Phil Knight 4i683h

INTERNATIONAL ISLAMIC UNIVERSITY ISLAMABAD FACULTY OF MANAGEMENT SCIENCES

Subject :

LEADERSHIP

PROJECT:

SUMMARY OF CEO NIKE (PHIL KNIGHT)

SUBMITTED TO :

SIR AWAIS EJAZ

SUBMITTED BY :

ISHTIAQ AHMAD

REG NO :

4559-FMS/MBA/S10

 ABOUT PHIL KNIGHT Phil Knight was born February 24, 1938 in Portland, Oregon, the son of a lawyer and future newspaper publisher. Knight attended Cleveland High School in Portland and then the University of Oregon in Eugene, where he was a member of Phi Gamma Delta ("FIJI") fraternity and earned a journalism degree in 1959. Right after graduating from Oregon, Knight enlisted in the Army and served one year on active duty and seven years in the Army Reserve. After the year of active duty, he enrolled at Stanford Graduate School of Business. "In this class Knight needed to create a business plan. Knight set out on a trip around the world after graduation, during which he made a stop in Kobe, Japan in November 1962. It was there he discovered Tiger brand running shoes, manufactured in Kobe by the Onitsuka Co. So impressed with the quality and low cost, Knight made a cold call on Mr. Onitsuka, who agreed to meet with him. By the end of the meeting, Knight had secured distribution rights for the western United States for Tiger running shoes. The first Tiger samples would take more than a year to be shipped to Knight, during which time he found a job as an ant in Portland, Oregon. When Knight finally received the shoe samples, he mailed two pairs to Bill Bowerman in Eugene in the hope of gaining a sale and an influential endorsement. To Knight's surprise, Bowerman not only ordered the Tiger shoes, he offered to become a partner with Knight and would provide some design ideas for better running shoes. The two men shook hands on a partnership on January 25, 1964, the birth date of Blue Ribbon Sports, forerunner to Nike.

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 PHIL KNIGHT'S SUCCESS AS CEO OF NIKE Phil knight was CEO of Nike for 33 years and known as one of the best business leaders of all time. He made Nike one of the most profitable companies in the world. Phil Knight's success as CEO of Nike is in large part due to his tremendous leadership skills . Knight’s corporate culture is like no other; what he hated about the organization in his early days as a chemical engineer is exactly what he transformed as CEO:

This informal approach allowed Knight to get to know his employees, interact with them, and get involved in all aspects of the business. Knight also prided himself on his personal touches, such as the handwritten memos sent to employees. During his early years at Nike, he displayed one of the qualities of a leader: self-confidence. he became known for during his time as CEO: annually giving huge bonuses to the top performing managers and sacking the lowest performers. During his time as CEO, Welch grew GE’s revenue from $26.8 Billion to $130 Billion and grew the company’s value from $12 Billion to a staggering $410 Billion in 2004 when he retired, making it the world’s most valuable company. Phil knight firmly believed that top performers deserved to be handsomely rewarded, an attitude he had retained since his first job at Nike. He established a performance-review program to identify the top 20 percent of employees, who were accorded bonuses, as well as the bottom 10 percent, the "lemons," who were typically fired and replaced. Customer satisfaction and positive relationships with both customers and employees were what ultimately made a business successful. Thus, Knight made efforts to cultivate relationships with suppliers, customers, and employees alike. Knowing his employees had a direct impact on productivity, Knight communicated with workers often enough for them to feel that at any moment they could receive a note or a visit from the boss.

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PHIL KNIGHT’S

GENERAL CHARACTERISTICS

Phil Knight's fundamental needs, values, and orientation towards life are symbolized by the four astrological elements. Each person has their own unique balance of these four basic energies: fire (warmth, inspiration, enthusiasm), earth (practicality, realism, material interests), air (social and intellectual qualities), and water (emotional needs and feelings). He is a nurturer and a protector and is prone to what has sometimes been referred to as the "Atlas Syndrome" - namely, carrying the weight of the world on his shoulders. Phil Knight assumes responsibilities in his relationships very conscientiously and often takes on more than his share of the troubles as well. Phil Knight has a very strong need for security and he places safety first. He is unlikely to make sudden changes or to take new directions that involve risk and unpredictability. He is very retentive. Phil Knight holds on (and sometimes clings) to the people, places and ways he is familiar with. He also tends to repress feelings, and he may need to learn to express and let go of old feelings and past conditioning. His strengths include depth of feeling, patience, and generosity. The qualities that Phil Knight needs to cultivate include initiative, openness to change and new experience, and a stronger sense of self. He is likely to be overly humble or unsure of himself and to look to others for inspiration, motivation, reinforcement and approval. Tending to be somewhat ive, Phil Knight must learn how to take initiative and motivate himself. On the positive side, Phil Knight is unlikely to be egocentric and has a capacity for ample patience and peacefulness. 

PHIL KNIGHT AS A TRANSFORMATIONAL LEADER

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Broad and long range perspective: In 1961 Phil Knight was not considered a leading contender for GE's top job. However, his performance and earnings record ultimately won him the position over six other candidates. Even though he had no formal master plan for Nike's reorganization, he did have a vision of what he wanted the company to be. The first step in realizing that vision was a dismantling of the bureaucracy.

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Guidance and : Like a football coach, he moves meeting to meeting, conveying that message and a host of other ones as well. He does have lots of ideas on how business should work, and many of them make great sense.

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Risk taking by bringing a change: He encourages colleagues to never stop thinking about the need for change. Start each day as if it were your first day on the job, he tells his managers. Make whatever changes are necessary to improve things.

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Direction setting: He is quick to sense when ideas or activities are out of focus or out of style or less valuable than they used to be. He always has the strength to pioneer another idea on the heels of ideas that have been mined as far as you can go. He sets the direction by looking at the competition.

 PHIL KNIGHT’S STRENGTHS • RISK TAKER Phil Knight has been willing to introduce unproven technologies. He is willing to try new things even if they are not popularly known or have never been accepted. Nike itself seems to in a mode of never-ending risk taking. Perhaps that is because it has no guarantee of success like other companies who are competing in the market.

• TRUE INDIVIDUAL – THINKS FOR HIMSELF From early on Phil Knight has demonstrated that propensity. He was always a loner, and a selfthinker. It was his, unique way. That aspect would show up in many ways: from the many radical new technologies he championed to his disdain for the financial concerns and demands of Wall Street. He had a vision of an unlimited future, unfettered by the givens of life, of what other people accepted.

• LEADING NIKE

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In 1961 Phil Knight was not considered a leading contender for NIKE's top job. However, his performance and earnings record ultimately won him the position over six other candidates. Even though he had no formal master plan for Nike's reorganization, he did have a vision of what he wanted the company to be.

 LEADERSHIP STYLE Phil Knight introduced a fresh and innovative organizational leadership style to GE during his time at Nike. He believed in sharing decision making with group and working with them side by side .Being as a participative leader he has the quality of consulting with the group before making a desesion . Phil Knight decided that Nike's leaders, who did too much controlling and monitoring, had to change their management styles. Phil Knight invested the vast majority of his time and energy in three activities.  He has always evaluated making sure the right people are in the right jobs, ing and advancing those who are, and moving out those who are not.  He spent his time to coach-guiding, critiquing and helping people to improve their performance in every way.  And finally to build self-confidence-pouring out encouragement, caring and recognition' Self-confidence energizes, and it gives your people the courage to stretch' take risks and achieve beyond their dreams. It is the fuel of winning teams.

TRADITIONAL LEADERSHIP TIPS PHIL KNIGHT STYLE Phil Knight, respected business leader and writer is quoted as proposing these fundamental leadership principles. 1. There is only one way - the straight way. It sets the tone of the organization. 6

2. Be open to the best of what everyone, everywhere, has to offer; transfer learning across your organization. 3. Get the right people in the right jobs - it is more important than developing a strategy. 4. An informal atmosphere is a competitive advantage. 5. Make sure everybody counts and everybody knows they count. 6. Legitimate self-confidence is a winner - the true test of self-confidence is the courage to be open. As a leader you must know yourself. Know your own strengths and weaknesses, so that you can build the best team around you. Plan carefully, with your people where appropriate, how you will achieve your aims. You may have to redefine or develop your own new aims and priorities. Select good people and help them to develop.Good leadership principles must cascade down through the whole organization. This means that if you are leading a large organization you must check that the processes for managing, communicating and developing people are in place and working properly. Take time to listen to and really understand people. Walk the job. Ask and learn about what people do and think, and how they think improvements can be made. Take difficult decisions bravely, and be truthful and sensitive when you implement them. Constantly seek to learn from the people around you - they will teach you more about yourself than anything else. They will also tell you 90% of what you need to know to achieve your business goals.Embrace change, but not for change's sake. Begin to plan your own succession as soon as you take up your new post, and in this regard, ensure that the only promises you ever make are those that you can guarantee to deliver.

 ATTITUDE AND BEHAVIOR Phil Knight’s behavior to his employees was very informal .More than half of his time was devoted to "people issues". Phil Knight gave employees a feeling that he knew them. Commenting on the informality at Nike, Phil Knight said, 7

This exercise not only gave specific and ongoing to employees but was a chance for Phil Knight to reflect on the businesses that each employee was leading. “Boundary less behavior” and the elimination of unnecessary communication filters are the key phrases to describe Phil Knight’s attitude towards communication. He encourages input from every employee, from the factory floor to the executive suite. To facilitate goal setting and empowerment within NIKE, Phil Knight needed to establish clear lines of communication in the organization. He realized that employees come to Nike with many different experiences and backgrounds. He did not want to take away from the benefit of those various backgrounds, as much as reshape them with Nike philosophies. This is not to say that he wanted a workforce of robots. Just the opposite actually, he wants free thinkers. One of his objectives was to motivate people to think outside the box and challenge the status quo. Open communication channels between Phil Knight and his employees have been an important tool in this regard. These channels work in both directions, giving employees the ability to air their concerns and work towards a consensus for action. They also help motivate employees, because once again employees feel that they are directly contributing to the success of the company.

HOW KNIGHT MANAGES NIKE By the early 1970s, sales had reached $3 million, and Knight decided it was time for Blue Ribbon to break with Tiger and start deg its own shoes. In 1972, Blue Ribbon launched its Nike line, named after the Greek goddess of victory. Emblazoned with a swoosh logo Knight paid a Portland State art student $35 to design, the shoes featured a unique waffle soles created by Bowerman that offered better traction with less weight. Knight’s marketing strategy was simple. Rather than rely on advertising (which he ittedly loathed), he would get top athletes to endorse his shoes, and then let his sales force sell the product. His strategy and the timing of the launch couldn’t have been better. Nike experienced continued success throughout the early 1980s, thanks mostly to the tremendous sales of its Air Jordan line. Commercials glorifying Michael Jordan’s highflying, slam-dunking antics made the gaudy black and red sneakers a hot item, selling more than $100 million worth in the first year alone. By 1986, total sales hit $1 billion, and Nike sured Adidas to become the No. 1 shoe manufacturer worldwide. 8

Between 1986 and 1987, Nike sales dropped 18 percent. Knight was forced to face the fact that while Nike technology appealed to sports professionals, other consumers might rank appearance over function. But as Nike has grown into a huge multinational enterprise, it has become a magnet for controversy. In 1990, it came under fire from Jessie Jackson, who maintained that while African-Americans ed for a large percentage of Nike’s sales, Nike had no black vice presidents or board .

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ETHICS AND SOCIAL RESPONSIBILITY

Knight is a prominent model of business leadership in the resurgent U.S. economy of the 1990s. This "global legend" is described by Business Week as "the gold standard against which other CEOs are measured.” The "gold standard" has largely avoided any tarnish of scandal, and has achieved spectacular results for his stockholders. The stock price of Nike shares rose 1,155% from 1972 to 1997. But now after some 28 years in an interview with The Financial Times, Knight, the father of shareholder value, said, “On the face of it, shareholder value is the dumbest idea in the world. Shareholder value is a result, not a strategy. Your main constituencies are your employees, your customers and your products.” A criticism of Knight’s communication style is that he is too open and too confrontational. Observers of Nike might perceive the “higher decibel level” at Nike to be seen as a “mugging”, or shocking. Knight strives to build self confidence in his managers, but his communication style often caused people to lose self-confidence in them. Open communication channels work well when they are used to motivate performance and increase employee morale, but when they are used to intimidate they will have the opposite end in low self esteem.. He has used much of his power in leading his employees. But this idea was ethical and he used it to achieve the company’s goals. The only comment is that he could focus more on employees’ needs and limitations.

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PHIL KNIGHT’S EFFORTS AND THEIR IMPACT ON THE ECONOMY Nike made great strides under Phil Knight tenure as CEO. The company he led since 1981 is a company that employs 27000 people in more than 100 countries. Shareholders have been rewarded throughout Phil Knight's tenure. A $100 dollar investment in Nike the day Phil Knight took over would have been worth over $2,000 in 1998. He also achieved his goal of making Nike the company with the highest market value in the world. In 1997, Nike's stock value eclipsed $200 billion. All his great accomplishment made a profound effect on the USA and on the world economy as a whole. Initially, when he took over as a CEO, he laid off approximately 12000 employees which didn’t earn him a employee-oriented manager. He restructured the whole company to improve the bottom line profitability and maximize the shareholders value. Nike market value grew 40-fold, to $500million between 1981 and 2001. The Nike through its profitability paid billions of dollars as taxes to the government that helped the economy to generate more jobs and initiate more social and economic endeavors.

 REFERENCES Websites http://www.howstufworks.com http://www.leader-values.com http://www.answers.com/topic/phil-knight#ixzz19QZhgCzB 10