When Donahoe took over as Nike’s top executive in early 2020, the former Bain management consultant and eBay CEO’s company touted his extensive tech industry experience and Silicon Valley savvy. He was at eBay between 2008 and 2015 and CEO of a cloud computing company shortly before joining Nike. At the time, the sporting goods maker claimed it was becoming something of a tech company. Nike was launching its own apps and wanted to sell more of its products directly to consumers on its website and in its own stores, a push that was a top priority for co-founder Phil Knight.

But in Donahoe, they chose a CEO who had neither a deep knowledge of sneakers and sneaker culture nor experience in retail, which led to the current disaster. He underestimated the importance of partners like Macy’s, DSW and Foot Locker in selling running shoes. And as a former management consultant, cost-cutting turned out to be his favorite tactic, which only made Nike’s problems worse.

It’s telling that Donahoe’s successor will be Elliott Hill, a longtime Nike veteran who retired as the company’s president of consumer and market in 2020. The shoemaker’s choice of Hill, who starts on October 14, appears to be a return to form – Donahoe was only the second outsider CEO in Nike’s history, despite already serving on the board for five years.

To be fair, Donahoe deftly navigated the COVID pandemic that broke out two months after he took office thanks to his technical skills, which helped the company handle a surge in demand caused by the e-commerce boom. But that rescue wasn’t enough when mistakes started piling up.

Early in his tenure, Nike launched wildly popular “lifestyle” versions of its Dunks, Air Force 1s and Air Jordans that were intended as mainstream streetwear rather than the footwear for athletes that had traditionally been Nike’s core business. And with the intention of cutting out more wholesale middlemen and selling directly to consumers, Donahoe decided to stop selling Nike clothing to retailers like Dillard’s and Urban Outfitters and reduce the amount of merchandise sold at partners like Macy’s and Foot Locker. Not only did this take away from sales, but it also opened up opportunities for competitors like Hoka, On Running and New Balance to occupy the vacated shelf space and gain market share.

In addition, Nike’s lifestyle shoes, which had initially driven strong sales gains, slowly but surely began to fade due to consumer boredom. But Nike depended on those booming sales and didn’t have enough new innovative products to pick up the slack. Earlier this year, Donahoe acknowledged that innovation had waned at a company that relies on a constant flow of new, boundary-pushing products. But he blamed the rise of remote work and Zoom.

By December 2023, Nike had cut its revenue forecast for the first time. Donahoe resorted to a tactic familiar to him as a former management consultant, announcing a three-year, $2 billion cost-cutting plan that included laying off 2% of employees. But this created a sense of siege at Nike and undermined employee trust in him. This focus on cost-cutting also contributed to unnecessary mistakes, such as a lack of attention to constituency groups like local running groups that are critical to promoting grassroots interest, according to a recent Wall Street Journal Article.

In June of this year, the company cut its revenue forecast again, leading to its biggest stock drop in history and a $24 billion drop in market capitalization. In July, Donahoe faced criticism from all sides. Former Nike marketing executive Massimo Giunco ​​posted a lengthy indictment of Donahoe on LinkedIn. “Nike’s CEO is not from the industry,” he wrote. “Ultimately, he’s an ill-advised, ‘data-driven guy.'”

With Hill as the new CEO, Nike once again has someone who not only comes from the industry, but is also a long-time Nike employee who knows the company and its culture very well. When it was announced that Donahoe would be leaving and he would step in, shares rose 7%.