Mark Parker President and Chief Executive Officer, NIKE, Inc

Wasn't that nice? Actually, I want to thank you for your incredibly kind and warm introduction, and I want to thank you all for being here. This is an honor and a privilege for me to be here and speak to you. I do want to say a couple of words about Robert. First of all, I'd like to acknowledge his leadership and that of his son Jonathan in making the Patriots a franchise that is so dominant on the field and so respected off of it. It's been a real privilege to work with you, Robert, and your organization. I'd also like to recognize the wider leadership role that Robert plays with the NFL. Nike's work with the league has far exceeded our expectations, and that is in no small part due to visionary owners like yourself. So thank you very much. I'd also like to thank the CEO Club of Boston for the invitation to speak to you today. I'll start by saying that although Nike is based in Oregon, we are no strangers to Boston and have strong connections to the many athletes and teams from Boston through the years—athletes like Doug Flutie, Paul Pierce, Shane Victorino, Chilean Flanagan, Jacoby Ellsbury. He's still... no, that was right on cue. Okay, I also already introduced was Joan Benoit Samuelson, and I just want to say a couple of words about Joanie. Joanie is a longtime personal friend of mine, a longtime Nike athlete. She is an impassioned advocate for environmental sustainability. She gives so much back to her sport of running and is an advocate for lifelong fitness. Joanie is a great friend and an incredible person. I will add that she ran in Boston, I think it was 11 days ago, and she ran 2 hours 52 minutes. She's almost 57—she probably doesn't want me to tell you that. In two weeks she'll be 57 years old. So 2:52, and then six days later she goes down to DC and runs a half marathon. So that's in the last 11 days. She's incredibly inspirational. She has been for me and for Nike over the years, and a little bit crazy. We like that combination. Boston's always been an important part of Nike in other ways. It's played an important part in Nike's history of retail. We opened our first East Coast retail store in the Boston area, and we've had a robust retail and marketing presence here ever since. That presence will only grow. I will add with the coming move of the Converse headquarters to Boston early next year. Converse, which you may know was founded back in 1908 in Malden, Mass., is a really important and vital part of our portfolio. I do want to recognize Converse CEO Jim Calhoun, who is also with us today, for his leadership of that storied brand. As Robert mentioned, my Nike career started just up I-95 in Exeter, New Hampshire, so this is something of a professional homecoming for me. When I started out in 1979—it's still hard for me to say that, it just seems so long ago—I think I'm pretty rare to be in the same company for such a long time, but it's been a thrill for me all those years and it continues to be. I started out as a product designer. I was also a product tester, a self-professed running geek at the time. At that time, Nike was an American company with several hundred employees, and I think our revenues were about $150 million. We were an upstart company that was fiercely independent and probably irreverent. Today, we're a company with around 50,000 employees and over $25 billion in revenue. From our base in Oregon, we've expanded into a global company operating in over 190 countries around the world. We are still, I'm proud to say, irreverent, still independent. If we've mellowed at all, it's probably in our awareness and our openness to the importance of partnerships. We're still willing to go it alone, but more than ever we see collaboration as a significant driver of our success. As Nike has grown and evolved, two words have always been incredibly important and central to everything that we do: innovation and inspiration. As our mission statement says, 'Nike exists to bring innovation and inspiration to every athlete in the world.' There's an asterisk next to the word 'athlete,' and that asterisk references something that Nike co-founder Bill Bowerman once said: 'If you have a body, you're an athlete.' What that means is if you're LeBron James or you're James from down the street, Nike is focused on you. You are important to Nike as an athlete, no matter what your skills are. By the way, that wasn't always our mission statement. For a long time, it used to be 'to be the number one sports and fitness company in the world.' In 2002, we were the number one sports and fitness company, so we felt it was important to revise our mission statement and our corporate values. We wanted a mission statement and a set of values and guiding principles that were really true to the spirit of the company, that were forward-looking, aspirational, and that employees would actually reference and use in their work—not some corporate pamphlet that turned out to be a well-designed dust collector. So we revised our mission statement and renamed our principles 'Maxims.' We put them into a language that was meaningful and lively. Maxim number six happens to be one of my favorites. It's called 'Be a Sponge,' and it speaks directly to how we nurture and cultivate a culture of innovation and inspiration. I'll read it to you: 'Curiosity is life, assumption is death. Look around. Open your heart and your mind and you open the future. Technology, history, diversity, geography. Today is a time of unparalleled interplay among cultures. Courageous new combinations of sports, fashion, music, movies, food, and the rest are redefining what is possible and relevant. Embrace this exchange. Develop wide peripheral vision. There are great ideas lying around like diamonds in the dirt. The brightest of those that you see out of the corner of your eye.' Now, my mission is to create a dynamic environment where this sort of curiosity is encouraged and rewarded. To accomplish this, you have to manage uncertainty. In my experience, leaders who manage with certainty just end up protecting the status quo. I don't want to protect the status quo; I want to upset it. So as a leader, I manage with a tolerance for uncertainty and I'm willing to accept mistakes because this puts Nike in a better position to create the future. I'll give you an example of how this translates into our design and innovation work. When I started as a designer, our design horizons were quite short. In fact, we would design one season in advance, meaning we were designing ahead of the market by only three to six, maybe nine months. Today, we still have a seasonal design agenda, of course, but we've also greatly expanded our design and innovation horizons. We have advanced R&D groups that are looking ahead two and five and sometimes longer periods of time. The goal is to push the boundaries of what people expect or even imagine. Then we have something we call the Innovation Kitchen. The engineers and designers who are part of this team have the brief to push past the edge of the envelope and to seek game-changing collaborations and partnerships. Not all of their ideas come to fruition, as you can imagine. In fact, many of them do not. But we're okay with these failures in a sense. We want our designers to become talented failures, in the same sense that John Wooden meant when he said, 'The team that makes the most mistakes usually wins,' because doers make mistakes. When they succeed, our designers succeed and they hit the mark. The products they create don't just refine shoes and apparel; they redefine them. Of course, our efforts to be at the forefront of innovation are not completely freeform and organic. There is a great deal of discipline and focus to what we do. We don't innovate just for the sake of something new. We do so with a real clear purpose: to make a meaningful difference, to be real and relevant, and to be better. That's why we work so closely with athletes to gain the deep insights that really drive the innovation. This is something that has remained constant over Nike's 40-plus years. When Phil Knight and Bill Bowerman shook hands and started the business that would become Nike, they really didn't have much. No stores, no warehouses, no distribution channels, and they had about $1,000 between the two of them. But what they did have was a deep knowledge of sports and a real passion for working with athletes and creating products that would help those athletes realize their full potential. This turned out to be their most valuable asset. For the last four decades, we have nurtured this passion for working with the athlete, for listening to the athlete—listening, as we say, to the voice of the athlete. That voice keeps telling us to innovate. It's really driving those insights that fuel that innovation. It is what we would call our rudder in water. The process of helping athletes be the best that they can be puts us in a position to fulfill our own potential. Many of the athletes we work with are really the best at what they do. People often ask me, 'Are the Nike athletes just high-priced billboards with a swoosh?' The answer I've always given is no. Nike athletes are some of the world's best experts out there. They know their sports, they understand the demands on their bodies, and they know their equipment and what it means to do sometimes. This understanding seems almost beyond what's humanly possible. I'll give you an example. We were testing a new driver with Tiger Woods. We had sent him eight samples of the driver and asked him which one he preferred. He said, 'The heavy one.' There was only one small problem: they all weighed the same—or at least according to our club designers, they weighed the same. But this was Tiger Woods, so we decided to re-weigh them. In fact, one of the clubs was actually heavier, but not by much—by one gram. One gram is about the weight of a dollar bill. It just shows you the sensitivity that the athletes have to their equipment. It's incredible. Their desire to have something that works for them pushes us to reach our own potential. To me, that's one of the things I love about what we do. In games where a gram, or a fraction of an inch, or a hundredth of a second can really spell the difference between being a champion or being an afterthought, it's that sort of precise, one-of-a-kind feedback that ensures the innovations stay real and serve a purpose. When you work with athletes as demanding as Tiger Woods, you don't just innovate for the sake of change; you innovate to change the outcome. Because the athletes demand that we get it right, it keeps us focused on what's essential and what really matters. That in turn propels us to develop products that are authentic and allow us to connect with consumers in a real, meaningful way. That's the second key element that has not changed at Nike: our unrelenting focus on the consumer. Our ability to connect with the people who use our products has fueled the Nike brand. It helps explain our success and our staying power. To cultivate loyal customers and create a real emotional connection, it's imperative that we engage with them and understand their culture and the communities they are a part of. You really have to go deep, and it must be a two-way dialogue, especially in this age of social media. As we know, consumers are more connected than ever before. They have more choices, they can easily compare products and publicize their opinions, not just to their immediate social circle but potentially far beyond. It's more important than ever for companies like Nike to give consumers choices that are real, relevant, and authentic. We have to focus. We have to be willing to get mad at things that don't work and amplify the things that do. Get rid of the waste. That is why I consider one of the most important roles I have as CEO is that of editor. By editing, we can amplify the power of what we do. The best products, from an innovation sense and a business sense, are the ones that are purposeful, and the stuff that isn't necessary is taken out. The focus on the essential extends beyond how we make products to how we organize our business. At Nike, we call this our Category Offense. Instead of a traditional organization focused on footwear, apparel, or equipment, we organized our business to focus on consumers in distinct sport categories like running, basketball, football, skateboarding, and so on. By concentrating on these categories, we are far more aligned and in a better position to engage consumers when they compete, when they train, and when they want to express themselves through a lifestyle lens. Not only do we put the best product in people's hands, but as a business, we are more competitive and ultimately more nimble. We don't let our size get in the way. We make it an adventure. In my early days working at Nike as a designer, I would sketch a lot when I was on my way to work or when I was traveling. Seeing my drawings, people would sometimes ask what I did. I'd tell them I design shoes. Often they'd respond by saying, 'Really? What more can you do with shoes that hasn't already been done?' That goes back to 1979. It's a good question—in fact, it's a great question. It's the one we keep asking ourselves. It's the one that keeps us up at night. As much as sports and the business of sports has changed in 35 years, my answer to that basic question has never changed. There is a tremendous amount we can do with shoes and other products. In fact, there has never been so much opportunity to innovate than there is today, and I think by a wide margin. Whether it's cutting-edge manufacturing techniques like waterless dyeing, 3D printing, high-tech knitting, product customization and personalization, digital technology, wearable technology—I still see almost endless opportunities for new innovations and new ways to inspire consumers. Of course, while our opportunities are unlimited, our resources are not. So as we line up against the opportunities to grow and innovate, we have to grow sustainably. I believe that growth and sustainability aren't contradictory; they're complimentary. I also believe that businesses that fail to see this won't have much of a future in business. Reducing and eliminating waste, achieving new levels of efficiency in energy consumption, improving our water usage—all of these areas present exciting possibilities to harness the power of innovation, collaborate with new partners, meet our sustainability goals, and add value to the business. So at Nike, we are incredibly energized by the future and all it holds. We're excited by the new types of possibilities to partner and collaborate, not just with athletes but also with unconventional partners like artists, NGOs, and universities, including some great schools and research institutes right here in Boston. We seek such collaborations because a huge part of our future potential depends on our ability to work with and learn from others. These are also amazing times for innovation in other ways. If you look at our innovation pipeline, it's fascinating. I've never seen a time when I've been so excited about innovation. Just take materials as one example. One of the last truly disruptive material changes in our industry was polyester, and that's already over 50 years old. Today, we imagine new materials and the possibilities: fabrics that adjust to body temperature, that harden upon impact, that change color in response to electrical signals, or monitor vital signs. Such transformative materials are just the start, and they will be a reality. There are many more exciting frontiers out there. At Nike, we are pushing hard not just to be across those frontiers first, but to do it in the most inspiring and innovative way possible. So with that, I want to thank you very much again and then open it up for some questions.

Well, first of all, I'd say all runners are very different. I actually like a more minimal shoe underfoot, but that spectrum runs the gamut. I think it's important for runners to recognize what's unique and important for them personally. We have a technology called Nike Free, which is all about a design that works with the body and motion, with the foot in motion, so it's allowing the foot to act more naturally. We have a range of Free products that go from what you might call more barefoot-based—we call it Free 1.0—all the way up to what we call Free 7.0, which is more cushioning. But the basic underlying principle is that you have this freedom of movement for your foot. If you need more cushioning, it's there. If you don't, it's there also. So it's really up to the runner.

No, I'll just say that I don't like speaking about our competitors honestly. I will say that we're focused on our potential, not our competition. As a leader, it's important to focus on your potential and not your competitors. That's what a leader does, and that's where true leadership and innovation come from—not by looking behind you or alongside of you, but looking ahead. I've always believed that. I think that's true with athletes as they look at ways to improve and realize their own potential, and certainly it's been true for Nike. So no advice for those people you mentioned.

I think the two go hand-in-hand. Part of our image comes from the innovation that we create, and that innovation really comes from the athlete. That relationship we have with the athlete is where those deep insights come from. Contrary to what many people might think, the athletes are actually deeply engaged in the innovation process. I mentioned Tiger Woods, but I can tell you dozens of other stories that are incredible—they should be in a book at some point. That's always been central to Nike and who we are: that connection we have to the athlete. I think that will always be the case. As for your first question, we'll set you up. There's no problem. In fact, I just want to add that 'There is no finish line' was an ad slogan, but it's much more than that. It's an internal guiding principle for Nike. It's how we live, how we think, how we act. I think Joan Benoit Samuelson, who is here, is a living example of that to me. I know that saying from Nike really resonates with her, as it does with all of us. We believe it. No matter how good we do, as much as we achieve, we always feel like we could be better. We are our own biggest critics, which I like. I like being in that position. We're always striving to be that much better. Joanie knows she personifies that as one athlete, almost 57, doing what she does on a regular basis. Sorry, Joanie, I didn't mean to keep bringing your age up. I'm a year older than she is.

Well, we're working closely with the US government on the TPP work that's going on. We feel that it's important to have that close connection and to work on what's ultimately going to present a level playing field for US companies and create jobs. We feel strongly that we are in a position to invest in the US, for example in North America, to create jobs. We think that the position we're taking and working with the US government on this issue is going to help make that happen. So we support a leveling of the playing field, let's put it that way.

Yes, good question. The World Cup is obviously the most popular sporting event in the world. It's a sport that has incredible following just about everywhere you can look around the world. The World Cup has always been important to Nike in terms of our connection to that sport and expressing what we're all about. The innovation we're delivering for this year's World Cup is well beyond anything we've ever done before in all facets of our business—not only in product but in communication. We have a World Cup ad that just hit a week ago. It's online, and I think there are 60 million-plus views already in the last seven days. So there's a lot of anticipation, energy, and excitement coming up to the World Cup. Nike is a global company. Football—global football, soccer—is incredibly important to us. We started out in 1994 really with nothing, and we are the world's number one football company today, certainly if you measure that by number one position in markets and footwear around the world. So I'm incredibly proud of what we've done within the sport of soccer/football and excited about what's coming up with the World Cup. It should be a great tournament, a great event. I just came from Brazil—no, I'm sorry, I just came from Madrid, where we launched more of our innovation story for the World Cup. It's incredibly exciting. Great spots. I think you'll be impressed with what we have coming. Thank you.

Sure. Digital continues to be incredibly important for Nike. The FuelBand exists; we will continue to support it as a product. We have new iterations coming out over the next few months. It's a product that has resonated as part of what we call Nike+, which is a larger digital community of about 28 million users. We're looking to grow that user base to 100 million-plus. Nike+ as a community—we're looking at new ways to do that. We just opened up what we call a Nike+ Lab down in San Francisco, inviting collaborations and partnerships to look at how we can actually bring that key FuelBand to life and scale it with some incredibly innovative ideas. We have a long-standing relationship—it's no news—with Apple. That relationship will continue. I'm very excited about where that will go. I really can't speak to that at this stage, but we're looking at other partnerships as well. I'll make it incredibly clear: we're very committed to digital technology as it relates to the user experience in sports and fitness as a motivating tool. I have to tell you, I've had many people come up to me and tell me that Nike+ or the FuelBand has changed their life. They've lost 30, 40, 50 pounds. They feel like a different person. They're much more aware of how active they are or aren't. We want to be a part of that and be an innovator in that space. So we're very committed to developing the partnerships that allow us to do that. Okay, I'll take one more question.

That's a great question. One of the things that I'll say is a challenge—although I'd like to replace the word 'challenge' with 'opportunity'—is the editing process. There are literally so many opportunities in all facets of our business, by category, by country, by product type, by sport, that we have to really edit and focus on the things that really matter. That's probably the biggest challenge-slash-opportunity we have. To edit properly, you've got to set up some criteria that you refer to in that editing process, so it literally becomes part of a filter. It's not up to me as a CEO to do all of that filtering. It's up to me as a CEO to make sure that there is a filter there that people can refer to as they make choices about what to focus on. So it's clear to us what our big growth opportunities are, and we are incredibly aligned against those growth opportunities. Sometimes we have new opportunities in those areas beyond what's expected, beyond the imagination of the consumer. In those areas, we want to be prepared too. So we are laser-focused on delivering in a disciplined way on the short term while we invest for opportunities to grow over the longer term. The best way to do that is to set up a culture that is open to new ideas but also has that discipline to edit and focus on the things that really matter. That's gone from being a bit of a tedious process to one that we have embraced, and it's a source of great energy for us.