Guy's Books and Thoughts

This is an interesting account of how Carlos Ghosn, the number two
executive at Renault came to Nissan and turned the company around. Of
course he did not turn the company around all by himself. He had a
team from Renault to work with as well as the employees of Nissan.

Perhaps Mr. Ghosn, was fortunate to have arrived when he did. In
Esther, one is reminded for the phrase "for such a time as this." If
Mr. Ghosn had come to Nissan say 30 years earlier, he probably would
have been laughed at. By the time Mr. Ghosn arrived at Nissan,
Japan's "Bubble Economy" had collapsed and Nissan was on the verge of
going out of business.

By 1999, Nissan was looking for a company they could partner with,
even if it was a foreign company. The head of Nissan had hoped to
partner with the Daimler/ Chrysler company, which had far more money
than Renault. But Daimler/Chrysler decided against the partnership.
That left Renault. For Nissan it was either a partnership with
Renault or
hope for a bailout from the Japanese government. When Renault and
Nissan entered into partnership, the Japanese government stayed
neutral on the matter. The government probably figured it was cheaper
to have Renault and Nissan make an effort at recovery than spend
taxpayers' money to bail out Nissan. I suspect the taxpayers would be
less than pleased with having to foot the bill for a bailout.

Before coming to Nissan, Mr. Ghosn, established himself as a problem
solver at Michelin, then Renault. At Renault he earned the nickname,
LE COST KILLER, because of the decision to close one factory. But his
cost cutting was done to save Renault. Sometimes cost cutting is a
necessary measure. I remember that one director of a university in
Hong Kong, tried to reduce the number of lecturers. She was trying to
improve the overall performance of the university. But some were short
sighted and only focused in on the cost cutting, ignoring the big
picture. Fortunately for Mr. Ghosn, the cost cutting measures worked
and he was able to turn Renault around. Kind of funny, when Mr. Ghosn
was in the midst of implementing policies at Renault, he received
notoriety and flak. But when the company began to recover, he was
praised.

Mr. Ghosn's reputation as LE COST KILLER preceded him to Japan. But
since Nissan had been undergoing steady decline for the past ten
years, people were willing to listen. It is interesting that in both
France and Japan, Mr. Ghosn encountered a problem of fiefdom's within
the Renault and Nissan. Department heads were more interested in
their own turf than the overall health of the company.
By "coincidence" I talked to a friend about a certain American company
with similar problems of fiefdoms. Maybe human nature is pretty much
the same all over the world. Of course there were some differences.
The French in their "fiefdoms" were more individualistic, while the
Japanese were team oriented WITHIN their own fiefdoms. But in both
cases there turf consciousness. Mr. Ghosn sought to break down these
fiefdoms using cross-functional teams. I suppose a company may be
compared to a body. If each body part decided to go its own way there
would be chaos. If a basketball player wants to shoot a basket, the
action of the body must be coordinated. Mr. Ghosn sought to integrate
the various departments into a coordinated whole.

While Mr. Ghosn was university trained, he is a man of action, not an
ivory tower academician. He went to where the action was. He did not
content himself with reading reports. He met with union leaders,
suppliers and dealers. People were discontented and spoke frankly
with him. He appreciated that people spoke freely with him. He makes
some interesting comments about Japanese management by consensus being
a myth. He states that people that got things done were individuals
who were sometimes tyrants.

It is interesting how a book can tie with other things. I think this
book ties in with the book FROM GOOD TO GREAT by Jim Collins. In both
Ghosn's book and Collins' book there is an emphasis on focusing one's
business core. In other words don't try to do everything. Focus on
what your "vocation." In other words Nissan would be making a mistake
if it forgot its "vocation" of making cars and started producing
television. Companies shoot themselves in the foot or worse, when they
abandon the core and try to diversify into a multitude of ventures.

This might be of those interested in "multiculturalism." My
impression is that Ghosn's "multiculturalism" is the real life hands
on type. In a sense one might say he's lived it: A Brazilian of
Lebanese descent; who was educated in Lebanon and France; worked in
Brazil, the United States and Japan. The Renault-Nissan alliance is a
cross cultural alliance. Mr. Ghosn first language was Portuguese, but
French is the language he is most comfortable with. But though French
is the language he is most comfortable with, the Nissan business
meetings are conducted in English. So both French and Japanese are
using a language that is not their native tongue. And neither side
could claim favoritism. In addition to the alliance between Renault
and Nissan, he also covers briefly the alliance with the Chinese. So
Renault has partners in China as well as Japan.

I should hasten to add that on the matter of culture, Mr. Ghosn,
states there is no one Japanese car maker culture. For example,
Toyota�s corporate culture tends to be more �conservative� reacting to
market trends, while Honda�s corporate culture tends towards
innovation and change. Mr. Ghosn mentions that Honda was readily
willing to try the new Michelin tires, while Toyota took years to
accept the tires.

The alliance between Renault and Nissan is almost like a marriage. Mr.
Ghosn says that both Renault and Nissan maintain their identities. And
they have a respect for each other. But it is not as if they are two
companies existing side by side on paper. There is cooperation and
a "synergy" between the two companies. The companies try not to
overlap each other, but complement each other. Renault is strong in
Europe, while Nissan is strong in Asia with a presence in the United
States. Some of this reminds me of conversations I had with a friend
who is now a seminary professor and his wife over the phone. I once
asked his wife, if she and her husband counterbalanced each other. She
replied that they complemented each other. The seminary professor
told me that two things necessary in a marriage are respect and
respectability. I am not saying this is a book on how to run a
marriage. But it's interesting that the words used by the seminary
professor and his wife �complement� and �respect� in regards to
marriage; are also found in the book regarding the business
relationship between Renault and Nissan.

I almost forgot the book also mention the value to paying attention to
the part of the puzzle which doesn't fit. I wrote in my margin about
comparing this to Thomas Kuhn's examining anomaly which doesn't fit
the paradigm. As I read a few sentences further, the author basically
addressed this issue, more in the business than scientific sense. He
states that paying attention to the anomaly is what leads to
innovation. It was a bit amusing to see this a few sentences down,
after making my notation in the margin. It's as if he anticipated what
I was thinking. Or maybe the other way around.

In conclusion, while this may be a business biography book it covers a
range of subjects from intellectual to practical. It is an interesting
study of human nature, human dynamics and problem solving.

Guy