Carlos Ghosn
My buddy Lei forwarded me a note from a friend of his in the GSB about Carlos Ghosn coming to speak at a weekly GSB lunch-time speaker event. I had never heard of Ghosn before, but I’m glad I went. Ghosn was named Business Man of the Year in 2003 by Fortune magazine, and is widely lauded for turning around Nissan. Ghosn has the distinction of being the CEO of both the French automobile giant Renault and Japan’s Nissan at the same time. When Renault and Nissan formed an alliance back in 1999, Nissan had $20 billion in debt and compared to all of its peers, was in astoundingly bad shape. Now, Nissan is in the green. He is so highly regarded in Japan that his nickname is Samurai and manga (comic book) has been written with him as a character.
Ghosn appears to be the perfect man to lead two global companies. Born in Brazil to Lebanese parents, he studied in France and is fluent in 5 different languages, with a sixth coming along. Ghosn spoke about the state of the automotive industry and the challenges of bring a very French company and a very Japanese company together towards success. He is an excellent speaker.
He spoke about the cultural problems in Nissan that made it plunge so low (not profit driven, not customer driven, and no cross functional teams). He said that leadership is about getting a group of people to work towards a goal they are uncertain of. When it came to the idea of failure, Nissan and Renault posed two different problems. In Japan, people feel shame when they fail. But failure is part of innovation — Ghosn says that shame comes with repetitive failure. In France, is it the opposite. If a person is doing a 95% great job, the French is likely to point at the 5% and complain.
He spoke at length about the new developing markets in China, India, Brazil, Russia, and sub-Saharan Africa. In order to open up the possibility of owning a car to more people, they have to drive the price lower. In America, the cheapest car is $9,000. But people can’t afford that. He described a partnership that Renault-Nissan has with Bhajaj Motors in Mumbai where Bhajaj is designing the car while using the resources and technology of Renault-Nissan. Ghosn noted that India is designing cars with the Indian consumer very much in mind. He also gave an interesting statistic for China — the domestic car manufacturers only have 12% market share in China. This is the lowest for any other country. In Japan, that stat is 80%. In America, 40%. In European countries, closer to 50%. So Ghosn thinks there is still some time before Chinese cars flood the international markets — they have a lot to catch up with at home.
Someone asked about hybrid vehicles and Ghosn made a point saying that technological innovation is very different from commercial marketization — a point that I agree too many engineers fail to understand. There are 65 million cars sold every year. How many of those are hybrid/electric vehicles? 0.1%. Yes, it is growing but there is still time before it becomes a big commercial market.
Ghosn showed a quick mind, offered more detailed answers (with figures, percentages, time estimates) than what I would have expected from a CEO, and felt comfortable with the crowd. Someone described the Renault-Nissan alliance as a marriage, and Ghosn said that you don’t judge a marriage by the first sixth months…you have to look where it is after 5 or 10 years. A while ago GM was rumored to perhaps join the alliance, and Ghosn described it as “what happens if you like the father-in-law but think the bride is ugly.” He also noted that when it comes to management, people only care when things are going bad. When things are good, great companies can run themselves. When you’re flying on a plane, you don’t care who is flying until you notice the engines are flaming out and you want to make sure the pilot isn’t some rookie.
As I was watching Ghosn, it really impressed upon me of the notable difference between leadership and management. I know I’ve been taught these topics before, but still. A leader’s fundamental role is to provide a vision for people to believe in and want to work towards. As Ghosn says, you cannot simply command or order people to be motivated. You have to inspire it. A manager is concerned about implementation and execution, and making sure you have total awareness of what is going on within your organization. I reflect back to the projects I’ve been a part of, and I wonder: have I been more of a leader, or a manager? As a major advisor to this year’s Krispy Kreme Challenge organizers, I realize that I failed to spend the time to truly communicate the vision of what Krispy Kreme Challenge was about and to inspire our group last year. My thoughts would first jump to ‘total awareness’ mode and start analyzing all the things that had to be done and how to execute. I think I did a better job with ARI, the senior design project, because in my role I was able to stay above the gritty implementation part and really make myself available to our undergraduates.
I need to be mindful of this differentiation between leadership and management, and wear their respective hats accordingly.