Turn Around - How Carlos Ghosn rescued Nissan. When Carlos Ghosn took over as COO of Nissan in April 99, this was the state of Nissan. 25 years of declining market share, 22 bn $ of debt, 140,000 demotivated people, ordinary cars.
Carlos Ghosn within three months of taking over, announced a NRP - Nissan Revival Plan as follows: Within three years by April 2002, Nisan would achieve the following:
a. Net debt of $ 10bn or less (cuurrent figure $ 22bn)
b Operating margins 4.5 % or more (currently negative)
Guess what was the actual performance?
Net debt $ 10 bn. operating margin of 7.9%.
And this was achieved within two years against a target of three. He also laid off 21,000 people and shut down four plants. And he achieved all this in a Japanese company, that too.
Here is how it was done:
a. Forming CCTs - Cross cultural and cross functional teams. No culture is good or bad, there is something to be learnt from every culture. This is not the case of a French company Renault taking over a struggling Japanese company Nissan. The best way is to take the best of French culture (analytical skills and terrific focus on product) and marry it with the best of Japanese culture (superb manufacturing processes). Cross functional teams were formed across locations to address key issues facing the company. Initially the Frenchmen did not even speak the Japanese language and vice versa. They were given two months to come out with specific recommendations to look at issues facing the company. Later this deadline was extended by one more month. And these teams were formed even before the merger was announced.
b. Solutions comes from employees at all levels. Ideas do not just come from leaders at the top. They come from employees at all levels. Ghosn spend the first few weeks of his tenure at Nissan travelling all over the world meeting employees, dealers, visiting plants, etc. He heard his people and they told him what was wrong with the company and what was needed to fix it. The Nissan Revival Plan was based on the inputs he received from Young Leaders at all levels in the company.
c. Personal commitment - If Nissan does not achieve these numbers, then me and the entire Executive Committee will go fishing. Most leaders do not take accountability. Ghosn announced to the media - "if we do not achieve these targets, the entire leadership team will resign". This sent a strong message to the world and to senior leaders within the company - I am serious. Failure is not an option, you better achieve these numbers, else you got to go.
d. 5% planning and 95% execution. Shut up and execute. Most leaders talk too much, do too little. Nissan used to make lots of plans and keep discussing these plans over and over again. Eventually the market circumstances used to change, forcing the plans to be redone all over again. Ghosn came out with a rule. Spend 5% of your time planning, 95% of the time executing.
e. Change people with logic and data, not threats. It is no big deal to fire people. But when we fire people, we in a way admit to two things. a - that we did a lousy job of hiring them and b - we did a lousy job in training and growing them. Ghosn's assumption - people are intelligent and reasonable. Convince them with logic. Use data, use the power of argument, never threaten with rank. That is more challenging and satisfying.
g. Earn market share, sell products profitably or do not sell at all. This would be a radical idea for most salespeople out there. Ghosn used the concept of "earning market share" to indicate that the market has to give us the right to sell our products at a profitable price. If we are not able to do so, then we need to earn that right - by improving our products, by building better cars, by running our company better. He never used to ask the question "how many cars do you sell?". "His question was always "are we selling cars profitably?"
Carlos Ghosn next target - Nissan 180. Sell one million more cars at 8% operating profit and achieve zero net automotive debt in the next three years. Yo!!!
..................Ideas from the book Turnaround - How Carlos Ghosn transformed Nissan
No comments:
Post a Comment