The objective of the paper is to analyse the issues that significantly influence Nike’s successful innovation into the female niche market. Nike has been a market leader in sport accessories, including footwear, apparel and equipment. In 2006 Nike had approximately 30% of the global branded footwear market compared with its nearest rival Adidas with 34%. Other significant competitors included Puma, Asics, Mizuno and Umbro. As a major reorganisation Nike shifted their focus from product orientation to a catergory-driven approach and from a product-driven mentality to a consumer-oriented approach. . These changes affected Nike’s entire product range which was also affected by the distinction of product units and also the requirements of different geographical regions. Nike also wanted to focus on the female market in particular and recruited a team which was led by Winslow, the leader of the global women’s fitness team to develop this market.
This paper is clearly divided into various sections as follows: Part C is a literature review of innovation management, successful innovation and market orientation. Part D studies the approach and methods used by Nike and looks at possible improvements to help Nike, including new challenges, barriers and trade-offs for the female fitness business. Part E presents recommendations for Nike and Part F conclusions about this paper.
In the global market, many organizations accelerate their innovation capability, to substantially increase their competitive advantage in order to dominate the market in their industry. The most common method to do this is to further enhance their innovation capability by integrating e-Commerce, Sustainable Development and New Product Development (Chapter 2).
Successful innovation has not been attributed to the same factors (Process innovation Management) in each organization. The primary purpose of this literature review is to highlight the key information of process innovation management, successful innovation factors, and market-orientation. The ideas and concepts from this review will provide the information to analyse and help Nike’s development of the female fitness market.
This literature firstly looks at the key components of innovation management and the key issues that important impact on organizational competitiveness. Firstly, R&D and technological management is an important significant factor that helps the company develop new products. It is driven by future needs, requirements and emerging technological opportunities. Secondly, manufacturing kindly provides the best solution to support the innovation process in terms of quality, cost and time. It requires the support of marketing and sales to get the products to the consumers. Thirdly, the supplier partnership and customers mainly influence the company’s competitiveness as they are involved in cost and price prediction. It also constantly requires having good marketing and sales skills for leading projects. Thirdly, customer and supplier partnership, it is a critical factor for company’s competitiveness as involved with cost and price prediction. Fourthly, the process and project management, are essential to innovation management and creating effective products and are divided into upstream and downstream processes. Fifthly, the management of design which links the customers needs with a demand vision. Finally, the culture of innovation, which in order to create new ideas requires information and knowledge sharing within the organisation (process inno, Mohammed Zairi). Process innovation, however, is characterized by the cross-functional integration and collaboration with supplier and customers.
Cross functional integration is an approach where different departments work together on a project in order to improve cost time and quality. It naturally occurs when design engineers work with process engineers and marketing people to solve development problems.
In this type of situation it is often limited to communication and co-ordination activities. To achieve true cross functional integration there are a number of steps and processors that need to be addressed. The first is the pattern of communication which is a critical element of the integration between upstream and downstream process and product management. The communication patterns are divided into four modes of upstream-downstream interaction: serial mode; early start in the dark;early involvement mode; and integrated problem solving. Integrated problem solving is a completed integration mode where problem solving between the upstream and downstream groups is closely connected which can help generate new products and processes to enhance the company’s competitiveness. Its ability can generate new product and process to enhance company competitiveness. Secondly, the upstream and downstream have to work together efficiently in order to be as productive as possible and develop capabilities and relationships. Thirdly, the sharing of knowledge and information between upstream and downstream which traditionally has been a problem derived from a lack of trust in the organisation. Fourthly, the role of the senior management is crucial to achieving integration across functions. Finally, promotion and compensation are tools that many companies use to stimulate and enhance cross function integration (manage new product).
Nike changed its approach from product orientation to a category driven approach to focus more on customer needs and the female fitness market in particular. This change led to a major reorganisation within the organisation which itself created a major problem in that the change was very slow. Nike’s management of the innovation process had an impact on the behaviour and attitude within the organisation. The following critical analysis identifies the major obstacles that limited the speed of change and provides specific advice and recommendations for a comprehensive solution and also predicts new challenges, barriers and trade-offs for the global female fitness market that Nike will face.
A: What specific advice and recommendation would you make to help Nike orchestrate the change more quickly and on a larger scale?
Nike’s main market has always been male footwear products which meant they were poorly equipped when they decided to target the female fitness market. Based on the literature review a number of recommendations will be made to provide an appropriate way for Nike to survive and improve its position in its new market for female goods.
Firstly the company must have a clear vision, mission and objective. By creating these it gives employees a guideline and everyone heading in the same direction. All staff involved in this new business activity must work together as a coherent group in order to develop the companies first integrated dance collection.
The female fitness range was a new venture for Nike and it had no processes or structure to support it. When developing a new structure Nike needs to focus on building a cross function organisational structure using the best people in the best places. One of the inherent problems when building this type of structure is dealing with the problems of conflict between line and project managers over the allocation of resources and funds and also monitoring lots of independent entities in the organisation. The importance of cross-functional integration (CFI) teams involving workers with multiple forms of functional expertise to work on new product development cannot be overemphasized. Besides, cross functional integration is an organic structure that allows the team members’ tacit knowledge embedded in individuals to be realized in the new product development team’s collective knowledge. The organisation uses this model to allow information sharing and also so it can utilize the best people with the best knowledge in the best place. The organization is forced to concentrate on this function to achieve an informational sharing and the best solution because it will encourage the best people in every area in the organization. However, the company has to make sure that the right people are used in the right time and right place.
After setting up the organisational structure and collecting the team together the management and leadership roles need to be clearly defined so there can be no misunderstandings about roles and responsibilities of team members in job descriptions.
Furthermore, worker incentives are an important part of motivation and help drive and track desired performance. In his report Sittig stated that Nike did not provide a lot of incentives to help motivation. Although the company provided cash bonuses to its employees this information was poorly presented to the employees who were unsure what they would get. It is important that Nike make it very clear the incentives and bonuses that its prepared to pay along with the conditions attached with them that allows employees to know at the beginning of the year.
A concurrent development of products and processes is another crucial factor for the global female fitness business. It refers to the simultaneous development of products and the processes that are needs to produce them. In order to have a range of products in the marketplace Nike needs to maintain its effort to develop products and processes all the time to sustain its market share.
Supply chain management is an important factor about the collaboration between the suppliers and customers. Effective innovation is about linking the creative, production and the logistics of delivery to ensure that products are produced and on the shelf for sale quickly which can enhance the companies competitiveness. Currently Nike has a distribution problem because their retailers are not prepared to develop and change their business. Nike needs to offer their retails some incentives to change to suit their distribution where retails would be rewarded for meeting predefined goals.
For employees to be 100% productive, they have to work in a creative environment. Nike needs to create the appropriate environment for its employees in order to get the best from them. Hence, the organization has to make sure that they set and create an appropriate environment to support its employees’ ability and capability to do their work.
Lastly, as Nike want to dominate the female fitness market they need to consider how to best advertise their products and create a positive image in the minds of females who are interested in fitness. For example, the investment in terms of women’s fitness advertising is required.
B: What new challenges, barriers or trade-offs would be uncovered for global women’s fitness as well as other businesses?
Nike defined the female fitness market as encompassing all of the fitness activities women performed to keep fit in the gym, as well as running and walking outdoors. The first challenge is to clearly understand this idea and define the scope of the women’s fitness market. Through this process, Nike will know exactly how large the market is and the growth potential of this particular market as well other players in it. The female development team need to know exactly what the customer needs and wants by switching from a product orientated to a market orientated strategy. Nike has considerable experience in the men’s market and is very successful there but they need new products, new marketing strategy and customer service.
When entering a new market Nike need to be aware of other players in that market and how they might react to more competition. Nike wants to introduce a complete integrated range of products, called a head to toe solution, aimed at a particular market segment and needs to look at how it can dominate that market. A straight forward barrier in front of Nike is the traditional and well-respected brands in different areas of women’s market. When trying to integrate different products into a re-organized category, how to step into those fields that they may not be good at such as apparel? How to balance the head-to-toe solution with Nike’s own individual products?
Because of the different time scales for design and production of different products it is very difficult for Nike to present a complete set of products for its retailers and customers. Implementation wise, how to combine different timelines for different products is a big barrier Nike has to conquer. This does not include the alignment of the product design schedule of different products only, but the real challenge lies in back-end supply chain management, manufacturing and delivering. Although combining different products into a single retail store looks simple, proactively it’s very difficult because the business model is locked in for decades with retailers while the supply chain system inside Nike is also hard to change.
Another issue that Nike needs to address is the team for this project. Traditionally Nike has used virtual teams which have been used for individual projects and are relatively short lived. This team needs to be much longer lasting and it will be difficult to assign people to the team and also assign roles and responsibilities.
Those staff that are integrated into the new team from various departments will have conflicts to deal with between their departments and the female program. There is a trade-off between how much effort goes in between the two jobs. For most employees their major concern is selling shoes or clothes instead of integrating them together.
The aforementioned text highlights a number of challenges and barriers to Nike’s innovation. The following are some recommendations for Nike to implement to make its innovation work.Firstly their supply chain needs to be changed which needs to start at the top management level. A product orientation focus needs to be put in place where all staff should change their mind and their strategy and looks at how they can get the product to the customers as quickly as possible.Nike’s selection of suppliers for its new range is very important, both for products and materials and also to fit in with its product orientation. Nike has got to develop the innovation practices and an innovation culture to cultivate their staff to accept change and also their suppliers. Although the female fitness market is potentially very big the demands vary across Nike’s many international markets and Nike need to research this before the implementation so that they can offer the right products to the right customers. When the suppliers, products and customers have been selected a timeline for production needs to be constructed so that a range of products can be introduced at the same time thereby introducing their head to toe concept. Customers will continue to look at Nike as individual products rather than a complete range of products are introduced at random times. An accurate product sequence must be calculated taking into consideration material sourcing, production, delivery and market demand. These factors will develop competitiveness and market share and allow Nike to enter the market and also alter and adjust products to suit variations in females interest, in this way Nike will be successful in this niche market.
The aim of this paper is to investigate and critically analyse the issues facing Nike for the successful innovation into the female fitness market. The paper has investigated and reported on: 1) Emphasis on the important issues about innovation management from the relevant literature; 2) Analyse the approach and methods which can help Nike shift from product orientation to market orientation and expand their market; 3) Explore new challenges, barriers, or trade-off for the female fitness business; 4) Present recommendations for Nike to improve the approach to managing innovation. Innovation is imperative for any company to remain competitive in the market. To be successful the innovation needs to carefully planned and executed to avoid mistakes and failure. Nike has made a good start but still need to learn from any mistakes and overcome obstacles and challenges to speed up their innovation.