Tuesday, January 24, 2006

Caretaker Manager Fails Nike

In what can only be described as complete and total vindication of my previous accusations, I am not too surprised to read reports that Nike founder and chairman, Phil Knight roundly canned his CEO from the "world's largest shoe company." Not that I have any problems with Nike, nor do I rejoice in their misfortune. I don't even have an issue with their offshore manufacturing transgressions. I truly don't.

In fact, the only issue I have with Nike is that they've never been a real brand. As I've written previously, Nike may be hugely successful, but in branding terms, they're no big deal. Few people insist on buying Nike and even fewer could tell you one reason why they should insist on Nike. To me, that's why they're not a brand.

Nike will be around as long as they have promotional dollars to buy celebrities and media attention. The minute the media money evaporates, the company will take a huge nose dive. There. I said it. Actually, so did USA Today:

"Nike watcher Lizabeth Dunn, an analyst at Prudential Equity, wrote in a report out Monday that she believes there was a "larger dispute going on internally" about marketing and advertising spending, among the cost areas she said Perez targeted as savings opportunities. Dunn said in her report that the shake-up "casts a shadow" on cost cutting."

But that's not the reason I'm writing today. Today I'm writing to expose that Nike, huge company that it is, can be added to the list of huge companies who have fallen victim to Caretaker Manager Syndrome. This is the syndrome in which company founders pass their brand on to know-nothing caretakers, whose main functions always seem to be based on brand ignorance. As a result, they spend their time extracting value and depleting the brand of its assets, instead of building and nurturing the brand for a more productive future.

In Nike's case, knight brought in William Perez, a suit and tie guy from package goods behemoth S.C. Johnson & Sons. I guess Knight figured Nike was large enough to bring in some blue blood management - or something - to play with the big boys. Sort of like Rodney Dangerfield being rich enough to join a snooty country club.

The only trouble is that boys from the package goods world, particularly the brand-ignorant Caretaker Managers, know nothing about the rough and tumble real arena that is the entrepreneurial marketplace. These are guys whose feet only touch the ground when that ground is on the seventh green. How else can you explain that under Perez's tenure, Nike was running at only "80% efficiency?"

In case you were wondering, Perez's tenure was short. Incredibly short. Shorter than most people have to wait for their divorces to finalize: Thirteen months.

One year and one month after being hailed as the CEO who could take Nike to the next level, Perez was sent packing with a $8 million dollar severance deal, which included the purchase of his Oregon home and the million-dollar remodeling tab. Nice, eh?

About the only thing Nike can be grateful for is Knight's ability to kill off Perez before he brought the whole house down. Now he's handed the reins over to Mark Parker, a Nike insider, keeping it in the family, as it were.

Good luck, Mark. Try to keep the old man off your back, the press at bay and the customers coming. While you're at it, see if you can turn Nike into a real brand, would ya?


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