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When the organizational changes are significant to make, two major theories are commonly addressed to, namely theory O and theory E. It should be pointed out that the theory E deals with the stakeholder’s value. It can be described as a planned method that is centered on a formal structure and is driven from the top with the help of some external consultants that provide a deeper understanding of the needed direction. In contrast to the described above statement, the theory O suggests development through the experience, the changes are impossible without the participation, and the help of the external consultants seems to be not needed.
Every corporate transformation can usually be described with the six dimensions, namely goals, leadership, focus, process, reward system, and use of consultants. The provided theories have significant differences; however, it should be pointed out that the mixture of various approaches can influence the outcome in a positive way.
According to recent studies, theory E is usually based on the economic factor, whereas Theory O is centered on the organizational one. The positive outcome requires an active user of both methods and is significant for the improvement. Successful managers usually predict changes as they monitor the environment constantly to see how the market and needs of customers change; however, not every circumstance can be predicted in advance, and that is, it may influence the economic condition of the organization. The understanding of the significance of making the transformation is an essential part of the successful business. It should be stressed that this demands critical and creative thinking, finding a way out from the zone of comfort, and identifying new ways that lead to a successful outcome.
Not every company implements certain management changes successfully, although mistakes are impossible to omit while making progress. It should be pointed out that the car company Datsun enjoyed great popularity in the United States from 1958-1980; however, some management mistakes led to the decline in sales and caused a lot of troubles as the company was not flexible concerning finding the common sense with the suppliers. The Datsun Company changed the brand name to Nissan and suffered a very tense competition from Honda that was the reason for Nissan cars to decrease in price. This fact proves the significant role of the environment for the prosperity of the company. The wrong management choices may influence the positive outcome and change the situation dramatically.
It should be stressed that Carlos Ghosn, the president of one of the most famous companies Renault and Nissan, has an impressive experience in running the top-selling car companies. Starting his career at Renault in 1996, he developed his success formula that had only three ingredients, namely trust, respect, fast working, and the ability to find the answers within the company combined altogether.
The major task of Ghosn was to reduce the costs, and he managed to make it, which consequently led to almost five billion dollars reduction in three years. The alliance of Nissan and Renault seemed to be impossible because of the differences in the objectives; however, due to the talented management of Ghosn, two companies succeeded in finding the common solution and the way towards development. He aimed to improve the reputation of Nissan despite the cultural or political differences as it seemed not important while focusing on the business. Ghosn claimed that the most significant task of the leader was to keep the word and to follow the consequences. According to the talented businessman, the changes can only occur when there is no need to fabricate solutions, and everything can be done from the very beginning.
The deep listening tactic is beneficial for progress. Ghosn listened to the ideas of workers, which should be improved or changed. The major changes that Ghosn implemented were the following, namely the changing of the official language to English, the possibility for the Japanese press to attend meetings, and the replacement of the regional president with the management teams. Motivation played a significant role in the company’s improvement. The ability of Ghosn to understand what changes are needed and to take not popular decisions contributed to the successful outcome.
It should be highlighted that the understanding that the Nissan Company is not in the perfect condition and demands certain changes to make progress led to the development of the plan. The critical thinking, the ability to get out of the comfort zone and take the needed decisions influenced the process of making a difference. According to Ghosn, the operating cost reduction, cutting of material suppliers, product development, and reduction of manufacturing organizations in Japan were essential for the success of the company. Ghosn decided to take responsibility for all the actions and changes in case the plan would not work.
The improvement demands significant adjustment and hard decisions. Respect and honesty became the guiding elements for the Nissan team. Although the Revival Plan was successful, the Nissan Company understands the significance of changes and further improvement. It should be stressed that the cost-cutting was one of the most significant parts of the plan as according to Theory E, economic changes can be considered as a guided power towards greater improvement. However, it is significant to highlight that the reduction of the plants in Japan and global headcount contributed to the development of the company also.
The hard changes were seen as the only way to make a difference and give a strong push towards success and prolific work. However, it is important to make an accent that not only economic changes contributed to the prosperity of the company as the organizational education, work with the employees and their motivation influenced the further development of the organization greatly.
It should be stated that the best results of changes may be achieved only with the combination of different methods and approaches. Being an innovator in the field of development of the Nissan Company, Ghosn, succeeded in the implementation of the appropriate methods for the improvement of the company.
The number of positive but hard changes led to the prosperity of the company. The case with Nissan Company proves the importance of making the right decisions and highlights the significance of the environment for the development of every project. The way for success can only be found through experiments. Although the talented leader can change the company dramatically, one should not forget that there is no progress without mistakes, and the case with the Nissan Company proves that everything is possible if the appropriate methods of changes are implemented into the working process.
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