if you went into the House of Innovation in New York, which is ginormous, it probably has a third of our product line. But on digital, you can access all of it. So whether it’s through our sneakers app where we create engagement with the sneaker community, or through the Nike mobile app, it just accelerates our ability to serve and reach consumers.
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WWD: You’re cutting wholesale substantially — by more than 50 percent. How has that changed how you operate?
J.D.: [That decision] is driven by the consumer. It’s how you and I are operating. Ninety percent of all shopping experiences now start on mobile phones. Even if they’re going to go into a store, they’re doing their homework on a mobile phone. So we’ve got to be where the consumers are because they’re at the center of everything we do. They want to get what they want, when they want it, how they want it. That’s true with media, with entertainment, with commerce. And so we have to be there. So we have to have the leading mobile apps to be there. So when they are doing their homework, or their browsing, we have to give them a choice.
WWD: Do you work to integrate the mobile with the brick-and-mortar experience?
J.D.: Yes. You can buy digitally, so we’ve got to have the world’s leadings mobile apps and website — and we do by far. Or they may say, I want to try on those Invincibles, so you reserve them and you go over to the SoHo store or the House of Innovation and they’re waiting for you. Or you can buy online and pick them up in a store. Or you say, there’s a Foot Locker or a Dick’s Sporting Goods right around the corner and I want to try them on there. We’re indifferent — we’re just trying to build a truly blended experience. With Dick’s Sporting Goods, we’ve linked our membership programs and that’s because we put the consumer at the center. We want to provide a consistent and premium, seamless experience so we want wholesale partners that share the same vision.
WWD: Where do the Jordan Brand and Converse businesses fit into the overall Nike universe?
J.D.: I’m blown away by the love our consumers have for all three of our brands. It doesn’t matter where I am: a Jordan store in China or a Converse store in Europe — you can just feel the energy and emotion of these brands. Jordan and Converse have such deep roots beyond sports: music, creativity, youth culture. And each of our brands inspires the other. You’ll see an innovation from one brand supercharge a cultural icon in another. It’s fun to see. All our brands are better off because they’re part of the Nike Inc. family. It’s a competitive advantage for sure.
One quick story: At this year’s Super Bowl in Los Angeles, close observers of the halftime show could see the power of our portfolio of brands on display. You saw Dr. Dre in Air Force 1s, Snoop Dogg in Chucks and Eminem in the Air Jordan 3. Three styles with roots in sport, but with their own attitude and relationship to consumers.
WWD: How do you communicate that Nike is more than just a shoe brand?
J.D.: Nike is a sports brand that comes to life across the spectrum connecting sport and culture. We see the interplay between sports and lifestyle as additive. Take a look at what just happened at Sotheby’s in January. Sotheby’s auctioned off 200 pairs of the Louis Vuitton/Air Force 1 by Virgil Abloh, with all proceeds going to the Virgil Abloh “Post-Modern” Scholarship Fund. This is a shoe born out of the world of sport, in collaboration with some of the biggest names in fashion. And the auction drew the most bidders of any auction in Sotheby’s history and was their most valuable charity auction in the past decade. That blows me away. And it reminds me that we’re so much more than a sports brand or a lifestyle brand. There’s a kind of power and cultural energy that only Nike can create. Regarding apparel, we know the shift toward comfort and athleticwear during the pandemic is here to stay. From new material in our Nike yoga collection to extended sizing to serve all athletes, we’re excited by the opportunity.
WWD: Where do you see Nike 50 years from now?
J.D.: We need to continue to create and serve the future of sport and the future of athletes, we need to continue to innovate and leverage a deep culture of innovation, we need to continue to expand the definition of sport. One of the most interesting areas is the way we’re linking physical activity to digital activity. So whether it’s in Fortnite or Roblox or some of our partnerships in gaming, we’ve done some things that seem to say you earn certain status in the digital world by doing physical activities. So in the metaverse, you’re going to earn certain things in a digital or virtual environment. By participating in the physical environment, we think it doesn’t have to be a zero sum thing, whether you’re playing sports or video games, I consider that an expanding definition of sport. And then we need to take action to create a better world. And that’s always been part of who we are. And we’ll continue to try to stay true to that.
WWD: Do you work with Phil Knight at all? And what have you learned from him?
J.D.: Phil is remarkable. I’ve been blessed to know him for the last 20 years and he’s been an inspiration to me as he is to this company. The thing about Phil — there are so many things that are incredible about him, but he’s all about the future. He is a true innovator. As a funny example, he called me eight months ago and said, “You know this NFT thing? I think it’s gonna be big. What are you doing about it?” Here he is, he’s 84 years old, but it’s just an example of always looking forward. And that’s a true innovator. I think he’s the most remarkable entrepreneur, founder, innovator of this generation.
WWD: Let’s talk a little about you. What do you like to do for fun?
J.D.: First and foremost, I spend time with my family. My wife and I are blessed with four (grown) kids and five grandkids. They are everything to me. I also love sports — always have. I played basketball, and through those experiences learned so many foundational lessons from my coaches and teammates. Even today, I still find so much joy in sports, from working out in the gym (which I try to do every morning) to getting to see an NBA game or soccer match live.”
WWD: Who is your mentor?
J.D.: My first mentor was my father. He loved people — he didn’t have the word “I” in his vocabulary — he was always focused on others. He strived to serve others with everything he did, and I observed that way of treating people from an early age. And my leadership role models have always been head coaches: Phil Jackson, Coach K, John Thompson, and Tara VanDerveer stick out in my mind. I have photos of those four behind me in my office. They are true servant leaders who lead almost from behind, serving their players, serving their programs, serving a broader cause. The power of service is a recurring lesson throughout my life.”
WWD: What’s the most important lesson you’ve learned that you apply to your career?
J.D.: I learned a valuable lesson when I was 28 years old and a consultant at Bain. Those were intense years with long hours and little sleep, and I had two young children at the time. One day a speaker spoke at a training program, saying he spent years studying world-class athletes. He said top athletes all shared a unique trait: they take care of themselves. He said for every hour they’re on the playing field, they train for 10 to 20 hours. They work out, they sleep well, they eat right. They look inward to learn their own strengths and weaknesses. And perhaps most importantly, they’re not afraid to ask for help — in fact, they view asking for help as a sign of strength. The speaker told us that he could never understand businesspeople because we didn’t take care of ourselves. We thought not getting sleep was a badge of honor and that asking for help was a sign of weakness, not strength. He was practically exasperated with us — and I instantly realized he was right. Ever since then, I’ve taken his advice to heart. No matter the role, I always try to keep perspective by taking care of myself and by asking for help. It’s the only way.
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