Nissan's Ghosn Calls Cultural Clashes 'A Luxury for the Rich'
19 January 2000
Nissan's Ghosn Calls Cultural Clashes 'A Luxury for the Rich'
DETROIT, Jan. 18 -- Nissan Motor Co., Ltd. Chief Operating
Officer Carlos Ghosn today told the Automotive News World Congress that as the
trend towards consolidation in the auto industry continues, the winners will
successfully manage change while avoiding the use of cultural clashes as a
"crutch."
Ghosn, who joined Nissan from Alliance partner Renault last year and
announced the Nissan Revival Plan on Oct. 18, said Nissan is determined to use
both nationalistic and company-to-company cultural diversity "as a catalyst,
not a crutch."
He noted that while the headlines are full of big merger and acquisition
stories, and the potential for culture clashes between companies, it is the
nationalistic cultural clashes within a company that are often more insidious
and pose of a greater threat to corporate health.
"Certainly many of you have felt the effects of intra-company cultural
clashes as your business has become globalized, as you have entered a foreign
market and relied on local talent to run your business," he told the audience
of more than 500 industry executives, analysts and media. "The results are a
waste of talent and a waste of energy."
Ghosn said the root of this waste is a failure to recognize that
developing a successful company culture in all locations is the highest
priority. Secondary -- but still critically important -- is managing the
cultural differences of the people, because it is a vital tool to enrich the
company culture.
"At Nissan," he said, "our 'people' culture was not enriching the global
company culture. Why? Because there was insufficient global company culture.
And, there was insufficient global company culture because there was no common
vision or shared corporate determination.
"But," he added, "we knew to succeed, developing this common vision and a
global company culture would need to be a main driver in regaining Nissan's
strength. And, our cultural diversity would need to be our catalyst, not our
crutch."
Ghosn said the company's mission is a two step approach. First, the
revival of Nissan and second the establishment with Renault of a bi-national,
multi-cultural company, not through a forced merger, but by exploiting
synergies, feeding off each companies' strengths and minimizing each
companies' weaknesses for the sake of developing a healthy business.
He called the measurement of Nissan's revival the "most cut and dried in
the business." The Revival Plan includes a return to profitability in the
first fiscal year of the new millennium, and then growing the business
profitably. Commitments include an operating profit superior to 4.5 percent
of sales for FY 2002 and a reduction in debt by 50 percent from the current
net debt level of more than $12 billion.
"We all knew that in order to develop a plan that would work, we would
have to treat natural cultural suspicions and culture clashes as a luxury for
rich people," said Ghosn, as he outlined key components of the Nissan Revival
Plan.
The Nissan Revival Plan was developed using nine cross-functional, cross-
cultural teams, each with one goal: to make proposals in order to grow the
business and reduce costs. Each team had the same rule: no sacred cows, no
taboos, no constraints and no cultural cop-outs -- Japanese, European or North
American.
Major components of the Nissan Revival Plan announced Oct. 18 include:
* The closure of five plants in Japan and a reduction in headcount by
21,000 globally, mostly in Japan, but also in Europe and North America, by the
end of FY2002.
* A change in Nissan's supply strategy from a "keiretsu first" approach
to a pure business approach, including a mandatory 20 percent average cost
reduction.
* A major unwinding of cross-shareholdings based on debt reduction
objectives.
Ghosn noted that much of the cost reductions in the Nissan Revival Plan
will be funneled into product development.
"No where will the results be more dramatic than here in North America,"
Ghosn said. "In fact, 50 percent of the new products Nissan will introduce
over the next three years are being developed for this market. Importantly,
these introductions will bring us in line with the industry mix of cars and
trucks at about 50-50."
He acknowledged that the Nissan Revival Plan, including aggressive product
introduction plans, is a major reason many pundits have changed their view on
Nissan's turnaround from "Mission Impossible" to "Mission Improbable."
Ghosn said he believes that to achieve "Mission Accomplished," Nissan,
like all companies contemplating globalization in today's marketplace, must
develop a shared company vision.
"At Nissan today, our vision is a reconstructed and revived company -- a
bold Nissan on track to perform profitable growth in a balanced alliance with
Renault to create a major global player in the world car industry," Ghosn
said.
"Our target is to move the current multi-regional organization to a multi-
cultural global one," he said. "The speed and globalization of the internet
alone is a clear indication that those automakers who believe a regional
approach is the best way may simply be wrong."
In North America, Nissan's operations include automotive styling,
engineering, consumer and corporate financing, sales and marketing,
distribution and manufacturing. More information on Nissan in North America
and the complete list of Nissan and Infiniti vehicles can be found on line at
http://www.nissandriven.com or contact the corporate media line at 310-771-5052.