Exclusive: The Woman at the Center of Nike’s Ambitious Consumer-First Strategy Gets Candid on Dramatic Changes at the Brand

Sheena Butler-Young

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Several years ago, when Heidi O’Neill was running Nike Inc.’s women’s business, she identified a critical issue: Her division lacked diversity.

But not in the way one might expect. O’Neill was helming an all-women team at a time when many U.S. corporations hadn’t fully embraced the notion that women could and should hold key leadership positions — particularly at firms that push female-centric products.

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In this regard, Nike could have been considered ahead of the curve, but O’Neill was thinking even further.

“[I thought] we should have women focused on the NFL and we should have men focusing on women’s,” she said. “I lean to the place of: More voices and different voices are better for everything. Our challenge with growing women’s wasn’t because we didn’t have enough women [working] on the business. We really started to light it up when we brought in new teammates.”

And O’Neill also recognized that shepherding growth in any business category requires targeted investment. “If [women make up] 50% of the world, we should pivot resources and investment that way at Nike: We’re shifting to make sure that all the power of Nike [is matched] to the footprint that women represent in the world,” she said.

It’s O’Neill’s ability to develop dynamic long-term strategies that uniquely positions her to lead Nike’s Direct business at a critical time. The athletic-industry behemoth’s 2-year-old “Consumer Direct Offense” sees the brand refine its positioning amid immense digital disruption, the rise of niche brands and frantic changes in consumer shopping. In tandem with its execution, longtime Nike CEO Mark Parker will exit his role in January, handing over the reins to tech-focused executive John Donahoe, president and CEO of ServiceNow Inc. and chairman of PayPal Holdings. (Parker will remain with the company as executive chairman.)

Since O’Neill landed in her post as president of Nike Direct in June 2017, analysts say the fruits of her efforts have been undeniable.

“Nike continues to grow its DTC business at a much faster pace than they’ve grown their wholesale business and they’ve instituted a lot of new programs and apps that have enhanced that process,” said Matt Powell, VP and senior industry adviser for The NPD Group. “Heidi has shown terrific leadership. She’s had a plan and executed against that plan. She’s very well thought of inside the company.”

On a public stage, O’Neill also represents a meaningful north star — demonstrating the ability of women to rise at Nike and occupy impactful posts following broader industry reckonings and the brand’s own admittance last year that it had previously fallen short in promoting women and other minorities. Just last week, employees at its Beaverton, Ore., headquarters staged a protest calling for the brand to elevate its treatment of women employees and athletes. And O’Neill was among the senior leaders to participate in the gathering. Held on the same day Nike reopened a building named after former Nike Oregon Project coach Alberto Salazar, the demonstration could be viewed as an extension of Nike’s cultural challenges. But insiders suggest O’Neill’s presence, as well as management’s decision to welcome uncomfortable dialogue, is a sign of progress for the Swoosh.

Here, O’Neill talks about leadership during disruption, women in power and measuring success in the digital age.

When it comes to company culture, how tough is it to execute change at Nike?
HON: “Nike has an amazing playbook that has lasted decades and that playbook need not go away. But it needs to merge with a new playbook on serving faster, more responsibly, through digital. One challenge is how we bring the teams together and break down walls between people who are making footwear and apparel product with people who are making digital product. [We’re integrating] people who think about stores first with people who think about digital first and there’s magic that happens when we do that. Consumers don’t live in channels and silos.”

How important is it to have women in power in the athletic space?
HON: “I so believe more voices, more perspectives, more female voices will make Nike a better company. If you were to come visit us in Portland and take a look around, you’ll see a lot of powerful senior women voices: The person who is running categories is a woman, the person running women’s is a woman. I could go on. We’ve matured to that state.”

You have significant responsibility at Nike at such a crucial time. How do you maintain your enthusiasm and stay motivated?
HON: “I have a goddaughter and we had dinner recently and she looked at me and said, ‘You know, Heidi, you can make the world better. You can change the world.’ She truly believes it. She wasn’t being [sappy], she was challenging me. I honestly [believe in] the power of Nike through digital to change the world through helping people be active — starting with kids and play to movement to fitness to running to sport. That’s something that makes me want to keep pushing because no one is doing that. [Nike founder] Phil Knight always wanted to change the world, but now — with digital powering us and us be- lieving if you have a body you’re an athlete — we really can.”

Many industry players have struggled with the digital evolution and consumer shifts. How is Nike approaching disruption differently to get ahead?

HON: “One of the separators for Nike is that before we think about disruption and transformation, we think about [our mantra of ] ‘making sport a daily habit.’ As someone who has been at Nike for 21 years, over time, I think it’s grown on me that there’s a privilege and power of having such a great vision to serve consumers with. If you’re entering times of transformation and dis- ruption and you have ‘how can we make sport a daily habit?’ as your compass, it’s really powerful. With that goal, we’re building an ecosystem of sport that’s powered by digital.”

What are the key components?

HON: “It starts with our app portfolio — the Nike app, our Run Club, SNKRS and our Training Club — [which is] just an incredible suite of digital experiences. Then there’s our store experiences that are connected digitally and provide that human connection. And we’re launching some great innovations from a service perspective with Nike Fit and challenging ourselves to look at new business models like the Adventure Club, [a subscription service model for parents and kids]. We’ve also just launched our first premium training service with Nike Training Club Premium.”

In executing the Nike Direct Offense, the brand has decided to end certain retail relationships, which has led to some criticism. How do you respond to that?

HON: “I had a nice session recently talking about this with [Nike CEO] Mark Parker and we were both talking about the importance of partners. That’s really been a part of Nike’s heritage: Whether it be through supply chain, retail, media or marketing, we built this company together with partners. I don’t see that changing. I see it shifting in how we show up.”

What kind of relationships are important for nike right now — and what are you moving away from?
HON: “We believe in partnerships where the partners have a strong voice, play, message and connection with the consumer. The partners that will work with us are ‘one plus one equals three.’ With the amount of transformation [that’s happening], we have to be agile. We have to look for retailers who are investing in themselves and creating great consumer experiences because that is a part of partnerships — it can’t be Nike alone. Those partners and independents that have great followings — and there are cult-like followings behind some of our partners — we will stay with them. They make us better.”

How do you reduce friction between groups that have traditionally worked separately?

HON: “[I tell my team] that we have to take time to educate each other. We have to slow down to speed up and make sure we’re speaking the same language. The second thing is: I really believe in this idea of the outside in. I’m on the Spotify board and we just brought some Spotify team- mates together with some Nike teammates to think about the future. It’s important to value the diversity on the team and to value those leaders at Nike who help us get where we are [but] also to bring in new talent.”

Over the past two years, Nike has made a series of educational acquisitions of non-athletic names — Israel’s Invertex is one such example. What have you learned?
HON: “When we acquired Invertex, we acquired amazing talent, technology around 3D programming, machine learning and computer vision. But mostly we solved a problem — [launching Nike Fit] — and now we can scale using those capabilities … When we bring in leaders from
the outside, they can teach us new things to do, places to go and things to see that we cannot see. I just love that clash — it’s a beautiful, virtuous play, because the teams are all growing together and having great experiences.”

How will you measure the success of Nike Direct?
HON: “I am a big believer in: Change the score- card, change the game. I think the digital scorecard for what success looks like is better than the scorecard for a traditional store. Digital looks at how engaged your customers are; [who] your monthly users are; and [whether or not] people come frequently and [return] frequently. Those are metrics we should care about if we’re thinking about building relationships and life- time value.”

Finish this sentence: The future of sport retail is?
HON: “We shed retail. I think this hard line be- tween a brand and retail blurs in a digital world. When you go to the Nike app, are you at retail or are you hanging out with Nike? Retail is — in a person’s mind — about selling stuff. And we’re going to sell stuff but we’re also going to build community. We’re going to provide you content that helps your life be better. We’re going to find community for you — whether that’s a sneaker- head or a running community.”

If you could go back in time, what advice would you give to yourself at the beginning of your career?
HON: “I would say, ‘Settle in Heidi, it’s going to be OK. Love the journey.’ Also, leadership is about finding your voice, using your voice and practicing it. I have all these stories in my career where I felt it was hard to get my voice out there — maybe because I was young, or I felt like I didn’t have the open forum — there were a lot of reasons. But every time — even when I practiced in little ways — I brought my voice to the table, I felt better. And I think the work was better and the team was better. “

 

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