# Nike's Culture, Succession, and Innovation Strategy

**Podcast:** HBR On Leadership
**Published:** 2026-03-11

## Transcript

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Welcome to HBR on Leadership.
These episodes include case studies and conversations with the world's top business and management experts, hand selected to help you unlock the best in those around you.
I'm HBR executive editor Allison Beard.
What does it take to start and build one of the world's most recognizable consumer brands?
In the case of Nike, it was the inspiration of an entrepreneurship class, a business partnership rooted in running, and the creative use of a waffle iron.
In this idea cast episode from 2017, HBR editor Dan McGinn speaks with Nike co-founder and chairman emeritus, Phil Knight, about creating a culture of ongoing innovation and how he passed the baton to his successor, Mark Parker.
Knight is the author of the book Shoe Dog, and he started the conversation describing how he came to team up with his former track coach, Bill Bowerman, to begin designing and selling shoes.
The shoe is the one piece of equipment that really matters to a uh to a runner.
Uh there's no ball involved, there's no racket, there's no helmet.
Bowerman was uh obsessed with it.
Uh he believed, you know, an ounce and a pair of shoes was the same as a thousand pounds in the last five yards of uh 1500 meters.
So uh he was obsessed with it, and it got me quite interested in it.
Sounds like as far back as the 50s, he was sort of tinkering and experimenting with all kinds of weird shoes.
You had to wear some of these as one of his runners.
Yes, in about uh my senior year, he had begun to believe that uh the shoes should be lighter than the shoes that were coming in from Adidas and Puma, the two main suppliers in running.
And so he began to, you know, make some shoes in his home workshop, and uh he didn't want to try them out on his Olympic athletes.
He tried them out on me, and so uh it got me uh quite focused on on the shoes.
What was the weirdest pair of shoes he ever had you wear?
Well, it was probably a pair of goat skin shoes with uh uh a very uh thin plate that uh you could feel the spikes through the the thin plate, but it was very lightweight and it was very odd looking, but uh it was light and it worked okay.
Some of this must have cost you some time, I would think in races.
Did it uh was there ever tension in the fact that he's making you wear these things and they might be hurting your performance?
He had me convinced it wasn't hurting my performance, and that came home to uh register very strongly when Otis Davis won the uh conference championship wearing a pair of Bowerman's homemade shoes.
Uh you began to believe in them.
Now your fascination with shoes and the idea that there might be a business there, uh that's something you thought about at Stanford during business school.
That's right.
I took a class in entrepreneurship and uh took the running shoe idea with the thought that uh why are shoes why are the quality running shoes made in Germany?
That's not a place to make shoes, and uh why aren't they made in Japan?
Which was uh uh, you know, very uh much more economic as far as the stitching, which is the most expensive part of a shoe.
So I used that as sort of a thesis of the paper, and uh the professor liked it, and uh that's the way it began.
And it seems like when you began, the idea was was mostly about importing as opposed to putting your own i design ideas into it.
Is that true?
Yeah, it was yes, it was mainly focused on uh economics and manufacturing.
So after Stanford, you went on a sort of a whirlwind tour and ended up talking sneakers in Japan?
How did that come about?
Well, I had uh had written the paper the Japanese uh ought to be able to uh make inroads into the uh the German shoe market, just as the Japanese had made inroads into the camera market, picked out a a sequence of factories that I was gonna call on, and the first one was Anitsika Company Limited in Kobe, and I called on them and got a great response and and I ordered some samples and away we go.
So eventually you you sent a couple of them to your old coach.
He was one of the first people you shared them with.
Why did you do that?
Well, obviously he was by that time really recognized as one of the best uh distance coaches in the world.
And so I thought if I could get him uh to approve the shoes, to buy a few p pair of shoes, that would be the ultimate endorsement, and that's see if I can get Bowerman to buy a few pairs.
So celebrity endorsements have become, you know, a driving factor in athletic shoes and athletic gear of all sorts.
You didn't really think of him as more than that in the beginning.
This was just about getting him to sign on and say these were the right kind of shoes?
Well, the endorsements uh they were already out there long before I ever got in the game.
But uh I I thought of it more as as basically uh an approval of the quality of the sh product more than the endorsement.
Uh endorsement I was more interested in.
If we get a Bowerman to sign off on it, could we ever get Burleson to wear a pair?
That that's kind of the way I thought about it.
How did it evolve to be an actual deal, like a partnership?
Well, when I sent the shoes down to him, uh he said, Let's get together for lunch, and I said, by all means, and went to the lunch still hoping that I'd get an order.
And it turned out to be more than that?
Much more than that.
He said, How about letting your old coach in on this?
Which pretty near floor floored me, but uh I thought about it for about 30 seconds and I said, What better partner to have?
So there's no downside of this in your mind?
No, absolutely none.
Of the various uh ideas he had when the when the shoes were still coming over from Japan, um, what were the most important things he added to the design and the innovation?
Well, uh in the early years, the factory had a uh what they called a high jump shoe, which had a unique uh cushion in it, which uh they called it the spring up, which gave the the it was supposed to give the jumper more spring.
It was it really didn't do much of that.
But uh when we looked at it, he said, you know, that that is an innovation for a running shoe to give a layer of cushion between the outer sole and the uh and the upper.
And so uh he tore it apart and and rebuilt it as a running shoe and sent it off and said, make it like this.
And that's a shoe we called the Cortez.
It was really kind of the first major breakthrough in running shoes in 50 years, and it's still an important shoe in the line.
And much of the idea for it came from him?
Basically all of it.
Where did the waffle iron come into play?
Almost 10 years later, we were distributor for Tiger Shoes, and then uh uh we set up our own line, Nike, after we had a uh br breakup with the uh with the original manufacturer, and uh he had come up uh he he had done some other innovative things with Tiger, including uh, you know, picking a nylon for the upper rather than just a leather.
And uh so we said what we really need in this new company and this new brand is really uh another breakthrough in shoes, something good.
So we had a a meeting up in Portland, Bob Wedell and I and Bill Barman, and uh we said, you know, there hasn't been uh outer soul innovation.
We had a uh midsole innovation, but we'd never had an outer sole innovation in running shoes for ever.
Uh so driving home to uh Eugene, he got to thinking about it and uh he couldn't come up with anything, but then his wife uh had waffles the next day, said maybe.
And it worked.
Ultimately it worked.
The original waffle iron, which is now in a trophy case here, stuck because he didn't have a catalyst in it and it couldn't release the and it got stuck, and his wife was really mad because it cost her twelve ninety-five to get a new waffle iron.
In the sixties and then the seventies, you faced a ton of financial issues.
You were constantly dealing with banks that wouldn't lend you money.
You had very complex negotiations and even lawsuits with Japanese suppliers.
How involved was Bowerman with those aspects of the company?
He wasn't personally involved, but he was quite aware of it.
And uh he was uh always there for support.
He was obviously in the major lawsuit against uh Anitsuka, he was a key witness.
Uh he was always uh totally supportive and always fully informed, but I was the one getting us into trouble.
What did you two disagree on?
Oh, uh almost nothing.
He basically left the uh day-to-day and the operations to me, so I didn't have any trouble with him that way.
And so his role was uh mostly to work on innovation, and uh he was good at it, and I was quite happy with that arrangement.
So by the mid-1970s, the company was now Nike and you'd built a facility up in New Hampshire.
Uh so that's where Mark Parker was first hired into the company.
Um tell me about the first recollection of him you had.
Well, he's a he was very likable that we're always looking for promising uh young talent.
Ultimately the company is going to be what its people are, and uh he was uh completely dedicated to to getting better shoes, and uh we we were glad to have him on board.
How important was it that he'd been a collegiate runner?
Very.
I think uh in the early days uh almost all the employees were were ex-runners or still runners or hope for to be even better runners, but they all uh had a touch of that, and I think that what made him so absolutely dedicated to to building a better shoe because they knew how important it was.
Some businesses think that a good business person can work in any kind of company.
You think of a company like Procter and Gamble, where you know it doesn't matter if you're marketing cake batter one day or potato chips the next day.
You don't that you know the theory is you don't need to have any particular passion for the product.
Do you disagree with that?
Pretty much.
You know, I I do believe there is such a thing as uh as a good general manager that can go across uh industries and categories, but for the most part, I think you really have to have a passion for the business you you're in.
I consider myself pretty good uh businessman, but I'd get fired at Microsoft.
You just don't get interested in the technology?
I I it it's completely above me.
Now, obviously they were on different coasts in those early years, but did Bowerman and Parker develop much of a relationship in the early days?
When when you were presenting shoes to Barman, there was always a certain amount of tension in the air.
And and Byrman's attitude was that Nike makes the worst shoes in the world except for everybody else's.
And uh so it could always be better.
So it was never really kind of good enough.
And so it was always the student presenting to the professor sort of relationship.
Even even for me.
That sounds like it must have been frustrating.
Uh it it was for some people.
That's uh that's a true statement.
It was not for Mark Parker and it was not for me.
Do you recall a moment when you first said to yourself, gosh, this guy might be more than a designer?
He could have the potential to be more broadly involved in running the business.
Yeah, I don't remember the exact time, but he came back with uh with some some shoe ideas, and it was quite clear that he was thinking broader, more broadly than just in terms of the shoe.
He was also thinking of the marketing aspects and the general management aspects of it.
And he said this could be a rising superstar.
You know, your own background, having an MBA, having spent years as an accountant, you have sort of a very foundational grounding in business.
Was it a concern that, hey, this guy's a designer, he doesn't have that kind of business training.
Maybe uh there is a limit to how much responsibility he could assume.
It wasn't a concern, but it was it was the way we thought of him originally.
That's a absolutely a fair assessment of how he was looked at in his uh early start of, I guess.
He was he was on his way up, but we thought it was sort of a limitation that could be head of design or something like that.
And it was only after we got to know him a little bit, hey, hey, this guy's uh half businessman, half designer.
Those combinations are few and far between.
So it sounds like it was a process where you sort of recognized a natural talent that you didn't know he had.
But was there any sort of cultivation or training, or did you do anything intentional to try to develop that side of him?
Well, our training program was we got a problem, go fix it.
We were growing really fast uh in those early days, and uh we had uh really demands for people that kind of outran uh what we saw as our capability.
So we were always pushing people beyond their limits.
And uh so we didn't really have a a training program for per se, but we we had to throw him into general management problems and and general management responsibility, and he always handled them well.
So that was basically his training program.
It was uh you know on-the-job training by uh crisis.
Now I want to jump back to Bowerman.
So he died in 1999.
Was he active uh with Nike uh right up until his death?
He had backed off quite a bit, about uh I would say about three or four years before that.
That uh he would uh literally uh six months before he died, he came out.
We had an all hands uh uh meeting where all the company employees got together and uh we had an interview with Baerman on stage.
So he was still involved, absolutely.
And he seemed to be in good shape and he he uh he seemed to enjoy the meeting.
He always had this sort of quirky sense of humor.
And he got a few of those jokes in and told about uh his role in the company and what he saw in the future and and gave us a blast on how bad our shoes were, and uh it was uh sort of typical Bauman that everybody enjoyed.
So even in 1999 he thought Nike shoes were terrible.
Absolutely.
By 1999, when Bowerman died, you'd been running the company that was now Nike for 37, 38 years or so, pushing close to 40.
Um, at what point in all this did you start to think about succession and a time when you might not be the CEO?
We've always since we've been a public company, we've always had what I considered a really good board of directors, so that they've always pushed me on succession plan, what would happen if something happened to you, et cetera, et cetera.
I really didn't really start thinking about it till uh till I was right around uh sixty-five years old.
And and it wasn't the number after my age, but it was the fact that I was beginning to lose energy, and uh thought the company really needed you know a more active CEO than uh what I was able to give, and that's when I began to think about it seriously.
So your first uh move at succession was with Bill Perez from Wrigley in 2004.
Tell me about that.
Well, uh, we thought the company would benefit from uh a look from the outside.
Whatever my idiosyncrasies were, the company worked around them and didn't even know they were idiosyncrasies anymore.
And we thought uh that uh that we could benefit from somebody from the outside.
So we interviewed uh uh several high profile people uh and ultimately picked Bill Perez.
What happened?
It didn't work.
It didn't work.
Bill Perez and I had had long talks, and one of the things that I I warned about is that uh Nike is a unique culture and it's not for everybody.
Uh some people adapt to that culture and some people don't, and he didn't.
You know, we talked earlier about whether somebody really needs to love athletic footwear to succeed at a company like Nike.
Was that part of the issue that he came from outside the industry and you know doesn't doesn't seem any evidence that he particularly likes sneakers?
That was something that didn't help.
Uh yes, I think that's true.
But I th I do think over and apart uh that uh Nike is a unique culture and that he really it was so different from his culture.
When we're working really well, it's a very collaborative atmosphere here, very kind of team-oriented, like from the athletic field.
He was more used to strict boundaries between positions and uh strict responsibility for that little box on the organization chart that was just different on who we were, and we didn't want to be like that other company.
So, how did Bill come to leave the job and what was the process that led uh to Mark becoming CEO?
Well, I made the decision that this was not working and was not gonna work, and if allowed to continue for another six months, it was gonna be detrimental.
So I recommended to the board that uh we make a change that uh we uh terminate Bill Perez and put Mark Parker in the CEO's job.
Did you resolve to be more hands-on in this period than you might have been?
Did you think that uh instead of a chairman who shows up every once in a while that you needed to be a more active chairman in those first years?
Kind of just the reverse.
With Mark, I had a few meetings and realized that we were sort of on the same wavelength and could kind of after all these years together finish each other's sentences, so I didn't have to meet with him very often.
I read somewhere that it's not unusual for you to go a month without talking to Parker.
That say seems really extraordinary for a founder chairman to go a month without talking to the CEO of the company.
How do you manage that and why do you do that?
There may have been a time or two when it's been a month, but uh I talk to him whenever I I want, or he calls me at the same time.
I so I don't know.
There isn't uh such a thing as a as a regular scheduled meeting.
There wasn't uh back ten years ago and and there isn't now.
It's just uh kind of as necessary.
And uh I wander, I walk around the company with access to anybody at once, so I know what's going on.
When you look at Parker's track record as the CEO, uh from a financial standpoint, it's been fairly extraordinary.
Um from a uh brand strength of brand standpoint, it's been extraordinary.
Um at the same time, he's noted for being able to admit a mistake when he makes one, whether it's an acquisition that doesn't work out, whether it's the foray into golf that you've undone.
What is it like when he tells you that a project that Nike has spent in some cases probably billions of dollars on was a mistake and he's gonna undo it?
How do you respond to that?
Favorably.
There's no such thing as a perfect manager, and then nobody bats a thousand.
And that one of the real nice things about about him and what I like to think is the culture of the company, it's open and honest.
As a general rule, not just Mark Parker, but anybody in the company, you don't get in trouble for making mistakes.
You get in trouble for covering up mistakes.
So I'm quite comfortable with that process.
Mark is now in his 60s.
You're I think in your late 70s.
Is it hard for two gentlemen of your age to run a brand that's so youth-oriented?
Better not be.
As I said, Nike is uh young and irreverent, and I'm neither, but we both have a lot of respect for the consumer, and I think we know who he or she is, and we better have uh that consumer in mind at all times.
And I think we have the average age of uh an employee at Nike is still right around 30 years.
So I think we're okay there.
Do you continue to believe that the Nike culture is so unique that uh the next CEO has to be coming from inside?
I think the next CEO from Nike will come from the inside.
As you think back on uh the way your products have evolved uh over 40, 50 years now.
What do you think Bill Bowerman would say if he saw a self-lacing pair of shoes that cost $720?
First thing he'd say is humph, a gimmick.
And then he'd pick them up and look at them and try them on and say, hmm, I want to take these home and think about them.
And he'd come back with an improvement.
I didn't say he hated Nike, I just said he thought they're the worst shoes in the world except for everybody else's, and I think he'd still think the same, yes.
That was Phil Knight.
He's the co-founder and chairman emeritus of Nike and the author of the book Shoe Dog.
He was interviewed by HBR editor Dan McGinn in 2017.
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