Nike Knowledge Management: Strategy, Strengths, and Gaps

Introduction

Nike (NYSE: NKE) has successfully transformed knowledge management (KM) into a significant competitive advantage by creating an organizational culture that seeks to interpret, use, and embed intelligence quickly across every strategic area. Nike is unique in that it has created an organizational ecosystem that learns over time, comparable in scope and function to the Toyota Production System (Dyer & Nobeoka, 2000). Due to their focus on KM, Nike has been able to successfully transition away from competing purely on price or products and is now competing with knowledge.

Assessing Knowledge Management at Nike

The intent of this paper is to analyze how Nike has been able to successfully use KM to turn the company into a learning organization and to identify the company's best practices. The areas requiring process improvement are also analyzed, as is the future direction of Nike globally based on their KM expertise and ability to turn knowledge into competitive advantage. The specific strategies the company needs to pursue from a KM standpoint are examined, as is the use of KM models relative to leadership strengths. Nike's transformation into a learning organization continues to be a catalyst of innovation, market growth, and the ability to manage relationships throughout its value chains.

The transformation of knowledge from a functionally defined and often siloed resource into a strategic competitive force is a defining characteristic of Nike's organizational development. Too often, organizations allow their knowledge to remain siloed, leading to political infighting and an inability to execute strategies company-wide (Senge, Lichtenstein, Kaeufer, Bradbury, & Carroll, 2007). What emerges from a study of Nike instead is a heavy reliance on informally structured teams known for their exceptional work ethic and passion for results (Stonehouse & Minocha, 2008).

Nike's success in creating a learning organization begins with a strong foundation of trust within and between teams. Creating a high level of trust across functional teams is critically important for establishing the conditions necessary for a learning organization (Dyer & Nobeoka, 2000). In a high-trust environment, work moves faster because there is no need to double-check motivations or insist on validation of direction — cross-checking is assumed unnecessary. Trust as a mechanism for freely sharing information to enrich individuals and teams is also a key characteristic of a learning organization (Collins, 2003).

In the Toyota Production System, the use of techniques to build trust across suppliers — considered unthinkable in the American auto industry — is standard practice in the Japanese auto industry to develop lines of communication and speed of response (Dyer & Nobeoka, 2000). No learning organization is perfect, as demonstrated by Toyota's own product recalls. However, having a learning organization is a strong catalyst for overcoming major disruptions to production and quality, as Toyota's experience has shown. Without a strong learning organization, Toyota would have been even more severely impacted by the implications of its recalls.

Like Toyota, Nike has created a culture that actively rewards and encourages the sharing of information and knowledge across functional and departmental boundaries (Stonehouse & Minocha, 2008). This ethic of information sharing is itself a catalyst of trust and makes processes — from the simplest to the most complex — more scalable and responsive to market conditions. While Nike and Toyota have entirely different organizational structures, their shared insistence on trust as the primary catalyst for turning knowledge into competitive advantage is comparable, as demonstrated by studies of both organizations (Dyer & Nobeoka, 2000; Stonehouse & Minocha, 2008).

Defining an Enterprise Knowledge Management Framework

Nike's organizational structures are built specifically to enable better cross-sharing of information and knowledge over time. While Nike initially organized its KM strategies by functional area — with design and development as the primary focus (Stonehouse & Minocha, 2008) — the company quickly developed a capacity for managing customer information and insights about customer preferences that few other companies have attained (Tsai, 2006; Stonehouse & Minocha, 2008). Customer insights research, including ethnography and intensive use of demographic and psychographic data, forms part of the baseline for each new product development project and eventual product launch (Rayport, 2005).

What emerges from a study of Nike's KM strategies is that marketing, sales, design and development, and finance are all intertwined to create a knowledge ecosystem that continuously regenerates itself based on inbound knowledge and insights. This regenerative aspect of the Nike KM system (Stonehouse & Minocha, 2008) is driven by the levels of trust that individuals and teams have with each other, combined with a work ethic and passion for results grounded in the belief that Nike is the innovation leader in its chosen markets.

Conclusion

In assessing knowledge management at Nike, the strengths inherent in their culture and the high value placed on tacit and implicit knowledge sharing are reflected in how well integrated new product development, innovation, marketing, and supply chain management are at the corporate level. Yet the company falters in supply chain knowledge management and knowledge transfer into retail channels. These two areas of greatest weakness require a redefinition of how the company's enterprise knowledge management (EKM) strategy is managed, specifically in the area of knowledge transfer.