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Nike co-founder Phil Knight watches the Oregon Ducks play UCLA in a football game last fall.
(Thomas Boyd, Staff)
Phil Knight's announcement last week that he plans to relinquish his role as Nike chairman and move most of his company stock into a limited liability company was not surprising. He's 77 and has focused increased attention in recent years on non-corporate matters, including University of Oregon sports and the Knight Cancer Institute. A little succession planning makes sense.
Knight and Nike have endured their share of controversy over the years - from scrutiny of labor practices at overseas factories to the current investigation into the company's sponsorship deal with the Brazilian national soccer team. Knight also has been intensely private. And at times, he has flexed political muscle. How many people can convince a governor to call a special session just to address an issue - in this case tax rules - affecting his company?
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But there should be no question that over the past 50-plus years Knight and his companies (Nike started as Blue Ribbon Sports) have been an overwhelmingly positive influence on Oregon. Nike has grown to be by far the largest Oregon-based business, has helped attract many other companies to Oregon, has donated millions to charity and has become an integral part of the state's image. If you want an idea of how successful Nike has been, the website 24/7 did the math. Over the past two decades, Nike's stock rose 2,300 percent. The Standard & Poor's 500, a measure of the broad market, gained 324 percent.
As Nike's stock soared, so did Knight's net worth - to about $24.6 billion, according to a Forbes' estimate. By moving the bulk of his Nike stock into an LLC, Knight accomplishes several things. The move likely reduces taxes, though how much depends on details only Knight and his advisers know. It also likely simplifies transfer of ownership when Knight dies and therefore helps provide continuity to both the company and the family.
The question for Oregon is whether the state is prepared for the post-Knight era. The state's political leaders could learn some lessons by looking at how Nike grew into one of the world's most recognizable companies:
Build a great brand: This is one Nike trait that Oregon already shares to a certain degree. Just like its largest company, Oregon is known as hip, innovative, tolerant and an overall cool place to be. Unlike Nike, it's not necessarily known for success. Let's just say Nike stock charts look a lot more impressive than Oregon unemployment charts. To take its brand to the next level, Oregon needs to work out some of the kinks (creating more jobs would be a good place to start) and continue to market the state aggressively.
Build beyond your natural strengths: This might very well be one of the most significant differences between Nike and the state it calls home. Oregon took advantage of Intel and Tektronix to build a robust high-tech industry. Nike's presence helped make Oregon the global epicenter for athletic apparel. The state's natural beauty and commitment to environmental stewardship have positioned it well in both tourism and green-related industries. And climate, soil conditions and innovation helped the state emerge as a force in the wine and beer worlds.
But while building on those strengths, the state chose to disregard another natural resource - timber. It also watched traditional manufacturing decline, a nationwide trend but one that is particularly painful here because of manufacturing's role in the economy and the lack of employment alternatives for blue-collar workers.
Phil Knight, in contrast, started out focusing on running shoes. But Nike became a global power to a significant degree because of the branding power created by Air Jordan basketball shoes in the 1980s. In ensuing years, it would create a leading golf brand from scratch by linking up with Tiger Woods. And as the Nike brand grew, the company became the leading outfitter of college and professional sports teams and became ever more creative in designing uniforms - making the brand even more powerful.
Don't let mistakes cripple you: It's not like everything Phil Knight touched turned to gold. Few remember this now, but at one point in mid-1980s Reebok passed Nike and became the No. 1 U.S. athletic shoe company, in part by putting more emphasis on fashion. Nike broadened its product line, introduced the "Just Do It" slogan, regained the No. 1 spot and never looked back. Anyone who has looked at Nike apparel lately knows the company learned the lesson about fashion.
Oregon, in contrast, has gone from one unproductive education initiative to another and has largely ignored the problems in rural Oregon for two decades.
Despite all his success, Phil Knight was never hugely popular in Oregon, except among fans of Oregon Ducks sports teams. Some of that probably is a product of his personality and some of it because Oregon does not easily embrace financial success. And maybe that's the biggest difference of all between Nike and Oregon. It's hard to be successful without fully embracing success.
--The Oregonian/OregonLive editorial board