CEO Mark Parker Foundation of Nike’s Organizational Culture

by Nathaniel E. Urban

Introduction

nike
Photo Credit: Huh Magazine

The purpose of this case study is to analyze how Nike CEO Mark Parker has used situational management style to influence the organizational culture of Nike. Nike is a multinational corporation that is responsible for the design, development, manufacturing, marketing, and sales of footwear, apparel, equipment, and accessories. This case study will provide a detailed description of situational management style and how Parker has used it to lead Nike as the most valuable brand among sports businesses. A critical analysis will give a description of Nike and an analysis of their organizational culture. It will also look at how Parker has applied situational management style and what his leadership has done to improve Nike. A conclusion will include a short discussion on what other organizations can learn from Parker’s management style.

Description of Situational Management Style

Situational leadership is a management style developed by Ken Blanchard and Paul Hersey. “The fundamental precept of situational leadership is that there is no one ‘best’ style of leadership, and that the most successful leaders are the ones who can adapt their style to a given situation” (Joseph, 2016). Good situational leaders are able to adapt their style to do what is best for a company, a group project, or any type of organization. The best situational leaders may use a couple general styles of management depending on the situation. The styles a situational leader may use are called coaching, directing, delegating, and supporting.

Coaching is a type of management style that involves a great amount of “hands-on” involvement by the leader in an employee’s work. This style is most effective when an employee displays weaknesses that need improvement. For a leader to be effective at coaching, the employee must recognize their weaknesses and seek to improve them. The employee is then responsible for their improvement but the leader is there to offer guidance.

“The directing management style typically involves taking over a challenging situation and applying specific knowledge and experience to right the ship” (Joseph, 2016). A leader who adopts directing management style uses it to establish clear goals and objectives for their position as well as their employees. The employees typically provide the input as to how the objectives are met. The leader will provide detailed instructions as to what changes, if any, the employee needs to make.

The delegating style places more responsibility on the employees as opposed to the leader. Most of the ultimate decisions are left in the hands of the employees. “The manager is able to provide guidance, but only when needed or requested by the employees, and serves in more of a consultant capacity” (Joseph, 2016). This style is extremely effective when a staff of employees is confident enough to work independently and provide their own ideas. The delegating style allows employees to use their best creativity in how they choose to accomplish a task. The leader pushes for their employees to critically think and work through a situation.

The supporting style involves the leader holding more of a motivational role. “The leader’s main function is to attempt to instill confidence in the workers so they eventually become more self-sufficient and productive” (Joseph, 2016). The leader attempts to assure their employees that they have the capability to perform what is asked of them. This style can involve the leader assigning projects to their employees while providing support when needed.

Situational leadership allows managers to be flexible. “One of the keys to situational leadership is adaptability. Leaders must be able to move from one leadership style to another to meet the changing needs of an organization and its employees” (Spahr, 2015). Situational leadership is unique and effective because it incorporates many different approaches. The correct approach depends heavily on an organization’s environment and its employees. A situational leader, like Nike CEO Mark Parker, is able to effectively move from one management style to another.

Critical Analysis

Nike is one of the world’s largest suppliers and manufacturers of athletic shoes, apparel, and sports equipment. Nike sponsors several well-known athletes and sports teams from around the world. Their iconic trademarks of “Just Do It” and the Swoosh logo are two of the most recognized trademarks in the world. Since Parker became CEO in 2006, Nike’s value has nearly doubled from $19 billion to $30 billion. Nike pays top athletes in many sports to use and promote their products and designs. Nike has signed multi-million dollar deals with athletes like Rory McIlroy and LeBron James. Parker has been labeled as “The World’s Most Creative CEO” and says that, “Nike’s culture is perfectly suited for the new, unpredictable age of business” (Safian, 2012). Parker has also said that, “The last thing we want is to be a big dumb company that feels we can put a swoosh on something and people will buy that” (Safian, 2012). Nike is known to be a company that is constantly adapting to an ever-changing market and customer base. The company actually receives much of their inspiration from their athlete focused customers. Parker has discussed how athletes are always progressing and striving to improve their performance. The same idea can be said about how Nike acts as a company.

The aspect of Nike that is going to be analyzed is their organizational culture. Nike’s organizational culture includes how the company is organized, how their employees behave, and what influences affect the employee’s success. Thanks to Parker, Nike is a company that is able to constantly adapt their structure in a growing and shifting market. Parker said, “Our management approach hasn’t come from studying and reading business books. It’s more intuitive, from the culture of sports. We’re constantly looking for ways to improve. Things are accelerating” (Safian, 2012). Parker organizes Nike in a flexible way that allows the company to seek new ideas, methods, and designs. Nike does well when it comes to adapting to change. They are known well for looking at change as an opportunity rather than a challenge. If a company is not able to adapt then it is more likely to fail. Parker said, “Sometimes with size and success comes the notion that since we’ve done things to be successful, we have the formula and can institutionalize it. That can be death” (Safian, 2012). Nike’s organization is established so that even what has worked really well for the company is still challenged. Nike does not contend on remaining comfortable in their styles and methods. They are determined to strive for the next best approach to a situation.

Parker is not someone who believes his employees’ abilities are fixed. He believes their abilities need to be cultivated in Nike’s culture. Andy Champion, Nike’s chief financial officer, said that, “Parker is notorious for constantly asking questions that push employees to think harder. What’s fascinating about his use of questions is that it leaves other leaders empowered to find the answers themselves and act on them” (Lebowitz, 2015). Parker is not a CEO who thinks he has all the answers. He wants employees to use what they know to ask insightful questions that promote discussion with other co-workers. Asking questions does not allow employees to get too comfortable with one way of thinking or doing something. Employees are encouraged to question their own personal methods and their work as well.

Employees are influenced by Nike’s eleven management maxims and their athlete focused customer base.  Nike’s management maxims are eleven simple statements that promote the core source of innovation within the company. Two of them are, “It is our nature to innovate”, and, “Be a sponge” (Waite, 2014). The first one says, “The company sees innovation as one of its core organizational competencies” (Waite, 2014). The second one says, “Employees at Nike are encouraged to be curious and open to new ideas, whatever their source” (Waite, 2014). These two maxims and the other nine represent everything the company stands for. The goal is for these maxims to guide employees at any level as they work with and represent the company. Athletes are considered to be Nike’s biggest influence due to their pursuit of growth and change. It is a powerful influence because Nike is a company that is pursuing the same thing. “Athletes and Nike designers fuel each other’s creativity when they work together. In 2008 Kobe Bryant and Nike’s Eric Avar designed the KOBE 9, which featured technology that made for a lighter-weight and better fitting shoe” (Lebowitz, 2015). A strong relationship between a company and their customers has the power to drive a company’s success and the customer’s loyalty to their product.

Nike does extremely well embodying situational management style through Parker. Parker has shown how he can easily transition between coaching, directing, delegating, and supporting management styles throughout Nike. Situational management style is all about a leader who can be flexible. Parker recognizes that not all of his employees are immediately comfortable with innovating. His coaching management style has shown, “Even those who are averse to change because they are safe and rather complacent in their secured positions doing what they do best and have been doing well, have been made to innovate” (Advise America, 2016). Parker has made change a natural part of Nike’s culture. Employees are trained to accept change as an opportunity for innovation. Parker helps his employees feel confident enough to accept this as part of Nike’s culture.

Parker is not a CEO who typically adopts a directing management style but that does not mean he is not able to. “Earlier in 2012, Parker noted that Nike’s R&D group had 350 ideas being explored. He recognized that the number was too high. He got personally involved-not specifically selecting projects, but working with the R&D team to set up criteria to evaluate” (Safian, 2012). Parker gave the R&D team a simple goal by saying that the number of ideas they had was too high. The employees provided most of the input as to how they were going to reduce this number after Parker help them create a criteria to discuss their ideas. The R&D worked to cut their idea list down to 50.

Perhaps Parker’s two strongest management styles are when he is able to use delegation and support. Parker pushes his employees to think through difficult situations and provide alternative ideas to present methods. “Every employee who is otherwise skilled to get his or her job done, is also tasked with the responsibility to contribute something more, to find out if there is something better and to develop oneself as well as the company in any which way one can” (Advise America, 2016). His delegating management style is thoughtful yet demanding. It involves a lot of personal accountability and responsibility. This is, however, exactly what Parker wants out of his employees. Strong delegation is the exact opposite of micro-managing, which is something Parker does not believe in. He said, “At Nike, we have incredibly strong people. They know what to do” (Safian, 2012).

Parker’s strongest ability is to use a supporting management style. Parker has been known to, “Go out of his way to solicit ideas from junior members of the team. He likes to pull raw ideas out and put them in the spotlight. He likes to celebrate the fact that ideas can come from anywhere” (Blazek, 2016). Parker likes to discover the ideas his employees possess and then help them sharpen them. He encourages his employees to look for new ways to innovate and adapt to Nike’s environment. He is also involved in the development of new designs and frequently walks the halls of Nike to see what he might gain from other employees.

Conclusion

Other organizations can learn a lot from Parker’s management style and how it has affected Nike’s organizational culture. Organizations can learn that change and innovation is necessary for their future success. Parker has established that, “Innovation is the center of our culture, so we can deal with things pretty effectively and naturally through that lens” (Greenfield, 2015). It is crucial for organizations to remember that being comfortable with the way they are does not really mean there is any growth. Leaders of organizations can also learn how to adopt different management styles. Not every situation is going to require the same type of management. A strong leader must know what management style will work best for the success of the organization. Parker understands that he must adapt his management style as often as Nike is adapting to the global market and their customer’s needs. Parker’s situational management style has allowed Nike to remain as one of the highest valued organizations in the world.

References

Advise America. (2016). Nike Management Style. Retrieved from http://www.adviseamerica.com/nike-management-style/

Avtgis, T., Liberman, C., Rancer, A. (2012). Organizational Communication: Strategies for Success. Dubuque, IA: Kendall Hunt Publishing Company.

Blazek, K. (2016, January 19). A Participatory Leadership Style: Nike’s CEO Mark Parker. Retrieved from http://www.boothco.com/360-feedback-resources/leadership-style-nikes-ceo-mark-parker/

Greenfield, K. (2015, November 4). How Mark Parker Keeps Nike in the Lead. Retrieved from http://www.wsj.com/articles/how-mark-parker-keeps-nike-in-the-lead-1446689666

Joseph, C. (2016). Four Basic Leadership Styles Used by Situational Managers. Retrieved from http://smallbusiness.chron.com/four-basic-leadership-styles-used-situational-managers-2982.html

Lebowitz, S. (2015, October 8). Nike’s CEO explains why athletes are the company’s biggest source of inspiration. Retrieved from http://www.businessinsider.com/nike-gets-inspiration-from-athletes-2015-10

Lebowitz, S. (2015, November 14). Here’s the leadership strategy Nike’s CEO uses to make employees smarter. Retrieved from http://www.businessinsider.com/why-nikes-mark-parker-asks-a-lot-of-questions-2015-11

Safian, R. (2012, November 5). How CEO Mark Parker Runs Nike To Keep Pace With Rapid Change. Retrieved from https://www.fastcompany.com/3002642/how-ceo-mark-parker-runs-nike-keep-pace-rapid-change

Spahr, P. (2015, October 30). What is Situational Leadership? How Flexibility Leads to Success. Retrieved from http://online.stu.edu/situational-leadership/

Waite, J. (2014, November 3). Nike’s Management Philosophy Revealed. Retrieved from https://www.linkedin.com/pulse/20141103230923-9245190-nike-s-management-philosophy-revealed

 

 

 

 

 

 

 

 

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