Nike’s Road To Integrating Innovation and Sustainability

Nike is a US$19 billion company with brand recognition that ranks up with Coca-Cola, Apple, and Cadbury. With a global following and global demand come enormous responsibility. The company operates and leads within an industry where performance rules, so sustainability intuitively is not a fit. Nevertheless Nike and its VP of Sustainable Business and Innovation, Hannah Jones, are turning the idea of how to approach sustainability on its head. And with such a strategy, Nike rethinks design, innovation, and progress. To that end, Jones set the tone of GreenBiz’s Innovation Forum this week in San Francisco.

Like many companies, Nike faces a future of constrained resources and rising prices. “Sustainability” to most companies means creating a product that is “less bad” or “more better,” but Nike decided to learn how its employees could view sustainability through a design lens. Balancing those goals while focusing on Nike’s core capabilities, the road to high-performance yet more sustainable products was bumpy.  The results, however, have transformed a company’s culture and purpose.

Jones and her team spent 18 months surveying other company’s work on sustainability issues, benchmarked Nike against those firms, and asked professionals a bevy of questions. CEOs, CFOs, and research and development teams were among the teams on her target list--but curiously, not sustainability teams. Jones and her staff had a mission to find out how a company like Nike could blend art and science--and also how Nike could get is most creative people to not only innovate, but execute. And in the meantime, a sporting apparel company had its executive talking to Eli Lilly and Procter & Gamble to learn how it can push the envelope in product innovation and manufacturing.

The upshot is that Nike has integrated sustainability and innovation processes throughout the organization. Sustainability professionals have to think about the company’s systems, while employees are encouraged to view innovation through the lens of sustainability. And “innovation” applies at all levels of the company: in its products, processes, revenue generation, business model, and throughout its industry. Furthermore, while companies traditionally kept their research and development work locked and hidden, Nike took the approach of Linux and Napster and decided to take an open sourced approach towards sustainability.

Nike’s mission statement is to inspire and innovate on behalf of the athlete. So the sustainability questions for Nike included how to incorporate materials great for performance but that are also regenerative and recyclable; how to transform the supply chain; and finally balance this new mindset with pushing products quickly to market. The cool company in Portland found itself needing to align more closely with agriculture, chemistry, and now must learn from other industries--plus balance a new way of designing and manufacturing products with materials that come from many time zones away.

The task is not easy and is still a learning process. Just start with Nike’s product lines, which are made from about 75,000 different materials. One sneaker could have as many as 300 different components. Its supplier rolodex has at least 2000 companies. And meanwhile you have a consumer base that demands zero compromise on price and performance.

The learning curve is still turning and winding for Nike, but the company has made progress. During last year’s World Cup in South Africa, Nike made waves among football players and fans for its jerseys made out of recycled plastic bottles. Within its industry, Nike has led with efforts such as the Sustainable Clothing Coalition and GreenXchange. Not everyone is happy; the company reduced some of its philanthropic activities in exchange for investing in disruptive technologies that down the road could help build a better, cleaner, and safer planet. But for Nike, creating a company culture where innovation means invention with value has made it a leader not just in Portland and within the apparel industry, but among other industries that are now taking sustainability seriously.

Leon Kaye is a consultant, writer, and editor of GreenGoPost.com and also contributes to The Guardian Sustainable Business; you can follow him on Twitter.  He lives in Silicon Valley.