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Nike's New Strategy: Move Into The Transformation Economy

03 Jun 2016

During recent years Nike has increased their digital investments, and as a result we've seen interesting products and services like the Nike+ Running App, Nike FuelBand and NikeID. In the middle of march this year Business Of Fashion reported that Nike launched a new shoe called HyperAdapt 1.0, it's a shoe that uses "adaptive lacing" technology that enables the wearer to tighten and loosen the shoelaces by touching a small button. This new product is one part of their new strategy which is all about personal transformation. 

"The technology has actually caught up to our ambitions," said John Hoke III, vice president of global design at Nike, at the launch. Business Of Fashion reported that Nike also launched a new Nike+ app that gives its users the opportunity to book one-on-one appointments with sales-assistants at local stores. The new app integrates with their other apps such as Nike+ Run Club and Nike+ Training Club - this means that they can collect more data about their customers and as a result they can create even more personalised content and offers.   

Transformation Economy - Nike's New Strategy

The image above is a visuation of how Nike moves from commodity to experience and finally to transformation. This is an extended version of Joe Pine's model The Progression of Economic Value which is featured in his book The Experience EconomyPine and his co-author Gilmore argue in this book that businesses must focus on creating memorable events for their customers and that the experience itself becomes the product. Additionally, they argue that a busineess focused on experiences charges for the feelings that the customers get by engaging with the brand.

The last and final step in this visualisation says "Transformation" and what we mean by this is that successful businesses have moved beyond experiences and started to focus on how their offering can transform the lives of their customers. This exactly what Nike is doing with their ecosystem of services and products. They don't just sell shoes, software and experiences - they are encouraging their existing and potential customers to make a personal transformation. The combination of Nike's shoes, gear, the app and the Nike Running Clubs enable people to become more than just a loyal customer, it helps them to become part of a community where they are being encouraged to become better runners and athletes. 

Jess Greenwood, strategist at the digital agency R/GA, defines the transformation economy as "the exhange of cash for goods or services that could considerably improve the quality of life of the consumer who buys them for the long term". Furthermore, Greenwood argue that this is a way to make money through happier customers. 

Small business Saturday

Another example of an initiative that fits into the concept of the transformation economy is the campaign Small Business Saturday by American Express. The idea behind the project is simple - it's to encourage people to support small and local brick and mortar businesses. Small Business Saturday is a counterpart to Black Friday which is organised by big retail chains the day after Thanksgiving.

Independent, family run and small businesses play an important role in the communities where they operate since they fuel local economies and constitute important geographical meeting points. Small retailers in the U.S. sold goods and services for estimated $5.5 billion during Small Business Saturday in 2012, and three years later that amount nearly tripled to $16.2 billion. From this, we can conclude that American Express has and still is transforming both small businesses and entire communities by encouraging people to support their neighbourhood business and shop local.

These examples show us that the transformation economy powered by digital technologies can enable businesses to truly help their customers achieve their long-term aspirations and objectives.

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