We recently came across this great article we wanted to share with you via [Austin Carr](http://www.fastcompany.com/3006644/most-innovative-companies-2013/jawbone-fitbit-adidas-how-nike-responds-competitive-threats ) (March 05, 2013 at 03:47PM).
Hope you enjoy it:
With big-name competitors like Adidas and upstarts like Jawbone and Fitbit forever threatening disruption, Nike can’t afford to ignore its competition.
Nike had been working on the FuelBand, its sleek electronic activity tracker, for close to two years when design startup Jawbone launched its Up competitor. Sure, the company had known about Up since Jawbone CEO Hosain Rahman announced the device at TED, but hitting the market before Nike was a potentially worrisome prospect. “There was a moment like, ‘Wow, they shipped it.’ We knew the space was ripe for more players,” says one source intimately involved with the FuelBand’s development. “When it was available, we all got one and tried it out.”
Then something remarkable happened. Customers complained of product inconsistencies and poor battery life, and Jawbone quickly issued a recall. “It flopped,” the source says. “At that point, we felt like, ‘All right, the door is still open for us.’ On the other hand, I’m not going to laugh at them because the same thing could happen to us.”
The insight, learned during my extensive reporting for our recent profile of Nike, which Fast Company just named as the world’s Most Innovative Company, sheds light on how much attention Nike pays to its competitors. The company can’t afford to act any other way. Big-name competitors like Adidas and upstarts like Jawbone and Fitbit are forever threatening disruption, especially in the quantified-self space. This week, for example, it was reported that Fitbit is looking to raise $30 million of fresh capital at a $300 million valuation. Just months ago, Jawbone relaunched Up, and Under Armour unveiled its Armour39 fitness band in late January. Despite the increasingly crowded market, Nike has managed to stay above the fray while still keeping a close eye on its competitors.
“I would say that the distance between Nike and our competition is a lot less than the distance between Nike and our potential,” says Nike CEO Mark Parker, summarizing the company’s strategy. “It’s easy to feel good when you’re comparing yourself to somebody that frankly is not a great standard. I’m not dissing the competition or anything, but, well, I’ll just say that our potential is just so much greater.”
At various points throughout my reporting, I heard a similar refrain. As Stefan Olander, VP of Nike’s Digital Sport group, which oversaw the FuelBand’s development, told me, “We don’t really look to [our] competition for ideas–and I don’t mean that in an arrogant way.”
But the truth is, like any company trying to survive a competitive landscape, keeping track of rivals is part of the game. Even Olander later acknowledged this was an unavoidable part of the creative process. “Every single person in Digital Sport would go out during the week, and buy whatever new fitness app or gadget had come out–be it headphones or a running watch–and then try it,” he explained. “We’d go out for a run or workout for an hour; come back; then have a session where we all set up [the devices] together. So if I brought in a new running watch, I’d go, ‘All right, here’s the screen; let’s download the software; unpack it; and so forth.’ We would see the pain points in the experience and see some things that were done pretty good.”
Olander says the team would meet every Wednesday morning to review pain points together. “We’d do the same thing with our own products,” he says.
Multiple sources revealed to me that, at one point, Nike had even very briefly considered doing a Fitbit-like device, though it’s unclear how serious this consideration ever was. According to these sources, one early FuelBand concept surrounded the idea that the device could be designed for positions other than the wrist. “You could connect it to your sweater or shoelace,” says one insider. Adds another, “It was never mandated that it had to be on the wrist.”
In the end, it was almost serendipitous Nike’s finalized concept for the FuelBand didn’t have much overlap with its rivals’ devices, especially considering Jawbone released Up just 11 weeks before the FuelBand launched. “The initial [FuelBand] timeline was actually on the same timeline [as Jawbone], trying to hit that holiday window. But that just wasn’t possible. It didn’t happen for a lot of good reasons–the hardware just wasn’t ready,” says the source intimately involved with the FuelBand’s development. “Fitbit had already been out, so we knew what that was about, but we also knew [Jawbone] was coming out with a different solution.”
Sterne Agee analyst Sam Poser believes it’s this growing threat–or the perception of a growing threat–that drives Nike. “Brands like Adidas and Under Armour are all doing new things,” Poser says. “When Nike’s competition is doing a lot, Nike tends to respond even better. When nothing is going on, Nike leads the pack, but it’s not as innovative–the urgency isn’t there in general. Have you ever gone into a really good restaurant when the place is dead and the service is terrible? And then go back to the same restaurant when it’s busy and the service is great? When you’re being challenged, you get busy, you hustle, and you do everything better.”
Adds Poser, “They’re like sharks. If they stop swimming, they die.”
Parker echoes this sentiment. “Despite the fact that we’re successful, we like to challenge ourselves. You can’t wait for there to be a fire drill,” he tells me. “In the end, I think that will wind up being your death.”
[Image: Flickr user kibuyu]