Nike CEO John Donahoe on Friday blamed remote work for the company falling behind on innovation, saying that it’s tough to be disruptive when people are working from home.
In an interview with CNBC’s Sara Eisen from Paris, Donahoe was asked about the company’s lack of fresh new products in its assortment, which had been a concern among investors.
“What’s been missing is the kind of bold, disruptive innovation that Nike’s known for and when we look back, the reasons are fairly straightforward,” said Donahoe.
He pointed out that footwear factories in Vietnam were forced to shutter during the Covid-19 pandemic but said “even more importantly,” Nike’s employees worked from home for 2.5 years.
“In hindsight, it turns out, it’s really hard to do bold, disruptive innovation, to develop a boldly disruptive shoe on Zoom,” Donahoe said. ”Our teams came back together 18 months ago in person, and we recognize this. So we realigned our company, and over the last year we have been ruthlessly focused on rebuilding our disruptive innovation pipeline along with our iterative innovation pipeline.”
Donahoe said Nike’s innovation pipeline “is as strong as ever,” and consumers can expect to start seeing new product drops each season, as well as the fresh storytelling the brand has long been known for.
The chief executive’s comments come at a tough time for the company. Some analysts and investors have criticized the sneaker giant for falling behind on innovation and losing market share to upstarts like On Running and Hoka, which have won over a new generation of runners and have grown rapidly in recent years.
In December, Nike announced a broad restructuring plan to reduce costs by about $2 billion over the next three years. It also cut its sales guidance as it warned of softer demand in the quarters ahead.
Two months later, it said it was shedding 2% of its workforce, or more than 1,500 jobs, so it could invest in its growth areas, such as running, the women’s category and the Jordan brand.
Donahoe insisted Friday that Nike is still “gaining share” and remains a dominant force in running and all things sport.
“We’ve done more to advance running than any brand in the world over the last 50 years and we continue to lead with elite runners,” said Donahoe when asked about On Running and Hoka. “Innovation has always been what’s marked Nike in running, as in other categories and so we’re not just going to copy what other people do, we’re gonna bring innovation.”