Leadership and Change Management: Nissan Turnaround Analysis

This assignment analyzes the Nissan turnaround led by Carlos Ghosn, examining the strategies employed to improve efficiency, adaptation, and human relations. It explores the effective change management practices, including transparency and inclusive leadership, and discusses the leadership ...Read More

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TURNAROUND AT NISSAN
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TURNAROUND AT NISSAN
1. What was done to improve efficiency, adaptation, and human relations, and how
were the potential trade-offs among the performance determinants handled?
To stop the downward spiral at Nissan, Ghosn reduced the number of stages in operations
while cutting down on force requirements. The relations with human resources are significantly
impacted during the reduction of the labor force. Ghosn practiced some conventional whittling
down while at the same time offering a more friendly working environment and shuffling staff to
other organization’s offices to negate any impact of the survivor's disorder. Such re-shuffling,
layoffs and drastic changes in working environments reduced employee productivity, and Ghosn
had to find new ways to motivate the staff and recover on productivity (Nakae, 2005).
Ghosn reduced the cost of supplies and acquisition of resources by an estimated 20%. He
accomplished this by reducing the number of suppliers and doing larger orders. Ghosn was very
keen to notice that the procure meant at Nissan was faulty, and the procurement specialist was
making excessively constrained orders, and this pushed the expenses unnecessarily upwards,
causing increment in operating costs. This move had a severe negative impact on customer-
supplier relationships, but Ghosn dealt with it by increasing the request sizes from the remaining
suppliers (Ghosn, 2002).
Ghosn had superior human relations and resourceful skills that he used to shift the focus
of auto production at Nissan. Nissan had a set of advisors who had no responsibility at all, Ghosn
reshuffled them and put them in positions with direct operational responsibility in an attempt to
ensure that they were directly useful to productivity (Ghosn, 2002). The firm had come to a point
whereby it only focused on execution. This practice went a long way to reduce customer

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satisfaction and to further push the company on a downward spiral of losses. Ghosn changed the
focus to the clients. He ensured that autos were manufactured in the light of client needs. The
shift would see more stakeholder and client satisfaction and change how things are done in
product development and on the production lines. The repercussion for this move presented in
the form of demoralized employees, but Ghosn dealt with it through the provision of more
friendly working environments and schedules. Ghosn also eliminated all of the vague job
positions that were giving the company a capacity far above what it could use, given the
prevailing sales volumes (Ghosn, 2002). This reduced unnecessary expenditure and enhanced
individual productivity and responsibility.
Ghosn, being an experienced manager, noticed that Nissan was failing due to powerless
dissemination. To counteract this negative energy, Ghosn reduced dealerships. To strengthen the
brand, Ghosn made sure that dealerships that remained had enhanced administration and made
them more business-centered (entrepreneurial). He also incorporated cross-functional groups to
make each team more engaged and probed to disrupt existing norms and see the realization of a
change that would be much more productive (Ghosn, 2002). Ghosn made sure that these
dealerships would cease to be social connections to the company and become vital business
forces in the company because he had an open mind that appreciated the value that the Japanese
and their clients attached to brand devotions (Zentner, 2016). The trade-off came in the form of
reduced brand devotion. Still, Ghosn recovered this by improving the administration in the
remaining dealerships in a way that they became more business-minded.
Ghosn moved the responsibility of configurations from the fashioners to the engineers
(architects). Ghosn had the critical thinking skills that helped him realize that most of the models
in production at the time he went to Nissan were not profitable. To address the issue of non-

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productive models, Ghosn had the planners create new autos intending to address client
concerns. Ghosn appreciates that there was a need to shift from struggling to stay in business to
fighting for profits. The inclusion of new models was his idea of reviving faith by clients,
investors, and stakeholders (MBA Knowledge Base, 2020). The trade-off for this reflected in
poor self-regard in the specialist, but it was combatted by giving them more leeway for creativity
and innovation. Nissan had cut down on product development in an attempt to save money.
Ghosn had to break traditions and shift almost the entire operation in a direction that would see it
begin registering profits.
Under the Leadership of Ghosn, adaptation at Nissan was improved by an accurate
distinguishing of necessary changes while avoiding loading these changes on staff. The
management of change was done with immediate effect accompanied by enough clarifications to
keep off resistance and misguided judgment. Ghosn proved to be an expert n managing staff
while remaining impartial and friendly to the business. The trade-off for this strategy was the use
of cross-useful teams to improve the relations amongst staff through crosswise associations to
ensure the personnel appreciated the changes so that they don’t feel as if they were manned by
the administration (Stahl & Brannen, 2013).
2. What were the effective change management practices used at Nissan?
Nissan Motor Company made a drastic turnaround in the year 200 accredited to a
partnership with Renault and leadership under a new CEO, Carlos Ghosn. Carlos Ghosn
implemented specific shifts in the corporation which saw it restored into a profitable enterprise.
Despite his success, Ghosn had to face several challenges that came along with the changes he
made to the company. The Chief Executive Officer had to handle these challenges prudently to
preserve the brand and ensure the effective execution of his strategies (Millikin & Fu, 2005).

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Transparency was one of the primary practices that enabled the turnaround process to
work effectively. For a change of such magnitude to work, all the involved parties needed to
believe that they are free to speak and exercise decision making. They needed to know that they
can trust their team members and their leaders. Ghosn made it a culture that every report,
number, stock, and the record had to be clear and valid. He set the example himself and lead the
entire organization to practice accountability (Ghosn, 2002). He sought after organization scale
transparency to ensure that everyone knew what other people were doing, further enhancing
accountability.
The company adopted another operating strategy alongside its traditional Nissan Way of
operations. Nissan had had the ability to administrations the entire workforce system that
incorporated performance management, Competency management, and career development. In
Ghosn’s efforts to rescue Nissan, he had to shut down a few offices and facilities, and, in this
process, a large number of people lost their jobs. The specialists he was working with at the time
reprimanded this move, but Ghosn was able to keep them focused on the main objective of why
he was at Nissan. If the company had continued on its downward spiral, they would have all lost
their jobs, including the specialists. He made sure that the specialists remained consistently
focused on the result and not the losses.
It would have been impossible for Ghosn to rescue Nissan if he fought against the entire
workforce. To avoid this kind of resistance, Ghosn made sure that the initiatives for change came
from the workers. He did this through practicing inclusive leadership such that even though he
gave the ideas of actual change, the implementation came from the employees working under
him. Ghosn created a scenario of responsibility for the switch on the side of the employees. This

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leading style was one way of spearheading change without actually appearing he was manning
the employees into his own will.
The most important thing that Ghosn did to ensure the entire organization and workforce
cooperated to change for better was to instill vision. Ghosn did his best to ensure that the whole
workforce shared in his idea of reviving Nissan. The management and administration levels
shared his in his vision and helped him sell his vision to all other stakeholders. Once all the
stakeholders understood that his vision was for the greater good of the company, they would
back him up since they appreciated the value of the end-result of what he was doing (MBA
Knowledge Base, 2020).
Despite all his efforts to make sure he and a smooth turnaround, Ghosn made sure that he
created a more friendly working environment for all stakeholders. He did this to motivate the
personnel involved in operations and to ensure that they don't lose focus on productivity. Giving
them more flexible working schedules and more solid retirement plans made them flexible to
accommodate the change in appreciation for the improved working conditions.
3. Which leadership styles (or competencies) best describe Ghosn’s leadership at
Nissan? Critically discuss the effectiveness of these styles?
Ghosn used a transformational leadership style to run Nissan. Ghosn realized that the
main reason why Nissan was failing was the lack of right drive and culture. Teams blamed each
other for the failure of the company. Departments had no specific goals and objectives; hence
they ended up failing both in terms of quality and delivery. The company would continue its
downward trend and probably even get to the point of bankruptcy unless there was a drastic
change in the way of doing things. Ghosn knew that it was impossible to change people's

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mindsets through rules and performance-enhancing strategies. He had to find a way to change
the mindsets of employees and the corporate culture at Nissan. Ghosn deemed it necessary that
the correcting factors and motions come from the Nissan fraternity (Zentner, 2016). He
transformed the company’s workforce by establishing both short term and long-term goals and
objectives both for individuals and team and then training them to set their own objectives ad to
adhere to them.
This method of leadership was beneficial because it served to change the sluggishness
experienced in the country. The workforce, managers, and technicians realized that the threat of
bankruptcy was real and was inevitable if at all, the company would continue operating at the
pace that it was running. This realization was brought through the sharing of vision and creations
of awareness. The understanding of the risk at hand was essential and sufficient to motivate
every party involved in Nissan to shift in their operations and to operate at optimal capacity. The
ideals coming from this transformation of mindset and though sawa the workforce, management,
and administration start working together towards a common goal. Productivity was increased as
individuals and teams worked harder and smarter, attempting to perform better each day (Stahl &
Brannen, 2013).
Ghosn was also keen to enhance cross-cultural leadership, which later spread into cross-
company operation between Nissan and Renault. Ghosn noticed that the cross-departmental
blame games would never cease, and the company would continue failing unless. To counteract
this, he brought different departments together and established a transparent operations platform
in which all teams could work together. This move was a further step in his transformational
leadership as it changed the former rigid departmental segregations that barred the harmony
between groups and hindered production to a great extent. With the kind of transparency he

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established, teams could work together in peace, and later, he saw the establishment of informal
cross-company groups that further enhanced cooperation and smoothened operations. Ghosn had
realized that the organization had a deeply rooted culture of refusing and failing to accept
responsibility at all levels. As Ghosn says, the sales department would blame the product
development team; the product planning would blame the engineering team and so forth (Ghosn,
2002). Ghosn had to make changes, so every party in the company could be responsible and
accountable. The result was more of a centralized process that saw the improvement in
production and production efficiency.
4. Critically discuss some of the cross-cultural leadership challenges faced by
Ghosn and how these were overcome
One of the significant problems that Ghosn experienced the struggle to bridge the cultural
gap between himself and the Japanese Workforce at Nissan. Normally Ghosn embraced the
variations in others. Ghosn was aware of the pressure he would impose on the traditional
Japanese management styles, and he knew that the imposition would stir up a lot of resistance
that would be a massive hindrance to his rescue mission. Ghosn therefore fired all the Japanese
managers immediately he started operations at Nissan. This layoff did away with the possibility
of a workforce that felt unsupported by the management that would change traditional Japanese
management strategies. In so doing, he eliminated any attitudes that would have been detrimental
to his change strategy (Stahl & Brannen, 2013).
The Japanese were used to consensual decision making; Ghosn realized that this made
individual departments mistakenly feel that their departments were operating fine. Yet, they
could sense there was a problem within the company. Consequently, departments blamed other
departments for the challenges facing the company. Ghosn minimized consensual decision

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making and centralized operations to some extent. He realized he had to do away with the
consensual decision-making process since it caused a lot of delays and increase production times.
In addition to Japanese cultural norms at Nissan, the firm also had corporate culture
issues that were preventing the company from making progress. Some of them include the lack
of clear objective goals, lack of profit orientation in operations, minimal focus on customers, too
much focus on competitors, absence of a sense of urgency, no long-term vision, and lack of
cross-functional lines of work. These shortcomings cost the company time and money in terms
of unproductivity and lack of effort towards a common agenda. For example, the company
promoted employees based on their age and tenure; Ghosn changed this practice and made sure
that employees were promoted according to performance and competitiveness. This practice
improves the performance of employees since they were motivated to perform. Ghosn dealt with
these challenges individually by instilling a shared corporate vision in the company. Ghosn
inspired strict accountability schedules within the company to ensure all resources and efforts
were working towards the same goal (Stahl & Brannen, 2013). He centralized operations and
made use of cross-functional groups to give the different teams a typical operating modulus that
would see the rise of the company into a profitable state of activities.

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References
Ghosn, C., 2002. Saving the Business Without Losing the Company. Harvard Business Review.
MBA Knowledge Base, 2020. Leadership Styles in Management. [Online]
Available at: https://www.mbaknol.com/management-principles/leadership-styles/[Accessed 16
March, 2020].
Millikin, J. P. & Fu, D., 2005. The Global Leadership of Carlos Ghosn at Nissan. Thunderbird
International Business Review, 47(1), pp. 121-137.
Nakae, K., 2005. Cultural Change: A comparative study of the Change Efforts of Douglas
Macarthur and Carlos Ghosn In Japan, s.l.: Koji Nakae;
Stahl, G. K. & Brannen, M. Y., 2013. Building Cross-Cultural Leadership Competence: An
Interview With Carlos Ghosn, s.l.: s.n.
Zentner, A., 2016. Analyzing the Change Management Case of Nissan through the Lens of
Emotional Intelligence. SSRN Electronic Journal.