Can Nike Still Do It Without Phil Knight?

(Part II)

Не didn't leave longtime executives com­pletely alone, however. Не liked to shuffle them around. That habit created what Nike calls its "matrix": the accidental internal structure that forces people to answer to more than one boss. For example. а bas­ketball-shoe marketer reports not just to the head of basketball but also to the heads of U.S. marketing and overall footwear – and, mоге informally, to anyone who wants to weigh in. As Knight moved executives here and there, someone who was а boss one day could find himself а subordinate to his former charges the next. Rotating titles meant there might be half-a-dozen people in the company who had served in any one position, giving them license to critique the performance of the newcomer. In this setup employees learn quickly that the only way to get things done is to come up with ideas and build alliances. Brashly making de­mands won't get you far.

And forget trying to work a backdoor to Knight. His reluctance to take a stand is well known. Knight puts people in posi­tions to make decisions, not to come to him. Anytime his hand is forced, he likes to hedge by using a standard disclaimer. "I reserve the right to change my mind to­morrow." Says Don Murray, a manage-­ ment consultant in Eugene. Ore., who has worked closely with Knight and Nike for a dozen years: "People who don't get the culture don't stick around very long. "They know they don't fit. That's it."

In the wrong hands this manage­ment style - can it even be called that? - could easily lead to chaos. Twenty-five thousand employees select­ing their jobs, answering to multiple bosses, and taking cues from a quiet, distant guy at the top seems a sure recipe for entropy. But it isn't. And that gets back to Knight's abil­ity to inspire, to successfully tap into ath­letes' desire to strive for something higher - to satisfy not just themselves hut fans, coaches, teammates. He does it by bringing in heroes.

This is not as corny as it sounds. Nowhere does the study, the worship, of he­roes have as much resonance as in sports. And Nike is teeming with employees who played at elite competitive levels. Parker ran cross-country at Penn State; Denson was a free safety and defensive back for Utah State; the VP of communications and the VP of global footwear played college hoops; the global director of basketball played football at Stanford; the global di­rector of football played in the NFL. En­rique Washington, a firmer Nike recruiter (and an 800-meter runner at Seton Hall), says that the company didn't always look for athletes, but having the athlete's drive and mindset was a must. "Most people had some passion in basketball or running. It helps with the message - not necessarily to be an athlete, but to embrace it," says Washington, now a partner at recruiting firm Generator Group in Portland. These are people who grew up with posters over their beds of the best in their fields. At Nike's college-style campus - whose out­door passageways Knight has lined with plaques commemorating the likes of line­backer Lawrence Taylor and Welsh footballer Ian Rush, and whose buildings he has named after such greats as Tiger Woods and Nolan Ryan - they feel right at home.

But to remember the most important person they're working for, all anyone has to do is glance at the name of the road that leads into the empire: Bowerman Drive. There is no more important to Knight - and subsequently to Nike - than Bill Bowerman. Knight turned his coach, who never played any sort of executive role after co-founding Nike, into everyone's coach. New employees at Nike get a book of maxims. No. 11 is "Remember the man." You can guess who that is. It's quite a legacy: Bowerman started America's run­ning craze practically singlehandedly with his 1967 book Jogging, and in 1970 he invented Nike's famous waffle sole by pour­ing a liquid rubber compound into his wife's waffle iron.

Tough, relentless, the coach everyone wanted, Bowerman was the guy whom Nike people, including Knight, were working to please. "Maybe next to my parents I've been more influenced by him than by any other human being," says Knight. "I think about him from time to time, at odd moments. I remember walking out of a team meeting with Jimmy Grelle (a star runner on Ore­gon's exceptional team). He said, `You look around that room, and you wouldn't think this would be one of the best track teams in the world, would you'?' That was true. It was just guys. But [Bowerman] really did get in your mind that you could be the best in the world."

When Bowerman died in 1999 at the age of 88, his stature at Nike only grew. In this decentralized company, where self-managing is the best way forward, Bowerman is a god, and Knight is the self-anointed priest channeling his words. Liz Dolan, former VP of global marketing, once approached Knight for some help on a complicated prob­lem. Instead of giving suggestions, Knight offered up a Talmudic tale: Once during college he had asked Bowerrman for some advice in improving his running times. Bowerman replied, "Triple your speed." "That's the kind of advice you get from Phil," says Dolan, now a host of the Sаtellite Sisters syndicated radio show. "He is less likely to sit down and break it down for you. He believes you can figure it out... He focuses more on talking to you one-on-one to get the best out of you rather than setting corporate strategy per se."

Though he detests public speaking - "I still get real nervous when I go in front of more than two people," he says - Knight drops in like a corporate Knute Rockne to give pep talks when his company needs them most. When he speaks he sends shiv­ers through the crowd. And what Knight talks about is the company, the people who started it, the trials and successes, the in­ternal heroes. In early 1999, when he re­turned from his year-plus absence to turn the company around, he called an all­employee meeting. As more than 1,500 people packed the basketball courts on the third floor of Nike's Bo Jackson Fitness Center, Knight reminded them of the com­pany's heritage, explained that they had been down before but had come back, and said that it was time to "elevate their game." At the end he apologized for being gone, and he started to choke up.

"I'll never forget that speech," says An­drew Black, former general manager of Nike's U.S. equipment business and now the CEO of Virgin Mobile Canada. "He in spired you to such а level that you just knew you wanted tо dо more for him than you were doing before. Не challenged us all tо really get focused. He's the kind of leader - you can hear а pin drop when he speaks. Не had the whole place giving him а standing ovation for quite а while when he finished."

If this company is able to run itself so well on autopilot - or at least with the pilot only lightly manning the controls - then what would make Knight step down? Cer­tainly not the board: His ownership stake sees to that. But Knight realized that Nike needs inspiration to succeed, says а recruiter involved with the process - and that he won't have the energy to provide it forever. То hear Knight tell it, it was а decision based purely on logic: "The focus wasn't mе," he explains. "The focus was what's best for the company. And obviously, man is mortal, so basically we're going to have а new CEO some day, and when is that time? I was getting into mу 60s when I started looking around saying, 'What dо we dо?"'

Those who work closely with him say the decision was much harder. Knight is known more for wearing his emotions on his rum­pled sleeve - Parker says over the years he's seen Knight cry "countless times" when in­spired by an athlete or employee - than for taking an actuary's approach to business. And this was nо easy call. "It's а tough process, and it took Phil some time," says Ralph DeNunzio, former CEO of Kidder Peabody and а Nike director. "Не knows it's the right thing to dо." Adds Parker: "This has been torturous for him."

Knight started the search in 2001, but his early steps were tentative at best. At the beginning аll he wanted was an executive VP, maybe а chief operating officer, who, if things worked out, would possibly step into the CEO slot. Не told Gerry Roche, the senior chairman of search firm Heidrick & Struggles, to find him that person. Then, in typical Knight form, he left the details to others. Roche combed through candi­dates, with director DeNunzio flunking about half before their names even got tо Knight. About 18 months ago Roche told Knight that he had to make this а CEO search; there was по way to get the best candidates otherwise. It was time for Knight to face the fact that he'd have to give up the title, the office, everything.

Now came the hard part. What the search committee wanted was someone who wouldn't cry to fix а company that was work­ing. They wanted а Knight-plus: someone who would fit into the culture, nоt try со change it; someone who would keep hon­oring the Founding Fathers of Nike, not govern by numbers; someone with passion. And yet they also needed someone with skills that folks already аt Nike didn't have, such as the ability to manage multiple brands - otherwise why go outside? They also needed а CEO who could relate to competitive sports - and even better, par­ticipate seriously in them. One candidate was about to be handed to DeNunzio until Roche tossed off the question: What do you dо on Saturdays when not working? Play golf? Tennis? The candidate replied that he did store checks. Do you play anything? asked Roche. The reply: I'm big on bridge, and I dо store checks. "He's а good person but didn't make the cut," says Roche. The search kept on at its leisurely расе.

Last May, though, that аll changed. Knight's oldest son, Matthew, was scuba diving in El Salvador, visiting the country on а mission for the charity he worked for, when his equipment malfunctioned. The 34-year-old died in the waters of Lake Ilopango, leaving behind а wife and two sons. Knight and his wife, Penny, were dev­astated. In а note to his staff, Knight told them that instead of sending him condo­lences, they should make а point of spend­ing mоrе time with their own families. "I wasn't а good enough manager, really, is what it comes down to," says Knight. "You have to manage your time [as а parent], and it's а pretty tough balance. It's а hard bal­ance, and when the kid's not there anymore, you can't make up for it." Those working on the CEO search noticed an immediate change. "It made him realize that there is а clock running and а calendar running, and that life is unpredictable," says one per­son who asked to remain anonymous.

Knight took the summer off. Soon af­ter he returned, the search committee de­cided it had а winner: the 57-year-old Perez. Не was а marathon runner, but more important, he came from a company that had а similarly inward-looking culture. S.C. Johnson, which makes products like Windex and Raid, constantly holds itself up as а family company, revering the five generations of Johnsons who shaped it over the years. Perez knew what culture means - he had joined S.C. Johnson in 1970 and never left - and he knew how со manage multiple brands.

Perez and Knight met for the first time in February 2004 at a hotel in Palm springs. The two spent an hour in а cafё outside drinking Diet Pepsis. Perez showed up in а sport coat and slacks, Knight in jeans and sandals. Both introverts, they spent а big chunk of the time talking sports. Later the topic turned to culture, at both Perez's shop and Knight's. "I looked at how he'd fit in," says Knight. "I looked at that very hard." On another meeting, when the two, along with Penny, flew to Los Angeles, Perez's introspective, almost shy personality made Penny remark that he reminded her of Phil. In late September, Knight met with Perez and his wife at their home in Racine, Wis., and flew back on Knight's private plane - with the certainty that Perez was it.

Finally, on Jan. 24, someone other than Knight got а good long look inside his office. Knight had already vacated it for his suc-­
cessor, boxing up the accumulated paraphernalia of 14 years in that particular space: the custom-crafted Nikes that pro­pelled Michael Johnson tо а gold medal in the 2000 Olympics, loads of University of Oregon and John McEnroe gear. His new home as chairman is in the Mia Hamm Building, two floors above what Nike calls its Innovation Kitchen - a se­cretive place, locked down to outsiders, where designers dream up the next new Air or Shox. It's a fitting location for Knight, who has worked in mystery and privacy tо create the company that has come to dominate the world of sports so com­pletely that it's hard to believe that basket­ball, running, football - any of it - existed without the Swoosh.

Not that he's finished working. The ba­ton may be passed, but Knight, as chair­man, is still going tо be there, strolling around, dropping in on people and projects when he feels like it, and most important, staying in their minds, reminding them that if they have problems, аll they need tо dо is triple their speed.

I. Find in the text:

чувствовать ностальгию, с самого начала, какова бы ни была причина, поиск последователя, в пределах досягаемости, не говоря о…, обставить (офис) в японском стиле, заставить кого-либо вернуться, понять (интерпретировать) молчание как свободу делать по-своему, лестница в ‘никуда’, вдохновлять, заниматься деталями (мелочами), удариться о скалы, стремиться к чему-либо, элита (элитный), обязанность, иметь страсть к чему-либо, работать на автопилоте.