Leading Change – Carlos Ghosn at Renault and Nissan

Ghosn’s philosophy of change leadership was already developed at Michelin based on three principles: “assume nothing (find answers within the company); work fast; and earn trust and respect with strong results.” He diagnosed the complications that Nissan had as internal. His initial analysis was that the “company culture emphasized narrow, functionality based thinking at the expense of a larger strategic view.” Based on this analysis he formed cross functional teams bringing executives from all statuses and geographical locations to brainstorm and recommend solutions within three months. The plan was clear and straightforward: reduce procurement costs; reduce debt; and close plants that weren’t viable and introducing new models. These decisions went against the beliefs and traditions of the Japanese industry. It challenged the keiretsu system as the choice to sell associate companies to raise cash and clear debt was never done in Japan. While Ghosn challenges the Japanese business tradition, he also acts with quickness to put the plan into action. Ghosn’s ability to be so direct and confident in what he believes needs to be done, results in dramatic improvement in Nissan’s bottom line.
According to Spector, there are five core tasks that lie at the heart of effective change leadership: 1) Develop and Communicate Purpose; 2) Establish Demanding Performance Goals; 3) Enable Upward Communication; 4) Forge an Emotional Bond between Employees and the Organization; and 5) Develop Future Leaders. In order to be a successful and effective leader, you should be willing to uphold your organization and exercise these tasks. This story of Ghosn’s shows how he utilized these tasks to be successful leader.
Develop and Communicate Purpose: “Ghosn’s main organizational purpose was to cut costs and do everything in his power to bring Nissan back to profitability at the earliest date possible. He created cross company teams to look at all opportunities for synergistic effort and