!DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Strict//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-strict.dtd"> Streamline Training & Documentation: A Question about Innovation at Nike

Tuesday, January 30, 2007

A Question about Innovation at Nike

About ten years ago, Thomas Finholt, a social psychologist at the University of Michigan, included this question on the mid-term exam for his introductory industrial pyschology course:
Nike has a potent corporate culture that acts to inculcate similar perspectives among Nike employees. In battles for dominance of the athletic shoe market, this unity of purpose has been a tremendous competitive advantage. However, recently, many analysts have speculated that Nike increasingly lacks the boldness and innovativeness that characterized the company's products and advertising in the late 80s.

Consider Nike's growing conservatism in terms of organizational learning. Describe how you think Nike's strong culture might negatively influence one of the following strategies for organizational learning:
  • learning from direct experience

  • learning from others' experience

  • learning from experimentation
Next, describe changes to Nike's culture that you would recommend to improve the organization's ability to learn.

Finally, speculate on factors of corporate culture that make it difficult for CEOs and other managers to realign corporate values, attitudes, and behaviors. [Hint: Remember that culture acts as the repository for an organization's history and traditions.]
A hint from me: I was drawn to this particular question by Prof. Finholt's reference to the concept of a competency trap in the example answer he provides for the question. A competency trap is an organizational dynamic whereby
[t]he more a particular behavior is used, the more it will be reinforced by experience and thus used more frequently. This positive feedback loop reduces the possibility of substituting another, potentially more suitable alternative.

Competency traps mean people who are successful with one technology may continue to exploit the technology and reinforce their focus and reliance upon it to the exclusion of other potential ideas. Competency can increase exploitation and reduce exploration, which may cause future difficulties if the environment changes.1
The problem of competency traps is highlighted in an excellent column in the January/February issue of Business 2.0, written by one of my favorite academics, Jeffrey Pfeffer of Stanford University's Graduate School of Business. (Pfeffer is co-author of The Knowing-Doing Gap, one of the this blog's suggested readings.)

Pfeffer outlines three strategies organizations can adopt to help them avoid falling into a competency trap:
  • Avoid excessive specialization. "Toyota has never put all its eggs in one basket — it makes high-quality trucks, minivans, even hybrids. By building a broad range of competencies and knowledge, Toyota can react quickly to changes in market conditions."


  • Develop peripheral vision to scan for changes in the marketplace. "Markets don't change all at once. Pay attention to the facts, not to what you want to believe."


  • Build a mind-set of continuous learning and vigilance. This equips the organization to explore emerging opportunities, rather than allowing today's strengths to decline into weaknesses through failure to adapt to changed circumstances.
As Prof. Finholt's example answer suggests, adopting the second and third of the strategies listed above could have been particularly helpful to Nike in making its culture "more receptive to experimentation and innovation."

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1 Definition provided by Keith Rollag, Babson College Assistant Professor, at his organizational theory website.

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