Carlos Ghosn as CEO of Nissan and Renault: Can He Rework the 'Nissan Magic'?
Carlos Ghosn: The 'Nissan Magic' Cont...
However, since the beginning, Carlos Ghosn was in a Catch-22 situation as Japanese were not used to dictatorship kind of leadership. He knew that if he tried to dictate terms, that could lead to bruising employee morale, and if he remained lenient, it could hinder the required change. Instead of imposing change ,CarlosGhosn brought about the need for urgency in operations by mobilizing them an agers. Carlos Ghosn identified that the basic flaw with Nissan’s culture when he took over was that employees were reluctant to accept the failures and held other departments or economic conditions responsible for them. This resulted in a lack of urgency among employees as everyone assumed the other would take action.He found that instead of solving the problems, they were trying to live with them. Nissan throughout 1990s, had been concentrating on short-termmarket share growth rather than long termgrowth and instead of investing its profits towards product portfolio improvement itwas spending themtowards equity purchases of other companies especially its suppliers. Its product profile was comparatively outdated with old designs when customers craved for stylish designs while competitors were steadily focusing on new product designs. By 1999, it had around $4 billion held in the form of shares while its purchasing costs remained very high, around 20-25%more than that of Renault's.
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The employees openly resisted cross-functional teams, as they strongly believed in territories and sectionalism, which was a major part of their culture. Carlos Ghosn explained, "Engineers work very well together, financial people work very well together, salespeople work very well together. But when you start to add an engineer, a marketer, a salesperson, and a manufacturer, here all the strengths of Japan in teamwork disappear."6 To overcome the resistance, he had to explain to the employees why the cross-functional teams were important and how they would impact the overall benefits. Carlos Ghosn believed that the general human tendency was to resist anything different. He considered that by accepting change, people tend to become stronger, as they understand the differences and try to analyze the causes for such differences. Cross-functional teams were formed and employees were involved in the revival process. This helped Carlos Ghosn explain his plans and gain acceptance easily. Through these cross-functional teams, employees were made to look beyond their line of responsibilities, understanding the nitty- gritties of the other departments as well. After the cross-functional teams were in place, people owned up responsibility whenever something went wrong. "The solution to Nissan’s problems was inside the company. The main [idea] we would have for revival of the company would be a rebuilt motivation of Nissan employees and partners," he explained.7 |
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Immediately after appointing the teams, they were asked to submit plans to achieve the maximum possible output in each area and within a week decisions were made. The outcome was the Nissan Revival Plan (NRP). After the NRPwas announced, every aspect from the timing, the plan schedules and the commitments as well as targets were clearly stated. Shiro Tomii, vice president, Nissan Japan remarked, "He establishes high yet attainable goals; makes everything clear to all roles and levels of responsibility, works with speed; checks on progress; and appraises results based on fact."8
Next >>6]"Carlos Ghosn: standing at the global crossing", op.cit
7]Saadi, Dania "Nissan's miracle man offers clues to solving national economic woes", www.lebanonwire.com
8]David Magee, Turnaround: how Carlos Ghosn rescued Nissan
