Effec­tive global leaders carry within them the capacity to trans­form the fortunes of the orga­ni­za­tions they serve. Entire work­forces can be mobi­lized to unite behind a common purpose and take owner­ship of the destiny of the orga­ni­za­tion as a whole.

Finding exam­ples of when leaders fail to deliver this kind of trans­for­ma­tion is reason­ably easy to do. Studying those different scenarios has value because we can glean so many different lessons from what went wrong. But it’s just as impactful to see remark­able exam­ples of when global lead­er­ship is discharged effectively.

Enter Carlos Ghosn. 

Carlos Ghosn is a man who managed to do the impos­sible (or what many claimed to be the impos­sible). In a nation where tradi­tions are honored and actively defended, he managed to get a large company to completely over­haul their strategy and modify long­standing customs that were holding them back.

After 20 years of lead­er­ship, Ghosn is now in the middle of a finan­cial miscon­duct inves­ti­ga­tion. His repu­ta­tion is, for the time being, in tatters. But, what is becoming clear, is his excep­tional abil­i­ties as a global leader. His achieve­ments are high­lighted even more as it becomes evident that his succes­sors lack the skill to take Nissan into a new era.

So how did Carlos Ghosn do it? What can global leaders learn from his example? Read on for a gold­mine of thoughts around one of the greatest turn­arounds in auto­mo­tive history.

As previ­ously stated, we are aware of the nega­tive media currently surrounding Carlos Ghosn as he awaits trial on finan­cial miscon­duct charges in Japan. The situ­a­tion will surely unravel over time. Whether the alle­ga­tions are true or not, aspiring global leaders can learn from Ghosn’s actions when he took over Nissan. This article serves the purpose of looking at his accom­plish­ments as a global leader in the past, without judging them nega­tively or posi­tively, but by laying out the facts. 

Nissan: The Company Inno­va­tion Forgot

Nissan had enjoyed steady growth and pros­perity since the end of the second world war. Known for producing quality cars that combined great engi­neering, the latest tech, and plenty of fuel effi­ciency. After putting a few designs out into that market that had global success, Nissan became content to ride the wave of that success. 

Customer appetites started to change; people wanted not just reli­able cars but beau­tiful cars with great design and all the latest tech­nology. Rather than inno­vating in response to these customer demands, Nissan assumed that reli­a­bility still took prece­dence over style so they did not invest in creating new designs.

In addi­tion to this the ‘keiretsu’, a group of preferred suppliers for the car compo­nents, meant that finding compet­i­tive pricing to reduce the cost of manu­fac­turing was not a priority. Nissan’s costs to produce a car was 20 – 25% higher than it was for Renault. The whole process was inef­fi­cient and contributed to Nissan not being prof­itable for several years. When the Japanese Yen devalued from 100¥ to $1 to 90¥ to $1, both Moody’s and Stan­dard & Poor’s announced that Nissan needed a cash injec­tion from another auto­mo­tive company or their credit status would be signif­i­cantly down­graded. Things were looking pretty dire, to say the least.

Renault and Nissan: A Jugger­naut Partnership

Both Renault and Nissan had a desire to expand their global reach. Renault wanted to decrease its reliance on the Euro­pean market and expand into the Asian and North Amer­ican markets. Renault was also doing well in the Latin Amer­ican market, partic­u­larly in Brazil. Nissan had a great share in the Asian and North Amer­ican markets but wanted to expand into Latin America. They couldn’t because they didn’t have the distri­b­u­tion facilities. 

By forming a strategic alliance, they hoped to share best prac­tice and balance out access to all the major markets across the world.

Ghosn: The Man With A Plan

Brazilian-born French exec­u­tive Carlos Ghosn with Lebanese ancestry has become known as one of the auto­mo­bile indus­try’s great turn­around artists. Dubbed “le cost killer” by those on the receiving end of his stream­lining, he also had a more posi­tive and more telling nick­name: “Mr. Fix-It.”

Before working for Renault, Ghosn was head of research for the devel­op­ment of indus­trial tires at Michelin in the mid-1980s, where he worked his way up to become pres­i­dent and chief oper­ating officer (CEO) of North America by 1988. After adding the posi­tion of chairman in 1990, there were no more advance­ment possi­bil­i­ties for him to at Michelin, and he started looking else­where. In 1996, he there­fore agreed to talk to Louis Schweitzer, CEO of the money-losing French automaker Renault.

Ghosn started working for a contrite Renault after the merger with Volvo failed to mate­ri­alize. He’d done an exten­sive amount of work turning around Renault’s fortunes. As part of the strategic alliance, Ghosn agreed to take the post of COO and work on producing a similar trans­for­ma­tion for the Japanese car company.

Carlos Ghosn knew that Nissan had the poten­tial to really gain back the ground they had lost and more. So he put together the plan that would cata­pult Nissan straight back onto the map. 

After a six-month consul­ta­tion, during which Nissan employees them­selves completed a review of oper­a­tions company-wide, Ghosn presented the ‘Nissan Revival Plan’ (NRP). This plan aimed to focus on the following:

1. Devel­oping new markets and new cars with a greater emphasis on design
2. Improving and reviving Nissan’s brand image
3. Kick­starting an invest­ment plan for research and development
4. Reducing the costs of production

In addi­tion to this, Ghosn reor­ga­nized the company struc­ture from top to bottom, removing posi­tions that served no purpose and redi­recting human resources else­where. He put in place a rewards package that encour­aged employees to come up with new ideas, thereby reversing the previous culture where every­body did their utmost to avoid making a mistake. 

Before the NRP came into effect, seniority drove promo­tion. Ghosn turned that on its head and made room for younger employees to be promoted above older employees. There was excite­ment to contribute again. So much excite­ment that the NRP was completed within two years. Costs had been reduced by 20%, and for the first time in years, Nissan was prof­itable again.

Ghosn didn’t stop there. A month later, ‘Nissan 180’ pushed a new customer-focused initia­tive to tran­si­tion the company out of the previous plan. Now Nissan would focus on making their prod­ucts more attrac­tive, more reli­able and they would also focus on improving the whole customer experience.

In a short summary of the situ­a­tion, it’s easy to believe that things were simple enough. However, the fact that Ghosn made the trans­for­ma­tion look easy, doesn’t mean that it was. 

Let’s look at some of the main chal­lenges Ghosn faced as he took Nissan through the process.

The Chal­lenge of Complacency

Ghosn’s greatest chal­lenge was undoubt­edly the compla­cency across the whole of Nissan’s oper­a­tions from the top of the orga­ni­za­tion right down to the bottom. Cash­flow was tied up in invest­ments that weren’t neces­sarily the best, suppliers took advan­tage of the fact that they were on a preferred supplier list and kept prices high. The “job for a life­time” ethos meant that every­body assumed that the Japanese govern­ment wouldn’t let the company go down in flames.

Deci­sions were taking forever to be made. Whilst the need to collab­o­rate was respectable, the constant need for consensus meant that many projects that could have moved the busi­ness forward were forever stuck in the plan­ning phase. Review after review would happen, and no concrete deci­sion would be reached.

In addi­tion to this, there were huge issues around a distinct lack of risk-taking; those within the company who wanted to further their careers did so by main­taining the status quo and avoiding all forms of risk-taking. People were being promoted simply because they had been there the longest number of years; not always a problem but it did mean that young talent was not utilized as it could have been. 

Once Nissan recog­nized that the situ­a­tion wasn’t great, a culture of blame ensued. It was always the other department’s fault. A survey was taken and every single depart­ment believed that the company was not doing as well as it should be because of other depart­ments and that they were doing every­thing that they should be doing.

Ghosn para­chuted into this situ­a­tion and every­body expected him to fail. He was open about the fact that he was not knowl­edge­able about Japanese culture when he first started on the assign­ment. He was a foreigner. He had a repu­ta­tion for finding ways to slash costs. He would have to make some very diffi­cult deci­sions that would involve bringing in outside help into the senior lead­er­ship team whilst displacing some of the long­standing Japanese senior exec­u­tives. He faced back­lash from the press who believed him to be yet another foreigner trying to impose their ideals on Japan…again.

So you can imagine every­one’s surprise when Ghosn took Nissan and Renault from strength to strength… for 20 years.

Why Did Ghosn Succeed?

Ghosn drew from a whole host of internal attrib­utes that enabled him to bring two entirely different economies, two compa­nies, and two cultures together under one banner. There are several key things he did to achieve this.

Cultur­ally Tran­scen­dent Leadership

Ghosn made it clear that he had a lead­er­ship philos­ophy that was applic­able in any context. This gave him a really strong foun­da­tion because his lead­er­ship style was almost completely untouched by any cultural bias. By choosing three core pillars as a lead­er­ship style that nobody could disagree with, he auto­mat­i­cally put himself into a place where people from different cultures world­wide would respect him. Who doesn’t want to work for a manage­ment team that’s

1. trans­parent, 
2. focused on great commu­ni­ca­tion, and 
3. excited to execute on a plan.

It was a very smart thing to do and contributed a great deal to his ability to trans­form the compa­nies he worked for.

Excel­lent Inter­per­sonal Skills

Ghosn was an expert commu­ni­cator with very advanced inter­per­sonal skills. He nego­ti­ated a merger between Renault and Nissan that allowed Nissan to retain every­thing it stood for as a brand. As a Brazilian-born Frenchman of Lebanese descent, Ghosn had a knack for moving seam­lessly between different cultures and different people across all levels of any orga­ni­za­tion he was a part of. Having an appre­ci­a­tion for lots of different contexts allowed him to develop his inter­per­sonal skills and build great rela­tion­ships with people from all over the world. 

He was known for being great at inter­acting with employees; he was always the person to visit the plants and greet people. He made a point of being visible and acces­sible to the wider team, choosing to cham­pion the impor­tance of warm micro-inter­ac­tions that made employees feel valued and interconnected.

His whole approach was to empower the Nissan teams to become masters of their own destiny and shape the success of the company. By pulling in middle managers, he created oppor­tu­ni­ties for them to grow and develop. Teaming was a skill that Ghosn was excep­tional at. So many factors were in a constant state of flux; the subse­quent job losses that came, new suppliers, new designs, new lead­er­ship… the list went on. Despite this, Ghosn was able to keep every­body laser-focused on achieving the goal of prof­itability and increased market share.

Cultural Intel­li­gence 

There’s no denying that Ghosn was really adept at learning about all the cultures he inter­acted with in order to be an effec­tive leader. Learning about Japanese culture was half the battle. The real genius was how he took all of his cultural expe­ri­ence and weaved a culture tapestry in the midst of what many people deemed to be an impos­sible situ­a­tion. To bring together French and Japanese culture under one banner was no mean feat.

Clear Vision

At all points, the vision put forward by Ghosn was clearly defined and easy for every­body to under­stand. When the company met its objec­tives early, Ghosn was ready with the next chal­lenge to keep every­body engaged and moving forward.

Compelling Story

The hardest part of turning Nissan around was getting the orga­ni­za­tion as a whole to under­stand that change was neces­sary. Every­body needed a wake-up call. Ghosn’s ability to take a timely story and use it to get every­body focused was a stroke of genius not to be underestimated.

Collab­o­ra­tive Culture

Creating a collab­o­ra­tive culture was one of the best things Ghosn did. The vision was fixed but the execu­tion needed to come from the teams them­selves. As Ghosn was not partic­ular about how they should execute the vision, he created the space for every­body to come together and design a plan that they all agreed with. Ghosn tran­si­tioned Nissan teams from being sepa­rate enti­ties wrapped up in blame culture and respon­si­bility denial, to inter­de­pen­dent teams that took almost complete owner­ship over the action plan to save Nissan from destruction.

Lesson 1 for Global Leaders: Master a Tran­scen­dent Lead­er­ship Style

Global leaders should build a lead­er­ship style based on universal core values. Ghosn cracked a partic­ular formula that was an excel­lent spring­board for being able to mobi­lize and inspire people regard­less of culture. Imagine then adding all of the other compe­ten­cies required of a global leader; you’ll be able to operate in prac­ti­cally any context.

Ghosn picked three prin­ci­ples that he felt were impor­tant; trans­parency, a commit­ment to executing the plan, and commu­ni­ca­tion. You may want to include all of those and nothing else or include different prin­ci­ples tailored specif­i­cally to your context. Either way, these prin­ci­ples will bridge the gap as you learn all the nuances of the cultures you seek to bring together and enable you to inspire the work­force to get on board with the changes you want to execute.

Lesson 2: Always Develop Your Inter­per­sonal Skills

Inter­per­sonal skills are key. Being able to get people onside was one of Ghosn’s key tactics in nego­ti­ating one of the most diffi­cult deals in auto­mo­tive history. As a global leader be sure to engage with employees at all levels of the busi­ness and be visible. 

Don’t be afraid to empower your teams to do great work and spur each other on to solve the chal­lenges faced by the company. Creating oppor­tu­ni­ties for employees creates an atmos­phere where people feel valued, which in turn helps them produce their best work. 

Lesson 3: Invest the Time To Truly Under­stand the Cultural Context

Upon reading the case study, what is clear is that Ghosn had a genuinely open mind when it came to under­standing Japanese culture. He consciously blocked any precon­ceived notions or ideas about how Japanese people carry them­selves and arrived with a desire to under­stand the tradi­tions that under­pinned so much of the culture of Nissan.

One of the three multi­cul­tural compe­ten­cies is the ability to be cultur­ally sensi­tive. Part of that journey is moving from an ethno­cen­tric atti­tude towards culture and tran­si­tioning into an ethnorel­a­tive atti­tude towards culture. Ghosn embodied an ethnorel­a­tive ethos that freed him from the idea that cultures fit into a hier­archy. He actively sought to under­stand both French culture and Japanese culture and looked for a way to build a rela­tion­ship between them.

Approaching these matters with such a posi­tive atti­tude meant that he was able to get two seem­ingly incom­pat­ible cultures on board and push both Nissan and Renault towards an outcome that was mutu­ally bene­fi­cial. Global leaders should never under­es­ti­mate the impact their atti­tude towards culture has on their ability to effec­tively lead people; the wrong atti­tude will have you alien­ating people before you’ve had an oppor­tu­nity to even suggest an idea. 

Lesson 4: Ensure that the Vision is Clear

Ghosn had a clear vision to make Nissan prof­itable again. He wanted to do that by cutting costs, making internal processes more effi­cient and cham­pi­oning an inno­v­a­tive spirit that would carry Nissan forward into a new age. The vision was easy for every­body at all levels of the company to under­stand and so it was far easier for every­body to collab­o­rate on its execution.

Global leaders must ensure that the vision is well defined; so well defined in fact that the employees and manage­ment can envisage how their role fits into the fulfill­ment of that vision. It is diffi­cult for collab­o­ra­tion to exist in an envi­ron­ment of confu­sion. This is one of the most powerful lessons a global leader can take away from Ghson’s manage­ment style. 

Another point to note is that the case study covers two periods of tran­si­tion, with two different visions. The first part of the vision was to make Nissan prof­itable. Then when Nissan hit that target a year earlier than expected, Ghosn was ready with another vision that the whole company could tran­si­tion into. This kept the Nissan wheels in motion and had the whole company moving from strength to strength as they inno­vated new prod­ucts and increased their overall market share.

As we all know, “a rolling stone gathers no moss.” Global leaders must be forward thinkers. When the vision is complete, there must be another waiting in the wings that the work­force can get behind. It defines what it means to be a dynamic global leader; you keep your team excited and ready for the next challenge. 

Lesson 5: Match the Vision with A Story

Story­telling is a powerful part of the human expe­ri­ence and an invalu­able tool for all leaders who wish to inspire others into action. Ghosn did this perfectly to help the Nissan work­force under­stand why change was neces­sary. One of the issues that Ghosn faced was the ingrained compla­cency at Nissan. A compla­cent atti­tude halted inno­va­tion and a desire to become more effi­cient. The cars being produced by Nissan were reli­able but had an outdated design. The cost of produc­tion was kept high by the commit­ment to the keiretsu preferred suppliers list which ate into prof­itability. Under­pin­ning all of this was the belief that if things were to go sour finan­cially, the Japanese govern­ment, in an effort to preserve people’s employ­ment, would bail Nissan out.

Very conve­niently at the time Ghosn took over the oper­a­tions at Nissan and master­minded the merger with Renault, a large Japanese corpo­ra­tion got into finan­cial trouble and was not bailed out by the Japanese govern­ment. This sent shock­waves through everyone at Nissan; Ghosn used this story to kick­start their creativity and create a healthy sense of urgency. If they them­selves did not do all they could to turn the fortunes of this billion-dollar company around, there was no bailout coming. Nissan would close and all of their jobs would close with it.

By pairing a clear vision with a powerful story that is rele­vant to all, Ghosn created the optimal envi­ron­ment for a typi­cally tena­cious culture to become fluid and adapt­able again. The lesson for global leaders is as follows; use a story to show people why they should get behind the vision. A vision without a clear reason why can be ignored. But if as a global leader, you take the time to find a reason that’s moti­vating enough, any culture can be molded and shaped differently.

Lesson 6: Create a Collab­o­ra­tive Culture

Global leaders recog­nize that they cannot achieve every­thing on their own. Creating an atmos­phere of collab­o­ra­tion and owner­ship creates a perfect envi­ron­ment for creativity. In addi­tion to this, the satis­fac­tion that comes from each employee knowing that their contri­bu­tion, however small, has an impact. Being a part of such an elec­tric envi­ron­ment stim­u­lates the work­force into giving their best, with every­body moving towards a common goal. 

Ghosn did this exceed­ingly well. As a global leader, the aim should always be to draw teams closer together to maxi­mize inno­va­tion and produc­tivity. It also makes for a far more effi­cient way of deliv­ering change. So effi­cient, you can over-deliver on your goals; Nissan became prof­itable one year earlier than planned because people began to work together so effectively.

Global Leaders Wear the Biggest Shoes

Fast forward to today and it’s easy to see the lasting effect that true global lead­er­ship has. Carlos Ghosn has been removed from his posi­tion and the void that has been left is evident. Nissan continues to fight declining sales and prof­itability. Manage­ment has yet to deliver a clear vision, the part­ner­ship between Renault and Nissan is now in jeop­ardy with leaders at the top of the orga­ni­za­tion resorting to threat­ening one another around stocks and shares.

It’s a far cry from the spirit of collab­o­ra­tion and inno­va­tion fostered by Ghosn in decades past. For aspiring global leaders, Carlos’ example is note­worthy because it shows the impact of successful global lead­er­ship in action; a living embod­i­ment of what is truly possible in this sphere of leadership.

We hope you were able to gain some insight from this example of successful global lead­er­ship against all odds, despite the nega­tive media currently surrounding Mr. Ghosn. The situ­a­tion today should not take away from your possi­bility to learn from this case study.

To find out more about how you can become the most impactful global leader you can be, have a look to see how the Eurac Academy can help you to reach those goals. To continue to receive a gold­mine of global lead­er­ship wisdom straight into your inbox, don’t forget to sign up for our weekly newsletter!