Monday, February 18, 2013

Constantly Innovating

Yesterday while the family was discussing interior design at the Anthropologie store in Chelsea Market, I made my over to a small newsstand located near the 9th Avenue entrance.  While browsing the selection I came across a recent release from Fast Company about the world's 50 most innovative companies.  I figured the trip through Anthropologie could take some time so I bought the magazine and started reading through the piece about the 50 most innovative companies.

I was somewhat surprised to see that in their estimation Nike was the most innovative company for 2012.  However, Fast Company presented a compelling argument as to why Nike has such an impressive year.  In 2012, Nike's experimentation yielded two breakout hits in the FuelBand and Flynit Racer sneaker.  The FuelBand is an electronic bracelet that measures your movements throughout the day.  Buttons on the device will tell a user how many calories one has burned, the number of steps taken and generally assess your activity level.  The Flynit Racer is a revolutionary shoe that is ultralight and because of its construction method could reduce long-term production costs.  

Throughout the article several prominent Nike employees were interviewed.  Nike CEO Mark Parker was one of those quoted in the piece.  During Parker's tenure which started in 2006, Nike's profits are up 57%, its market cap has more than doubled along with the fact that Nike owns half of the running market and 92% of the U.S. basketball shoe business.  For me, there are two memorable moments from the article both attributed to Parker.  One, Parker states the need for Nike to be innovative and not solely rely on celebrity endorsements and the culture of the swoosh to boost sales.  In talking about this point, Parker says the following:

One of my fears is being this big, slow, constipated, bureaucratic company that's happy with success.  Companies fall apart when their model is so successful that it stifles thinking that challenges it.

The other enduring segment was contained in a discussion about the disruptive potential of the Flynit Racer.  According to Parker, the Flynit Racer is one of those technologies that has incredible potential, not only within running, but across multiple categories.  The innovation lies in how the shoe is constructed. Fast Company explained the change in the article.  

The old Nike model involved cutting rolls of prewoven material into pieces, and then stitching and assembling them.  But with Flynit, a shoe's upper and tongue can be knot from polyester yarns and cables whicc gets rid of all the unnecessary excesses.  The Flynit Racer is 5.6 ounces, roughly an ounce lighter that its counterparts with Nike only using as much thread as it needs in production.

We have also been reminded over the past couple of weeks that yesterday Michael Jordan's 50th birthday.  As Jordan literally and figuratively soared above the NBA, the swoosh became the most recognizable symbol world-wide.  Even with the end to Jordan's playing career a decade ago, Nike has continued its international dominance (also helps that Basketball has become more of an international game in large part to Jordan and the 1992 summer Olympics).  Despite Nike's popularity, it is clear that the Company and its CEO feel the pressure to push the envelope of design and innovation.

Parker's commentary about an organization becoming constipated frames the argument for prototyping and experimentation.  Furthermore, the Flynit Racer reinforces the ideal that we should embrace disruptive innovations.  While there is plenty to criticize about Nike and in particular its well documented suspect labor practices, the article pushes each organization to consider the potential harmful effects of complacency and fear of disrupting what is familiar.