Aligning Profitability and Sustainability: Nike

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Aligning profitability and sustainability A central issue that companies grapple with as they try to become more sustainable is how and to what extent they adopt this as part of their corporate strategy. Nike faces the same dilemma as it builds on the success of the ‘Considered’ initiative while simultaneously encountering challenges implementing the ethos across the entire brand. How far can and should Nike go in “considering the right thing and doing the right thing”? Businesses often strive to find the balance between being economically and environmentally sustainable. However, it is possible, with innovation, to align the benefits of these aspects and minimize trade-offs. For Nike to advance on the sustainability scale, it is imperative that they identify and pursue alignment mechanisms that will allow it to become profitable and sustainable. Integrating sustainability across the brand While Considered as an ethos is promoted and accepted across the Nike brand, a key obstacle to progress is its limited and non-uniform implementation across the various categories. Sustainability needs to evolve from being a strategic initiative to an organizational strategy that encapsulates all categories setting brand wide objectives, identifying resources, and establishing uniform metrics for performance. As noted in the case, sustainability for Nike is not just a CSR goal anymore rather a crucial factor in long-term growth and competitiveness of the company. Specific measures in the strategy to accomplish this could include creation of a comprehensive index covering all categories and products taking into consideration the differences in costs, prices, and targets. Secondly, modifying the operations to build in the impact of sustainable design, development and manufacturing on the production time line will allow for wider implementation of the practices. Furthermore, this helps incorporate iterative design through measurement, audit, and tracking through the product life cycle. Adoption would also increase if Nike can create a broader negotiating platform to enable all categories to benefit from price reductions from suppliers. Finally, any organizational strategy would require champions among the various teams to disseminate the sustainability ethos, build liaisons across functions and in general ensure broader enforcement of best practices. The message of “being good is good for the business” needs to be part of the leadership’s vision, implementation and evaluative measures in the company. External partnerships and alliances An internal philosophy and focus on sustainability is one part of the equation in achieving long-term sustainability in an organization. Organizations need to create and foster an eco-system around them that help them align the profitability and sustainability goals. Nike, as the market leader, is in an excellent position to create partnerships and alliances towards that goal. Nike should spearhead the creation and/or consolidation of industry wide practices including rating systems for the products and performance metrics. Promoting environmentally friendly systems would accelerate adoption by suppliers thereby strengthening its global sourcing channels. Third-party monitoring and validation relationships would bolster Nike’s credibility and improve its standing as an environmentally responsible organization. This is especially important in the light of its past experience with the labor crisis. Nike should create strategic partnerships with suppliers promoting knowledge sharing, assisting in training and education and identifying long-term benefits. It should engage the suppliers in dialogues regarding comprehensive standards promoting alignment in their goals. Customer awareness and branding An organization’s value is in the eyes of the customer. The Nike brand commands tremendous customer loyalty and recognition through its association with high performance, innovation and aesthetics. For Nike to evolve as a sustainable brand, it has to create value for its customer to be part of the new ecosystem. Nike should differentiate itself by the additional dimension of eco-friendliness to build on its performance and aesthetic values. Leveraging celebrity endorsements and raising consumer awareness, Nike should engage customers in the sustainability vision through collaboration with NGOs, eco-friendly groups and environmental campaigns. Evolving the brand to be associated with social and environmental responsibility would improve customer satisfaction and the bottom-line. In conclusion, Nike’s challenge is to interlock profitability and sustainability as it strives to address global sourcing, competitive and environmental issues. To succeed, Nike should create a comprehensive strategy to implement sustainability practices internally while simultaneously forming alliances and partnerships with external stakeholders, including customers. By marrying innovation with ‘green’ it is feasible for Nike to create cost-effective, high performing, and ‘cool’ eco-friendly products.

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