Carlos Ghosn’s Strategies in Nissan Company

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Evaluate to what extent did Ghosn use or not use the defining perspective of organization development?

Systematic perspective is essential for any business conduction, and it has the strategy in its core. A system implies the balance between the strategy, processes, personnel, finance, innovations, customers, etc. According to Nissan’s financial crisis and low rate of competitiveness at the market, when Ghosn began work in the company, its organizational system didn’t seem to be well-balanced.

However, Ghosn started the process of the systematic improvements by determination of the precise goals and directions. Ghosn’s main goal was, as he claimed, to do everything possible “to bring Nissan back to profitability at the earliest date possible and revive it as a highly attractive company.”

Ghosn also admitted that the systematic changes in the organization were of tremendous importance as well as the protection of the organizational “identity and the self-esteem of its people.” Therefore, the systematic approach was taken into consideration by Ghosn and was endowed with great significance and value.

Alignment means the coherence and correspondence among the strategic processes, environment, and employees. In Ghosn’ case, it can be observed that the effectiveness of alignment differed in various periods of his management. In Nissan, Ghosn established high demands and requirements for the staff members, and especially those who were in charge of supervision and management.

He demanded a high level of accountability that, according to him, “must start at the top.” However, not all the employees handled alignment with Ghosn’s demands, and within two years he removed “a number of key executives for failure to meet performance targets.” Ghosn’s demands were high not merely in executive office but all units of the company.

The strict requirements and regulations introduced by Ghosn make it clear that the alignment perspective was important to him. However, the fact that sometimes the subordinates failed to achieve the working objectives proves that alignment wasn’t always fulfilled.

The perspective of participation was considered by Ghosn perfectly. Under his management, the employees of all departments could make a contribution to Nissan’s development. It best of all can be observed in the example of the company’s problems diagnosis in 1999 when “Ghosn engaged in a process he called ‘deep listening,’ speaking to over 5,000 people.”

In this process, each person could share his or her concerns about the existed issues and could suggest some potential problems solutions. Ghosn’s management was people-oriented to a great extent and the support of employees’ participation and commitment. Therefore, participation perspective was used extensively.

Social capital perspective implies the creation of the trustful and cooperative interrelations within and outside the company. It seems that it was implemented by Ghosn with the mixed success. Japanese people are proud of their culture, and the differences between the Western and Asian cultures are great.

The foreigner’s attempts to adjust to and to understand a new culture would be a way to gain trust. However, Ghosn preferred to focus on goals achievements rather than worrying “about cultural differences or politicking.” Therefore, social capital can be considered as insufficiently developed.

Teamwork functioned extremely well in Nissan. Ghosn emphasized the importance of interrelations among the company’s units, at local and international levels. Ghosn encouraged communication and discussion. It can be observed in the example of “deep listening” mentioned previously. It is the case of the large-scale communication among all the team members.

In what ways did Ghosn use or not use the defining perspective of organization development?

The system perspective was used by Ghosn in the way he balanced interrelations between the long-term goals, processes that were aimed at their achievement, and the people who committed their best to make it possible. The main objective was the achievement of profitability that became a basis for the plan development.

The processes included in the strategic plan were the reduction of costs, number of manufacturing platforms, number of suppliers, and plants; launching new vehicle models, and the increase of investments. When following the plan, Ghosn was very strict towards his subordinates and especially executives.

The Japanese executives claimed that Carlos Ghosn always challenged them “to make higher commitments and targets.” Therefore, in support of the systematic perspective, there was the establishment of high working standards that induced the balanced interrelations between objectives, processes, and people.

Due to the establishment of high demands, the alignment was always a success in the company. As it already was mentioned, the incapability to cope with the challenges was the reason for some executives’ removal. However, Ghosn himself and many of his decisions were very much aligned with the requirements that were dictated by the lamentable situation and the overall environment.

Ghosn claimed that “the only power that a CEO has is to motivate,” and according to Nissan’s business improvement, he did his job well. The motivation of employees’ by high values and strict regulations eventually led to positive outcomes.

The participation perspective was adopted by the encouragement of open discussions, interconnections between departments, and information transparency, both within and outside the company. The open conversations between executives and their subordinates support the high level of participation and commitment.

It is very important for communication to be mutual. Ghosn effectively managed this issue by talking to the employees while diagnosing the problems, and then “when he announced his diagnosis to the press, and more importantly, to employees within the company.”

Ghosn’s emphasis on frankness, openness, and transparency contributed a lot to the development of social capital. However, the lack of adjustment to Japanese culture and the “significant departures from traditional Japanese approaches to management” interfered with the establishment of more trustful cooperation. At the same time, he adopted the policy of public transparency that ensured the disclosure of all the organizational processes. Therefore, it raised the level of the public trust.

The best example proving a developed teamwork perspective is the “cross-functional teams.” While working in Renault, Ghosn found that “the narrow, functionally based thinking” interferes with the provision of “a larger strategic view.” He emphasized that cross-functionality was important for the company’s success. Therefore, the cross-functional teams were responsible for refinement of communication, investigations, and data collection that led to better understanding of the problems.

Evaluate the impact this had on his strategic renewal

Before Ghosn, Nissan was “a failing company.” The problems diagnosis conducted by him detected the significant financial decline that was followed by a lack of “sense of urgency” in the Japanese executives and the unattractiveness of some products. The strategic renewal was targeted to the growth of profitability as well as the creation of this sense of necessary urgency by the strengthening the demands and requirements.

The introduction of transparency policy allowed encouragement for achievements and was consistent with Ghosn’s views. He said that “top management is highly visible,” therefore executives’ words must comply with their actions. Ghosn motivated management with challenges and eventually the results were positive. The development of the cross-functional teams helped the development of interrelations that enabled the in-depth understanding of the issues.

While working time at Nissan, Carlos Ghosn managed to increase the company’s profitability. Nissan was at the financial decline in 1999 when Ghosn was assigned as COO in the executive office. Overcoming the crisis was the primal goal in his management policies, and he applied the variety of techniques and methods, at times controversial, to achieve financial sustainability.

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Carlos Ghosn’s Strategies in Nissan Company

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