THE PERILS OF PROFIT-DRIVEN MYOPIA: LESSONS FROM CORPORATE MISSTEPS By Javier Palenque

In the modern marketplace, smart companies often grapple with the delicate balance between revenue generation and maintaining the core values and community focus that initially propelled them to success. This balance is critical; tipping too far towards profit can alienate the very community that built the organization. An illustrative example of this phenomenon is Nike, a company renowned for its brand dominance yet criticized for occasionally losing sight of its foundational values in pursuit of revenue. I will discuss Nike, a company so large that it can afford horrific market mistakes, unlike the USTA. It acts like a giant, but its leadership fails to accept that it is a pop-up show for two weeks in NYC, and what matters is a well-crafted balance between revenue generation and maintaining the core sport growing. Since they fail to do this, they are by design killing the sport and paying highly unintelligent executives to deliver the blow.

Nike: A Case Study in Corporate Myopia

Nike's journey from a small startup to a global behemoth is nothing short of remarkable. Founded by Phil Knight and Bill Bowerman, Nike's initial success was rooted in its deep connection with athletes and a commitment to innovation. The company's early years were characterized by a focus on quality products and a strong community of athletes and sports enthusiasts who believed in the brand's mission.

However, as Nike's ambitions grew, so did its focus on revenue. The company’s aggressive marketing strategies and relentless pursuit of profit began to overshadow its commitment to the community. This shift became evident in several key areas:

Labor Practices: Nike's reliance on overseas manufacturing, particularly in countries with lax labor laws, led to widespread criticism and allegations of sweatshop conditions. The company's focus on reducing production costs to maximize profits came at the expense of worker welfare, causing a significant backlash from consumers and human rights organizations. The community that once supported Nike's growth began to question the ethical implications of their purchasing choices.

Product Diversification: In an attempt to capture a broader market, Nike expanded its product lines beyond its core athletic wear. While this strategy initially boosted revenue, it also diluted the brand's identity. The focus shifted from serving athletes to catering to a broader consumer base, resulting in a loss of authenticity and alienation of the original community that had championed the brand.

Marketing Controversies: Nike's marketing campaigns, while often bold and innovative, sometimes sparked controversy. For example, the 2018 ad campaign featuring Colin Kaepernick, while applauded by some for its stand on social justice, alienated others who felt it was a political move designed to capitalize on a divisive issue. This highlighted a growing disconnect between Nike's revenue-driven decisions and the values of its diverse consumer base.

The Consequences of Alienation

When a company prioritizes revenue over its foundational values, the consequences can be profound, here I will explain what Nike did and then in bold, I will explain what the Ol’ Boys do to tennis in America:

Erosion of Trust: The community that once felt a deep connection with the brand begins to feel betrayed. Trust is a fragile commodity, and once lost, it is challenging to regain. Nike’s labor practices, for instance, led to a significant erosion of trust, resulting in consumer boycotts and negative media coverage.

USTA: The tennis community has no trust in the USTA and its methods of governance, so they all act independently from it while accepting some of the guidelines since the sections get grant money. This erosion of trust cannot be repaired when the leadership of the USTA avoids dissent and runs the failed not-for-profit as a failed tyranny.

Brand Dilution: As the brand attempts to appeal to everyone, it risks appealing to no one. The original community that supported the brand feels marginalized, while the new market segments may not develop the same level of loyalty. Nike’s diversification strategy, while profitable in the short term, led to a dilution of its core identity.

USTA: If one looks at the marketing budget of the USTA it is $30M, however, it is to promote the US Open, not the sport. This is absurd as the show is just a pop-up show no matter what the executives say or think. Most employees should be part-time, not full-time. By the lack of intelligence of the leaders, they are diluting the brand of “tennis.”

Long-Term Viability: A short-term focus on revenue can undermine long-term viability. Brands that lose their connection with their community may see a decline in customer loyalty, reduced brand equity, and a negative impact on their bottom line. Nike's controversies, while not crippling, have forced the company to invest heavily in repairing its image and reconnecting with its core audience.

USTA: while the viability of the US Open is dependent on the aging of Wall Street bankers, the viability of the sport is sealed, its death. The reason is the lack of vision by the salesperson CEO and the Klan of incapables, who believes the status quo is good for the sport, when all the evidence they reject, states the contrary.

Lessons for the Future

The experiences of companies like Nike offer valuable lessons for other organizations:

Stay True to Core Values: Companies must remain anchored to the values and mission that initially inspired their success. This requires a commitment to ethical practices, community engagement, and authenticity.

USTA: Does not do that and pays $60M per year to people who do not do that.

Balance Profit with Purpose: Revenue generation is essential, but it should not come at the expense of the community. Companies must find a balance between profitability and social responsibility.

USTA: Does not do that, as the CEO keeps increasing prices and losing real estate daily to pickleball, has no plan and the executives are all yes men, who benefit from the lack of vision from the CEO.

Listen to the Community: Engaging with and listening to the community can provide invaluable insights and foster loyalty. Companies that prioritize open dialogue and transparency are more likely to maintain a positive relationship with their consumers.

USTA: They hate dissent, transparency, and accountability, so it’s like having intelligence censored by the limited-minded people in control.

In conclusion, the journey of a company from its humble beginnings to global success is fraught with challenges. As Nike's story demonstrates, a singular focus on revenue can lead to a disconnect with the very community that built the organization. By staying true to their core values and balancing profit with purpose, companies can avoid the pitfalls of corporate myopia and ensure long-term success. Sadly, the USTA simply refuses to accept its failures and is killing the sport daily. And yet the executives are still getting paid. What!

I say no to ineptitude and YES to growing the game.

I can be reached at [email protected]

PS. The market has choices, like the ON shoe.