Page 216 - Performance Leadership

Chapter 11 The Return of the Mission Statement • 205

Nike’s performance indicators should reflect this. From a cus-
tomer perspective, “customer satisfaction” makes less sense than con-
sumer “mind share.” Mind share would be measured by asking
guided and unguided questions as to which brands consumers asso-
ciate with various sports, such as basketball, soccer, golf, and jogging.
The more Nike is mentioned in the unguided questions, the more
consumers are willing to purchase Nike products over other brands.
The higher Nike’s mindshare, the more people are willing to pay a
premium for the products, compared to other brands or unbranded
products.
Mind share would be a leading indicator; it could predict sales and
margin preservation. If Nike’s mind share increases in the market, sales
should go up. And as customers are willing to pay a premium, less
markdown is needed. A complementary indicator would be a cross-
sell ratio: in other words, in how many cases do consumers use mul-
tiple products? This could be tracked within a certain sports product
line but also across various product lines. Because many consumer
products are not registered, as insurance or software would be, it is
often hard to measure this exactly. However, a market basket analysis
can be used, which analyzes cash register data for which products are
bought together. Alternatively, statistically significant market research
can be done that allows making assumptions about the complete mar-
ket. Cross-sell is a lagging indicator; it shows to what extent a certain
objective has been reached. In the case of mind share and cross-sell,
the objective would be to see if “inspiration” is a successful value
proposition.
Innovation could be measured on an aggregated level, such as the
product line, and on a divisional or corporate level. A lagging meas-
ure that is often used is the percentage of revenue coming from new
products. If this is high, Nike has a high ability to execute with its
innovations, whether they are functional with products such as golf
clubs and soccer shoes, or more fashion-based, as with apparel. Of
course the percentage should not be too high, because that would
indicate the product life cycle is going too fast and there is not
enough time to get a good return on investment on new product
development.