Nissan's Current Struggles
- Nissan is currently facing significant challenges that could lead to its downfall, as evidenced by a drastic
decline in operating profits and employee layoffs.
- The company has lost its core audience and is struggling to maintain quality in its vehicles, which has
resulted in a tarnished reputation.
- In early 2019, Nissan reported a staggering 99% drop in operating profit, forcing them to lay off nearly
13,000 employees.
- This situation raises questions about how a company known for producing beloved vehicles has hit such
a low point.
Historical Context of Nissan
- Nissan, originally known as Datsun, has a rich history spanning over 100 years, with many iconic models
emerging during the 1970s, 1980s, and 1990s.
- The Z series, starting with the 240Z in 1969, played a pivotal role in establishing Nissan's presence in
the U.S. market by offering affordable sports cars.
- The Skyline, particularly popular in the 1980s and 1990s, is considered one of the most influential cars
of the last half-century, attracting a dedicated fan base.
- Despite a strong reputation in the 1990s with models like the twin-turbo 300ZX and the 240SX, Nissan
struggled to innovate due to financial difficulties.
Financial Challenges and Corporate Changes
- Nissan's financial troubles were exacerbated in the 1990s when they were losing money on every car
sold in the U.S., leading to a partnership with Renault in 1999.
- Renault took on $5.4 billion of Nissan's debt in exchange for a significant stake in the company, which
helped stabilize Nissan's finances.
- Carlos Ghosn was appointed CEO to spearhead the turnaround, but his controversial actions later led to
legal issues and public distrust.
- Despite initial success in reviving the brand, Nissan's reliance on cost-cutting measures has resulted in a
decline in vehicle quality.
Quality Decline and Consumer Perception
- Under Ghosn's leadership, Nissan began using cheaper parts to cut production costs, leading to
significant quality issues in their vehicles.
- Notable problems included the use of plastic timing belt guides that degraded quickly, leading to
premature repairs and lawsuits.
- The continuously variable transmissions (CVTs) used in many models were reported to fail around the
time warranties expired, damaging consumer trust.
- Despite updates, Nissan's cars have consistently ranked poorly in consumer reports, with many models
described as feeling cheap and less enjoyable to drive.
Market Saturation and Sales Strategies
- Nissan's focus on producing volume cars, like the Versa, helped stabilize finances but diluted the
brand's identity and appeal.
- While models like the Murano and Altima were decent, the market became saturated with these
vehicles, leading to diminished excitement among consumers.
- Nissan's aggressive sales tactics included offering subprime loans to buyers, which contributed to
financial instability for many customers.
- The practice of selling to anyone, regardless of their financial situation, ultimately led to a negative
perception of the brand.
Nissan's Need for Innovation
- Nissan has failed to update its enthusiast-focused models regularly, with the 370Z and GTR remaining
largely unchanged for over a decade.
- The lack of innovation has led to boredom among fans, who expect more frequent updates and
improvements in performance and design.
- The fallout from the Ghosn scandal has further damaged public perception, with Nissan struggling to
regain consumer confidence.
- In 2019, Nissan's financial performance mirrored the dire situation of the late 1990s, with significant
losses and layoffs indicating a need for a strategic overhaul.
Recommendations for Future Success
- To recover, Nissan must focus on improving the reliability and quality of their vehicles, starting with the
materials used in production.
- By learning from competitors like Kia and Hyundai, Nissan could revitalize its brand image by producing
affordable, reliable, and appealing cars.
- Nissan should identify and cater to its target audience, creating vehicles that resonate with consumers
and reflect the brand's heritage.
- Bringing back popular models and introducing new, exciting vehicles could help rekindle enthusiasm
and loyalty among fans and customers.
Challenges Faced by a Foreigner in a Japanese Company
- The initial reaction of the company to the foreign leader was one of skepticism, as employees were
discouraged about how he would fit into the Japanese corporate culture.
- Concerns were raised about the foreigner's ability to contribute effectively to the company and
navigate the complexities of the local culture.
- Despite these challenges, the foreign leader was able to implement necessary plant closures, which
were viewed as long overdue decisions for the company's survival.
Empowerment and Inclusion in Decision-Making
- The foreign leader actively engaged with employees, creating an environment where voices from
various levels of the company could contribute to discussions about its direction.
- He encouraged frank conversations about the company's issues, which were previously difficult to
address due to cultural constraints.
- This approach fostered a sense of empowerment among employees, enabling them to express their
views and contribute to the decision-making process.
Promotion and Diversity Initiatives
- The foreign leader emphasized the importance of eliminating discrimination within the company,
particularly regarding the promotion of young high-potential employees.
- He recognized that promoting diversity and inclusion was essential for the company's growth and
success.
- Efforts were made to ensure that both Japanese and non-Japanese employees, regardless of gender,
could work together on company problems.
Creating Collaborative Structures
- The leader implemented structures within the company that facilitated collaboration among employees
from different functions and backgrounds.
- These structures were designed to transform ideas into actionable plans, thereby promoting innovation
and creative solutions.
- The collaborative environment fostered by these initiatives was seen as a true representation of
freedom within the workplace.
Respect for Cultural Values
- Throughout meetings and decision-making processes, the foreign leader ensured that respect for the
local culture was a priority.
- He believed in the potential for collaboration and unity among employees from diverse backgrounds,
emphasizing the importance of working together.
- This focus on cultural respect was crucial for fostering a harmonious working environment and
enhancing team dynamics.
Government Involvement in the Automotive Industry
- The speaker reflects on the automotive industry, emphasizing the importance of government
involvement despite working in a heavily regulated sector.
- They reference the interconnectedness of various stakeholders, suggesting that a prosperous economy
relies on collaboration among them.
- The idea of interdependence is highlighted as essential for creating an environment conducive to
growth and success in the automotive sector.
Leadership Experience at Nissan and Renault
- The speaker discusses their unique position as the first individual to lead two Fortune Global 500
companies, Nissan and Renault, simultaneously.
- They describe the demanding nature of their role, which required extensive travel and time
management across different countries.
- The speaker shares their reluctance to take on both CEO roles, citing the challenges and stresses
associated with such a responsibility.
- They attribute their dual leadership to circumstantial factors rather than personal ambition or desire for
additional challenges.
Turnaround Strategy for Nissan
- The speaker recounts their arrival at Nissan in 1999 when the company was nearing bankruptcy, with
debts of approximately 20 billion dollars.
- They describe the turnaround as a "mission impossible," yet they successfully salvaged 21,000 jobs and
sold off unprofitable assets.
- Despite facing public backlash, the speaker remained confident in their strategy, believing in the
necessity of decisive actions for potential success.
- They emphasize the importance of not compromising on the solution during a turnaround, regardless
of the risks involved.
Lessons Learned from Turnaround Experiences
- The speaker reflects on the valuable lessons gained from their turnaround experience, highlighting that
every problem has a viable solution.
- They acknowledge their outsider status in Japan as both a challenge and an advantage, as it allowed
them to approach situations without preconceived notions.
- They note that their lack of understanding of Japanese culture led to a degree of leniency from local
employees, who were willing to give them the benefit of the doubt.
Electric Cars and Government Support
- The speaker discusses the current challenges of selling electric cars without government subsidies,
asserting that such support is essential for market viability.
- They highlight that many countries are investing in incentives to promote electric vehicle adoption,
recognizing the need for sustainable alternatives to fossil fuels.
- The speaker contrasts the success of diesel vehicles in Europe with their poor performance in Japan
and the United States, attributing the difference to government intervention and incentives.
- They argue that government influence can significantly shape consumer behavior and market trends, as
seen in the automotive sector.
Perceptions of Electric Vehicles
- The speaker addresses misconceptions about electric vehicles, recalling a competitor's dismissive
comment comparing them to golf carts.
- They assert that electric cars can deliver high performance and should not be underestimated in terms
of driving experience.
- The speaker anticipates increased electrification in motorsports, particularly Formula 1, highlighting the
immediate power delivery of electric engines.
Advice for European CEOs
- The speaker offers reflections aimed at European CEOs, drawing from personal experiences and insights
from literature.
- They reference the book "The Road Less Traveled," suggesting that acknowledging the difficulties of
leadership can make challenges more manageable.
- The speaker humorously contrasts their own experiences as a CEO in Europe, suggesting that
recognizing the inherent impossibilities can shift perspectives on leadership challenges.
Overview of Renault and Nissan
- Renault and Nissan are two distinct automotive companies with their own cultural and operational
identities.
- Renault is a French company with a strong regional presence in Europe, while Nissan is a Japanese
company with a global reach, particularly in the United States and Asia.
- The speaker, who serves as CEO of both companies, highlights their combined sales forecast of 6.3
million cars and projected revenue of approximately $60 billion for the year.
- The profit forecast for the two companies combined is estimated at $7 billion, reflecting a 9 percent
global market share.
The Alliance's Unique Structure
- The Renault-Nissan Alliance is characterized by cross-shareholding, where both companies collaborate
more than they compete, aiming to create significant value.
- This cooperative approach allows for shared technological development, reducing redundancy and
increasing efficiency in investments.
- Despite its efficiency, managing a cross-cultural alliance poses challenges due to differing cultural
backgrounds among employees.
- The automotive industry remains vital globally, generating substantial employment, with Nissan
employing 200,000 and Renault 150,000, plus an estimated two million in the supplier network.
Investment and Competitive Landscape
- Both companies invest heavily in technology and manufacturing, with an annual investment of around
$10 billion directed towards developing new vehicles and technologies.
- The automotive industry is highly competitive, with many companies facing challenges, including the
emergence of new manufacturers from China and India.
- Technological advancements are critical, as current vehicles quickly become outdated due to rising fuel
efficiency and environmental standards.
- The market for cars is bifurcated, with stable sales in developed economies decreasing, while growth is
occurring in emerging markets like China and India.
Emerging Markets and Consumer Needs
- Emerging markets are projected to grow significantly, with estimates suggesting they could account for
40 million cars sold annually in the next five to six years.
- The demand in these markets spans various segments, from luxury to entry-level vehicles, necessitating
affordable options to enhance mobility for lower-income consumers.
- The speaker emphasizes the need for developing low-cost vehicles, particularly for markets like India,
where consumers cannot afford cars priced over $3,000.
- Technologically, the goal is to make cars affordable while meeting safety and environmental standards,
which poses engineering challenges.
Innovation and Technology in the Automotive Sector
- The automotive industry is not merely a commodity business, but a technology-driven sector where
innovation is paramount for staying competitive.
- Examples of innovation include improving fuel efficiency and developing environmentally friendly
vehicles to meet future consumer demands.
- The speaker notes that while hybrid and electric vehicles are gaining interest, they still represent a
small fraction of the total market, indicating a slow transition to mass market adoption.
- There is a growing expectation for cars to become more connected and integrated with digital
technologies, enhancing the driving experience and productivity.
Leadership and Cultural Challenges
- Effective leadership is crucial in navigating the complexities of a diverse workforce within the
automotive industry.
- Cultural differences can lead to challenges in collaboration, especially in a cross-cultural environment
like that of Renault and Nissan.
- The speaker emphasizes the importance of recognizing and addressing cultural impediments to
improve organizational performance.
- A successful organizational culture encourages learning from failures and fostering motivation among
employees, which is essential for long-term success.
Future of the Automotive Industry
- The future of the automotive industry will likely see the emergence of new players, particularly from
rapidly developing markets like China and India.
- Chinese manufacturers currently hold a small market share but are expected to grow as they gain
experience and establish their identities in the global market.
- Indian manufacturers are innovating by creating cars that cater specifically to local needs, which could
lead to significant competition for established brands.
- The speaker concludes that the automotive industry will continue to evolve, with a focus on
technology, cultural integration, and meeting diverse consumer needs across global markets.
Challenges in Leadership
- In the current environment, leaders often face skepticism from others regarding their decisions and
visions.
- The importance of discipline is emphasized, suggesting that achieving significant outcomes requires
consistent effort in smaller tasks.
- Establishing clear targets and milestones is crucial for tracking progress and ensuring accountability in
leadership roles.
- Leaders must maintain their own beliefs and make independent analyses to navigate challenges
effectively.
Carlos Ghosn's Background
- Carlos Ghosn is introduced as a prominent figure in the automotive industry, serving as the chairman
and CEO of Renault and Nissan.
- In 2003, he was recognized by Fortune as one of the ten most powerful people in business outside the
United States.
Vision and Motivation
- Ghosn emphasizes the necessity of having a vision grounded in a comprehensive understanding of
global market dynamics.
- Pursuing this vision requires unwavering commitment, regardless of external skepticism or criticism.
- Building motivation within a company is essential, particularly when aiming for leadership in
technology that resonates with consumers.
Product Success Indicators
- To determine whether a product is a hit, Ghosn suggests focusing on profitability rather than solely on
media coverage or consumer opinions.
- He cites the 350Z and Murano as examples of successful models that not only received acclaim but also
generated significant profits.
- A successful product must meet sales expectations and contribute positively to the company’s financial
health.
Flexibility in Planning
- Ghosn advises against overly rigid planning, arguing that unexpected opportunities may arise that could
be missed if one adheres strictly to a predetermined path.
- He encourages flexibility in strategy, especially in the rapidly changing landscape of business from 2010
to 2020.
Execution vs. Strategy
- Ghosn asserts that execution accounts for 95 percent of business success, while strategy constitutes
only 5 percent.
- He reflects on his experiences in various leadership roles, emphasizing the need to prioritize execution
over prolonged strategic discussions.
- Establishing clear goals is crucial, but leaders must also take action to achieve them rather than relying
solely on strategy.
Diversity and Learning
- Ghosn highlights the value of diversity in teams, noting that working with individuals from different
backgrounds can enhance learning and broaden perspectives.
- While diversity may present challenges, it can also unlock significant potential for innovation and
growth within organizations.
Commitment and Recognition
- He cautions against seeking external recognition, stating that it can lead to disappointment and distract
from personal and organizational goals.
- Instead, Ghosn emphasizes the importance of internal commitment to personal and professional
objectives as a driving force for success.
Decision-Making in Leadership
- Ghosn discusses the complexity of decision-making, noting that effective leaders must balance timely
decisions with preparing their teams for execution.
- He stresses the importance of making decisions that will lead to tangible changes rather than making
choices for the sake of action.
Commitment to Results
- The necessity for leaders to commit to results is emphasized, as this commitment fosters motivation
and engagement among team members.
- Ghosn contrasts his approach to leadership with others by highlighting the importance of accountability
and clear expectations for success.
Mentorship and Learning
- Ghosn reflects on the significance of mentorship, noting that both positive and negative experiences
with leaders can provide valuable learning opportunities.
- He encourages aspiring leaders to learn from both inspiring figures and those whose leadership styles
they wish to avoid.
Conclusion and Audience Engagement
- The video concludes with Ghosn inviting viewers to reflect on which of his rules for success resonated
most with them.
- He expresses gratitude for the audience's engagement and encourages continued belief in one's
abilities and potential for success.
Introduction to the Event
- The event begins with an introduction featuring music and a welcome to the audience by the host, Gary
Shapiro, who is the president and CEO of the Consumer Technology Association.
- The audience is encouraged to welcome the keynote speaker, Mr. Carlos Ghosn, who is the CEO of
Nissan Motor Company and Renault.
Carlos Ghosn's Background
- Carlos Ghosn is introduced as a significant figure in the automotive industry, leading Nissan and
Renault, with a workforce exceeding 450,000 employees globally.
- He is recognized for being the first person to simultaneously run two Fortune 500 companies and has
played a crucial role in the Renault-Nissan Alliance.
- Under his leadership, the Alliance has achieved remarkable sales figures, selling over 8.5 million
vehicles in 2015, which is a substantial market share globally.
- Ghosn's strategic direction transformed Nissan from near bankruptcy to profitability through the Nissan
Revival Plan, greatly enhancing the company's market presence and profitability.
The Future of Automotive Technology
- Ghosn discusses the transformative changes expected in the automotive industry over the next decade,
driven by advancements in autonomous driving, electric vehicles, and connected services.
- He highlights that by 2030, predictions indicate that 15% of new vehicles sold could be fully
autonomous, and electric vehicles could account for 25% of new cars in urban areas.
- The rise of shared mobility is also anticipated, with over a quarter of all miles driven expected to be
through shared services by 2030.
- Ghosn emphasizes the urgency of these changes, stating that Nissan is committed to meeting consumer
expectations for safer, more productive, and connected driving experiences.
Commitment to Autonomous Driving
- Nissan aims to deliver 10 models with autonomous driving functionality by 2020, addressing the need
for safer driving as human error accounts for over 90% of road accidents.
- The company is also focused on enhancing driver productivity and connectivity, as consumers
increasingly expect to engage in activities like video conferencing while driving.
- Ghosn shares his personal experience of testing an autonomous car, emphasizing that consumers
desire to retain control over driving while also benefiting from autonomous features.
- The Alliance is investing in battery technology and electric vehicle infrastructure, particularly in regions
like China where government incentives are promoting EV development.
Nissan Intelligent Mobility
- Ghosn introduces Nissan Intelligent Mobility, which encompasses three pillars: intelligent driving,
intelligent power, and intelligent integration, aiming for zero emissions and zero fatalities.
- Intelligent driving focuses on making driving safer through autonomous technologies and advanced
safety features, while intelligent power aims to enhance driving efficiency without sacrificing
performance.
- Intelligent integration seeks to connect vehicles to the broader societal framework, addressing policy
impacts and enhancing the overall driving experience.
- The potential societal benefits of these advancements include addressing climate change, supporting
aging populations, and fostering economic development.
Seamless Autonomous Mobility (SAM)
- Nissan introduces Seamless Autonomous Mobility (SAM), a technology developed with NASA that
enables autonomous vehicles to navigate unexpected obstacles safely and efficiently.
- SAM allows for real-time human oversight, ensuring that autonomous vehicles can make quick
decisions in unpredictable circumstances, thus enhancing safety and efficiency.
- The technology has been tested using a fleet of autonomous vehicles and aims to create a reliable
ecosystem for autonomous services like Robo taxis and delivery shuttles.
- Ghosn emphasizes that SAM will facilitate the integration of autonomous vehicles into everyday life and
improve consumer acceptance by providing peace of mind through human oversight.
Nissan's Electric Vehicle Innovations
- Nissan has been a pioneer in electric vehicles since launching the Leaf in 2010, which remains the best-
selling EV worldwide, with over 250,000 units sold.
- The upcoming Leaf model will feature ProPILOT autonomous driving technology, showcasing Nissan's
commitment to integrating advanced features into their electric vehicles.
- Nissan is also exploring new technologies like e-Power, which uses a gasoline engine to charge the
battery, eliminating the need for external charging while maintaining high performance.
- The company is testing biofuel cell technology in Brazil, which utilizes bioethanol to produce electric
power, highlighting their commitment to diverse solutions for sustainable mobility.
Partnerships and Collaborations
- Nissan is actively partnering with technology companies, including Microsoft, to enhance connected car
technologies and develop advanced human-machine interfaces.
- The collaboration aims to integrate virtual personal assistant technologies like Cortana into vehicles,
enhancing user experience and connectivity.
- Ghosn emphasizes the importance of collaboration across various sectors, including tech startups and
social entrepreneurs, to foster innovation and improve mobility solutions.
- Nissan is also focusing on how vehicles can contribute to energy management within communities,
showcasing the potential for EVs to serve as energy sources for homes and businesses.
Conclusion and Call to Action
- Ghosn concludes by reiterating Nissan's commitment to transforming mobility through innovative
technologies that prioritize safety, sustainability, and customer needs.
- He invites collaboration from various stakeholders to leverage technology for improving lives,
emphasizing the collective responsibility in shaping the future of mobility.
- The presentation ends with a call for audience engagement, encouraging feedback on what intelligent
mobility means to them.
