Nike Decides To ‘Just Do It’ And Replaces CEO John Donahoe With Company Veteran Elliott Hill

Nike just announced that CEO John Donahoe will retire on October 13 to be replaced by longtime Nike stalwart Elliott Hill. Donahoe joined Nike’s board in 2014 and became CEO in January 2020. Hill came to Nike as a sales intern in 1988 and worked his way up to president, consumer and marketplace by 2020.

According to reports, Hill was on the shortlist to replace current executive chairman Mark Parker when he stepped aside as CEO, but Donahoe got the top post and Hill left the company shortly thereafter.

Now Hill is coming back as CEO and member of the board and there has been a resounding roar of approval from company employees and stockholders.

Nike stock jumped 9% in after-hours trading Thursday after the news broke, according to CNN. And Fast Company’s Mark Wilson reported that many “jubilant” employees left work early to celebrate.

Welcome Return

“I am excited to welcome Elliott back to NIKE,” chairman Parker said in a statement. “Given our needs for the future, the past performance of the business, and after conducting a thoughtful succession process, the Board concluded it was clear Elliott’s global expertise, leadership style, and deep understanding of our industry and partners, paired with his passion for sport, our brands, products, consumers, athletes, and employees, make him the right person to lead Nike’s next stage of growth.”

Hill is equally jubilant about his return. “NIKE has always been a core part of who I am, and I’m ready to help lead it to an even brighter future. For 32 years, I’ve had the privilege of working with the best in the industry, helping to shape our company into the magical place it is today.”

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Strategic Missteps

As recently as April, Nike co-founder Phil Knight told the Oregonian that Donahoe had his “unwavering support” as the company rolled out a line of new products in advance of the Paris Olympics. But that confidence wasn’t widely shared, with its stock dropping 24% so far this year before yesterday’s bounce.

On paper, Donahoe seemed to have the right stuff to guide Nike forward. He holds an M.B.A. from Stanford and previously served as president and CEO of Service Now and eBay after putting in over 20 years at consultancy Bain & Company as president and CEO.

Described as more of a numbers guy – “In his four years at Nike, he’s proven to be more of a calculator than a creator,” wrote Fast Company’s Wilson in an in-depth profile – Donahoe predictably used his calculator’s toolkit to turn Nike around.

Innovation Lacking

After six months at the helm as part of the “Consumer Direct Acceleration” (CDA) strategic plan, Donahoe aligned the Nike team around what was termed a “simpler consumer construct” based on Men’s, Women’s and Kid’s products and away from its previous organizational focus on the sport and enhanced performance for each.

It effectively turned Nike into any other fashion sportswear brand and diluted the company’s secret sauce of striving for enhanced sports performance. A notable lack of innovation resulted.

It “turned more lax on product innovation, particularly in running, as up and coming brands started to resonate,” wrote Oppenheimer analyst Brian Nagel.

Loss Of Retailer Support

Also pivotal to the CDA plan was to shift sales from wholesale channels to more profitable Nike direct distribution in stores and online. That proved a failure too.

Donahoe underestimated the impact retail partners, especially independent specialty stores, play in driving demand and continued loyalty to the Nike brand.

Last year, the company tried to make amends with retail partners, but the damage was done.

“This withdrawal opened the door for those retailers to partner more closely with other brands. Although Nike is now rebuilding those relationships, it is still suffering from the exposure it essentially gifted to other brands,” GlobalData’s Saunders shared with Retail Dive.

Cut Corporate Muscle

And perhaps the worse decision Donahoe made was to cut costs through massive company layoffs. The potential to be laid off is one of the risks of working for any company, but for one like Nike that is driven by a spirit of winning, repeated layoffs can take the wind out of even the most motivated team members.

In June 2020 under the pressure of the pandemic, Donahoe announced the layoff of 700 employees as part of a “restructuring” plan. But the layoffs kept happening as costs continued to need cutting.

At the close of fiscal 2024 ended May 31, Nike had shaved about 5% of its workforce from 2023, from 83,700 to 79,400, according to the company’s annual reports.

In the latest round of 740 job cuts announced in July, more than 40% of those let go were at the director level or higher, including 32 vice presidents, according to OregonLive.

“The Nike talent today does not, in our view, hold a candle to the talent at Nike 7 years ago,” wrote Williams Trading analyst Sam Poser.

Restoring Nike’s Winning Team Spirit

Incoming CEO Hill’s job on Day One is to restore his team’s winning spirit and it looks like he has a big head start in doing it.

“I’m eager to reconnect with the many employees and trusted partners I’ve worked with over the years, and just as excited to build new, impactful relationships that will move us ahead,” he said in a statement.

Hill graduated from Texas Christian University with a degree in kinesiology – the study of body movement – and took a Master's in sports administration at Ohio University. He followed that up working for a year as an athletic trainer for the Dallas Cowboys, before joining Nike and climbing the corporate ladder.

So he knows all about what it takes to organize, inspire and coach a team, on the sports field or in the corporate office. And a primary responsibility he held during his previous 32-year tenure at Nike was to play well with the company’s retail partners, something that has slipped over the last four years.

“Elliott Hill is one of the most outstanding C-suite executives I have ever worked with,” shared former Nike senior global creative director of the Olympics Scott Touidjinee-Williams with Fast Company. “I do not know anyone who does not speak highly of Elliott.”

In an obligatory parting note, outgoing CEO Donahoe admitted as much. “It became clear now was the time to make a leadership change, and Elliott is the right person.”

Note: I’ve requested further comment from Nike and will update this post accordingly.

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