The Truth Behind “Secret” Innovation At Nike, Apple, Google X

The Truth Behind “Secret” Innovation At Nike, Apple, Google X


MARCH 5, 2013

Our annual guide to the state of innovation in our economy, featuring the businesses whose innovations are having the greatest impacts across their industries and our culture as a whole. On the outskirts of Nike‘s yawning campus in Beaverton, Oregon, a nondescript garage sits behind a line of tall trees, hiding between a day-care center and a security firm. A door to the garage, marked only with the letter “A,” is always locked; the windows to the facility are tinted like a rapper’s SUV. Inside, two toned athletes are lunging in front of a pair of Xboxes. A gaggle of laptops tracks their progress, spitting out Matrix-like data onto the screens. The floor plates beneath their feet are pressure-sensitive. There are high-speed cameras and infrared lights watching overhead, staring down at various weight machines, climbing ropes, and other gym props.

This is the Sparq performance center, one of the most secretive labs at Nike’s headquarters. It’s the 21st century equivalent of the advanced facility Russian boxer Ivan Drago trained at in Rocky IV, and it was key in developing the analytics behind such digital products as Nike+. Few Nike employees know of its existence, I’m told; even fewer have access. As Sparq performance director Paul Winsper insists (implausibly, given my notebook and recorder), “We don’t want anybody to know about this.”

During my reporting for Fast Company‘s profile of Nike, which we just named as theworld’s Most Innovative Company, I was continuously being let into Nike’s “secret” facilities–underground research labs, high-tech training centers–so much so that I wondered if Nike labels its locations “secret” the way the government broadly labels files “classified.” It’s easy to buy into it all–to be so taken by the magic of seeing “Access Granted” on a keypad that you are blind to the fact that there’s nothing terribly magical about what’s inside. Innovating in “secret” is a growing trend–not just at corporate giants like Nike, Apple, and Google, which have perfected the art of clandestine operations, but at any number of startups that claim to be in “stealth mode” while paradoxically reaching out to the press. It’s part marketing, part strategic PR–a way to gin up interest in a product or company, cloaked in a veil secrecy, before a big-bang reveal. It can do as much to juice public perception as it can to foster internal culture.

For example, at the campus home of Nike’s Digital Sport division, the group responsible for the Nike FuelBand, a sign on a door in the basement reads, “Restricted Area: We hear you knocking, we can’t let you in.” Inside, I witness a group of engineers hacking an experiment together involving Nike+, sensor-laced shoes, and the 1987 Nintendo gameTrack & Field II. Says Digital Sport VP Stefan Olander, “What you just saw [them] doing, no one has.”

This sense of secrecy extends to the highest levels of the organization. In Nike CEO Mark Parker’s office, for example, he shows me a pink running shoe that he says will reinvent Nike’s manufacturing processes. “You might be the very first person outside of Nike to see this,” Parker tells me with a smile.

In the Zoo and the Innovation Kitchen, another two of Nike’s mysterious R&D labs, engineers and designers are buzzing around iMacs and sewing machines. I’m told only a few dozen employees in the world have access to these facilities. As I enter the Zoo, an engineer even confides, “Sometimes you want to be nice and hold the door for someone behind you, but you just never know.”

All of this surely has some level of truth: Nike doesn’t want full details of its R&D leaked out, nor does it want, say, some Adidas employee wandering in to snap photos. (Ahem: “Hell would freeze over before we copied a product,” Adidas design lead James Carnes tells me.)

But like an action movie, the story isn’t built to withstand serious inquiry. The “Restricted Area” sign on the basement door in the Digital Sport division? It’s more of a bumper sticker than a security warning. In fact, I see the sign, which also lists hokey warnings like “no tailgating,” plastered in various locations on campus, in multiple poster sizes, as if it were part of a movie set design. As for the Innovation Kitchen and Zoo, despite being told otherwise, there are clearly more than a few dozen employees inside both spaces, which, mind you, are located on the first floor of a campus building, behind only slightly tinted windows through which passersby can clearly see from the campus sidewalk. At one point when I walk by, a door to the Kitchen is propped open, unsupervised.

So what’s with all the hush-hush? Culture. Employees internalize their own stories–that their work is imbued with a value worthy of secrecy, vaulting Nike into the lofty heights of philosophical (and sometimes self-important) corporate cultures alongside only Apple and Disney. When I bump into Nike coach and three-time New York City Marathon winner Alberto Salazar, in between the campus’s Olympic-size swimming pools and sky-high climbing walls, even he tells me, “This place is like Disneyland.”

That self-image is infused into every marketing message and product release, and transferred to a public eager to finally be let in on the secret. The more exclusive the presentation of those products and brands, the more they are desired.

It’s the exact strategy employed by Google and its Google X lab. The skunkworks group was supposedly created to freely innovate in solitude–outside the watchful eyes of shareholders and executives. Yet the media and public are forever being let inside the operation. We know the company is working on space elevators and driverless cars and Google Glass, its futuristic eyewear project. Anything that comes out of Google X now has a certain je ne sais quoi–eliciting a halo effect around Google’s products and brand that can’t be achieved by any other means.

Apple has mastered this art, and induced a near frenzy around its products–iWatch! Apple Television!–in the process. The idea here isn’t necessarily that Apple and Google X and Nike are actually always working on a new top secret project–it’s more so that we assume they are, perhaps for the same reason we assume the military is constantly developing next-generation technology in private, despite us knowing no more than what we see in video games and movies.

“There’s a halo effect of being seen as an innovative company,” says Forrester Research analyst Sarah Rotman Epps. “I don’t think mainstream consumers pay attention to it, but it’s not lost on industry watchers and the press. There’s this narrative that emerges around your company that becomes very hard to change. You can be caught in that in a negative way–like Microsoft or Nokia or HP or RIM–or you can create this halo of innovation around your brand. Perception becomes reality.”

After leaving the secretive garage on the corner of campus, the one labeled “A,” I’m told I won’t be able to locate it again. It’s that hidden, my handlers say, like a witch’s cabin that vanishes into the woods. (One handler even jokes, “After the article runs, we’re going to have to kill you.”)

It seemed like a challenge. So the next day, I go hunting. I search in the rain for 45 minutes, down endless little roads.

Finally, there it is–unguarded, intact, no laws of physics denied. Another Nike myth busted? Perhaps. But I can’t go in; the garage is empty. The lights are turned off. The building is there, but the ideas inside are gone. The secret is kept.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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