Transformation at Renault Nissan
Transformation at Renault Nissan
Nissan Motor Company was on the edge of bankruptcy when French automaker Renault purchased a controlling interest and put Carlos Ghosn as the effective head of the Japanese automaker. Nissan’s known problems of high debt and plummeting market share, Ghosn identified that Nissan managers had no apparent sense of urgency for change. Ghosn’s challenge was to act quickly, minimize the inevitable resistance that arises when an outsider tries to change traditional Japanese business practices. Being non- Nissan, non-Japanese, Ghosn tried to dictate changes from above, the effort would backfire, undermining morale and productivity. To resolve this problem, Ghosn formed nine cross-functional teams of 10 middle managers each, giving them the mandate to identify innovative proposals for a specific area (marketing, manufacturing, and so on) within three months. Each team could form subteams with additional people to analyze issues in more detail. In all, over 500 middle managers and other employees were involved in the so-called “Nissan Revival Plan.”After a slow start—Nissan managers weren’t accustomed to such authority or working with colleagues across functions or cultures—ideas began to flow as Ghosn stuck to his deadline, reminded team members of the automaker’s desperate situation, and encouraged teams to break traditions. Three months later the nine teams submitted a bold plan to close three assembly plants, eliminate thousands of jobs, cut the number of suppliers by half, reduce purchasing costs by 20 percent, return to profitability, cut the company’s debt by half, and introduce 22 new models within the next two years. Although risky, Ghosn accepted all of the proposals. Moreover, when revealing the plan publicly on the eve of the annual Tokyo Motor Show, Ghosn added his own commitment to the plan: “If you ask people to go through a difficult period of time, they have to trust that you’re sharing it with them,” Ghosn explains. “So I
Nissan Motor Company was on the edge of bankruptcy when French automaker Renault purchased a controlling interest and put Carlos Ghosn as the effective head of the Japanese automaker. Nissan’s known problems of high debt and plummeting market share, Ghosn identified that Nissan managers had no apparent sense of urgency for change. Ghosn’s challenge was to act quickly, minimize the inevitable resistance that arises when an outsider tries to change traditional Japanese business practices. Being non- Nissan, non-Japanese, Ghosn tried to dictate changes from above, the effort would backfire, undermining morale and productivity. To resolve this problem, Ghosn formed nine cross-functional teams of 10 middle managers each, giving them the mandate to identify innovative proposals for a specific area (marketing, manufacturing, and so on) within three months. Each team could form subteams with additional people to analyze issues in more detail. In all, over 500 middle managers and other employees were involved in the so-called “Nissan Revival Plan.”After a slow start—Nissan managers weren’t accustomed to such authority or working with colleagues across functions or cultures—ideas began to flow as Ghosn stuck to his deadline, reminded team members of the automaker’s desperate situation, and encouraged teams to break traditions. Three months later the nine teams submitted a bold plan to close three assembly plants, eliminate thousands of jobs, cut the number of suppliers by half, reduce purchasing costs by 20 percent, return to profitability, cut the company’s debt by half, and introduce 22 new models within the next two years. Although risky, Ghosn accepted all of the proposals. Moreover, when revealing the plan publicly on the eve of the annual Tokyo Motor Show, Ghosn added his own commitment to the plan: “If you ask people to go through a difficult period of time, they have to trust that you’re sharing it with them,” Ghosn explains. “So I