Diagnosis and Rescue
Immediately Carlos Ghosn was hired at Nissan, he embarked on a journey to understand some of the things that were hindering the country from realizing its goals. In addition, he identified things that would hinder him from achieving his goals at the company and immediately established ways of managing them. One of the things identified was cultural disparity (DuBrin 2011). He identified some factors at Nissan that, age factor and the level of education are highly affected employee promotion. In addition, he recognized that organizational promotions are not just based on education but also on seniority (Millikin & Fu 2004).
From his diagnosis, this institution results in the vital organizational culture that most people at Nissan tended to circumvent, making mistakes in order to safeguard their jobs. Therefore, what Ghosn learned from the very first time at Nissan is that conformity had significantly replaced process.
At Nissan, Ghosn identified that the previous management used the mechanism known as consensus building. Mainly this mechanism was employed by management to preserve harmony but lead to a situation where some workers avoided making mistakes or being associated with mistakes as a way of safeguarding their employment (Millikin & Fu 2004). The result of this approach was that it hindered the company from making viable decisions.
In addition, this culture severely affected risk-taking and also slowed the speed and process of making decisions. In terms of employees, Ghosn identified that the workers of Nissan greatly lacked a cautious sense in relation to the problem of insolvency. Partly this stemmed from the tradition of the Japanese government- always bailing out organizations that do not perform well.
Setting the Vision
According to leadership theory, leaders employ symbols to create reality (Chiesa & Frattini 2009). They engage in assessment analysis and goal setting. Great leaders create desirable visions outlining the things that ought to be attained by their organization. With this, Ghosn believes that the failure of any company to attain its goals is basically attributed to the management and not external forces like economic recession (Magee 2003). For instance, when he arrived at Nissan, the company was cash strapped and unable to make the required product line investments. The ever appreciating yen, excess capacity and production transfers to overseas countries were major concerns of Nissan.
Ghosn came with a different opinion. For him, external forces like market fluctuations and economic recession could not give a full explanation of why other companies like Honda and Toyota were managing through in the wake of Nissan’s failure (Kase, Riquelme & Sáez-M 2005). Ghosn opined that the management had not given its workers a clear long term vision. Immediately Ghosn took actions to redress loss and profits, boost employee motivation, organized cross-functional teams to review all its functions and restructured the relationships with suppliers. In addition, he launched a three-year strategic plan mostly referred to as the Nissan Revival Plan.
With this, he identified concrete objectives and promised his resignation if they were not attained within the set time limit (Daft 2008). Ghosn mostly focused on important elements to yield immediate results like negotiating component prices with dependable suppliers. Another paramount aspect of his leadership was to widen information and source initiatives through CFTs, which too served as his functional communication channel.
The Behavior/Attribution Approach
According to behavioural theory, the conduct of an effective leader is much different from that of ineffective ones. Two main classes of leadership behaviour are relationship-oriented behaviour and task-oriented behaviour (Rasiah, Sadoi, & Busser, 2013). To boost his analytical insight, Ghosn mostly relied on his well-built work ethic and transparency. By upholding transparency in all functions, he aimed at the best possible outcomes while lifting the employees’ morale at the same time. According to Ghosn, credibility bears two legs, transparency and performance. For performance, they had none to show during the company’s poor performance, so they were only left with transparency.
According to Millikin and Fu (2004, p.121–137) one of the Ghosn’s striking characteristics was his aptitude to synthesize the aspects of an intricate problem and proposition of seemingly simple solutions. Ghosn’s success was greatly attributed to his collective approach of employees. This is evident from the way he entrusted core leadership in teams and personally rules from the middle. Besides, Ghosn is not a reservist. This factor greatly served as a weapon in a country where people are always suspicious of foreigners and spoke no Japanese. To make matters even much worse, the society hates change and his change process at Nissan was envisaged to be a daunting task (Hackman & Johnson 2008). But, his personal resilience, respect for all and workers involvement eased things for him.
The Sociological Approach
According to social network theory, good leadership is evidenced by the way the leaders in an organization relate in terms of organizational effects behaviours and beliefs. Some of the challenges were that traditional practices such as downsizing and closure of plants, as Japan emphasizes lifetime employment. Especially when he considered closing down five plants which comprised both power train plants and assembly plants, most of the employees never felt to the idea (Lewis 2007, p. 17). For Ghosn, persuading the employee’s unions over the badness of rigid job definition had become a big task. Instead, Ghosn substituted the scenario-based promotion he entrenched at Nissan with merit-based incentive and performance-based system (DuBrin 2011).
Ghosn, for instance, managed to restructure the intricate manufacturing structure at Nissan. That is, almost twenty-four sectors or areas were reduced to about twelve areas of operations, and all were to be used by about three to four Nissan plants. After the restructuring process, Nissan reported returns of $1.5 B for six months. This was the best results the corporation had ever registered. The reasoning behind was the multicultural experience Ghosn amassed from different countries where he had previously worked, enabled him to embrace the Japanese culture and even built on it (Hope 2013). The most striking aspect of his successful leadership is depicted in the manner in which he balanced western individualism, teamwork and eastern collectivism.
Recovery phase
During the rescue phase, Ghosn through consultations with his team managed to change many things. Some of the things changed by Ghosn include: slashing or reducing costs, shut down factories that were not profitable, shortened the supplier network, disposed of assets that were not lucrative, and reignited the insular culture of Nissan (Chiesa & Frattini 2009). Under the leadership of Ghosn, the company aggressively expanded into many emerging markets like the Chinese market, Indian market, Russian market, Brazilian market as well as the Southeast Asia market. In addition, Ghosn changed or shifted manufacturing and assembling of a number of core products from Japan.
On top of this, he heavily invested in the company in order to develop vehicles that were affordable. At the same time, he produced models that did not emit a lot of greenhouse gasses. Some of these models are still in the market now and include electronic cars such as the Nissan LEAF (Millikin & Fu 2004). At Renault, he also introduced new electronic models.
References
Chiesa, V., & Frattini, F 2009, Evaluation and performance measurement of research and development: techniques and perspectives for multi-level analysis, Cheltenham, Edward Elgar.
Daft, R 2008, New era of management, Thomson South-Western, Mason.
DuBrin, A 2011, Impression Management in the Workplace: Research, Theory and Practice, Routledge, New York.
Hackman, M. Z., & Johnson, C. E 2008, Leadership: A Communication Perspective, Waveland Press, Long Grove.
Hope, J 2013, Reinventing the CFO: How Financial Managers Can Transform Their Roles And Add Greater Value, Harvard Business Press, New York.
Kase, K., Riquelme, H., & Sáez-M, F 2005, Transformational CEOs : leadership and management success in Japan, Elgar, Cheltenham.
Lewis, P 2007, Management: challenges for tomorrow’s leaders, Thomson/South-Western, Mason.
Magee, D 2003, Turnaround: How Carlos Ghosn Rescued Nissan, HarperCollins, New York.
Millikin, J., & Fu, D 2004, The global leadership of Carlos Ghosn at Nissan. Thunderbird International Business Review,47 (1), 121–137.
Rasiah, R., Sadoi, Y., & Busser, R 2013, Multinationals, Technology and Localization in Automotive Firms in Asia. Routledge, New York.