Carlos Ghosn At Nissan An Evaluation Management Essay

Carlos Ghosn At Nissan An military rating Management EssayIn 1999 Renualt and Nissan formed an alliance, as both companies could make head flair from each other. Renualt deficiencyed a partner that could enhance their global position and Nissan had been looking for a strategic partner because they needed financial support later their credit rating was announced to be lowered to junk status, mainly due to the Asian financial crisis. The alliance should in like manner contribute to new way ideas for Nissan to turnaround their seven come out of the closet of eight year dearth. Carlos Ghosn was the guy to help Nissan to do this.The challenges that Ghosn faced were among others resistance to change, Japanese burnish and discourse problems. Ghosn promised that if he hadnt changed the famine to a profit within two years, he would step down from his job at Nissan. He managed to turnaround Nissan in just eighteen months.Evaluation of Carlos Ghosn approachThe evaluation of Ghosn app roach to the turnaround of Nissan is addressing the following aspects. At the end of the paper the actual evaluation will be stated.Resistance to changeWhen strategic changes are going to be implemented in companies, resistance to change almost always appears, and Nissan were no exception. The resistance in Nissan occurred because the Japanese last is bureaucratic and focuses on social harmony. further organizational culture also ca apply some resistance from the employees. With that said I dont think that the employees where that resistant. It sounds like the employees knew that the situation was serious, and they didnt want to neglect their job. As stated later in the paper, the perspicacityset of the employees change and that the changes happened very fast. Some of the main causes of resistance are unawareness of what and why things are ever-changing and lack of communication from the leader to the employees (Ford 2009). The first thing Ghosn embrace is exactly those things, and thereby avoid resistance concerning those causes. Tina Nielsen Strategy consummation 48-hour mental test 050684-1216 CM-J41 Oktober twenty-ninth 2010 scallywag 4Reasons for resistanceDespite of the things Ghosn do to avoid resistance, there is some resistance from the employees. The causes for resistance are seen belowNo guaranty of lifetime bookingPromotion based on performance kind of of seniority and education (Nennkou-Jyoretu philosophy)Ghosn encouraged risk-takingMatrix structureThe changes for the employees were thus large, as their whole business mindset had to change. The causes are described in the followingLifetime employment was security for the employees as they knew that they would never lose the job. The Japanese government would bail the company out if they were in financial trouble. This, though, werent the case for the major financial house, Yamaichi, which went bankrupt and non saved by the government just forward Ghosn came to Japan (case C551). This changed the employees mindset so they got a sense of urgency of getting Nissan to perform well again or else they could lose their job.A large resistance from the employees was the promotion of younger leadership over older, longer-serving employees. The Nennkou-Jyoretu philosophy did no longer exist, as Ghosn treasured to promote risk-taking and personal accountability and responsibility. This was done by introducing performance based incentive systems, which include cash incentives and stock options for achievements directly linked to achievementful operating profit and revenue (caseC553). The change of the promotion system would course some resistance from the employees that were up for a promotion, but didnt get it because of the new system. This could nominate a dis-motivating problem that Nissan has to consider and exterminate.The condition for changing the promotion system was to encourage risk taking. The Nemawashi philosophy destroyed the effectiveness of s pennan tping point making in Nissan and other Japanese companies. These informal meeting before information meeting was Tina Nielsen Strategy Execution 48-hour exam 050684-1216 CM-J41 Oktober 29th 2010 Page 5held to protect the individual from making bad decisions, and in the previous promotion system, the only thing preventing the employee of a career founderment what failure and mistakes. This Ghosn changed as he wanted the employees to think, take responsibility and be responsible for what they did. Every report that the employees handed in had to be accurate and the employees was held accountable for what was stated in the report.Ghosn changed the organizational structure to a matrix structure. This meant that every employee will have two bosses a functional and a regional. The often disgraceful weakness of this structure is the discussions among employees from different departments about resource allocation (KaplanNorton 2006), and thereby cause resistance to the change.It was no t only the employees that were resistance to change. Business analysts and the media both criticized Ghosn for going against the Japanese culture by expiration people that not met targets, this also let to a nickname the foreigner (case C552). The government responded to this change of business culture by offering subsidies and programs for the affected employees, probably because they saw the rational of not bailing companies out of their crisis, just because they didnt manage their company well.Organizational cultureTo turn Nissans deficit to a profit, the corporate culture had to change. The Japanese culture had a big impact on how the corporate culture was, but some of the problems at Nissan where not normally seen in other Japanese companies. On top of the problems Ghosn states (see case C549), there are some other organizational problems. These problems wereFollow-up on decision was not effectiveTop management had created tunnel vision regarding market share instead of profit created unprofitable productsCommunication problems with the layersTina Nielsen Strategy Execution 48-hour exam 050684-1216 CM-J41 Oktober 29th 2010 Page 6Top management did not follow up effectively on decisions, which do it difficult to know which decisions were successful and which were bad. The consequence is that Nissan doesnt learn of their mistakes and thereby cannot use the lesson learn from bad decision or the experience from good decisions to future decision making.Top management focussed on market share instead of profit, which created unprofitable products as listed in the case only four out of 43 models turned a profit. (Case C546). The reason for this focus was the maintenance of company size and staff. This corporate problem stem from the long standing partnership between the government and major businesses to ensure long employment. As there was no guaranty at world bail out by the government, Nissans strategic focus has to change to regard profit instead of market share.The communication problem at Nissan concerns no shared vision or strategy throughout the company. Staff doesnt know what the top management is doing and top management doesnt know what the other managers and employees are doing. This may lead to a company that doesnt move in the same perpetration as the employees dont know the direction they should work. This problem stems from the study culture problem that classs dont talk to each other, and only worry about how their own department is doing.What Ghosn did to enlist supportTo handle the above problems Ghosn made three principles that transcended all cultures in the firm. These were1. Transparency2. Execution 95%, strategy 5%3. CommunicationThese principles were used to give employees structure and give guidance on what to keep in mind when managing the company in the future.Ghosn was surprised how fast the employees at every level adapted to the new management process. But he also saw the cultural problem as a cha llenge and he Tina Nielsen Strategy Execution 48-hour exam 050684-1216 CM-J41 Oktober 29th 2010 Page 7stated that it was important to respect the employees culture. This led to the following initiativesThe first thing Ghosn did was to ensure that the people that accompanied him from Renault had the same respect and attitude for Nissan and the Japanese culture as him.He initiated long discussions with several hundred managers in order to get an insight on the day-to-day operations. He turned the resistance into feedback and used the conversations with managers as a resource to gravel the optimal solutions (Ford 2009).After these discussions he developed a program which encouraged the employees at Nissan to contribute recommendations for the company. This replaced outside hiring and Ghosn hoped this bring on motivation. This program called Cross-Functional-Teams (CFT) consisted of 10 members from different departments. The groups also contributed to better insight across the differ ent departments, and moved away from the imploded relationships in the company (Krackhardt 2000). It also gave the employees a better insight of the company as a whole. The groups developed a new corporate culture from the best elements of the Japanese culture (caseC551). Working in these groups also helped the managers to think in new ways and share ideas across departments.Ghosn created a matrix structure so every employee had two bosses this improved the transparency and communication between the departments and also the awareness of both functional and regional problems.Ghosn disciplined employees strongly for inaccurate and poor data he wanted employees to take responsibility. This was to speed risk taking and personal accountability. Ghosn created a system of if you contribute there will be opportunity and reward (case C553)These initiatives and the fact that Japanese respect leadership helped Ghosn to incorporate his new management process in the corporate culture. Tina Niel sen Strategy Execution 48-hour exam 050684-1216 CM-J41 Oktober 29th 2010 Page 8National cultureThe Japanese culture is very incorporated in every company in Japan as so in Nissan, and it is hard not to affect Ghosn. The national culture has challenged Ghosn both on the personnel side and the financial side. The following are listing some of the Japanese cultures impact on NissanThe keiretsu philosophy fix up not bad(p) of $4 billionCultural consensus of group harmony creates efficiency no awareness of what is going on outside own group (Imploded relationship Krackhardt 2000)Finger pointing no one accepted responsibility. Blamed everyone but themselves.Acceptance rather that responsibility because culture protects career advancementNemawashi informal meetings before information meetings no individual to blameHampered risk-taking and slowed decision making at all levels. Routine, details and concepts with no sense of urgency slowed decision making and created no risk takingAs G hosn states The Japanese are so organized and know how to make the best of things. The respect leadership. (CaseC550)Ghosn had a very open mind when entering the job, for instance he didnt wanted to learn much about the Japan before he came, because he didnt wanted to get any preconceived ideas (case C546). Ghosn had also worked at four different continents and spoke five different languages, which indicates that he has an open mind to cultural differences and that he is used to work in different cultures. You can say that Ghosn is multicultural.This helped Ghosn to reduce the difference between his culture and Nissans culture, and thereby didnt induce deep cultural differences. Tina Nielsen Strategy Execution 48-hour exam 050684-1216 CM-J41 Oktober 29th 2010 Page 9Culture as a helper or parapetCulture was both a helper and a hindrance for Ghosn. The hindrance consisted of how deep Japanese culture where incorporated in Nissan, such as no responsibility, accountability and risk t aking from employees and the keiretsu philosophy.The respect for leadership was a big helper for Ghosn, as the employees at every level where willing to change their mind and embrace new ideas. Ghosn himself was very surprised that the acceptance of change happened that quickly.The way Ghosn embraced the cultural difference was by evaluate and building on strengths of the different cultures, all employees, including Ghosn himself, would be given a chance to grow personally through the consideration of different perspectives. (case C550). This way Ghosn made culture into an opportunity and not a hindrance for managing Nissan.Luck and timingOne of the most powerful impacts on strategy execution is the capital market (BowerGilbert 2007). One of the reasons that Nissan needed help was the Asian financial crisis, where the devaluation of the yen/USD had a big impact on Nissans keiretsu investments. This meant that Nissan should find a new partner in the automobile industry to avoid a c redit rating as junk. They also needed new capital and new ideas.The financial house, Yamaichi, went bankrupt at the same time Ghosn arrived to Japan, and where not helped by the government. This sent a message to Nissans employees that they should not be sure of having a job if Nissan proceed with their operations as usually. Ghosn also took advantage of the situation by using the Yamaichi example any time possible.Renault looked for a partner, as they wanted to exploit the Japanese and the North American market to enhance their global position. Another reason was to reduce their dependency of the European market. In May 1998 Renault integrate with DaimlerCrysler, which led to a sense of urgency of finding a partner to compete more Tina Nielsen Strategy Execution 48-hour exam 050684-1216 CM-J41 Oktober 29th 2010 Page 10globally. If Renault didnt alliance with Nissan, Ghosn would never have been COO of Nissan.Another thing is that Ghosn came to Renault in 1996, if the alliance wer e made before that, Ghosn would not have been the leader of the changes. If the alliance were made in the beginning of his career at Renault it is not sure that Ghosn would have got the job.All these events have resulted in the success of Nissan turning their deficit to a profit. If these events where not happening at the same time, it is not certain that the success Ghosn experienced would have happened.I dont think than Ghosn could have had the same success a hardly a(prenominal) years earlier, as the Yamaichi bankruptcy changed Nissans employees mindset referring to their job security. Renault would probably not have been looking for an alliance partner (and Ghosn would not have been in Nissan), if they hadnt got the need of a global position on the world market, which they urgently got in 1998 after the merger with DaimlerChrysler.The conclusion is that both luck and timing of many elements affects the success of changes.EvaluationMy opinion of Carlos Ghosns approach to turning Nissan around is that it was the right way to do it. Ghosn knew that he had to respect the national culture, and he knew that he had to lead the employees being heard. The latter is often a reason why resistance occurs, because it is the employees that know the day-to-day operations and know what can be done (Ford 2009).A describe initiative he imposes was the CFT, which should enforce communication and motivation He (red.Ghosn) felt that if the employees could accomplish the revival by their own hands, the confidence in the company as a whole and motivation would again flourish. (CaseC550) Tina Nielsen Strategy Execution 48-hour exam 050684-1216 CM-J41 Oktober 29th 2010 Page 11This was very clever as the CFT accepted the firing of the 21,000 employees. This was accepted of the employees because if the CFT agreed on that, then it must be right, or else they wouldnt have fired people. If it was Ghosn alone that made the decision, employees may not have been accepting that as fast, and resistance would have appeared.The way Ghosn approached the Japanese culture were with humility and respect, this was necessary in a country where culture is as important as in Japan.LiteratureFord, J. D. and Ford, L. W. (2009). Decoding resistance to change. Harvard Business Review, 87(4), 99-103Kaplan, R. S. and Norton, D. P.(2006).How to implement a new strategy without disrupting your organization. Harvard Business Review, 84(3), 100-109Krackhardt, D. and Hanson, J. R.(1993).Informal networks the company behind the chart. Harvard Business Review, July/August, 104-111Bower, J. L. and Gilbert, C. G. (2007). How managers everyday decisions create or destroy your companys strategy.Harvard Business Review, 85(2), 72-79