Philip Knight: The Creation and Success of Nike

Step-by-step Outline of How Philip Knight Formed and Made Nike Successful

Philip Knight

Meeting Bill Bowerman

When Knight met the famous coach Bill Bowerman at the University of Oregon where he went for further studies after completing his high school at Cleveland, he may never have known he was walking right on the track of entrepreneurship, whose success was going to shake the world in a couple of decades time.

Knight was a member of the Oregon track and field team, which was under coach Bowerman. Perhaps, due to Knight’s huge enthusiasm for running, a friendship soon developed between him and Bowerman, which saw the two men frequently talk deeply about the sport and the challenges that retards its success.

Identifying a Need

One of the most disturbing challenges they identified was the running shoes. The American shoes available then were discomforting to wear. Though they were cheap at $5, they were terrible in value. Athletes could not run with them for long without sustaining injuries on their feet.

On the other hand the superior German running shoes also available then were far too expensive. They were sold for $30.

Knight keenly noted these things and thought it would be better if athletes could have good running shoes at a reduced and affordable price. And as he moved into another phase of his life, these thoughts and experience were to transform him into an entrepreneur.

Business Education and the Journey into Entrepreneurship

His enrollment into Stanford Graduate School of Business after leaving the University of Oregon with a degree in accounting in 1959, then a year of military service, was to become the awakening of his entrepreneurial spirit. Now, he had actually found what he would love to do for the rest of his life – being an entrepreneur.

One of the courses he took was on small business, which was taught by Frank Shallenberger. And when Shallenberger gave them an assignment to create a new business, and to explain its purpose, as well as to write its marketing plan, Knight’s earlier experience with running shoes in Oregon immediately came to his mind.

The paper he presented was titled: “Can Japanese Sports Shoes Do to German Sports Shoes What Japanese Cameras Did to German Cameras?” He was convinced that a business that could get good quality sports shoes produced cheaply in Japan and sell at a low price in the US would be successful and could be able to knock off German sports shoes manufactures from their leadership position.

Taking Action on His Business Idea

Knight traveled to Japan in 1962 after his graduation from Stanford and a stint with an accounting firm based in Portland. His aim was to bring alife the business he had earlier created in Stanford. He believed so much that producing cheap but superior running shoes in Japan and shipping to the US to sell would be a success.

He signed a contract with Onitsuka after inspecting their shoe factory in Kobe where he saw and was happy with the quality of their running shoes called Tigers, to distribute Tigers in the US. The best part of it for him was that Tigers was produced at low cost in Japan, so it would be sold cheaper than other brands in the US.

Forming a Business with Bill Bowerman

Knight knew that his business success would be easier to achieve if he brought in someone with experience and passion for the industry. And who else would that be than his former coach and friend, Bill Bowerman.

Therefore, following his return from Japan, he immediately reached out for Bowerman, and after they had discussed the business, the two men agreed to form partnership, with each of them investing $500. They formed a company and named it Blue Ribbon Sports Inc., used the invested capital to order Tigers from Japan and began its distribution.

Starting Out His Business on a Small Scale

Knight began his business in a small scale. He was going to track and field events across the Pacific Northwest, and from the back of his green Plymouth Valiant car he would sell his shoes. Business was just picking up so he still needed to keep his job as an accountant while gradually building his sales and learning the ropes of the business – he was just 26.

His sales for the first year was $364, however by the sixth year of selling Tigers in the US Blue Ribbon’s sales had climbed over a million dollars.

Banking on the huge success of his business, Knight resigned his accounting job to concentrate on his business.

What’s in a Name? Knight Changed His Company Name and Logo

Convinced that the name and logo a company carries is crucial to its success, Knight set out in 1972 to find a new name and logo for his company. He encouraged all his staff numbering 45 to suggest a name they could use.

At the end of the exercise, Jeff John, one of Knight’s sales men suggested Nike, which he said appeared to him in a dream. Nike is the name of the Greek winged goddess of victory. This was generally accepted by both Knight and his staff.

Knight also launched ‘Swoosh’ as its new logo during the 1972 Olympic trials in Eugene, Oregon. No doubt, it will certainly not be out of place to attribute the huge success the company has made since then to the new name and logo.

Take for instance: The Company’s sales was $3.2 million in 1972, the year the new name and logo were launched, and in each successive year that followed for a decade, the company doubled its profits. This tremendous business success was enough to shoot Nike pass Adidas as the industry leader in the United State, thereby realizing Knight’s ultimate dream of upstaging the leadership of German sports shoes in the US.

Leaping into Great Success with Michael Jordan

In 1984, recognizing the importance of having a celebrity endorsement to achieving remarkable success, Knight signed on Michael Jordan, a 21-year old basketballer to promote Nike Shoes. But Michael Jordan wasn’t a celebrity by this time. Knight signed him on anyway, seeing that the boy was good at the game and had the potential to be great. It was a gamble which paid off beyond anyone’s imagination.

Almost instantaneously, Michael Jordan rose to international stardom, so of course did Nike become one of the most recognized brands worldwide.

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