Detroit, Michigan – We are halfway through our roasted Indiana duck a l’orange with French green lentils when I raise the question of politics with Carlos Ghosn, Nissan Motor Company’s chief executive and Renault SA CEO. Would he consider running?
Carlos Ghosn, President and Chief Executive Officer, Nissan Motor Co., Ltd. Click image to enlarge
by Jeremy Cato
“No,” says the Amazon-born, Beirut-raised, Paris-educated Ghosn, pausing and shaking his head between bites. “In politics, it is not possible to get rich and to be honest. It is not possible. In business it is possible to be honest and get rich. So I am not interested in politics.”
Carlos Ghosn is perhaps the single most interesting and, some would also argue, successful car company executive in the world. He is a fascinating interview and a brilliant dinner companion.
He has opinions, and he shares them. He speaks several languages, including French, English, Portuguese and some Japanese. His memory is like a steel trap, and his world view is based on having lived on five continents, worked for three global companies and studied at some of the best schools in France.
He is a formidable presence, even though he is not a big man — perhaps five-foot-seven or eight inches and no more than 160 lbs. He also does not like confrontation, as he notes in his new book Shift: Inside Nissan’s Historic Revival, though having interviewed him some ten times, I will tell you he likes a lively discussion and a passionate debate. I am told he does not suffer fools – or unprepared journalists and car executives – gladly.
So when a Nissan official offered me a chance to sit down for dinner with the man who has led Nissan’s turnaround from near-bankrupt basket case to the most profitable volume carmaker in the world, I jumped at the chance. My many past interviews told me it would be interesting, but what I read in the book convinced me this was a “can’t-miss” opportunity – one of those occasions where a journalist labours beforehand to conjure questions as interesting as the answers.
Some of Ghosn can be explained quite easily. As a youth, he was taught by Jesuits in Beirut, Lebanon, just before the civil war broke out in the early 1970s. He was, in his own words, “an exceptional student, but an undisciplined one.”
As was the case with former Prime Minister Pierre Trudeau, the Jesuits fixed that, instilling a sense of discipline and organization. Father Lagrovole, his professor of French literature, taught him something else: “He said to us, ‘If you find things complicated, it means you haven’t understood them. Simplicity is the basis for everything.'”
He left Beirut for Paris, where he studied mathematics at the Lycee Saint-Louis, before moving on to study engineering at the prestigious Ecole Polytechnique and finally the Ecole des Mines.
His openness to other people and other cultures stems from having lived, studied and worked in places as diverse as Brazil’s Amazon rain forest where he was born; the Middle East where he grew up; Continental Europe where he was educated and took his first job with the French tiremaker Michelin; the American south in North Carolina, where he ran Michelin’s North American business; and Tokyo with Nissan.
With that as a backdrop, it seems logical and sensible for him to approach the reinvention of Nissan in his own unique way. When Renault shocked the industry in 1999 with its US$5 billion purchase of a controlling interest in then-struggling Nissan, the deal hinged on Ghosn, then a senior Renault vice-president being fast-tracked for the top job, agreeing to go to Japan to lead the turnaround.
“When I walked through the door of Nissan’s headquarters in the Ginza district of Tokyo for the first time (in the spring of 1999) after the signing of the Alliance (with Renault), I was the perfect ‘outsider’: foreign to Japan, to its networks, to its conventions and to its prejudices,” he says. “It’s something of a shock to find yourself suddenly embedded in a fairly opaque Japanese organization, without an office of your own, unable to speak the language, with all your reference points gone.”
What he did not do was arrive with what he calls “a box full of answers and start handing them out.”
Nissan was buried under more than US$20 billion in debt, tied into a complex web of largely unproductive relationships with some 1,800 other companies and saddled with a dull product line. It had lost money in seven of the eight years prior to Ghosn’s arrival.
The place “was in such a state of deterioration that the solutions to the problems, if any, were going to have to be found on the inside. My plan was to work with my team, devise a certain number of basic principles and follow them.”
What he stressed to his team from Renault is that “you’re not missionaries. You’ve come here not to change Japan, but to straighten out Nissan with the men and women of Nissan. We’re the ones who have to assimilate with them – it’s not up to them to adapt to us.”
As our conversation unfolds, it seems obvious that by background, training and temperament, Ghosn has proven himself in tune with the critical importance of culture in any business turnaround. Too many business leaders ignore the culture of an organization. But as Edgar Schein of the Sloan School of Management at the Massachusetts Institute of Technology says, cultural understanding is essential for leaders.
Writing his classic book Organizational Culture and Leadership, Schein notes, “…one could argue that the only thing of real importance that leaders do is to create and manage culture and that the unique talent of leaders is their ability to understand and work with culture. If one wishes to distinguish leadership from management or administration, one can argue that leaders create and change culture, while managers and administrators live within them.”
Talking about organizational culture with Ghosn is a treat. Unlike so many corporate leaders (Carly Fiorina, recently forced from Hewlitt-Packard, comes to mind), Ghosn seems to understand and respect the role of culture in the health and wealth of a company.
Carlos Ghosn introducing the 2005 Nissan Pathfinder and Frontier, Detroit, January 2004. Click image to enlarge
At Nissan, he says, he knew he could not impose change from the top, but the company had to change. So he created what he calls “cross-functional” teams comprised of executives from all parts of the company, from marketing to engineering to design and sales.
“The idea was to tear down the walls, whether visible or invisible, that reduce a collective enterprise to a congregation of groups and tribes, each with their own language, their own values, their own interests. To compel people to talk to one another, to listen to one another, to exchange knowledge. That was the essence of their power,” he says.
The road Nissan has taken since those dark days has been well documented. Ghosn says the company is on track to sell 3.6 million units annually by September of this year, a boost of one million in three years. And the company is extraordinarily profitable. Recently, Nissan said consolidated net profit for the third quarter through December 31 had risen 6.9 per cent to 134.20 billion yen (US$1.27 billion).
As our dinner wrapped up, the question of how he will run both Renault and Nissan came up. This April, Ghosn also became the CEO of Renault, while retaining that role with Nissan. He plans to run the two companies, 10,000 km apart, by spending time in both countries and an equal amount of time on airplanes. No one has done this before.
“Well, we will see if it can be done,” he says with a shrug, getting up to leave.
Yes, we will.
Nissan’s big challenges and opportunities, according to Carlos Ghosn
Nissan’s big challenges and opportunities, according to Carlos Ghosn