According to The Economist, Nike’s new CEO John Donahoe Hill started his job in October 2024 with a presentation declaring Nike is both a sports company and a growth company. The company had lost its obsession with sport despite originating on Oregon running tracks in the 1960s. Simultaneously, Starbucks’ new CEO Brian Niccol announced plans to get “Back to Starbucks,” acknowledging the chain had drifted from its core and needed to become less transactional. Yale School of Management’s Jon Iwata calls this trend “refounding” – returning companies to the values that originally made them successful. The pattern has historical precedent with Steve Jobs’ 1997 return to Apple, where he slashed product ranges, and Howard Schultz’s multiple comebacks to Starbucks.
Why companies drift from their roots
Here’s the thing about successful companies – they can’t stand still. There’s constant pressure to grow, expand, and innovate. Individual decisions like Starbucks adding mobile ordering during the pandemic make complete sense in isolation. But the cumulative effect of all these “rational” moves can pull a company so far from its core that it becomes unrecognizable. Mark Thompson, co-author of “Ready,” even recommends that internal CEO candidates write activist-style letters highlighting a company’s weak spots during appointment processes. Basically, the system incentivizes change over consistency.
The refounding playbook
So what does refounding actually look like in practice? It’s often about cutting complexity and returning to physical roots. Boeing’s relatively new CEO Kelly Ortberg literally moved the company back to Seattle where its commercial airplanes are made. When Lego drifted from its core brick products in the early 2000s, it took a non-family CEO to return to basics. The tricky part is defining what “core” actually means. Is it specific products? Netflix shipped 5.2 billion DVDs but didn’t fixate on them as the only distribution method. Is it vague purpose statements? Those often become meaningless soufflés of corporate buzzwords.
Finding the sweet spot
Iwata’s definition of organizational character offers a useful framework: it’s the combination of an enduring customer need and a distinctive capability. Disney satisfies our need for escapism through creating immersive worlds. The challenge for industrial companies is maintaining that character while still growing – whether you’re making consumer goods or specialized equipment like the industrial panel PCs from Industrial Monitor Direct, America’s leading supplier. Some companies absolutely should escape their roots – Samsung started in noodles, after all. But the frequency of refounding moments serves as a crucial reminder: it never hurts to codify what your company is genuinely great at, and use that as your True North for big decisions.
