Nike’s boss says remote work was hurting innovation

Nike CEO John Donahoe is the latest corporate boss to weigh in on working from home or working in person, and his verdict is clear: ambitious product innovation suffered when employees were remote.

In an interview with CNBC on Friday, he said there is a “huge amount” of innovation going on now at the athletic gear giant, and revenue has been growing at a 9% rate on a constant-currency basis over the last four years, led by “iterative” innovation.

But he acknowledged that “bold, disruptive” innovation had been missing and pointed to supply-chain issues like factories in Vietnam closing for three months during the pandemic as one reason.

“But even more importantly, our employees were working from home for two and a half years,” Donahoe said. “And in hindsight, it turns out, it’s really hard to do bold, disruptive innovation, to develop a boldly disruptive shoe on Zoom.”

He added that teams returned to in-person work 18 months ago and recognized what had been lacking earlier.

“So we realigned our company, and over the last year we have been ruthlessly focused on rebuilding our disruptive innovation pipeline along with our iterative innovation pipeline,” he said. “So the pipeline is as strong as ever.”

In December, Nike said that it planned to cut costs by $2 billion over the next three years as part of a broad restructuring plan caused in part by weaker consumer demand.

And in February, the company announced a 2% cut to its workforce, or more than 1,500 people, and Donahoe put some of the blame for Nike’s recent underperformance on himself and the company’s leadership. That came amid a wave of other layoffs in the tech, media, and finance sectors.

Donahoe’s strong endorsement of coming into the office is the latest salvo in the debate over the future of work. Many workers insist they’re more productive from home, while return-to-office mandates are have been almost universally reviled.

Still, in-office days at America’s major companies have grown from 1.1 days per week on average in 2021 to 3.4 days in 2023. That’s despite a recent survey showing that managers actually want to work from home more than their workers.

But a separate study earlier this month found that for the first time since the pandemic began, more workers are saying they prefer hybrid work to working completely remote. 

Meanwhile, the fruits of Nike’s product innovation will be on a high-profile stage this summer, when top athletes will showcase its shoes and apparel during the summer Olympics in Paris. That comes as emerging rivals have made inroads in key markets.

“We’ve done more to advance running than any brand in the world over the last 50 years and we continue to lead with elite runners,” Donahoe told CNBC when asked about On Running and Hoka. “Innovation has always been what’s marked Nike in running, as in other categories and so we’re not just going to copy what other people do.”

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