Carlos Ghosn implemented highly effective change leadership when transforming Nissan from a company that was experiencing several years of negative growth to one of the best managed and most profitable corporations in its industry. He accomplished this by executing management techniques that can be categorized within the “core tasks of change leadership. ” The evaluation of Ghosn’s execution of each task is covered in the following paragraphs below.
The case suggests that early in Ghosn’s career he realized the importance of developing and communicating a purpose, which enables separate cultural or functional units to collaborate and work toward a common goal.
At Michelin, Renault and Nissan he followed a similar pattern of establishing cross-functional teams to diagnose company problems, communicate results and develop a strategy to solve those problems. At Nissan, Ghosn used input from his cross-functional teams to develop and communicate an aggressive Nissan Revival Plan (NRP) in October of 1999.
Ghosn communicated the plan to company employees, the press and the general public outlining specific measurable goals that would be met to revitalize the failing company.
NRP essentially became the company’s purpose from 1999 until 2001, filling a gap where no purpose previously existed. Ghosn provided his reasons for developing and communicating a purpose saying, “focusing on specific business objectives, people don’t have time to worry about cultural differences or politicking. After the NRP achieved its results a year ahead of schedule, Ghosn initiated a new plan called NISSAN 180 that was designed to “transform a good company into a great company.
” Much like NRP, NISSAN 180 became the company’s new purpose and established its new sense of direction. From 2001 to 2004 all efforts for the company would be focused on NISSAN 180. Within the first few pages of the case, Ghosn is described as a manager who demanded a high level of performance from his employees, pushing them to focus primarily on achieving results.
The case states; “Ghosn earned a reputation as a tough demanding boss who set brutally high standards” and “he believed that by focusing on performance, he could bypass concerns for cultural differences. ” For example, during the NRP development process, a cross-functional purchasing team had their initial proposal flatly rejected by Ghosn, who told them that “they were not aggressive enough. ” Ghosn was not only demanding during the development phase of the NRP, but also set demanding goals within the NRP itself.
In 1999, Nissan was to transition from a company that experienced seven consecutive years of losses to one that would achieve a consolidated operating profit of 4. 5 percent by 2002. After the NRP was achieved, Ghosn set even more demanding performance goals in his NISSAN 180 plan. The expectation was to transform NISSAN from a good company to a great company. Lastly, Ghosn relentless pushed Nissan to move from a seniority based culture to a performance based culture.
By setting demanding goals for the company and establishing a performance based culture, employees had little time to think of anything else, but achieving or exceeding personal, team and company expectations. One of Ghosn’s most admirable qualities is his ability to acknowledge to himself that it is impossible to understand everything about a company and its competitive environment. Because of his ability to bypass this physiological hurdle, Ghosn was able to lead in a less authoritarian manner when developing solutions to problems and new strategies.
There are many examples in the case where Ghosn enabled highly effective upward communication. During the diagnostic phase of discovering Nissan’s problems, Ghosn met with over 5,000 people, taking pages of notes and developing written analysis after his meetings. When developing the NPR, he established multiple cross-functional teams to assist him in formulating the new strategy and direction for the company. Ghosn “knew that if he tried to dictate changes from above, the effort would backfire, undermining moral and productivity. Ghosn was able to develop and implement a “Nissan Revival Plan” that had a much greater chance of success by meeting with thousands of stakeholders and establishing nine cross-functional teams to develop solutions for the company’s problems,. By meeting with and incorporating input from all relevant stakeholders, the NRP was eventually designed to work within the context of Nissan’s current environment and ultimately became the most effective plan the company could have produced. Ghosn had the good fortune of joining a company with employees, who collectively possessed a strong emotional bond and sense of loyalty to the corporation.
Early in the case, a Renault executive argued that Ghosn had an easier time making significant changes at Nissan, because its employees were “hungry for leadership. ” Later in the case Carlos Ghosn commented on Nissan employees saying ; “our workers want to succeed” and “they want to be proud of their company and their management. ” At Nissan the emotional bond was set. It was Ghosn’s job to strengthen that bond by earning the trust of his employees and reinforcing their emotional connection to their company.
Ghosn accomplished this by speaking directly to his employees, setting clear expectations and performing what he called “deep listening. ” He gave his employees a chance to influence the company’s direction and thereby allowing employees to have an emotional stake in its outcome. He enhanced the emotional bond between the company and its employees by demanding that they solve the company’s problems, which meant the employees would be fully invested in the outcome of the company’s new direction. The development of change leaders was never explicitly covered in the case.
Perhaps Ghosn wanted to first establish a new direction for the company, change the values and behaviors of his employees, establish norms agreeable to this new direction and ultimately change the company’s culture before explicitly developing change leaders. However, through Ghosn’s actions it can be assumed that Nissan would be well positioned to have a deep bench of change leaders for years to come. At Nissan, Ghosn pushed his employees to become change leaders by meeting with them in person and asking them to think critically, identifying the company’s problems and developing solutions to fix those problems.
In addition, Ghosn forced team and sub teams members to acquire the essential skills to become effective change leaders by formulating cross-functional teams with the objective of developing tactical plans to transform Nissan back to profitability. After the NRP was complete, the small army of employees involved in the project could now apply lessons learned from the process to continually improve company operations. By the time the case ends in 2005, Ghosn would have to define structures and procedures to support the development of future change leaders.
However, this task would be easier since the foundation had already been built through the NRP and Nissan 180 projects, and the establishment of the new performance based culture. In conclusion, Carlo Ghosn was able to make Nissan great again by using the following core tasks of change leadership; developing a clear purpose for the company via its NRP and Nissan 180 plan, establishing demanding performance expectations by setting high performance goals and establishing a performance based culture, enabling upward ommunication through “deep listening” and the use of cross-functional teams to solve problems, re-enforcing an emotional bond by demanding that employees solve the company’s problems and set its new direction and lastly by providing the necessary context through the use of cross functional teams to enable employees to develop change leadership skills.