The Thing About Innovation By Dr. Marcus Collins

What a difference a year can make. After amassing $185.3 million in NFT sales revenue in 2023, within three years of operation, Nike is rolling up its virtual sneaker label, RTFKT (pronounced “artifact”). What was once seen as a step into the future for the sneaker giant will soon be a chapter from its past and a cautionary tale for brands that aspire to innovate.

For some, the decision to sunset the venture is a no-brainer. Web 3 has slowed and Nike’s acquisition of the digital fashion business in December 2021 happened at a time when non-fungible tokens, augmented reality, and virtual reality were the closest bet to be the next big thing. ChatGPT didn’t make its debut until almost a year later, so AI wasn’t as pervasive or pronounced as we now know it to be.

Furthermore, Nike’s financial standing was in a much stronger position then, as was its now ousted CEO, John Donahoe, who oversaw the acquisition and later stepped down from his role at the brand due to poor sales performance (ironically attributed to a lack of innovation).

That’s the part that has many of us so stunned. RTFKT was a breathtaking technical accomplishment. But more than that, it was a glimpse of the future for Nike and, quite possibly, the future of branding for the fashion category more broadly.

The headlines provide a rational argument for why Nike would cut RTFKT loose. The embarrassing recent losses, the erosion of channel control, and the overreliance on direct-to-consumer commerce sent shockwaves throughout corporate HQ in Beaverton, Oregon. So now the company is cleaning house and, subsequently, killing a promising innovation.

But Nike’s story isn’t altogether unique. Every corporation does this in moments of sorrow. A few disappointing quarters and leaders tend to cut bait on whatever’s seemingly not “working”—today. This is standard procedure for corporate America. However, the short-term forces of today’s performance metrics often undercut what could be for tomorrow’s successes.

That’s the complicated reality of brand innovation: It operates on a different timeline than business operations. Brand innovations require a long-term time horizon, and the pressures of quarterly results and Wall Street expectations subsequently restrict the kind of time investment necessary to incubate breakthrough ideas. What a shame.

The biggest issue for Nike—like much of corporate America—isn’t a lack of innovation as much as it is a lack of patience and curiosity.OP