How Nike Drives Growth

As the late great former Harvard Business School marketing professor Theodore Levitt would most certainly agree, “People don’t want to buy athletic shoes and apparel. They want to become better athletes or feel like one.”

Nike understands this and is growing at 10% per year even with sales of $28 billion in 2014. The company has been selected one of the top 10 most innovative companies in the world by Fast Company the past two years.

One significant reason for Nike’s success at innovation and growth is what CEO Mark Palmer calls their “category offense” strategy in which they seek to dominate entire sports such as football, soccer, golf or tennis, not sell shoes and apparel. They are doing this by first identifying what athletes in each of these sports are trying to accomplish and where they struggle, and then apply Nike’s technology and expertise to create new offerings that address the athletes’ needs better than any other solutions.

This is also an excellent example of what Levitt said many years ago (paraphrasing), that you can be the master of your solution for which you will seek markets, or you can be the master of your markets for which you can apply your solution expertise to create new value.

Focusing on the mastery of your solution tends to lead to the erosion of competitive advantage, commoditization, and cost-competition. Focusing on the mastery of your markets, however, i.e., understanding customers’ needs and identifying which are unmet, and then applying your solution expertise to address their unmet needs creates competitive advantage, new value, and drives growth.

Identifying customers’ unmet needs first and then applying our solution expertise to address them is our only hope for driving sustainable growth.