A Jog with Nike's New Team

Chairman Phil Knight and co-Presidents Mark Parker and Charlie Denson talk about how they're turning around the sports-apparel giant

After several years of stagnant growth, tepid product launches, and controversies over its ties to sweatshops, sports-apparel giant Nike is finally regaining its swoosh -- and getting back on the growth track. Much of the credit goes to Mark Parker and Charlie Denson, two longtime Nike veterans who share the daily responsibilities of running the $9 billion company based in Beaverton, Ore. (see BW, 11/04/02, "How Nike Got Its Game Back?").

The enigmatic co-founder of Nike, Chairman and CEO Philip Knight, promoted Parker and Denson about 18 months ago as part of an effort to shake up senior management and move the company in different directions. Knight and his co-president also brought in some key outsiders who appear to have assimilated well into an outfit known for its insularity.

The result is a Nike that's both softening its image and broadening its reach to connect with the "athlete in all of us," as Nike execs like to say, rather than focusing purely on the hardcore athlete. The company is aggressively expanding its sports-apparel business, gaining more ground internationally in soccer, and improving its market share in golf. Nike, with revenues just about evenly split between the U.S. and international markets, is now a truly global company.

Recently, Nike's three top executives gave their first joint interview to talk about the changes at the company with BusinessWeek Seattle Correspondent Stanley Holmes. Among the biggest surprises: Parker and Denson clearly seem to work well with each other. As Parker quips: "I spend more time with Charlie than I do with my wife." The two leaders recently vacationed together, going fishing in Alaska for a week, though they claim they didn't talk shop. Edited excerpts of the conversation with Knight, Parker, and Denson follow:

On Nike's moves to regain its financial rhythm:


I think there are a lot of reasons for our non-growth in the last four years. Obviously, there were a lot of outside factors. The good news: [Even in the face of] tough outside factors, our sales didn't go down. They didn't go up either.

We got to be a $9 billion company with a $5 billion management. We just grew too fast. Since that time, we have integrated a lot outside managers: head of Europe, head of Asia, head of Latin America, head of finance, head of supply chain, and head of apparel. It takes a while to integrate those people, but I think overall we have.

On appointing Nike veterans Mark Parker and Charlie Denson as co-presidents:


In trying to decide how to replace [former President] Tom Clarke in the management system, I finally came to the conclusion that combining the [talents of] these two guys was in the company's best interest. They combine the best [of all] features -- they describe themselves as the right brain and left brain of the company.

On how Parker and Denson divide up the business:


Charlie comes from sales, and Mark comes through brand. Charlie has the territories and the businesses, and Mark has the apparel, footwear, and advertising. One of the best things Charlie did was bite the bullet on inventory. He said, "Take a hit on inventory until we put back integrity in our [orders] program." That has been a huge positive.

With Mark, as well as getting advertising back on track, the Presto and Shox [two recently introduced shoes] came out of that time period. What's really dramatic: When we had Presto and Shox going good and we had orders drop off on the low end, Mark literally got that turned around overnight -- more than anybody at this company or in the industry could have. You look at those things and say, "That's how it's supposed to work."

On how the two Nike presidents work together:


We've both been in the company for the same amount of time. We've had similar experiences. It's gotten to the point where we can talk shorthand to each other. But we have a healthy dose of self-criticism and a desire to really understand what's going on. The fact we have brought in a number of outside management has been a real plus, too.

One of the things I was worried about was the "mom and dad scenario," where someone doesn't like what mom says and they go to dad. We both went into it with our eyes wide open and were sensitive to that. It has proven not to be as much of an issue as we thought.

Denson: Going into it, we both had some trepidation [about] learning how to dance together. It truly has worked out better than I thought it would. As we work together more and more, we realize how we come at it from direct opposites.

A lot of it is from our backgrounds. Mark comes at it from a more creative, a more futuristic look at things, and takes a different path to the destination than I do. What I found to be compelling is that we could get to the same place faster than we had anticipated coming from almost diametrically opposite ends of the thought spectrum.

On Foot Locker's decision to cancel up to $250 million worth of orders:


I was surprised by their decision. We've dealt with them for 30 years, and we've had a lot of ups and downs in those 30 years, and so this is where we earn our money, right?

We believe there are consumers out there who want to buy our high-end product, and we'll find a vehicle to get it to them. But in the short run, we're working through our distribution system and customer base to come up with the right decision.

Denson: Foot Locker thinks their marquee target is $90 to $100, and obviously we think it's higher than that. There's no lack of distribution points for Nike in North America. We still feel pretty confident we can get the product to the consumer at the right place at the right time.

Foot Locker isn't our only distribution point for the high end. But it's an ongoing discussion with them, and we've said they'll remain our biggest account.

On Nike's plans to serve today's consumer:


What's most important is the product we create. You're not going to lead in any of these businesses unless you commit to...products. The consumer today is particularly savvy and critical. They have too much choice for us not to be as sharp and innovative as we can be.

On Nike's future:


My whole deal is: I hope to die here, but not soon. It's an interesting company with interesting people, and I think it can be better and bigger than it is.

Edited by Patricia O'Connell

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