When Finding A New CEO, Go With Tissue Before Talent

“Successful succession” of CEOs in global brands happens as often as a unicorn sighting. In fact, the term might be an oxymoron on par with “jumbo shrimp,” or “military intelligence.”

Just ask Nike.

The last two CEO placements (both outside hires) have successfully steered the athletic giant down a path that even the highest tech sneakers would have a hard time gaining traction on. 

Now, Nike has a new CEO, which has the Internet abuzz with optimism. 

This is good news for the company, which has been in a stunning freefall. For what it’s worth, I have studied and guided successions for over 16 years now, and I am optimistic as well.

I’ve overseen thousands of searches for new leaders of organizations, and a whole lot of them are for CEOs that are following founders of successful companies. My take is that Nike finally appears to be headed in the right direction.

Why? They went with someone who knows the company and is a DNA match. 

When I started our search firm over 16 years ago, an image came to mind about what it’s like to replace a CEO: an organ transplant. I live near the largest medical center in the world, so I’ve had the opportunity to interview several transplant doctors about what makes for a successful procedure. The answer is consistent and a little surprising. You might think that the focus is on finding a healthy organ donor, but the real art is in finding a tissue match with the person that needs a transplant.

One doctor told me, “You can put a healthy heart into a healthy body, but if the tissues don’t match, it’s a terrible ending for everyone.”

That’s what I think has happened to Nike for the last two CEOs. And hopefully that’s what they’ve averted in their new CEO.

Outgoing CEO John Donahoe’s four year tenure at Nike ended in disaster. Many speculated that the reason he didn’t work out was his departure from Nike’s core competencies of sales and marketing. Donahoe bet on direct-to-consumer digital strategy as a way to bolster sales. And given that he started in the year of the pandemic and lockdowns, that probably seemed like a good idea from a talented new CEO. 

However successful that strategy was during the pandemic, the company suffered for it later. Donahoe’s plans went dead against the core competencies that built Nike’s success: cutting edge product innovation and culturally cool marketing. He also dropped the human-to-human interaction that made Nike such a success.

Interestingly, Donahoe‘s predecessor only lasted a year. He too had a lot of talent, but it just didn’t work out. 

So why the trouble finding a CEO that can lead Nike into a future where Phil Knight is not running things? It’s common for a founder to refuse to take his hands off the wheel. We frequently see a brand become hostage to its founder and his vision. But this isn’t the case at Nike. What went wrong for the past two CEOs is simply a failed tissue match. And this suggests to me that Nike failed to reflect on who they were as a company and instead sought a savior from the outside world. 

One of the few lessons we have memorialized from Socrates is “know thyself.” I think that may be the lesson every company and board should master before naming new outside leadership. And I think the last two failed Nike CEOs are casualties of the board overlooking this lesson. But the new CEO seems to have a better chance, because he appears to be a tissue match who “knows” Nike.

Elliott Hill has stepped in as the new CEO. But unlike his two predecessors, Hill has intimately known Nike’s DNA for a long time. You might say he’s even part of it. His tenure with the company began in 1988, where he worked his way up through the ranks, being promoted from intern to senior team leadership before retiring in 2020.

After hiring two very talented CEOs, it appears that Nike hired people who were talented, without studying whether or not they were the right match, just as even perfectly healthy organs won’t thrive in a transplant patient if the tissue match isn’t there. Hill on the other hand, knows Nike through and through. He knows what got them where they are. He is a tissue match on par with family. I believe that means Nike has a much higher chance of pulling out of their nose dive, and it looks like Wall Street is already agreeing.

So should companies only hire alumni as their CEO successors? Some experts think so. Harvard recently published research that quantified the high probability of failure and cost to the company when a new CEO is an external hire. In their research, they found that less than three percent of these CEOs have a chance of outperforming their predecessor. Wharton Business School researcher Matthew Bidwell found that while outsiders often appear to have better experience and education than insiders do, they are paid more, perform worse, and have higher exit rates.

With Elliott Hill’s long history and deep alignment with Nike’s culture, there’s reason to believe the company has finally found a leader who can steer it back onto its iconic path. While the jury is out on whether Hill can restore the brand’s footing, one thing is certain: this time, Nike’s bet isn’t just on talent—it’s on a true tissue match.