Competition and the Elastic Enterprise: Business Platforms, Personal Biometrics and Strategic Options: Nike and FuelBand

How does a sports shoe manufacturer grow?  Well if it was the 1980s or 1990’s, you would get sport celebrities, use high technology materials, create great designs, diversify your merchandise, and go global with sales and manufacturing.  Nike did exceedingly well with that model.  Today you still do all of that but you do more…

If you’re at the top of your game, you “just do it,” differently.  You do it as an elastic enterprise.   Nike is well on its way to becoming an elastic enterprise.  And it’s already reaping the benefits of an elastic strategy with a robust strategic options portfolio.

Nike’s FuelBand, a recently launched high-tech electronic wristband, is another component in Nike’s elastic journey that highlights its strategy.

FuelBand is the latest in a series of wearable devices that Nike offers to its customers to track workout information that they can then upload to the Nike business platform, Nike+.  FuelBand measures calories, movement, and time.  Using its onboard microprocessor, accelerometer and ambient light sensor it calculates NikeFuel, a measure of human activity, “calculated the same for everyone” according to Nike ads.  It’s part of the broader data-driven revolution fueled by digital technologies.

So a bit of history.  Nike began its journey to elasticity back in 1987 with Nike Monitor, an early and unsuccessful attempt to provide biometrics and telemetry to its customers while running.  Even then it was Nike’s idea was to establish a more engaged relationship with the customer.

Despite the lack of early success, Nike persevered.  During the past 15 years they have partnered with other companies to provide heart monitors, watches and smart shoes (for a brief history of Nike+).

The breakthrough moment came from a co-development project with Apple in 2005-2006.  The joint venture led to the creation of the Nike+iPod product and later an iPhone app and Nike+ related websites (http://nikerunning.nike.com and http://nikeplusactive.nike.com).

Fuelband is the latest step in a powerful socially driven elastic strategy.  At this point, Nike has several robust business platforms, a growing business ecosystem that includes over 50+ million global customers, universal connectors with partners like Apple, Polar, TomTom, Life Fitness, TechnoGym, Precor USA, Cybex, Star Trac, plus other Nike proprietary devices like the SPARQ Sensory Training Station for professional athletes.  Most importantly all of these efforts have added significant monetizing opportunities and diversified growth for the firm.

And Nike’s strategy also supports its vendor community and its move into other product categories.  Via Nike+ customers get personal development recommendations, expert advice, coaching, how-to videos, games, social networking with friends, friendly competition among members, and smart linkages to relevant products (some provided by Nike vendors) in the Nike online store and external service providers (e.g. coaches, dieticians, training specialists).

With the addition of FuelBand new categories of customers are added to the business ecosystem – to include all sports and any virtually any human activity that burns calories.  Moreover NikeFuel provides a basis of comparison of activity for wearers and thus enables a new level of social comparison and networking.

So each new device adds new capabilities to the business platform and new options for growth.  New strategic options create incentives for new partners to join the Nike global business ecosystem.  As the business platform expands Nike is positioned to drive radical adjacencies, perhaps into health diagnostics, health rehabilitation, or health monitoring.  Nike could some day be a part of an always on, prevention-oriented vision of health and medicine (see related WSJ article – “A Doctor in Your Pocket”).   While speculative Nike is now situated to explore a wide range of adjacencies with its elastic strategy.

So elasticity is not just in Nike’s footwear and high performance clothing.  Elasticity is becoming part of the firm’s DNA.  Elastic strategy and strategic options thinking enhance Nike’s future value: business platforms + business ecosystems + devices + sensors + partners + customers + radical adjacency.  This combination generates a powerful game plan and a strong playbook for innovation, competitiveness and growth.

Not bad for a “shoe company.”

One thought on “Competition and the Elastic Enterprise: Business Platforms, Personal Biometrics and Strategic Options: Nike and FuelBand

  1. Pingback: Pebble Technology and its “Watch” — A Start-up Surging with Elasticity « The Elastic Enterprise

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