Business Lessons from Shoe Dog?
When you think of Nike, you probably think of their cutting edge (and sometimes controversial) ads. Or you think of the high-profile athletes who are paid to represent them. Or maybe, if you’re more financially-minded, you think about their (approximate as of this time) $136 Billion market cap.
And it’s exactly those lofty heights that makes Phil Knight’s memoir Shoe Dog so compelling. The story starts with Knight, out of college (University of Oregon of course) in the early 1960’s when he has the Crazy Big Idea to sell Japanese running shoes in the US. Reflecting back on the story, the extremely modest beginnings and all of the challenges along the way, it’s nothing short of amazing that he and his team created one of the biggest brands in the world and a hugely successful global business over the next 50+ years.
The book is well worth a read, just for the great story and the history, but there are also a lot of great ideas for business owners. Here’s my quick take on the top 6 business lessons that I picked up:
Top Business Lessons from Shoe Dog
#1 – Cash flow challenges and growth can (and likely will) kill you.
From the start in the early 1960’s Until Nike went public in 1980, the company continually struggled with cash flow – primarily because of their growth and the nature of the business. They would borrow enough to cover the next shipment of shoes (which could take months to come in) and sell those just in time to help cover the next order – any significant delays or missed steps along the way and they would be out of business… which almost happened at least 1/2 dozen times.
Lesson – Even if you’re profitable, you’ve got to constantly be focused on your cash position and you need to actively manage money coming in and out to keep yourself out of trouble. Strong growth only makes all of that much, much harder.
#2 Build your banking relationships early (and often).
It’s pretty clear from the book that Knight didn’t enjoy working with bankers. They were constantly hounding him to rein in growth and to keep more cash on hand – which didn’t match his vision at all. In fact, the company twice had to deal with having their line of credit revoked – which with their super tight cash flow situation almost killed the business.
To be fair, in the early 1960’s in Portland, there were only 2 or 3 banking choices available and none of them was really structured to support a high-growth start-up.
Lesson – having the right bank on your side can make a huge difference and over time, the right bank might change on you so it’s best to keep looking for options even if you’re happy with what you’ve got.
“I refused to even consider ordering less inventory. Grow or die, that’s what I believed, no matter the situation.”– Phil Knight (Shoe Dog)
#3 It takes a team… the right team
Knight consistently makes the case that Nike would have never happened without his team of ‘genius misfits’ around him. He was the leader but even from the earliest days (the first employee) he counted on others to make an impact and to help make things happen. In Nike’s case, the right team happened to be mostly former runners and mostly from Oregon – which gave them a strong shared culture to build on.
Lesson – you can’t build a great company by yourself. You have to find others who believe in what you believe in… and then let them do what they do best.
#4 It takes perseverance…
During the first 15 or 16 years of existence Nike ran into all sorts of challenges. They had ongoing cash and banking challenges. They were continually looking for new suppliers and factories. They had a long-standing issue with the Department of Treasury that could have put them out of business at any time and they were constantly battling competitors who had more money, more history, more market share than they did.
The single biggest take-away from the book is that the first 15 to 20 years of the company’s existence was one long grinding battle that would have defeated most.
“The cowards never started and the weak died along the way. That leaves us, ladies and gentlemen. Us.”– Phil Knight (Shoe Dog)
Lesson – creating a great business is a marathon and each new round of success should be celebrated, but you should also recognize that it will lead right into the next round of challenges.
#5 Believe in something…
Nike’s success – especially the first 10 years or so stems directly from the passion that Knight and the early employees brought to their efforts. Sales were made by young men with a passion for running and track who truly believed they were bringing a better solution to the athletes and their teams. That conviction and drive made it easy for them sell shoes.
Lesson – you’ve got to believe in what you’re selling and having a strong passion will help you identify your best customers (in this case runners) and serve them better than anyone else can.
“So why was selling shoes so different? Because, I realized, it wasn’t selling. I believed in running. I believed that if people got out and ran a few miles every day, the world would be a better place, and I believed these shoes were better to run in.”– Phil Knight (Shoe Dog)
#6 Give Luck a chance to work for you.
Looking back over the years, Knight admits that they had their fair share of lucky breaks (and unlucky breaks) and he’s quick to admit that without those positive breaks, they would have never succeeded. However… it’s also clear that they worked very hard to make that luck happen… and that they would take full advantage of the luck anytime they could. Nike signed up some of the biggest athletes in the world – sometimes before they were big but those ‘lucky’ endorsements came from a lot of hard work and effort.
“Hard work is critical, a good team is essential, brains and determination are invaluable, but luck may decide the outcome.”– Phil Knight (Shoe Dog)
Lesson – Jim Collins in his book Great By Choice studied thousands of large companies and statistically determined that all of them ended up with about the same amount of ‘luck’ over the years. However, the companies who were best prepared to take advantage of their opportunities were the ones who succeeded in the long run. Nike has always been quick to capitalize and it’s paid off for them.
What do you think? Have you read Shoe Dog? What was your big take-away? We’d love to hear your thoughts – leave us a comment below.
Shawn Kinkade Kansas City Business Coach