Phil Knight: Nike, Oregon and Business As Usual

A good title for a comprehensive book on entrepreneurial success would be: Philip Hampson Knight: a biography.

If Knight was a University of Washington supporter, not a University of Oregon supporter extrêmement généreux, every husky supporter would agree with the statement that Phil Knight did it right and, from an entrepreneurial perspective, continues to do so.

There is a problem at Oregon, however, and while the problem is certainly not limited to the university, Phil Knight is in an ideal position to implement and enhance the solution.

Knight’s contributions to Oregon have been more than financial.  For Oregon, Knight has also contributed conceptual strategy, extensive image remaking, and innovative recruiting psychology.  Comic books featuring recruits.

Normal brains couldn’t have done that.

Phil Knight’s brain, however, would be exceptional anywhere, and Phil Knight has the money to transform his inspiration and vision into reality.  Every good thing recently happening at Oregon has had Phil Knight’s hand on it.

Why the extensive involvement?

To simply suggest that billionaires have their toys – Paul Allen has the Seahawks and the Trailblazers, for example – is trite and not truly applicable to Knight’s relationship with Oregon.  Phil Knight simply has an unbridled passion, a love, for his undergraduate alma mater.

Loyal Washington fans subsequently demonize Phil Knight but, again, were Phil Knight’s passion and loyalty directed toward Washington, Husky fans might mention Phil Knight and Don James in the same breath.

Heresy?

Hardly.  Essentially, Knight is a very intelligent, savvy visionary who, in the eyes of Washington fans, happens to be backing the wrong horse.

In a sense, Knight is repaying a debt of gratitude to Oregon.  If it weren’t for Oregon, Nike wouldn’t have happened.  Phil Knight went to Oregon as middle distance runner, lettering three years with a best time of 4:10 minute in the mile.  The coach was Bill Bowerman, head Oregon track coach from 1948 to 1972, who had four NCAA championship teams and 64 All-Americans during his career.  By the time Knight graduated from Oregon, the name Bowerman was eponymous with track and field in the United States.

After serving a year on army active duty, Knight went to Stanford Business School where he concluded in a Small Business class that the word best describing him was “entrepreneur.”  His passion was still running.  His master’s thesis was entitled, “Can Japanese Sports Shoes Do to German Sports Shoes What Japanese Cameras Did to German Cameras?”  Knight thought so.  After getting his MBA in 1962, Knight, the entrepreneur, was anxious to find out.

Knight approached Bowerman with Knight’s idea for revolutionizing running shoes in the U.S., inviting Bowerman to contribute some of Bowerman’s ideas about shoe design.  Excited by the prospects, Bowerman not only agreed to help work on shoe designs but lent his name, reputation and credibility to the effort.  It was Bowerman and Knight.

Initially, the Bowerman/Knight enterprise was called Blue Ribbon Sports but later changed to Nike, renamed after the winged Greek goddess of victory.

Time progressed, Bowerman eventually retired but, with Knight at the steering wheel, Nike continued to grow.  And grow.  And became one of the top shoe designers, manufacturers and marketers in the world.  Sort of.  Like competing shoe companies, Nike doesn’t directly manufacture their shoes.

In the mid-1990’s, “progressive” gadfly Michael Moore attempted to obtain interviews with greedy capitalist entrepreneurs throughout the U.S. but no one would talk to him…except Phil Knight.  Having Moore criticize a business operation is analogous to having Wallis Simpson (former Duchess of Windsor) criticize the British monarchy.  Knight somewhat naïvely believed he had nothing to worry about because he was understandably proud of Nike, believed any criticism was undeserved, and he could prove it.

But that’s not what Michael Moore is about.  Moore reflexively called into question “Nike labor practices” and use of foreign manufacturers, implying things that weren’t necessarily true.

Knight countered that Nike does not own any of the factories but if Moore built a factory in the U.S. that could compete with foreign manufacturers, Knight would use Moore to manufacture Nike shoes, and any question about labor problems would be moot.

In theory, it was a golden opportunity for Moore: a chance for patriotism and providing a solution to a problem while making money.  But, again, solutions, productivity, are not what Moore is about.  Moore is an American entrepreneur who makes movies critical of American entrepreneurs.

While those who would not consent to interview with Moore remained unscathed, Nike briefly became the bete noir du jour (it’s a pun).  Excited labor leaders grabbed the opportunity.  Even Jay Leno jumped on the wave, hammering Nike in a monologue.

Anti-Oregon fans bruited the phrase “slave labor” although none knew what the hell they were talking about.  Nonetheless, Moore’s crusade had spotlighted the issue.  So Nike monitored their manufacturers, requiring minimum age limits, factory safety standards, and reasonable working hours.  Not much changed because Moore’s implications were overstated.

Moore went on to make other films all indirectly featuring Michael Moore.

Meanwhile, back in Eugene, with assistance from Nike, Oregon recruiting innovation blossomed.  Michael Moore never asked whether a star high school football player could be swayed by a gift of Nike shoes?  From Nike’s perspective, everyone should be swayed by Nike shoes.  Nike’s strategy is simple: identify a common group of people participating in a certain sport, and design a shoe for them.  Demand, here, meet Supply.  They’ve even designed limited edition shoes specifically for the Pit Crew, Oregon students in the student section.  The shoes are functional, attractive and can be earned through attendance and proper behavior at games.

Oregon gives Nike shoes to recruits as well.  A few years back, my youngest son, Max, was friends with Lake City High (Coeur d’Alene) offensive lineman Carson York who was being heavily recruited by Oregon.  Returning from his official visit, York showed Nike shoes and other gifts, and York had a photo of the gifts on his Facebook page for a while.  Whether York was ultimately swayed by Nike products is conjectural but that the 17-year-old seemed quite enthused at the time is not.

DeAnthony Thomas was enthused too.  Unexpectedly so.  He had been verbally committed to USC for 10 months.  Why did he change his mind at the last moment?  On the day he switched, Thomas volunteered one non-reason: “A lot of people say I’m going to Oregon because of Nike.  I’m not going for Nike. I’m going to be a baller.”  But “a lot of people” hadn’t said that.  They hadn’t had time to say that.  Yet.  A perplexed Lane Kiffin, on the other hand, said, “He was telling other guys to come to ’SC.  We don’t know what happened.”

Something happened.

It wasn’t like Oregon, after waiting until the last moment, all of a sudden swooped down out of the nearest Crenshaw palm tree, bearing gold, frankincense and myrrh.  They’d been on Thomas as long as USC.  Something happened and, while nothing has surfaced publicly, Thomas’s immediate denial of what changed his mind is prima facie evidence of what changed his mind.  Based on Phil Knight’s modus operandi, however, it was perfectly legal, whatever it was.

Phil Knight is sensitive to image and marketing, and Nike is outstanding at marketing.  At the same time, Knight goes by the letter of the law and suggestions that Nike does things illegally have no substance.  Adhering to the letter-of-the-law is commendable but the law is elusive and, as anyone with a sense of reality knows, 1) we are no longer a nation of laws but a nation of lawyers, 2) better lawyers are expensive, and, other things being equal (or unequal), legal decisions in general favor the side with the most money, and 3) as a consequence, what will ultimately be ruled in court can be anyone’s guess.  Nike has both money and lawyers, and enjoys relatively strong corporate legal security.  Phil Knight is, therefore, in a good position to take chances based on expediency.  Therein lies the common flaw.

How Knight thinks was evident from his Joe Paterno eulogy where he defended Paterno, saying Paterno notified the athletic director about accused pedophile Jerry Sandusky and, therefore, was absolved of any wrongdoing.  Ultimately, Paterno was also a victim.

“If there was a villain in this tragedy, it lies in that investigation, not in Joe Paterno’s response to it,” said Knight.  That remark garnered a standing ovation.

But, no, it was Paterno’s response.  Or, more to the point, lack of response.

After being confronted for the second time in 1998 by the mother of one of his victims, Sandusky was reported to have said to her, “I wish I was dead.”  If he truly had such remorse, and those who knew about his proclivity had acted, subsequent pedophilic acts may not have occurred.  I know a man who, as a boy, was raped by an older man.  Besides the despicable heinousness of the act itself, young boys who get raped grow up with problems they should not have.  Sandusky needed to be stopped – even he knew that.

Imagine Gil Dobie, Jim Owens, Don James, Jim Lambright, Keith Gilbertson or Steve Sarkisian discovering that a former assistant coach was performing pedophilic acts in the Husky football facilities, and doing nothing other than notifying the athletic director.

Whose football program is it?

An inner sense of outrage, moral obligation at least, would have driven them far beyond that.  In contrast, interestingly, Knight thought the same way as Paterno.  Notify the chain of command, and you’re legally uninvolved.

Legally, perhaps, but morally, no, you’re not uninvolved.  Kids need men willing to step to the fore.  That’s why the Penn State Board of Trustees dismissed Paterno, believing he had a moral (there’s that annoying word again) obligation to go much further than he did.

If Knight meant what he said, and since Knight and Oregon athletics are interminably intertwined, after leaving Penn State, perhaps Sandusky missed the boat by not applying to Oregon.  Based on the implicit premise of Knight’s eulogy, Sandusky would have only legal obstacles, not an issue of morality, to worry about.  As it is, between the “legal” mindset, and the American legal system, Sandusky’s present obstacles are only legal – but a competent legal team can breech most, perhaps all, of those.

Meanwhile, Oregon continues to exercise recruiting innovation.  The reader can provide the examples – it’s not like they’re never discussed.  And it’s probably all legal.  If not, the fault lies with Oregon Head Coach Chip Kelly, not Phil Knight.

From my distant perspective, Phil Knight is basically a good man with uncommon gifts in organization, innovation and marketing but who is misled by a legal mindset – it pervades corporate America; Knight isn’t alone – that needs to be tempered by conscience.  A CEO myself, a businessman for over 40 years, my perception is that the business world needs fewer lawyers and more individual moral integrity.  Inwardly, I believe Jerry Sandusky, in spite of (or, perhaps, because of) his monstrous sins, knows what I mean.  I have no doubt that Phil Knight does too.  At the risk of sounding naïve, in the near future hopefully both will embrace their conscience and follow its direction, especially Knight who is in a position to make the world a much better place, a place where the Jerry Sanduskys would be self-governing, not daring to do what they do.