Philip H. Knight

The Nike boss wasn't a big fan of advertising, but the company's flair for promotion launched an athletic-shoe revolution.

Image credit: Nike | Official Website

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OCTOBER 9, 2008

Philip H. Knight
Co-founder of Nike Inc.
Founded: 1972

"Play by the rules. But be ferocious."-Philip H. Knight

In 1993, the man whom The Sporting News voted "the most powerful person in sports" wasn't an athlete, a manager or a team owner. He was Philip H. Knight, the dynamic iconoclast who for nearly 30 years has shod the feet of sports legends and "weekend warriors" alike. In less than a decade, his marketing savvy and uncompromising competitiveness had transformed the athletic-shoe industry and made Nike one of the most successful and widely recognized brand names in the world.

Knight first came up with the blueprint for what would become the world's No. 1 athletic-shoe company while working on his master's degree at Stanford University. Assigned to write a term paper on starting a small business in an area he knew well, the former University of Oregon track star naturally chose running. He outlined a plan for breaking the stranglehold Adidas had on the running-shoe market by using cheap Japanese labor to manufacture a cheaper, better-quality running shoe.

Shortly after graduating in 1962, Knight decided to put his plan into action. He flew to Japan to visit Onitsuka Tiger Co., manufacturer of an Adidas knockoff sold in Japan. Introducing himself as the head of Blue Ribbon Sports, a company which existed only in his mind, Knight told Tiger executives that his firm was the ideal choice to import their shoes into the United States. He convinced Tiger to send him some samples, promising to place an order after his "partners" examined them.

Back in the United States, Knight borrowed money from his father to pay for the samples, and he sent a few pairs to his former University of Oregon coach, Bill Bowerman, who quickly became his partner. Putting up $500 each, Bowerman and Knight officially formed Blue Ribbon Sports and purchased 200 pairs of Tigers, which Knight began selling from his car at high school track meets throughout the Pacific Northwest.

By the early 1970s, sales had reached $3 million, and Knight decided it was time for Blue Ribbon to break with Tiger and start designing its own shoes. In 1972, Blue Ribbon launched its Nike line, named after the Greek goddess of victory. Emblazoned with a "swoosh" logo Knight paid a Portland State art student $35 to design, the shoes featured a unique "waffle sole"-created by Bowerman-that offered better traction with less weight.

Knight's marketing strategy was simple. Rather than rely on advertising (which he admittedly loathed), he would get top athletes to endorse his shoes, and then let his sales force sell the product. His strategy and the timing of the launch couldn't have been better. That summer, the Olympic track and field trials were held in Eugene, Oregon, with none other than Bill Bowerman as coach of the American Olympic team. Knight took full advantage of the opportunity, putting Nikes on the feet of several top finishers. When they made national television, so did the shoes they were wearing. One of the most visible runners to wear Nikes was American record-holder Steve Prefontaine. A cocky, anti-establishment type, Prefontaine became the first of a team of edgy athletes Knight recruited to endorse his shoes.

As Knight had planned, athlete endorsements played a major role in boosting Nike sales throughout the 1970s. For instance, after tennis "bad boy" John McEnroe hurt his ankle and began wearing Nike three-quarter-top shoes, sales of that style leapt from 10,000 pairs to over 1 million. And the sudden popularity of jogging combined with Nike's canny marketing created a demand where none existed before. No longer would any old pair of shoes do for that jog around the block; people wanted to wear what the best in the world were wearing.and that was Nike (as Blue Ribbon was re-christened in 1978).

Nike experienced continued success throughout the early 1980s, thanks mostly to the tremendous sales of its Air Jordan line. Commercials glorifying Michael Jordan's high-flying, slam-dunking antics made the gaudy black and red sneakers a hot item, selling more than $100 million worth in the first year alone. By 1986, total sales hit $1 billion, and Nike surpassed Adidas to become the No. 1 shoe manufacturer worldwide.
Amazingly, Knight stumbled only once in his stellar career. In the late 1980s, Nike's strategy of focusing on hard-edged, hard-core athletes ignored the growing market for aerobics shoes. When British shoe manufacturer Reebok pitched their leather shoes as a fashion item for the trendy aerobic workout crowd, they quickly overtook Nike in the top spot.

Between 1986 and 1987, Nike sales dropped 18 percent. Knight was forced to face the fact that while Nike technology appealed to sports professionals, other consumers might rank appearance over function. In response, Nike came up with Nike Air-a multipurpose shoe with an air cushion in the sole. The commercial produced to unveil the new line featured the Beatles' song "Revolution." (The rights to which cost Nike $250,000.) Nike Air may or may not have been a revolution in footwear, but it certainly revived sales. Nike regained the lead from Reebok in 1990 and has remained there ever since.

But as Nike has grown into a huge multinational enterprise, it has become a magnet for controversy. In 1990, it came under fire from Jessie Jackson, who maintained that while African-Americans accounted for a large percentage of Nike's sales, Nike had no black vice presidents or board members. Jackson launched a boycott that led to the appointment of Nike's first black board member. That same year, stories of teenagers being killed for their Air Jordan's sparked outrage at what was perceived as Nike's overzealous promotion of its shoes. More recently, Knight has been accused of exploiting factory workers in Asia, some of whom are paid less than $2 per day by the subcontractors who manufacture Nikes. But despite this negative publicity, Nike sales have remained strong.

Philip Knight, now in his late 50s, has come to be viewed as one of the master marketers of the age. When asked by a reporter how he achieved such fame, in a veiled reference to the Reebok torpedo that forced him to rethink his marketing strategy, Knight replied, "How did John Kennedy become a war hero? They sunk his boat."

Sole Man
Although Philip H. Knight was certainly the marketing genius behind Nike Inc.'s success, he wouldn't have had much to market without Bill Bowerman. It was Bowerman's design innovations that kept Nike on the leading edge of athletic-shoe technology. Bowerman constantly fiddled with running shoes, searching for ways to improve them. He would slice them up, take a toe from one, stitch it to the heel of another and then attach both to an upper with duct tape and rubber cement. His methods were admittedly unorthodox. And so was the way he came up with Nike's heralded "waffle sole." As Bowerman often tells the story, "I was looking at my wife's waffle iron, and I thought it looked like a pretty good traction device." So he grabbed a bottle of liquid urethane, poured it on the iron, and the waffle sole was born.
The Knight Stuff
The culture Philip H. Knight fostered at Nike Inc. during its early days was anything but corporate. Executive conferences were referred to as "buttface meetings," because direct confrontations and yelling were encouraged. Tequila fountains irrigated sales conferences. During a company golf tournament, a sales rep distributed marijuana paraphernalia from his golf cart. And when tattoos became the rage, scores of Nike workers had themselves branded with the famous Nike "swoosh."
Some viewed Knight's encouragement of such antics as mere childishness. But it would prove to be a stroke of motivational genius. As one veteran Nike employee put it, "It was a holy mission, you know, to "swoosh" the world. We were Knight's crusaders. We would have died on the cross."