Chapter 1: Early life and education
Chapter 2: Early career
Chapter 3: Renault turnaround
Chapter 4: Nissan turnaround
Chapter 5: Nissan growth
Chapter 6: Crises and opportunities
Chapter 7: Current state of business
Chapter 8: Personal reflections
Chapter 9: Conclusion
Up in the air on New Year’s day
I’m somewhere over the Atlantic Ocean now, cruising at an altitude of about 14,000 meters. As I fly toward Brazil, my thoughts are in Japan. While it is a tradition for me to spend the New Year holiday with my family in Brazil, a part of me wishes I could also be in Japan, on the most celebrated day of the year. I extend my Happy New Year’s wishes to all.
As the CEO of both Nissan Motor and Renault, and the chairman of the Renault-Nissan Alliance, I split my time each month between Japan, France and other markets where the companies operate, such as the U.S., Brazil, China and the Middle East. People often ask me what I do from day to day. It’s a difficult question to answer: No one day is like another. It depends on the region where I am working and what decisions need to be made. But while every day is different, it is also the same in the sense that I am focused on the performance and success of these businesses.
Regardless of where I am in the world, I am an early riser. In Paris, I’m usually at the office by 7:30 a.m. In Japan, I arrive closer to 8 a.m. because of the additional travel time between my home in Tokyo and Nissan’s offices in Yokohama. By the time I arrive, I have already been working quietly by myself for many hours. I find these are often my best hours.
Most of my day is tightly scheduled. Meetings start at 8 a.m. and don’t stop until the day is finished, often around 8 p.m. or later. It is not uncommon for me to leave Tokyo on a Friday night, attend meetings in another country over the weekend, then fly to Paris for a full week of work. It helps that I can sleep well on an airplane. This kind of lifestyle can take a toll on you, both physically and socially. It is not without a price to pay, and you have to manage that. But it is what is required of many leaders in the age of globalization.
Globalization is changing how business is done and what it means to be competitive. We are also seeing another societal trend shaping global business: the issue of identity and the resurgence of nationalism. These two trends coexist. To understand what I mean, consider Brexit. The U.K. voted to leave the European Union, but they still want to work with the region – and trade with the world.
Both trends are certainly at play at Nissan. Globalization is what makes it possible for us to sell our cars in more than 160 countries and attract diverse talent. But our identity remains deeply embedded in our Japanese DNA.
As I said, I also run Renault, a French automaker. For the last 17 years, Renault and Nissan have engaged in a unique alliance to generate synergies for both companies. These two companies have shared goals, but distinct cultures and identities. The Renault-Nissan Alliance is an example of how, despite differences in language, regions and traditions, two companies can be stronger together. In this way, the alliance also embraces both the opportunities of globalization and the benefits of individualism.
Just as globalization and identity describe Nissan, they also perfectly express my life. My grandfather was a Lebanese man who moved to Brazil, where I was born. But I spent my youth and high school days in Lebanon before attending college in France, where I acquired French citizenship. I also lived in the U.S. for many years, and I have children who live there still.
But I feel Brazilian when I’m in Brazil, so you can imagine my pride when I was able to carry the Olympic torch in my home country at the start of the 2016 Rio Olympics last summer. Some people tell me, “You’re like a different person when you’re going back to Rio.” Maybe that’s because I’m returning to my roots.
My children also grew up with many cultural influences. They were born in Brazil and the U.S., and they received their education in France, Japan and the U.S. Everywhere they have lived, they have picked up pieces of the culture: They have adopted the graciousness and scrupulousness of the Japanese people, while also embodying a uniquely French way of thinking. I believe that one day the world will be filled with people like them, those who retain their identities while embracing globalization.
Where a person is born no longer determines their destiny. Twenty years ago, it was normal for people to work in their home country, but from now on, more people will live and work far away from their birthplace. This opens up new opportunities but also exposes individuals to new risks. For example, globalization requires more people to work in an unfamiliar country for extended periods of time. In addition to adapting to new environments, they will have to deal with things like jet lag, and many may even lose friends along the way. The sacrifices they will make will be great, and they will need plenty of resolve and resources to overcome the challenges. My life has not been without these sacrifices. However, globalization can also expand one’s horizons, allowing people to realize their potential and achieve success.
People around the world, particularly in Japan, are opening up to the idea of a global lifestyle. It is in this context that I share my own story, with the hope that it may provide some inspiration.
The history of my family, the story of me: How Lebanese roots and childhood in Brazil shaped me from an early age
My full name is Carlos Ghosn Bichara, after my grandfather Bichara Ghosn. He was born at the base of Mount Lebanon where there were many Maronite Christians and an abundance of centuries-old Lebanon cedars. The Maronite Church is a part of the Roman Catholic Church that maintains its own original structure and rites. To this day, Maronite churches hold Mass in Syriac, said to have been the language used by Christ.
Religious conflicts, as well as extreme poverty, made life in Lebanon difficult during the early 20th century. To escape these challenges, my grandfather, at the age of 13, boarded a boat with just a single suitcase in his hand. It took three months to get from the Lebanese capital of Beirut to Rio de Janeiro, Brazil.
After working for a short period of time in Rio, he moved to the basin of the Amazon River to seek greater opportunities. He landed in Sao Miguel do Guapore, before it became part of Brazil, and eventually settled in the then-undeveloped lands of Porto Velho, today the state capital of Rondonia.
Agricultural products, including rubber, were harvested there. The region was quickly becoming a major international hub for rubber production, and there was an intense movement of people and supplies. Capitalizing on this environment, my grandfather headed several companies, one of which provided local assistance to aviation companies expanding their routes into the Amazon. My father, along with his brothers, would eventually inherit this business after my grandfather’s death.
It was common for Lebanese immigrants to travel to their homeland, wed, and then return. The same applied to my grandfather. Through an introduction from a friend, he met his wife-to-be in Beirut. A few years after they were married, my father, Jorge Ghosn, was born in Brazil.
My father also traveled to Lebanon when he came of age. There, he met and married my mother. Her name is Rose, but she goes by Zetta. She was born in Nigeria and later studied in Lebanon. I remember her mother – my grandmother – well. She had a tremendous influence on me. She was always well-organized and approached everything with honesty and in earnest. She was also very strict, so as a child, I didn’t like her very much. I have learned in the years since that these are the kinds of people you remember most, the ones who make a lasting impression. Much of who I am is the result of who my grandmother was.
My mother also had a tremendous influence on my life. Unlike her mother – and perhaps as a consequence – she wasn’t very strict. Rather, she was filled with love and was very approachable. She was also a devout Francophile. She spoke French exquisitely and was even more French than people who had been born there. This would greatly influence my choices when it was time to pursue my studies, and my family and I would live in Paris for many years.
My mother, who is now 86 years old, resides in Brazil, as does most of my family. Two of my sisters live near my mother in Rio de Janeiro. My father has since passed away. I return a couple of times each year. Overall, we’re a close-knit family.
I provide this family history because it has had a profound impact on shaping my life and identity. My part of the story began in 1954, shortly after my parents were married and settled in Porto Velho. My older sister was also born there.
From what my mother tells me, I was full of energy as a baby. But when I turned 2, there was an unfortunate incident. Our home was located in the tropical area around the Amazon, which was infested with mosquitoes. It was common practice for all the children to drink only boiled water to avoid disease, but one day I was accidentally served water that hadn’t been boiled. I came down with a high fever. As it was described to me, I was on death’s doorstep. The doctor told my parents that if they wanted me to survive, I would need to live in a place where the climate was more favorable, and where the water was safe to drink. In other words, we would have to move.
The unforgettable Father Lagrovole: A move to Lebanon leads to valuable life lessons from a respected teacher
Following the doctor’s recommendation, we moved to Rio de Janeiro, but my condition didn’t improve much. Concerned about my slow recovery, my mother convinced my father that I should continue treatment in a nicer environment with fresher air.
My father agreed. After a long discussion, my mother, older sister and I moved to Lebanon, while my father remained in Brazil. Despite the move, my bond with Brazil was not broken. We returned to Rio to see my father often.
The Lebanon where I spent my childhood was much different from the Lebanon my grandfather had left a half-century before. It possessed a spirit of gender and cultural equality. People from various religions lived together harmoniously, and it was often called the “Switzerland of the Middle East,” until civil war erupted in 1975.
Although Lebanon had won its independence from France in 1943, it continued to belong to the French cultural sphere. The Lebanese people considered the plurality of cultures to be a positive attribute. Indeed, I grew up in a multicultural environment. The school I attended – the College Notre Dame, a Jesuit school providing continuous education through high school – had a French principal and Lebanese, Syrian and Egyptian teachers. In many ways, the Jesuits’ organization could be considered the world’s first “multinational corporation.”
I was a good student, but I was rebellious. Much to my mother’s disappointment, I had a reputation as a “problem child” at school. I liked history, geography and languages, and I would study diligently at home. But at school I would hang out with friends, goof around and cause harmless trouble.
I had so much energy inside of me that I was always looking for ways to disperse it all. Looking back now, I know I did some unwise things, but I don’t necessarily regret them. After all, isn’t that what youth is for?
I was not without positive role models. The person who had the strongest influence on me during this period was a French teacher named Father Lagrovole. He was in charge of French literature. He was stout and hunched over with poor posture, but he performed the most magnificent poetry readings.
My favorite was a reading of the fables of Jean de La Fontaine, often called the Aesop’s Fables of France. “One day, the weasel’s wife seized the palace of the young rabbit,” Father Lagrovole read aloud. He then asked me, “What kind of instrument do you associate with this poetry?”
Before I could answer, he said, “I thought of the trumpet when I heard s’empara,” explaining that the sound of the word for “seize” resembled the sound of that instrument. He warmed to the idea, and sang out brightly: “S’empara, s’empara!” Despite how strict he was with his students, his classes were, without comparison, the most enjoyable. His advanced age meant we looked up to him as a wise figure and a person of truth.
One thing I learned from him was the importance of expressing my ideas concisely. Father Lagrovole often said, “When you make everything complicated, it means that you don’t understand anything.” He was also an example of someone of great virtue, one among the many monastics of the times who left their families to teach subjects like French and literature to the world. Even during my rebellious phase, many of his lessons stayed close to my heart.
My mother remained a powerful influence on my life as well. When I turned 17, I faced an important decision: where to go to further my education. It was perfectly acceptable to get a basic education in Lebanon, but my mother urged me to consider attending a university in France to ensure better personal development. She made a strong case, and so I took and passed the baccalaureat, France’s university entrance qualification test. I had been blessed with many close friends during my 11 years of school life in Lebanon, and those friendships continue to this day. But I felt my destiny was in France. Again, I would leave another home for a new horizon.
Student life in Paris: A steep learning curve
The university system in France is unique compared with those of other countries. Students first take a qualification exam called the baccalaureat to gain admittance into the university system. However, students who aim for upper-level universities, the grandes ecoles, must also attend a preparatory school offering a two-year course of study for another entrance exam.
My prep school, the lycee Saint-Louis, was located in an exclusive residential area of Paris. I had my sights set on attending France’s leading business school, the Hautes Etudes Commerciales, or the HEC Graduate School of Management. My cousin Ralph, who is eight years older than me, had graduated from HEC. He worked at a bank, had his own apartment in Paris and was the symbol of success in my eyes. So I sent my resume and transcript to Ralph, and asked him to recommend me for the prep program for HEC.
But when the principal of the prep school looked at my records and grade report, he saw I had an outstanding strength in mathematics. He told Ralph that my talent would be buried at HEC and recommended the Ecole Polytechnique, a school focused on engineering. My principal at the lycee Saint-Louis had said a similar thing: mathematics was my strongest suit, and he thought I should pursue it.
I was disappointed at first, but Ralph consoled me by saying that I could change to business if I discovered I disliked science studies. That was enough to convince me to give it a chance.
Before I could get there, however, my first trimester at Saint-Louis was a disaster: I scored just four points out of 20 in mathematics. But my terrible performance opened my eyes to what needed to be done. Students at the school were nicknamed “moles” because they stayed locked inside doing coursework all day, never seeing the sun. I decided that I, too, needed to become a mole.
This lifestyle change paid off: My grades sharply improved after the second trimester, and by the third, I was at the head of my class. One more year of mathematics and I could go on to the Ecole Polytechnique.
I entered the Ecole Polytechnique in 1974. The school, part of the grandes ecoles university system, was established in 1794 amid the French Revolution. It is under the control of the Direction generale de l’armement, part of the French Defense Ministry.
I was able to earn a stipend from the university, which educates high-achieving young students throughout the country. The goal was to provide promising young leaders with the necessary education and sophistication to secure French development and stability. This is why so many senior officials and politicians are graduates of grandes ecoles. Students enrolled not only from France, but also from countries and regions that were once French territories. There are opportunities for anyone to move up the social hierarchy in France, even if he or she was born elsewhere.
Expectations were high. There were demanding lectures, discussions and assignments every day. Of course, there were boring lectures as well.
One of my fondest memories was a trip to the U.S. with 40 fellow students. The program allowed us to visit the University of Colorado and interact with American students. I was struck by their power of self-expression and advanced communications skills. I also felt that the U.S. opened gateways on a much larger scale than France. There were so many students from Europe, South America and Asia, it was easy to imagine that America was attracting the most talented and elite people from all over the world.
I kept my grades up, and I graduated in 1976. After that, I went to another of the grandes ecoles, the Ecole des Mines in Paris, which focuses on applied sciences. While many graduates entered the national civil service, I had no interest in taking that path.
At the time, I was seriously thinking about proceeding to the Ph.D. program in economic science. There were still many things I wanted to study. I also wanted to enjoy student life — and the beautiful city of Paris, which I had come to know by heart. However, a different path was waiting for me.
On a roll with Michelin: Forgoing further studies to join the tire maker brought lessons of a different kind
One day in May 1978, at around 8:30 in the morning, I woke up to the jarring sound of the phone ringing. When I answered, the man on the other end of the line identified himself as Hidalgo.
“The Michelin Company in France would like to expand its business in Brazil,” he said. “They need French engineers who are familiar with the local environment. Would you like to have an interview in Clermont-Ferrand?”
The catalyst for this call was my sister, who had told Hidalgo about me in Brazil. I called my sister right after I hung up. When I told her I was barely interested, she said, “It sounds like a good opportunity. Why wouldn’t you take it?”
Clermont-Ferrand is a provincial city located in central France, home to the tire manufacturer Michelin. At the time, I was 24 years old. I had progressed to the second master’s level of the grandes ecoles universities, earning a degree at the Ecole des Mines. I was considering entering a doctoral program in economics and hadn’t thought much about starting my career.
But the word “Brazil” rang in my ears. I hadn’t lived there for 18 years, but it was my birthplace and my spiritual home. My father and many relatives still lived there. The idea that someday I might be able to work at French companies in Brazil was an attractive prospect.
I took the interview. It went well — the company was clearly interested in hiring me, and it wasn’t long before they made me an offer. It wasn’t easy to move from Paris to the countryside of Auvergne, but I kept telling myself, “Brazil is waiting.” I decided to end the student chapter of my story to embark on a new adventure.
A hundred people entered the company at the same time. We became friendly during the three months that we lived under the same roof, taking seminars at all the major departments of the company and dining and traveling together on weekends. It was a time of personal and professional growth. Surprisingly, even though it was a training period, we often had opportunities to solve pressing company problems. Michelin often gave freshman employees the chance to suggest ideas on important issues, such as how to make production processes more efficient or how to best manage raw latex.
After general training, we moved to plant training. We cut and transported raw rubber. Mostly we were working in three shifts, including one late at night. It proved a great learning opportunity, teaching us not only about the rubber manufacturing process, but also about quality control management and how to put plans into action.
I spent break times playing cards with the veteran workers. Even though I had just come out of the grandes ecoles system, I found I was able to forge strong bonds with the workers at the plant.
After training, we were each assigned a plant. Le Puy, where large tires were manufactured, was my first assignment. I had an interest in improving productivity and toured the site many times every day. The importance of effective communication quickly became apparent to me and was reinforced every day. This wasn’t something I had learned in my schooling, but it was one of the biggest lessons from my early career.
I traveled to plants around Europe and soon got my “big break.” It was a global era for Michelin. Management was targeting one overseas location after another, and the company turned to a younger generation of executives. I was promoted to manager of the plant in Le Puy in my third year with the company, at the age of 26. This was recognition of my measurable success and rapid integration into the company.
Michelin was a traditional corporation in many ways, but it was also advanced. I was not a French national, but I was allowed to possess such a job title and share such responsibility with other executives at a young age. This openness was due to the personality of the grandson of the founder, Francois Michelin, a man with the highest standards and a deep interest in people.
My main challenge was to build trust and relationships with my older subordinates. I spent a lot of time cultivating teams that could solve problems together. Two years passed, and when the management of the factory was fully on track, someone appeared from the headquarters office. It was Francois Michelin himself, and he had a new opportunity to offer me.
Turbulence and triumph in Brazil: A transfer across the Atlantic helps me hone my reform chops
The first thing you noticed about Francois Michelin was his height. What you learned by working beside him was that he was also sophisticated, dignified and polite. He was appointed co-owner of the Michelin tire company in 1955 and held that position for more than 44 years. He was much more than the manager of the family business: Michelin’s globalization was a result of his acumen and ability.
He offered me a job working at Michelin headquarters under Behrouz Chahid-Nourai, the chief financial officer. Two experiences would be critical to my career. The first was the development of cross-manufacturing — a principle that would serve me well in this job and all others. This concept emerged based on my analysis of Kleber-Colombes, a tire manufacturer focused on automobiles, vans and farm equipment that Michelin had taken financial control of years earlier. The company was doing poorly, but Michelin didn’t want to abandon it. Instead, Michelin absorbed Kleber-Colombes’ automobile tire business as a budget brand and utilized the same production line to manufacture both brands.
Another key opportunity was the chance to work with Chahid-Nourai. He taught me the concepts and practices of cutting-edge corporate finance, including the techniques for optimizing resources. Seven years after I joined the company, Francois Michelin sent me to Brazil, which opened a big door for me.
In 1985, I was finally transferred to Rio de Janeiro, where I could be close to my parents and sisters. My family was happy about my new assignment. However, the plight of Michelin Brazil made it far less than an ideal situation. The country was mired in political unrest, dealing with a financial crisis and had, until recently, been ruled by a military regime. Hyperinflation had exceeded 1,000% a year, and businesses there were experiencing massive losses. In fact, huge debt was becoming Michelin’s primary concern in Brazil.
Despite these challenges, I considered the country to be a potential treasure trove of opportunity for Michelin. Brazil’s natural resources were abundant, and its enormous market potential was comparable to that of China, Russia and India.
I worked hard to implement reforms. Michelin had purchased two huge rubber plantations in Brazil. Performance had stagnated, but it was primarily due to external factors, mainly the price controls decreed by the government. I initiated negotiations with the government, trying to secure approval to raise prices. Simultaneously, we emphasized meticulous management and control of cash flow. Extreme measures were required. And while the people at Michelin headquarters in Clermont-Ferrand were frustrated, I was steadfast in my resolve. In the end, I was able to resurrect the Brazilian operations and establish segment leadership in the marketplace.
Around this time, however, the labor union movement grew more violent, and worker strikes became more frequent. One day, despite being cautioned against it by the managers around me, I went alone to a factory whose workers were on strike to hear their concerns. I did not encounter any hostility; all they wanted to do was talk.
After three years of turbulence, the Brazilian operations stabilized. Because of the strict cash flow management measures we had put in place, our subsidiary was producing great results. Trust from headquarters increased. I was 31 years old at the time. If I think about it now, my actions represented youthful indiscretion, but I believe I was right to maintain a bullish approach toward growth.
One day I received a message from Francois Michelin saying, “The old married couple would like to visit Brazil.” I was grateful. The boss I trusted was watching over me. He came to Brazil with his wife in 1987. I spent 10 days with him, touring factories and plantations all over the country. He showed interest in everything and treated everyone with respect, regardless of social class or title — a worthy leader in this era of globalization.
After he returned home, I was presented with another challenge that would reshape my career: I was to go to the U.S., a fiercely competitive region and Michelin’s biggest overseas market. I was told that Francois Michelin wanted to leave everything to me. After the Christmas holidays, my young family and I left my homeland once again.
Warm welcome, big challenges in America: Lessons in integration, and from Iacocca, in the world’s toughest market
In February of 1989, I arrived in the U.S. to start my new assignment. My family and I would be living in Greenville, South Carolina, a small town with traces of the Old South. It was a highly religious and welcoming place, and we basked in the warmth of southern hospitality.
When I got there, we were a family of three. Our second and third daughters, and our first son, would be born in the U.S. It was a happy time in my life, not only because of our growing family but also because of the rewarding work. My mission was to lead Michelin’s acquisition of Uniroyal Goodrich, a major U.S. tire company, during a time of economic downturn.
At the time, the U.S. had the biggest auto market in the world, and Michelin had to establish a strong presence if we wanted to be a contender. I felt considerable pressure from headquarters, and competition was fierce. Goodyear, a U.S. company, was the industry leader in tire manufacturing, and Japan’s Bridgestone had just acquired the legendary U.S. brand Firestone. Michelin had no time to waste.
The acquisition of Uniroyal was approved in the early 1990s, and we faced some problems right away. Uniroyal had a large inventory of old equipment and had not invested in replacing key parts, making production slow and inefficient. Under the terms of the acquisition agreement, Michelin had negotiated the closures of three plants in North America, which was met with heavy criticism. We simply could not afford them. This earned me the nickname “The Cost Cutter.” But I didn’t mind — I knew cost-efficiency was the pathway to recovery.
Cost cutting was only part of the strategy. We also needed to fully integrate the business to achieve maximum synergies. To do this, I created an executive committee composed of the most talented people from Michelin and Uniroyal. This would be the first, unsophisticated, model of the “cross-functional team” utilized with success in the Nissan Revival Plan a decade later.
The fusion of cultures was the first big challenge for Michelin. As a provincial company from France’s Auvergne region, its way of doing business was different than that of U.S. companies. If we wanted to leap forward as a global company, the U.S. focus on short-term profit would need to come together with the European family-owned management style, which focuses on long-term results. We made a number of other operational changes: We adopted a multibrand strategy in North America, in which we assigned Uniroyal to the main battlefield of the aftermarket, where brand power was more important than in the original-equipment marketplace. But we kept Uniroyal’s head office at its traditional headquarters in Akron, Ohio.
This was a time for me to personally learn by doing. In Brazil, I had battled against the government to raise prices, but in the U.S. I battled rivals in the market. Competition was everything.
We had meaningful successes. Uniroyal was one of the most significant suppliers of tires for what was then the world’s largest carmaker, General Motors. GM was a generous company and willingly accepted the takeover by Michelin. We were also able to establish contact with Japanese automakers. I traveled several times to the North American plants of Toyota Motor, Honda Motor and Nissan Motor, including Nissan’s plant in Smyrna, Tennessee. Japanese carmakers were on a roll at this time, and I had a feeling that they would climb to the top of the world’s automotive industry, and soon.
I also learned a great deal about leadership. There were many impressive leaders in the automotive industry, including Lee Iacocca and Robert Lutz, who left Ford Motor for Chrysler and served as vice president under Mr. Iacocca. Lutz was an open-minded man. I invited him to a seminar at Michelin, and he told the crowd: “Before, I couldn’t imagine who would buy a Chrysler vehicle.” I was shocked he would say something like this at first, but I realized that he was a master of communication. He told it like it was and didn’t use fabrications or flattery. I could tell the audience was impressed. To be honest, so was I. He was an important influence on my leadership and communication style, and we have stayed in contact over the years.
In short, things in the U.S. were going very well. Then I received a call from Francois Michelin. He was sending his son to come work for me.
On to a new adventure at Renault: After 18 Years at Michelin, I accept an offer to help revive the French carmaker
Edouard was the youngest son of Francois Michelin. When he arrived to work for me, I put him in charge of our critically important truck-tire manufacturing and sales departments. His good manners and respect for U.S. customs earned him an excellent reputation among his colleagues.
Because Michelin was a family-owned business, it was assumed that Edouard would succeed his father. As such, I never expected I would reach the very top of the company – I did not have the right last name.
In 1996, after about seven years of working in the U.S., there was a major restructuring of the business. I was put in charge of our global tire operations for passenger cars and small trucks, and served as the president of the North America office. Essentially, I had climbed to the No. 2 position.
But would I be happy to stay in that position forever, knowing I couldn’t climb higher? I wasn’t so sure. So when I received a call from a headhunter, an alumnus of the Ecole Polytechnique, I agreed to meet. Over dinner, he asked if I was interested in the automotive industry. Renault was looking for a No. 2 who could eventually rise to be the top executive. He arranged a meeting between me and Renault Chairman Louis Schweitzer.
At 8 a.m., I met with Schweitzer for an hour and a half at Renault headquarters in Boulogne-Billancourt, a suburb of Paris. He mentioned that the company’s second-in-command was about to retire, and he was looking for a potential successor. He said I was their top candidate.
My main motivation for taking the job at Renault wasn’t the prospect of one day running the company. Rather, I was interested in the opportunity to study new things and take on new challenges. I had always been interested in cars and complex products that required teams of people and supply chains to work in close coordination.
After a board meeting, I notified Francois about the meeting with Schweitzer and my intention to leave Michelin. For a moment he seemed surprised, but then he said simply, “Please let Edouard know.”
After 18 years at Michelin, my heart was heavy at the thought of leaving — both the company and Francois. I have always remembered the strength of his vision, his humility and the sincere kindness he extended to me. In fact, he was one of the first to recognize the power of Japanese companies on his own.
Many years later, I was reunited with him at Renault. He asked how I was doing, and I told him I was well. He resigned in 1999, and Edouard, as expected, took his place. Francois Michelin passed away in 2015 at the age of 88. There is a lot of him in me.
‘Le Cost Cutter’ strikes again
Management at Renault had gone downhill in the years before I joined in 1996. At that time, the company was facing a massive deficit. Even under pressure from the government, the management team had not come up with an effective strategy for improving labor-management relations. Workers were aging, production facilities were woefully outdated and products were inferior. We had a lot of work to do.
I took two months to study up on the company, talk to people and assess the situation. One of the first problems I identified was how the company was structured. Different departments weren’t communicating or coordinating efforts. I also saw too much fruitless finger pointing from the management team, too few solutions.
It was time for me to take action. I formed a cross-functional team, just as I had done in Brazil and the U.S. We broke down the thick walls between departments, brought in fresh perspectives and emphasized teamwork and problem solving.
The first major issue we had to address was the cost structure. Before I joined the company, Chairman Louis Schweitzer had said that he thought Renault’s cars were too expensive. He had already set a goal of reducing the factory shipment value by 3,000 francs per vehicle ($480 at current rate). I told him we should make even bolder cuts — but not at the expense of technology and quality. In those areas, we should invest more heavily. That was the impetus behind the “20 Billion Franc Cost-Reduction Plan,” which we announced in March 1997.
This plan shocked many at the company. At meetings, my fellow executives told me, “That was a typo, right? Tell me that the decimal point was misplaced.” I felt like people were secretly thinking that I was an outsider, and that I was going to screw up their company.
However, I stayed calm and cool. Personally, I don’t like confrontation. Fortunately, it wasn’t necessary, since I had the support of Schweitzer. So I moved forward.
That doesn’t mean I went ahead with 100% certainty; I had my own anxieties about whether I had made the right decisions. I felt additional pressure to show positive results because of my “outsider” status. I still had to earn credibility.
I turned to the same methods that had been successful during my time at Michelin. We set specific targets and timelines, and held ourselves accountable to them. I worked with suppliers to gain their support to lower the number of parts and decrease unit prices — and I rewarded the ones who cooperated by giving them larger orders. This wasn’t easy, but it was what was needed to be done.
The biggest challenge was the decision to close the Belgian Vilvoorde plant, an old facility where 3,000 people worked. This caused a great deal of controversy. We had informed the Belgian prime minister about our plan to close the plant, and he went ahead and announced it publicly without our permission. Protests erupted all over Europe. Newspapers labeled me (once again) as “Le Cost Cutter.”
The public outcry happened because Europeans, including the French, did not have all the facts needed to understand the depths of the problems that had forced Renault to take these actions. Before the Belgian prime minister made his rogue announcement, we had planned to lay out the negative financial results. If we had been able to execute on this timeline and be fully transparent, people would have seen the dire financial situation and better understood the necessity of the plant closure.
This experience taught me several things. Closing a Renault plant was unlike closing any other. Renault was a state-run business, so any factory closure resulted in the collapse of a major piece of the labor union. Workers still operated in two shifts, rather than the three needed to maximize production. In the end, we resurrected Renault only by challenging conventional thinking.
Gradually, management battles and labor strikes disappeared. The commotion subsided. We were able to set new goals, aiming, in fact, to match the performance of Nissan’s Sunderland plant in the U.K., one of the most — if not the most — productive plants in Europe. Ultimately, Renault was revived and its performance from 1997 to 1999 improved substantially. But the industry was changing around us. We needed a partner to help us break through.
The birth of the Nissan partnership
My journey to Nissan Motor began with the “merger of equals” between Daimler-Benz and Chrysler. This historic partnership was announced in May 1998, and it challenged the entire automotive industry.
A few days after the announcement, Renault’s executive committee held a meeting. Chairman Louis Schweitzer mentioned that Renault should also start thinking about potential mergers and partnerships. At the time, the company was showing some revenue growth, but it didn’t compare to the growth of the new company formed by Daimler and Chrysler, which became as large as General Motors and Ford Motor virtually overnight. We understood the strategic challenge: Could Renault stay relevant among such mammoths?
The question then became not whether we should form a partnership, but with whom. We knew that automakers who delivered sales of fewer than 4 million units wouldn’t be around much longer, so that disqualified any smaller candidates. On the other hand, the then-largest automakers, such as GM and Ford, were out of reach.
After extensive deliberations, we narrowed our list down to three candidates: Mitsubishi Motors, Nissan and a South Korean automaker. At the time, neither Mitsubishi nor the South Korean company seemed like the right fit (thought 17 years later, we entered a partnership with Mitsubishi Motors). Nissan, however, seemed like it could be a good match. It had the size and international brand recognition. And I had a good impression of the company.
Nissan had the incentive to partner. In the decade leading up to that point, Nissan had experienced only one profitable year. Its president at the time, Yoshikazu Hanawa, was publicly looking for a partner, though he initially had bigger companies than Renault in his sights, notably DaimlerChrysler. Renault was next in line to enter discussions with Nissan.
We didn’t know what the others were offering. But unlike Daimler, which was negotiating with several other companies at the same time, Renault’s interests were focused solely on Nissan. The negotiations went well, but it was clear to us that Renault wasn’t Nissan’s first choice. Our fate depended on whether Daimler was going to take Nissan’s deal or not. But we kept at it, and in March 1999, Daimler’s chairman, Jurgen Schrempp, left Tokyo and the Nissan deal behind.
A colleague informed me of Daimler’s exit while we were attending the Geneva Motor Show. Now we were the only player in the game. I was not directly involved with the negotiations; Schweitzer had instructed me to provide assistance in case of an emergency, so I was offering support from the sidelines. But in November 1998, I was called in to pinch-hit: Schweitzer asked me to provide Nissan’s executives with details about our 20 Billion Franc Cost-Reduction plan. I delivered a three-hour presentation to Hanawa-san and six other executives. It was apparently effective, because Hanawa-san later told me, “I was going to request that you be the one to come if we ever entered a partnership with Renault, Ghosn-san.”
Because Renault is owned in part by the French government, it took some time to get the deal approved. Members of the government were supportive of it, but there was some hesitance after a failed Volvo deal from years earlier. Schweitzer assured Prime Minister Lionel Jospin that such failures wouldn’t be repeated. The prime minister gave his approval.
When the deal was finalized, Schweitzer told me, “There’s only one clear candidate to go to Nissan: you. “Indeed, I had the necessary qualifications. I had experience working with different cultures and also with restructuring businesses. Schweitzer would later tell me that if I had refused, he would have terminated the Nissan partnership. But it didn’t take much to convince me – this was the opportunity I had been working toward. While I had my heart set on going, the ultimate decision would be up to my family; we had just returned to France not two years before. Fortunately, they were game for a new adventure. We packed for Japan.
Open minds and enthusiasm: Early days in Tokyo
Cultural sensitivity and a sincere desire to fix Nissan help Ghosn break the ice.
Before the alliance between Renault and Nissan Motor, I had been to Japan only once in my life. It was in 1984, and I was still with Michelin. I had gone on a business trip to visit Komatsu, but my stay lasted for only two days – too short to get a real impression.
I visited Japan a few other times during the partnership negotiations with Nissan, but my true relationship with the country began when my family moved there in May 1999. I arrived in Japan a month before the rest of my family, and initially lived in a hotel. The Nissan headquarters was then in a prime location in Ginza, near the center of Tokyo. My first office as chief operating officer was a renovated conference room a few doors down from the then-CEO Hanawa-san. My executive assistant, Takahashi-san, was extremely efficient, expertly managing my appointments so that I could work at a brisk pace.
Upon my arrival, I could tell people were curious about my intentions. My reputation as a “cost cutter” had preceded me. Nevertheless, I jumped headfirst into the task at hand. I was careful to respect the traditions of the Japanese culture at Nissan. For the general shareholders meeting, I had practiced bowing at 30 and 60 degrees. But I was there for one reason: to fix the company. I told those shareholders: “I came to Japan not for the sake of Renault, but for Nissan.” I still remember the warm applause.
I met with many stakeholders, including the unions and suppliers. They were unanimous in saying that while the changes would require sacrifice, as long as I fixed the problems, they supported me. That was all the approval I needed.
Around this same time, other executive- and manager-class personnel from Renault were beginning to arrive in Japan – 30 in all. Many were hand-picked by me, and others came recommended. For each position I filled, I focused on whether that person possessed enthusiasm and an open mind. As a leader who had run many companies in several countries, I knew that the only ones who could truly change the company were people inside it; the chances of a French outsider trying to “reform” it from the outside were zero. What I needed were managers who could solve problems in close cooperation with the Japanese. And I did not want there to be any division within the ranks, so I discouraged exclusive gatherings or private clubs for the people who came from Renault.
Because I had chosen people with open minds, the French newcomers adjusted well and were welcomed by their colleagues. Certainly there were some inside Nissan who were skeptical. I remember a popular TV commercial jingle: “The new boss is French. Not even the body language gets through.” This ad referred to the significant cultural differences between the French, who shake hands, and the Japanese, who bow.
And that was only the beginning of the differences I would encounter. Still, our alliance was successful because we were able to come together around shared goals.
And it wasn’t just Renault people coming to Nissan – Nissan employees also went to Renault. In the end, everything we have done as an alliance has benefited both companies – otherwise we wouldn’t do it. And it’s a critical reason why the alliance continues to succeed today, while others who have tried this model have failed.
Mapping out a plan to save Nissan
Seeing losses everywhere, Ghosn rejects the first X-Trail, initiates huge cost cuts
The first order of business when I joined Nissan Motor was to build a plan for its recovery. At the time, Nissan was in a desperate situation. The company’s share of the Japanese market had been steadily falling for 26 years. Financially, it had been in the red for seven of the eight years through 1999. Interest-bearing debt was more than 2 trillion yen ($17 billion at current rates). Because of this, the release of new models had slowed almost to a stop.
How did Nissan find itself in such a hole? One reason was that the company had simply not valued profits. Back in 1999, Nissan offered 43 models, but saw profits for only four of them, and small ones at that. I remember one executive meeting early on in my tenure in which I rejected the development plan for a new model called the X-Trail.
To me, the reason was clear: The proposed business plan would result in a loss. But other executives and staff were shocked. It was the first time that a plan for a new model had been rejected by the executives. The team argued that without the plan, dealers would have nothing to sell. I responded to their pleas by saying, “no profit, no program.” Discipline was critically important. (The X-Trail we have produced since 2001 is an improved, and profitable, version of that plan.)
The issue wasn’t that Nissan executives hadn’t recognized the problems in front of them; it was that no one wanted to take the tough action needed to solve them. But I was adamant: We had to confront reality.
Over the next several months, I turned to the employees to put forth their ideas and plans. A key part of this process was the development of cross-functional teams (CFT). The CFT is a concept at the core of my management approach, and it was a method I had practiced many times before and proved successfully in the face of many corporate challenges over my career. The problem at many large companies is that individual teams only hold a piece of the solution, but they don’t talk to each other to assemble those pieces together. A CFT facilitates this.
At Nissan, we put together 10 teams in all, composed of 10 middle managers from purchasing, production, development, finance and other relevant functions. Each team addressed a specific company challenge. I also joined in the discussions, which was an invaluable learning experience for me.
One team was focused on purchasing. At the time, Nissan was paying 20 percent more than Renault for parts. Not because they were higher quality, but because Nissan was trading with so many suppliers, we were not achieving the appropriate economies of scale to bring down the price per part. We could do better.
At first, members of the purchasing CFT said they would target a 5 percent cost reduction in three years. I refused. This was not a big enough improvement. I pushed them to think bigger. At the end of a series of meetings, we had agreed on a 20% cost reduction over two years. I didn’t tell them that was the goal — they arrived at it on their own, which was much more effective than a solution imposed from the top down.
Discussions regarding Nissan’s revival plan continued through September 1999. At the end of that month all major elements were assembled into one big file. In October, I locked myself in my office to review the details and refine it. As the plan fell into place, it was clear to me that this would require enormous change and bring much pain – but with potential long-term benefits. The alternatives were to risk the collapse of the entire company. I knew it was time to explain those changes and rewards to the public.
On Oct. 18, two days before the Tokyo Motor Show, I stood on the stage at a venue in Tokyo’s Hakozaki district, preparing to deliver a speech. I was using a teleprompter, which was still not used often in Japan. I wanted to make sure I had every word precise, as it would affect many lives. After I finished, a wave of applause erupted from both Japanese and foreign media. A veteran observer told me then, “I’ve never seen such an overwhelming response before in Japan.” Now the hard work could begin.
A whole new Nissan (almost) overnight
Saving the automaker from a sea of red took a massive effort from all involved.
The Nissan Revival Plan produced a range of reactions worldwide. Some worried that the plan, introduced in late 1999, would lead to the destruction of traditional Japanese business relationships. Others worried about their jobs. But I wasn’t putting out a plan I didn’t believe in fully. I asked for trust and backed it up by saying that if we did not return to profit after a year, I would resign, as would my executive committee.
One of the biggest changes we made was in purchasing, which caused some tense moments. Traditionally, Japanese companies form close ties with their suppliers. However, as with the Renault restructuring, we focused on reducing procurement costs by doing more business with whichever companies could best meet our requests for lower prices. It was based purely on merit. That was the only way.
For example, Nissan Motor was purchasing almost all of its sheet steel from four of the five major Japanese iron and steel companies, which was one of the main reasons our purchasing costs were so high. To remedy this, we maintained relationships with all four steelmakers but began focusing on Nippon Steel (now Nippon Steel & Sumitomo Metal) and Kawasaki Steel as our primary suppliers.
Our transactions with another steelmaker, NKK, decreased significantly, and the company announced in 2001 that it would merge with Kawasaki Steel. The media dubbed this the “Ghosn Shock.” But I knew better – long before the announcement, I had met with the top executives of NKK and personally outlined our new strategy and policies, so no one was caught off guard, let alone “shocked.”
These cost-saving measures were carried out in other segments as well. The revival plan included a target of reducing the total number of trading partners by half. At first, the number of suppliers decreased. But when Nissan’s fortunes turned the corner after 2000, the number of our business partners actually rose. And as we focus on new technology, such as electric vehicles, our list of suppliers continues to grow.
We have seen this trend across the board. We had to close five plants but have since opened 15. We also had to cut 20,000 people from a workforce of around 150,000, but today we have a headcount two times the size after the initial reduction. Nissan had 2 trillion yen ($17 billion at current rates) in debt, but now has 1.5 trillion yen in cash.
I do not want to discount the sacrifice so many people made during this process. I remember seeing a story in an American newspaper at that time that featured managers of some of the small and midsize companies near Tokyo’s Murayama factory, which we shut down. They told the paper that their companies would not be able to survive unless Nissan returned. But they acknowledged there wasn’t a better plan -– and they wanted to cooperate, no matter what it took.
I will never forget these words. They strengthened my resolve to deliver a better future for our entire ecosystem of suppliers, partners, employees and communities.
And we did deliver it – faster than expected. By the year through March 2002, Nissan had achieved a 4.5 percent margin on operations and reduced interest-bearing debt to less than 700 billion yen. We were one year ahead of schedule. As it turns out, I didn’t have to quit my job. In fact, I was named chief executive officer in 2001.
The meaning behind Nissan 180
The first post-recovery medium-term plan set important precedents for the automaker.
When the financial results of our recovery were released, Japanese society began seeing Nissan Motor in a new light. As the now CEO and president of this success story, I was graciously welcomed everywhere I went. I received requests for interviews and speeches, and I even appeared on a couple of talk shows. Suddenly even our local yakitori restaurant, one of my family’s favorite hangouts, was swarmed with cameras. The attention was new to me, but I didn’t let it distract me from the ongoing work. Recovery is a continuous process.
Nissan’s financial performance was on the upswing. At the same time, we were restructuring and adopting a fresh growth strategy, which included construction of our Mississippi plant in the U.S., which now produces large pickup trucks and is a backbone of Nissan’s growth. It was time to move to the next phase.
The next medium-term management plan was called Nissan 180. Each number had a meaning.
The “1” signified our target of increasing sales by 1 million units worldwide by 2005. The “8” stood for the 8 percent or better operating margin – the highest level in the industry – to which we aspired. And the “0” indicated our goal of zero interest-bearing debt. We’ve kept up the practice of using numbers in the names of our medium-term plans, including the current one, Nissan Power 88, which runs through March 2017. To me, numbers provide a common language that can effectively communicate the management’s vision to all employees.
There is another reason we focus on numbers. One of the differences between Japanese and French cultures is how decisions are made and executed. In France, we come to decisions quickly, but the execution can take a variety of directions, because the decision is open to interpretation. In Japan, it takes longer to come to a decision, but once it’s made, action is uniform and swift. So the best way to achieve a target is to make sure it is specific.
Another cultural difference is that in Japan, there is a high level of deference for the rule of seniority. While I think it is important to respect seniority, it should not be in the form of discrimination against young people. A wage and promotion system based solely on seniority produces negative effects. Rather, people should be evaluated on the results of their work and their contribution to the company. To me, it’s about performance. That is why Nissan introduced an incentive system that rewards financial performance at management levels.
We are continuing with these changes to ensure that younger employees and women are empowered with opportunities. After all, I was given big responsibility at a young age, and that is the reason I am where I am today. In these ways, Nissan’s revival is still ongoing. But by 2003, at least financially, we had fully recovered.
A delayed but fortuitous China entry
An unexpected partnership with Dongfeng helped Nissan tap a burgeoning market.
Nissan Motor was slow to make a full-scale entry into what has become the world’s largest auto market: China. We had been there for 30 years and produced Nissan’s first Cedric model for the Chinese market. But it was in 2000 that we started to realize the true opportunities. At the time, there were 1.2 billion people in China buying only 2 million cars a year. That’s 10 cars per 1,000 inhabitants. In Japan, there were 600 cars being sold per 1,000 inhabitants. At a certain point, the Chinese market was going to boom.
Toyota Motor and Honda Motor had already made their moves into China in the 1990s, but because of Nissan’s necessary restructuring, our plans had been delayed. But there were plans. In February 2000, just before the Nissan Revival Plan was launched, I met with Toshiyuki Shiga, who was in charge of corporate planning (he would later become chief operating officer) and told him to start preparing plans to expand into China. The market was still in its infancy, but we knew the potential it represented.
I had a chance to meet Wu Bangguo, deputy prime minister of China. I went with the intention of posing many questions to Mr. Wu, but he pre-empted me.”Mr. Ghosn, you revived Nissan, and we need some help at a state-owned automaker called Dongfeng. If you were allowed equity participation, would it be possible for you to support the revival of this company?”
I was caught totally off guard. In China at that time, there was a general reluctance to offer any more joint-venture licenses. In fact, in the automotive sector, foreign entities were prohibited from owning more than 50% of capital in a joint venture. But with the support of authorities, we were able to create a deal unlike any other.
The scale of the project had suddenly become enormous, valued at more than 100 billion yen ($851 million at current rates). This posed a tremendous opportunity, not only to open the door to the Chinese market, but also to contribute to the entire business of Dongfeng. It also provided Nissan with the opportunity to catch and even surpass car companies that had been in China for much longer.
So in March 2002, Nissan announced a capital tie-up with Dongfeng, and we began working on this historic new venture immediately. We created a mission team called the Golden Triangle and held meetings every other week to review reports. But as the project grew, we found that a conventional conference style no longer allowed us to hear reports from all of our teams.
I began to hold Friday night meetings with Shiga-san and a handful of other team members at an Italian restaurant near my house. I usually don’t work too many late evenings, as I reserve those hours for family, but this required extra effort. After we finished our plates, I let the questions fly. Our primary concern was not the financial situation of Dongfeng, but whether we could achieve a real partnership.
In the end, things went well with Dongfeng executives. We established a strong relationship with Mr. Miao Wei, who was chairman at the time, and with Mr. Xu Ping, his successor. One of the reasons for this rapport was because the Chinese people had a deep respect for Japanese products. Dongfeng also benefited from Nissan’s global management expertise. In return, Nissan was able to leverage Dongfeng’s local assets, so we weren’t starting from scratch. It wasn’t risk free, but it was an important part of our strategy.
Today, our sales in China are a significant contributor to our global totals. And we see tremendous opportunity for low- and even zero-emission vehicles to be developed in the Chinese market.
On a personal note, after visiting China several times, I learned how to write my name in Chinese characters. I was completely fascinated by these characters and practiced them privately in my free time.
Codifying the Nissan Way
After the success of Nissan 180, Ghosn and his team set a course for lasting growth.
I have on the bookcase in my office a photo book titled “Shift,” which charts our journey from 1999, when I first came to Japan, to 2005, which marked the end of the Nissan 180 plan. Copies of “Shift” were distributed worldwide and handed out to all Nissan Motor employees, and it does its best to capture the six years that, as I wrote in the book, forever changed us, as a company and also as leaders. The final photo is especially meaningful: It captures the moment right after we sold our 1 millionth vehicle, reaching our Nissan 180 goal.
The book is an important record of the incredible feat the people of Nissan achieved. But in addition to recording the past, I believed we also needed something to guide us in the future. That something became the “Nissan Way.”
In 2005, a number of executives, including myself, attended a daylong retreat at a camp in Hakone, some 100km southwest of Tokyo, to discuss various ideas. We wanted to create a global code of conduct that the entire Nissan community could embrace. It was based on the idea that, “The power comes from inside” and is divided into five mindsets and five actions that all Nissan employees are expected to demonstrate to this day.
That same year — 2005 — was a turning point for both Nissan and myself. In May, I was appointed CEO of Renault. Former Chairman Louis Schweitzer had announced that I would be his successor three years before he stepped down as CEO. He had even wanted me to take the helm prior to 2005, but I asked him to wait because I wanted to concentrate on rebuilding Nissan.
With this promotion, I became the first CEO to simultaneously lead two Fortune 500 companies. This position allowed me to further deepen the relationship between the two automakers through the Renault-Nissan Alliance.
Leading both a French and a Japanese company required a major shift in how and where I spent my time. Until then, I had spent three weeks of each month in Japan and one week on overseas business trips. However, in order to also lead Renault effectively, I needed to reorganize my time: one-third in France, one-third in Japan and the remaining third in the markets where we operate. My family returned to France.
At Nissan, I named a chief operating officer to handle management along with me. I appointed Toshiyuki Shiga, who was then a managing director. Because I now wore two hats, I could not manage Nissan the way I did before. Of course, strategy is ultimately decided by the highest decision-making group, the Executive Committee, which I chaired, but a certain degree of role-sharing was necessary. As I take on the role of Mitsubishi Motors chairman today, I have similarly asked our chief competitive officer, Hiroto Saikawa to step into the role of co-chief executive officer of Nissan.
That said, I still like to be a hands-on manager. I want to know what’s happening in the development, production and sales offices, and I make extra time in my schedule to visit them. Even at the top level of an organization — and maybe even especially then — there is always something to be gained by seeing and feeling things for yourself. As I take on additional responsibilities as Mitsubishi chairman, I will continue to find time to do these things. To me, if you think there aren’t enough hours in a day, you simply aren’t maximizing the ones you have.
Gaining depth with the Renault-Nissan Alliance
Ghosn discovers the challenges and rewards of heading two carmakers.
By the year through March 2006, Nissan 180 had ended, and we were in the first year of the next medium-term plan: Nissan Value-Up. For the first time, our recovery was starting to lose momentum. Some attributed this to a bounce-back effect after reaching the Nissan 180 goal of increasing global sales by 1 million vehicles. Other causes seemed to be affecting the industry at large, brought on by emerging technologies, shifting consumer preferences, high oil prices and the entry of new competition from regions like China and India.
I wasn’t worried. The morale of employees was high, and they continued to work hard toward achieving our next set of goals.
This was my first year as the leader of both Nissan Motor and Renault. I would spend the first week of the month at Renault and the third week at Nissan. In between, I would visit other regions as needed, traveling to the U.S., China, Russia, South America and various European countries.
Serving as the top executive of two large companies simultaneously was unique and especially challenging, but it had its rewards. I had to be constantly mindful that Renault was one company and Nissan was another. Each had its own decision-making body, board of directors, shareholders and so on. We never made a decision about Renault in Tokyo, and we never made a decision about Nissan in Paris. These two companies had nothing in common except the willingness to cooperate in some areas for the good of both. I carried separate briefcases and had separate schedulers; the job organized itself.
The other challenge was making sure to always weigh the interests of Renault and Nissan equally. I allocated my time between the companies 50-50 and made sure it was clearly logged and transparent to all employees.
This is what made the Renault-Nissan Alliance different than an acquisition or merger. An “alliance” was a new, third type of business relationship, which fostered a deep sense of belonging. It was important that no one feel as though they were compromising or sacrificing as a result of the alliance. But while I was adamant that the companies remain distinct entities, we also sought for Nissan and Renault to share information and development resources to maximize performance and leverage synergies.
Because of the alliance, Nissan was able to enhance an important skill: working in a multicultural environment. Nissan experienced the full range of global cooperation with Renault, such as sharing in purchasing, technology, production, information technology and integration in human resources. The cross-cultural sharing has been just as important as our business synergies. The alliance between Renault and Nissan works because both the Japanese and French put forth an equal amount of effort to make it work.
The alliance helped Nissan open its doors to the world while maintaining its identity. It hasn’t always been easy, but it’s what has positioned us to compete in today’s auto industry. In the years to follow, this would become even more critical.
Bringing back an icon
Carlos Ghosn’s decision to resurrect the GT-R gave Nissan a fresh spark.
At the end of 2007, I announced the revival of a Nissan icon: the high-performance GT-R sports car. The model had been discontinued in 2002, and a successor had not been announced. At the time, Nissan Motor was in the midst of its revival, and it did not have the funds or human resources to devote to a sporty, high-performance car. But, as with our China strategy, we were putting the building blocks in place.
Reviving the GT-R, and also the Z, was about more than just the vehicles themselves – it was about reviving our brand. How society, customers and shareholders saw the company was critical to our success. And that included our employees. Morale among Nissan employees was low when I came to Japan. To motivate them, I focused on creating projects that would build excitement and give them reasons to be proud of their company. A flagship car was one of those projects.
First, I set out to reform our design department. A month after I became chief operating officer in June 1999, I started a search for a new head designer. My first condition was that the right candidate should come from outside the company. While it was important to me that Nissan employees rebuild Nissan themselves, I felt the role of a new designer required someone with fresh eyes and new approaches. At the time, the technology department had a significant influence over the design of our products, which wasn’t an ideal process. Designers did not feel valued, and they weren’t encouraged to express bold new ideas. If we were to resurrect these iconic cars – and build them for the future – we needed designers who weren’t bound by past policies. This required us to look beyond Nissan’s walls.
My second condition was that the new design head would be Japanese; it would be important that these flagship cars reflect the beauty and culture of Japan. Third, the right candidate would have proven global success.
My search ended with Shiro Nakamura, who to this day is the chief creative officer, overseeing design operations across our three brands, Nissan, Datsun and Infiniti. When I met him, Nakamura-san was a successful designer at Isuzu Motors. I told him that if he took the job, he would be expected to sign off on all final designs. Until then, this had not been the case at Nissan. Because it was not clear who signed off on final designs, no one needed to take responsibility when things went poorly. Nakamura-san accepted my condition.
Under Nakamura-san’s design leadership, Nissan released a new Z in 2002 and then the GT-R in 2007. The GT-R became one of the highlights of our medium-term plan, called Nissan Value-Up. It gave the Nissan brand a much-needed spark and generated sustained profitability. The GT-R assumed a brand leadership role in the U.S., the Middle East and Europe.
The GT-R succeeded in integrating Japanese character with global appeal in its design. This is a balance we continue to strike: While the majority of our designers are based in Japan, we seek out those who can ensure that we convey the Japanese roots of our cars in ways that appeal to all of the markets where the cars will be sold.
The GT-R’s revival was not just about design. We also focused on great engineering and top performance, without high spending. We built it from the ground up to be unique in the high-end sports car segment. It is still my favorite car to drive today.
Nissan in crisis mode
The outbreak of the global recession prompted a quick rethink.
In the spring of 2008, six months before the financial markets would come crashing down, my instincts told me that the economy was about to go into a period of reassessment. But there was no clear indication, at least to those of us in the auto industry, that we were on the brink of economic collapse.
Then, on Sept. 15, we experienced the “Lehman shock,” or as they call it in the U.S., the start of the Great Recession. Economic and financial systems all over the world were paralyzed. Even companies on solid financial footing were no longer able to borrow money. Automakers, too, had to face harsh realities, because we needed to move large sums of money to finance purchasing and sales, while also supporting our suppliers.
I was in Paris at the time of the crash. As soon as I heard the news, I immediately made a phone call to Nissan Motor headquarters. I told the chief operating officer, Toshiyuki Shiga, to assemble all of the executives in Ginza for an executive committee meeting. It was a holiday in Japan, but we couldn’t wait to make critical decisions. In the meantime, I told the Nissan management team to create plans of action for each department – purchasing, development, production and sales. I didn’t know exactly what would happen, but we had to be prepared.
The most important consideration was cash management. Nissan had launched a medium-term plan called GT 2012, which emphasized profitability through active investment. However, since the financial system was paralyzed, we could not afford to let go of any cash. We had to refrain from investing as much as possible. We suspended the plan immediately.
Overnight, the world had changed completely. Nissan, like every other company on the planet, was forced into an unstable situation. But because of our quick action and the cooperation of Nissan employees, we were able to rebound relatively quickly. In addition to suspending our medium-term plan, we also reduced production, froze new parts orders and took other measures, such as reducing overtime. Even our corporate-sponsored baseball team suspended its activities to conserve funds. All management positions took a 5 percent pay cut.
I returned to Japan on Sept. 23 as planned. We held a town hall-style meeting with employees and told them that while we may need to take further cost-reduction measures, we would not compromise investments in important projects that would affect the future growth of Nissan. We had to focus not only on the short-term but also the long-term sustainability of our business.
When the economy crashes, even large companies like Nissan can become helpless. Ultimately, governments had to come to the rescue. Government agencies, government-affiliated financial institutions and central banks in various countries, led by the U.S., took measures to keep big businesses from failing by lending them money or assisting them through special programs. Compared to the U.S. and Europe, the Japanese authorities were more cautious about becoming directly involved and took time to fully analyze the situation.
I was in frequent contact with government officials, both in Japan and overseas, to exchange ideas and offer advice, based on Nissan’s situation. The experience reminded me that cash is the lifeblood of the economy. We, along with other businesses, had to adjust our management philosophy completely. It was a bumpy few months, but Nissan’s fighting spirit came roaring back, like a muscle memory from the early days of our revival. Whatever happened next, we would be ready.
Going electric and disproving the doubters
The LEAF validated Nissan’s decision to skip hybrids and focus on electrics.
As I wrote previously, even in the midst of the financial crisis, it was critical to not pull back on the investments that were positioning us for the future. At the top of that list was the development of electric vehicles.
Many people have said that we made a big bet on electric vehicles, but in reality, it was the result of research and deep analysis. There were a few forces accelerating our development of electric vehicle technology. For one, prices of crude oil were skyrocketing, and electric vehicles would allow us to move away from a dependence on oil. There was also growing concern about the environment, and an industry responsibility to reduce carbon emissions. Meanwhile, environmental regulations in the U.S. and Europe were becoming ever stricter – all reasons to move away from fossil fuels and toward zero-emissions power.
Despite this overwhelming evidence, when we announced our plans to build an electric vehicle in 2008, we were met with skepticism. Some critics said that we were focusing on electric vehicles because we lacked hybrid-vehicle technology, but that was incorrect. We made a strategic decision to focus on electric vehicles. Other companies had tried to do so but failed due to a lack of battery technology. Nissan Motor, on the other hand, had succeeded in developing electric vehicle batteries that could provide the same performance as a gasoline-powered car. We had the technology to build an all-electric vehicle; why wouldn’t we leapfrog over hybrids?
In December 2010, we introduced the world’s first mass-produced, affordable electric car, the LEAF. The race for a zero-emission car had begun. Those same automakers who doubted us seven years ago are now following in our footsteps. Because of tougher environmental regulations, no auto company can compete without an electric car.
This increase in competition is good because it makes the industry stronger. But other companies still have a ways to go to catch up to us.
This shift in attitude reminds me of one of my favorite books, “The Alchemist,” written by Brazilian author Paulo Coelho. When it first came out, the book only sold one copy in the first month. His editors told him to stop trying to sell it, but he fought them for a year. Today the book is one of the best-selling in history, and it has set a Guinness World Record as the most-translated work by a living author. I reread it last fall and was reminded that sometimes you need to ignore the critics and go forward. I’m glad we did. Today, the Renault-Nissan Alliance accounts for more than half of all electric vehicles sold worldwide, and we are committed to maintaining this advantage into the future.
Disaster strikes: Japan’s March 11 earthquake
Nissan plants hit harder than most, but employees pull off “miraculous” recovery.
Like anyone who lives in Japan, or has a close connection with the country, March 11, 2011 is imprinted in my memory. I was in Paris to attend a Renault management conference. I received an email early in the morning with two foreboding sentences: “Big earthquake occurred. We are now investigating the damages.”
I replied immediately: “I want you to put all your efforts into the recovery, whatever the situation.”
From that moment, information flowed into Paris in a continuous stream. We learned that the damage to the Tohoku region, in Japan’s northeast, and to our factories and supply chains was significant. Of all the Japanese automakers, Nissan Motor was the hardest hit. Major damage forced us to stop production at two important facilities. Nissan immediately established a disaster countermeasures office to respond.
I prepared to return to Japan immediately, but I was confronted by two obstacles: One was the closure of Japanese airports. Because of the extensive damage caused by the earthquake, the subsequent tsunami and the nuclear power plant meltdown, activities at major airports in Japan were suspended. The pilot of our corporate jet couldn’t take flight – even when departures from Japan were allowed, arrivals from overseas were not permitted for an extended period. The other problem concerned a pressing management issue at Renault that required my attention in Paris.
Because of these complications, it wasn’t until March 21 that I finally made it to Japan. On the 29th, I traveled north to our Iwaki factory in Fukushima Prefecture, where the most damage had occurred. I wanted to go as soon as possible to inform our employees that I planned to rebuild the factory immediately. I had heard that, since the day of the earthquake, everyone had become worried about the future of the factory, but I had no intention of closing it.
I also needed our suppliers to come to the disaster area. It was a difficult situation, as the damage to the nuclear plant was happening at the same time, but it was imperative that we assist each other in the rebuilding. The best course of action for me was to go to the factory and deliver the message personally. The management team told me they were committed to bringing the factory back to life.
When I returned on May 17, 2011, barely two months after the disaster, I saw the miraculous result of their efforts. The plant had returned to nearly full operations. During that visit, employees shared with me their experiences during the crisis, and the aftershocks and subsequent earthquake that hit a few weeks later. Their commitment to restoring operations despite these odds made a significant contribution to the recovery of Nissan, and in a symbolic way, to all Japan.
Nissan’s quick recovery was, in large part, due to the mindset we developed during our near-death experience in 1999, when Nissan was on the brink of bankruptcy. Overcoming that crisis and putting Nissan on the road to growth and sustainable profitability taught us many lessons that were reinforced by the Fukushima disaster and by the negative impact last year’s earthquake had on operations in Japan’s Kyushu region.
The Chinese character chosen in Japan to symbolize the year 2011 was “kizuna,” which can be translated as ties that can bind a family, a nation, or even a company together. The response to the disasters powerfully underscored the strength of those bonds, and taught us important lessons about how to be a stronger company in the face of crisis.
More than numbers
With Nissan Power 88, Ghosn focused on long-term efforts to build brand value.
At the end of the fiscal year in March, Nissan Motor will close the book on Nissan Power 88, our current medium-term business plan. The two eights in the title refer to our goal for operating margin and our target for global market share at the end of the plan (to be measured in fiscal 2017).
It was in the second half of 2010 that we started brainstorming for Nissan Power 88. At the time, there was no medium-term plan in place at Nissan. I had regularly introduced company plans every three years since I came to Japan in 1999, but we intentionally suspended our fourth installment – called GT 2012 – because of the financial crisis of 2008. We replaced GT 2012 with a tentative rebuilding program called simply the Recovery Plan.
Then the earthquake occurred in March 2011, two months prior to our planned announcement of Nissan Power 88. This forced us to delay the announcement of the plan, but the rebuilding of our damaged factories and supply chains progressed rapidly thanks to the efforts of our employees and partner companies. We were able to introduce Nissan Power 88 in June of that year, with its content largely unchanged from before the earthquake.
Our goals were ambitious, as they should be, but I emphasized to our executive committee that “those numbers are simply the result.” While the numbers themselves had meaning, the most important factor was sustainable growth of our brand power and sales.
The use of numbers makes plans, policies and milestones easy to understand. This is why Nissan’s previous medium-term plans were largely defined by numerals, such as Nissan 180 and GT 2012. They are an effective communication tool that everyone in a culturally diverse organization like Nissan can understand and share.
That being said, I decided that Nissan had moved past the point of relying on just numbers to define its goals. Our cost management and profitability had been steadily rising to the best level in the automobile industry, so both an 8% operating margin and an 8 percent global market share were well within our ability to achieve. I felt that there were more important things we needed to do than just chase numbers. We had to strengthen our brand and improve sales power. So with Nissan Power 88, I tried to craft a plan that would progress at a steady pace over the course of six years.
It takes time to raise brand value, but it is critical. With good brand value, we can reduce incentives and discounts. It is about quality, customer satisfaction and innovation. Today, Nissan advertises at major airports around the world and serves as a primary sponsor of soccer championships and other sports events, among other efforts to raise brand awareness and value.
The results have been positive. In 2010, for example, Nissan did not even rank among the top 100 global companies by brand value, according to an annual survey we commission. Today – six years later – we have climbed to 46th.
The strength of Nissan’s brand power is the most effective tool for securing our long-term success. If I can forge a company that sustains quality, customer satisfaction and innovation at a high level, then that company will have a long future ahead of it.
We are two months away from the end of fiscal 2016. By then, the company should be approaching an 8 percent operating margin though still short of an 8 percent global market share. But again, it is not about the individual numbers, but the sustainability of our progress. We have improved operational efficiency and increased our competitiveness. And we will turn to our next medium-term plan to further build on our progress and evolve our business for the next six years.
Weathering Japan’s post-crisis market
In Thailand, Nissan found a way to maintain both profitability and quality as the yen soared.
It was after the outbreak of the global financial crisis in 2008 that someone suggested we produce the Nissan March in Thailand. We were dealing with a very strong Japanese currency.
The March is one of Nissan Motor’s biggest sellers in Japan. As the yen kept increasing in value, this compact car – which was produced domestically and sold for around 1 million yen ($8,798 at current rates) – became difficult to export profitably. I listened to various opinions regarding the transfer of the March’s production to Thailand. Some said it would lead to “the deindustrialization of Japan.” But even after the financial crisis hit, the yen continued to soar, and we needed to revise our cost structure in accordance with the changing currency rates.
I asked our executive committee members,”If we move production overseas, how will quality be affected?” Our Japanese executives and engineers drew up a number of options for such a move and we narrowed them down to just a few. I held firm on our profit targets, despite the harsh business environment surrounding us.
Thailand was the most rational solution to our dilemma of how to stay true to our doctrine of great quality and high profitability. At the time, the Thai government had implemented a series of incentives for eco-friendly cars. If an automaker’s vehicles met certain conditions, such as getting 20km per liter of gasoline, the government would provide corporate tax breaks and reduce the import duties on production equipment, parts and raw materials.
We had long discussions about whether building a second factory for the March in Thailand was a good idea. It would entail a serious investment. But considerable sales growth was expected in Thailand, and the prices of imported cars were rising. Moreover, foreign vehicles imported into Thailand were subject to an 80 percent tariff.
Considering all this, the wisdom of producing the March in Thailand looked indisputable. Still, I told my team: “We will do this only if we can keep the quality of the cars equal to those made in Japan.” Our Japanese team replied: “Why don’t we treat the Thailand plant as an extension of our Oppama factory, one that just happens to be on the other side of an ocean?”
It was a good concept, and Thailand became home to the third production line of our Oppama facility, located in Japan’s Kanagawa Prefecture. After the decision, a large group of engineers from Oppama were sent to Thailand for an extended period to guide the process.
At the Thai factory, we decided to introduce a final process called the “elaborate line,” in which we shipped cars to Japan only after they went through a comprehensive inspection. Then, after the cars arrived in Japan, we conducted another inspection before delivering them to dealerships. This process was a wonderful display of wisdom and teamwork. Later, when I decided to export the March from India to Europe, it was also because of a suggestion from our manufacturing team. The same could be said when we spun off our Kyushu factory to refine it as an export base. Everybody at Nissan kept in mind our earnings goals while coming up with their own ideas. A company doesn’t work well when the ideas only come from the top.
Personally, I don’t like to “micromanage.” I encourage all of our employees to think and act on their own. This concept hasn’t changed since the creation and implementation of the Nissan Revival Plan. Neither has our commitment to the Japan market. In the last several months, we introduced many of our most breakthrough products in Japan, including the award-winning Serena, the first Nissan vehicle to be equipped with ProPilot autonomous driving technology. We also unveiled the new e-Power NOTE, an addition to our lineup of efficient powertrains. In Japan, we will continue to produce 1 million vehicles a year, and we will neither change our profit guidelines nor shift production sites from overseas to Japan unless it’s economically rational.
One of the greatest assets of Japanese companies is the combined, on-the-ground wisdom of their workers. Tapping this resource at all of Nissan’s facilities should enable us to overcome every challenge.
Friends in high places
Ghosn’s network of global connections has helped Nissan-Renault reach its goals.
When you’ve been in business as long as I have, you build a global network of contacts and receive invitations to events dealing with global issues. For example, I always look forward to attending the World Economic Forum meeting in Davos, held every January. I participated in this meeting for the first time in 1998.
After the Nissan Revival Plan proved successful, I received another invitation, this time from Klaus Schwab, the founder and chairman of the World Economic Forum. He wanted me to become a member of the board of trustees. This was an exciting opportunity, as I was still in my 40s at the time, and this position would make it possible for me to hear from and talk with many of the world’s political and economic leaders.
Davos is not just about the connections, but the content of the conversations. It is focused on mobilizing global leaders to take action and make commitments to improve the world. Being in the automotive industry gives me a unique perspective on these issues. Much of the technology we are developing – from autonomous driving to electric vehicles – is going to benefit society beyond our customers. For example in Japan, there is growing concern about car accidents, especially with the increase in older drivers on the road. Autonomous driving will be one solution to the problem of unsafe elderly drivers. This is where technology matches social needs, and Davos gives me an additional global platform to discuss these opportunities.
Government officials often become important partners in reaching business objectives. This was true, for example, in the case of Great Britain, where we celebrated the 30th anniversary of our Sunderland plant in 2016. The plant, based in Sunderland, in northeast England, employs more than 7,000 people and is a significant contributor to the national and local economies. Because of our role as a major employer, I’ve exchanged ideas frequently with British prime ministers, including Tony Blair, Gordon Brown and David Cameron. I also had the opportunity to visit them at No. 10 Downing Street, and Tony Blair was a frequent visitor to our factory in Sunderland, his home electoral district.
I have continued this positive association with the current prime minister, Theresa May. When Brexit became a potential issue concerning the competitiveness of Sunderland, we had an open conversation and quickly reached an understanding.
And then there is Russia. Renault invested in Russia’s largest automaker, Avtovaz, in 2008, as did Nissan Motor in 2012, and we have been able to build a good relationship with the Russian government in the process. When we decided to seek a 25 percent stake in Avtovaz to restructure the automaker, we were competing against two other companies who offered bids, and Renault came out on top. Russian President Vladimir Putin told me the reason was because he trusted us the most to keep the Russian identity of Avtovaz’s Lada brand. When he was re-elected president in 2012, Nissan’s investment in the Russian automaker was decided: Avtovaz became part of the Nissan-Renault Alliance.
Finding a like-minded partner in Daimler
Ghosn discusses the ‘strategic collaboration’ and an unexpected legal challenge.
Every year, a motor show alternates between Frankfurt and Paris. And every year, I host a press conference with Daimler Chairman Dieter Zetsche. There, we discuss our partnership on developing engines through the Nissan-Renault Alliance, while lounging in chairs. It is casual, and we invite the press. We have been doing this for the past few years, and I look forward to it every time.
Our partnership began in 2010 when Nissan Motor and Renault agreed on a business relationship with the German automaker, which included cross-shareholding. This partnership allowed our two companies to jointly develop chassis and engines for many of our respective vehicles, from luxury cars all the way down to compacts. We planned to exchange mutually beneficial information with each other in an open way. We began with three joint projects, but now that total has reached 13.
We call this relationship with Daimler a “strategic collaboration.” It’s different from the alliance between Nissan and Renault in that the latter is based on a high level of cooperation like that of a single corporation (although, as I have said many times, we are not). The bond between Daimler and the alliance, on the other hand, is more limited in scope. We thought it was still important to focus on the common goal of pursuing synergies wherever possible. Daimler, which went through an unsuccessful merger with Chrysler, shares our philosophy and it has worked well.
Nissan has always been an open-minded company, especially when it comes to partnerships. The automobile industry is entering an important phase where we all need to respond to new challenges, including taking responsibility to protect the environment and keeping up with new technology. It takes a great deal of time and expense to sustain stable growth while adapting to these new paradigm shifts. I believe that alliances and partnerships are the best way to meet these challenges and help us meet the demands of our era.
That said, unexpected things always have a way of coming up. Of all the events of the last few years, the one that sticks out in my mind is the series of negotiations we went through with the French government after the enactment of the Florange act in 2014. This new law awarded double voting rights to equity owners who had held shares for two or more years. I will spare you the details of the negotiating process, carried out with countless government officials, but it was a very big deal for us when we finally reached a settlement at the end of 2015.
The Florange act was enacted as a response to the closure of two ArcelorMittal blast furnaces. The Florange act meant that the government had gained double voting rights, and thus a stronger voice, in businesses in which it held equity. And because the French government owned about a 15% share in Renault, it would have gained a more powerful voice in the company. We were also concerned about the implications this law would have for Nissan, in which Renault owned a 43.4 percent share.
At the shareholders meeting in April 2015, we offered a proposal to maintain the existing structure. The French government sought to buy additional Renault shares on a temporary basis, and our proposal was rejected by vote. Naturally, tensions between us and the government were heightened.
Because I am the president of both Renault and Nissan, the situation was especially complicated. To prevent conflicts of interest, I temporarily resigned as chairman while the topic of voting rights was discussed at the Renault board. Nissan’s position was presented by Hiroto Saikawa, now co-CEO, who also served as a Renault director. We took a firm stance that “the developments in France should have no impact on Nissan, which is an independent Japanese company.” Otherwise, the alliance of Nissan and Renault that we’d painstakingly built over the course of 17 years would suffer.
Ultimately, we were able to reach an agreement that restricted the involvement of the French government. Its voting rights at Renault were limited to certain subjects, and we agreed on a deal that would offer it no voting rights pertaining to Nissan-related subjects. In terms of long-term security, Nissan was in the clear. In fact, this was a highly important development that strengthened the trust with Renault.
Making diversity work
How a multicultural workforce became a source of strength for Nissan-Renault.
The success of the alliance between Renault and Nissan Motor is due to our ability to unlock the potential of our cultural diversity – both across the alliance and within the individual companies. The alliance’s management teams are made up of not only Japanese and French employees, but those from many nationalities from all around the world. At Nissan alone, 20 of our 52 executive officers are from outside Japan and represent more than 10 different nations. Of our 10 executive committee members, half are Japanese and half are from outside Japan.
But simply being diverse is not enough. The challenge is how to achieve unity through diversity and maximize its potential. That has been an important goal for me as CEO. If you look at the world’s automobile market, 90 million cars are sold annually, and only 5 percent of those are Japanese cars sold in Japan. Meanwhile, Nissan does business not only in Japan but in more than 160 countries and regions, and we have employees of various nationalities who are experts in their own region, each with significant experience. As Japanese and non-Japanese work together and learn together, this cooperation contributes to our overall performance. Our differences are many, but our potential together is great.
Gender diversity has also been a focus of my leadership. In 2004, I created a department called the Diversity Development Office, which reported directly to me. This was not a social decision; it was a business one. About 65 percent of car-purchase decisions all over the world are made by women; however, most decision-makers and workers in the car industry are men. This discrepancy doesn’t make sense from a competitive sustainability standpoint.
We are making progress to support women entering leadership positions. Women will soon occupy 10 percent of the managerial positions at Nissan in Japan. The global average is 13 percent. In 2008, Nissan was the first Asian company to win the U.S.’s Catalyst Award, given to businesses that contribute the most to the advancement of women in society. We received a similar award in Japan. There are plenty of opportunities for women, and this is just the beginning of it.
I believe that both cultural diversity and gender diversity give Nissan an advantage over other Japanese automakers. It is important to have a workforce that reflects our diverse customers all over the world. It is also a source of strength in times of crisis: After the March 2011 earthquake, for example, Nissan fared better than other companies because we have spent a lot of time focusing on how we communicate ideas and work as cross-functional teams. When crisis hits, we know that we can draw support from many different regions.
In a globalized world, the ability to manage diversity is only going to become more critical for any leader. If you can build a company with different cultures working together, you’re going to get the best out of every culture – and deliver the best results for your company. Nissan is proof of this.
Something special in Brazil
The Rio Olympics gave Nissan-Renault a chance to shine in Ghosn’s homeland.
The Olympic torch was heavier than I expected, but Rio was as hot as I remembered it. The Olympic Games in Rio de Janeiro were scheduled to commence on Aug. 5, 2016. At just past 11 a.m. on that day, I was running a distance of about 100 meters down Avenida Atlantica, along Copacabana Beach, to pass the torch to the next runner as my family watched nearby. Despite being wintertime in Brazil — its location in the Southern Hemisphere means its seasons are flipped from those in the North — the temperature hovered around 30 C, causing beads of sweat to trickle down my face.
Brazil is my homeland. My great-grandfather crossed the Atlantic by boat and reached the shores of Rio more than a hundred years ago. Today, my mother and two of my three sisters reside in Rio. We’re a tightknit family. I return to Rio twice a year, generally in August and during New Year’s, and my children also do their best to make it down to Rio from the U.S. So even if there were no Olympics, my children and I would have been here around this time. That said, I felt this summer was going to be special, quite different from other years. That’s why I urged our staff in Brazil and the Americas to do their very best to secure Nissan’s position as the local sponsor of the Olympics.
This meant that Nissan was the sole provider of 4,200 cars for the Olympic Games. We held many events on the torch’s relay route, and Nissan vehicles – passenger cars and minivans made in Mexico, the U.S. and Brazil – were scattered all over the area. Larger-sized minivans were provided by Renault.
The Nissan-Renault Alliance was everywhere, and our presence went beyond vehicles. No visitor could miss the brightly lit glass-walled building along Avenida Atlantica, near the beach volleyball venue. We converted that building into the Nissan Kicks Hotel, which was used by Nissan personnel and guests, including members of the media from around the world. Nissan Kicks is the name of a compact car sold in the Brazilian market. Currently, the car is built in Mexico, but it’s slated to be produced at the Resende factory, located right outside Rio’s city borders.
We are working to improve our business and grow our market share in Brazil. In August, we announced that the alliance will strive for a combined 15 percent share of the country’s automotive market, up from 10 percent today.
It’s no secret that Brazil has recently fallen on hard economic times, with slumping resource prices and political strife. Despite all of this, I’m convinced that there is great potential in this country. I should know because I watched Brazil overcome even worse conditions in the 1980s, while I was heading Michelin’s local subsidiary; the country was ruled by a military regime but eventually transitioned into a democratic state. I believe the Olympics gave Brazil one jump-start it needed.
The first rule of business is to take advantage of all opportunities, but it is also important for businesses to give back to society. Some of you may have seen Rio’s favelas — slums on the hillsides of the city, where poor people live – featured in the news. A steep class divide is an unfortunate side effect of economic growth, but we at Nissan are addressing this problem by building a work-training facility in the Caju district. Even though several foreign companies have factories in the area, many people in Caju are unemployed. With our training facility, we’re helping to create opportunities for the people there.
Some people have asked if I have any interest in a political role in Brazil, and the answer is no. But I do feel a deep desire to give back to the country, if strictly from a business perspective. The Brazilian automobile market is the seventh largest in the world, but a number of years ago, it was ranked as high as fourth, ahead of Germany. Who knows? Perhaps Brazil can one day claim that spot again. For now, we are planting the seeds of growth, and we will see what the future holds.
Beyond the boardroom: Ghosn the family man
The CEO reflects on fatherhood and instilling independence in his four children.
The subject of work has so far dominated my narrative. I am a deeply private person, and hold my family close. But it would not be a complete picture of my history if I did not spend time to tell you more about my family, especially my children.
I have four children. My oldest daughter was born in Brazil. My second and third daughters, along with my son, were born in the U.S. I cherish the memories of each of their births, but I will never forget the moment I first became a father. Although it was 29 years ago, I remember it like it was yesterday.
Many of our best memories have happened when we were on vacation together. In one memory, I was jet skiing with my son, and our jet ski tipped over, forcing us both into the water. My second daughter, who was 7 at the time, jumped in to come to our rescue. Can you imagine that? A 7-year-old girl jumping into the water to save her brother and father. We are always there to rescue each other when needed.
One of my primary goals as a father has been to foster a sense of autonomy among my children. Not just financial autonomy, though they are on their way to promising careers. More so, I wanted to build their “intellectual independence,” which is having the will to learn and think on your own, and “emotional independence,” or spiritual independence – the ultimate sense of self-reliance. I think it’s important for my children to have more than just unconditional love, but also maintain their own identity and make their own decisions. The ideas of discipline and focus that have guided my professional life are also relevant to my family life in this way.
That doesn’t mean I won’t offer them advice – I do. Today all four of my children work in the U.S., and I speak with them regularly on the phone on weekends. Although I offer advice, I don’t expect them to follow it. This is important. They need only to consider my input, and then make their own decisions.
I have written often about my own background and diversity. My children had a similar upbringing, which informs their worldviews. For example, my son speaks English and French, and was educated in the U.S., Japan and France. He also understands Lebanese culture. Therefore, he fully appreciates diversity and believes that a person’s identity is not bound by nationality. For him, the country a person is from has nothing to do with who he is.
Although we live far apart, we spend some holidays together. My children come – without significant others – so that we can enjoy each other as a family. Vacations are easier to take in August, but we also try to spend Christmas together. We may not be doing anything special, but the simple act of being together is what matters. We use this time to catch up on our interests and share what we have been thinking and working on. I am proud of who they have become.
The next generation
Nurturing new leaders is more important than ever for Nissan’s expanded alliance.
On April 21, 2016, Osamu Masuko, CEO of Mitsubishi Motors, came to me to ask for Nissan Motor’s support in reviving his company in the aftermath of its fuel-efficiency scandal. Nissan and Mitsubishi Motors were already partners on kei mini-vehicle development, so I knew the company well. It was clear that forming an alliance made strategic and financial sense for both of our companies. And coming from Nissan, which had known its own challenges, we knew that Mitsubishi Motors deserved a second chance.
We announced our plans for the deal in May, and it was completed on Oct. 20. Nissan became Mitsubishi Motors’ largest shareholder, and Mitsubishi Motors became a member of the Renault-Nissan Alliance. With this enlarged alliance, our sales are now at 10 million vehicles per year, putting us among the top three automotive groups worldwide. This scale gives us an advantage over most other automakers, and a disadvantage to none.
In December, I was elected chairman of the board of Mitsubishi Motors. It will be my responsibility to support Masuko-san and Trevor Mann, who came from Nissan to Mitsubishi Motors to take on the role of chief operating officer. But the fate of Mitsubishi Motors depends not only on its top leadership, but also on the growth of leaders within the company.
What qualities make a good leader?
First, a leader is somebody who can deliver performance. He or she systemically delivers, and has long experience delivering on challenges. This sometimes means we must speak up to identify problems or present controversial opinions. This is not always easy for Japanese leaders, for cultural reasons. When we first held alliance board meetings, almost all of it was in French. I had to tell my Renault colleagues to be quiet and listen to their Nissan counterparts. I encourage more Japanese leaders to speak up whenever necessary. This is critical to delivering results.
Second, a leader needs the ability to engage with people. When you’re heading a company, people need to connect with you. If they see you as stiff or cold or not easy to understand, they’re not going to listen to you, and a lot of motivation and engagement is going to be lost. In other words, a leader must have the capacity for empathy.
Third, a leader needs industry intelligence. Electric cars, zero-emission vehicles, smart cars, self-driving technology, stiffer regulations and new competition are all transforming the auto market in huge ways. If you don’t have industry intelligence, it doesn’t matter how much empathy you have, or what kind of performance you can deliver – you will have a lot of difficulties if you are not constantly learning, understanding and acting.
I believe no one is born a good leader. Leaders become leaders when they are recognized as such by other people. When I came to Japan in 1999, I was viewed with deep skepticism by employees. But I worked hard to deliver performance, connect with people and always build my industry intelligence. Through this process, I have gained the trust of our employees, and together we have delivered results. I believe Mitsubishi Motors can do the same.
A glimpse of the future
Ghosn on his plans for life after Nissan and why the alliance will outlast him.
I get a lot of questions about my plans after Nissan Motor – and if I believe the alliance will outlast me. The answer to that second question is yes, without hesitation.
In the old days, before the Renault-Nissan Alliance was formed, no one in the auto industry could have imagined a partnership like this. Back then, the only ways two companies came together were by outright mergers or acquisitions. The alliance was a unique system, one that we invented and perfected through 18 years.
Over the years, we have proved that our approach is an effective one with benefits for all companies. We have shown that multiple companies can maintain their respective identities while cooperating in such areas as purchasing and tech development and leveraging their combined larger scale. The alliance devised an effective way for all its different companies to grow in an increasingly competitive industry.
But, of course, no one can predict the future. There is a chance that one day the management of Nissan, Renault, and the alliance will be separate. The fact that today I oversee all three entities is because that is what has worked best so far, but it is not the way it must be forever. The future will be decided by the board of directors for each company.
What kind of person will lead Nissan next? I will leave the specific person up to the board, but I will make a suggestion as to what qualities the right candidate should possess: It should be a person who can respond effectively to change and who can sustain growth, and it should be someone who understands the Nissan Way and is dedicated to its future.
And what will I do next? When the time comes, I have considered various pursuits, but life has a way of following its own unplanned path. I hope I will be spending a great deal of time with my children and grandchildren. Perhaps I will teach or do something of a similar intellectual nature. I am also interested in using the lessons from my long business career to support other business, institutions and organizations. Many have asked over the years, but I have not had the time. For me, the source of vitality is to keep learning.
I won’t settle in one place; I will travel all over the world. I cannot conceive of spending all my time in just one country. I am most at home on the move. I continue to believe in globalization and will continue to communicate its merits.
Wherever the future takes me, I know I will return to Japan often, and think of it even more. This incredible country has shaped who I am; it is part of my identity. What I have learned cannot be quantified.
I would like to close by saying thank you to Japan. Eighteen years have passed since I came to this country, and I can never fully repay the debt of gratitude I owe for the way it welcomed me and the kindness it has shown to me. I am forever changed by the people I’ve met here and the company I have been entrusted to lead. Thank you for this opportunity to share my history with you.
(Source: Nissan Motor Corporation; based on the serialised story – My Personal History: Carlos Ghosn originally posted on Nikkei.com)