Building a Better Mousetrap: Nike and Innovation

Posted by Chuck Kocher
On June 10, 2013

Ralph Waldo Emerson is commonly credited with coining the phrase: “Build a better mousetrap, and the world will beat a path to your door.” Even though Emerson never actually uttered or wrote those words (and modern day mousetraps weren’t invented until seven years after his death), the potential rewards of innovation—of building a better mousetrap—are indisputable.

Perhaps no business embodies that concept better than Nike, which is why it’s not a big surprise that Fast Company named them the Number One Most Innovative Company of 2013. Part of what separates Nike from others is that their innovation isn’t one-dimensional. It’s a combination of people, products, and culture. Fast Company has a fascinating inside look at life behind the scenes at Nike, but here are some key things that make Nike an innovative success.

Innovative People. Nike CEO Mark Parker isn’t content to rest on the company’s laurels. Sure they have outstanding celebrity endorsements. Yes the have one of the most recognized brands in the world. But they also have competitors who will eat their lunch in a heartbeat if they don’t stay on top of their game. That’s one thing that drives Parker. “One of my fears,” he says, “is being this big, slow, constipated, bureaucratic company that’s happy with its success. Companies fall apart when their model is so successful that it stifles thinking that challenges it.” So he pushes the company to take risks, and to make changes before the competition forces them to do it.

Innovative Products. When you think of Nike, it’s likely that the first thing you think about (after that “swoosh”) is shoes. But their product line goes way beyond that.  Just ask Serena Williams (one of Nike’s most visible athlete endorsers).

When she first came to Nike she told them, ‘I don’t care how I feel; I just want to look good.’ And they said, ‘We’re going to make you look good, and we’re going to make it comfortable.’ Last year at the French Open, my dress was almost like a Herve Leger [bandage] dress, really tight fabric. But I was able to perform, and to move. It was really functional, but it was also bringing design and style.” Then she added, “They actually invent fabrics, which is really cool for me, with my fashion background.” She never even mentioned the shoes!

One of the innovations that earned Nike the Number One Most Innovative Company of 2013 is another non-shoe item, the FuelBand™, an electronic bracelet that measures your movements throughout the day, whether you play tennis, jog, or just walk to work. As Sarah Rotman Epps from Forrester Research says, “Nike has broken out of apparel and into tech, data, and services, which is so hard for any company to do.” They see themselves as more than a shoe company or an apparel company. They are all about enhancing performance.

Innovative Culture. Nike fosters a culture of innovation. They revere their innovative past. They prominently display the waffle iron cofounder Bill Bowerman ruined making rubber soles back in the 1970s as an homage to past innovation. But employees feel that what they are currently working on is equally innovative—so much so that employees don’t talk about what they’re working on. But that secrecy is a powerful thing because employees feel like what they’re working on is so valuable that nobody wants to spill the beans.

Innovation has paid dividends for Nike. Last year their annual revenue hit $24 billion (an increase of 60 percent since 2006). Their profits are also up 57 percent, and their market dominance is jaw-dropping: They own 50 percent of the running shoe market and an amazing 92 percent of the basketball shoe business in the United States.

What can innovation do for your company? You may not dominate the market like Nike does, but you can own your space. But to do that you need innovative people (leaders), innovative products, and a culture that fosters continual innovation.