With his Middle Eastern roots, CEO of Nissan Motors and Renault Carlos Ghosn keeps on mesmerizing the world with his insightful leadership, maintaining Nissan Motors as a top-league player in the world market. Here is an exclusive interview with the man behind the wheel.
Moubayed: Car manufacturers around the world are suffering from the credit crunch. What is the exact status of Nissan, and what are your plans for the future?
Ghosn: We are operating in severe circumstances. The global auto industry has been facing a triple threat from the financial crisis, a severe economic recession and the volatility of foreign exchange rates. In the short term, companies such as Nissan had to adapt in function. We have no choice but to manage through it with a high level of caution, lucidity and speed. In practical terms, that means optimizing profit and free cash flow as much as we can while, at the same time, maintaining an adequate level of investment to fund our core business.
For the long term, I am optimistic about prospects for the global auto industry – and, specifically, for Nissan – based on two key trends. One is linked to the prospects for growth in many of the world’s emerging markets. As people in Brazil, Russia, the Middle East or highly populated countries such as China and India develop a growing middle class, the number of vehicles per 1,000 inhabitants is likely to grow.
With the potential demand for more cars in more countries, there could also be an increased demand for cars that are more environmentally friendly. Zero-emission vehicles will therefore become important, and Nissan and Renault are now developing a range of zero-emission vehicles to be marketed in 2010, with mass marketing to follow in 2012.
Moubayed: After the experience of SHAM, a joint Syrian-Iranian automobile, Syria is heading towards establishing more plants to manufacture cars. As an expert, do you encourage Syrian businessmen to venture into this domain?
Ghosn: The most important element before establishing a car manufacturing facility is to have clearly outlined the market. First, you need to have a very clear idea about what products the markets can absorb and whether your products can be competitive. Once you have done this, then you can decide if you want to develop a manufacturing facility and, if so, the size of the manufacturing facility. Unfortunately, in the Middle East, there is no working de facto free trade agreement, so I would not encourage anybody to venture into a manufacturing facility, since every single market in the Middle East is too small to carry a manufacturing facility on its own.
Before joining Renault and Nissan, you worked with Michelin, as COO of its South American activities, based out of Brazil, and as head of research and development and plant manager in France. Have the successes of Nissan and Renault somewhat overshadowed your career with Michelin?
Michelin will always be special to me because it is where I began my professional career. Joining the company at the end of my student life offered me an entry into the industry, a job in a French corporation with a global vision, and a return to my country of birth, Brazil. I was privileged to work and learn in Michelin operations on three continents – in South America, Europe and North America.
My years with Michelin were formative. I began in manufacturing, where I not only learned about processes on the shop floor, but I also learned a great deal about the importance of teaching skills, education and communication between the managers and the workers in the shop. I moved to Brazil at a time when the Michelin operation there was in crisis, and I learned lessons about inventory control, pricing in hyperinflation, labor relations and financial management. I was given a lot of responsibility at Michelin, and every opportunity helped me to grow and build management skills that I use to this day.
Growing up in Brazil, and then in Lebanon and France, you obviously had an ambition that knew no bounds. How did your college years in France and your school days at the College Notre-Dame de Jamhour in Beirut prepare you for what you were to become?
During my college years in France, my life revolved primarily around mathematics. My education gave me a fondness for precision, an aversion to approximation and the resources to take up intellectual challenges. In College Notre Dame de Jamhour, I learned the value of hard work, the necessity of discipline and organizational skills.
All those traits complement the Japanese work ethic and business environment quite well. People in Japanese companies have a reputation for being process-oriented and precise. A pragmatic approach is important in an industry such as the auto industry, where precision and attention to detail are essential.
You became Chief Operating Officer of Nissan in 1999, president in 2000, and CEO in 2001. The company had $20 billion in debt, and only 48 of its models were generating profit. Many traditionalists in Japan laughed when you promised to resign if the company still had debt by 2005. Looking back, 10 years after joining Nissan, what would you say are the golden decisions you took, which made Nissan the company it is today?
During the early stages of Nissan’s revival, we knew our success would depend on the motivation of the people inside Nissan. Motivating the entire work force involved sharing our vision, building credibility, listening and showing trust. People don’t like change, so we changed only what was hurting performance or not adding value. In each case, we asked ourselves why we should change, how we could change and what the measurable benefit would be.
We started with the vision, developed our strategy and then set our priorities, as stated in the Nissan Revival Plan. From there, we set our objectives, which had to be clear and quantified. Finally, the process had to be deployed, with strong communication up and down and throughout the organization. When it came to the fundamentals of the business, management could not and did not compromise. We led by example, no matter how difficult our decisions seemed to many inside the company or to most outside the company.
We made no excuses and accepted none in return. In our company – then as now – we measure performance and profitability. We are very specific and focused on our priorities. We will not produce unprofitable products. We will not chase market share that is not deserved. We watch results carefully and keep an eye on the reality. We say what we will do, and we do what we say.
Syria is undergoing a massive reform campaign, where private banks have entered the market, private universities, and more recently, a Damascus Securities Exchange has been relaunched 50-years after its closure. How do you see the reform process in Syria?
I visited Syria while I was young in Lebanon, and I have been to Syria many times recently. I am very encouraged by the reform process taking place in Syria. This would trigger a huge potential in the Syrian economy, and if there is anything we could do to establish entrepreneurs in the process, we will do it.
You have acquired celebrity status in your native Lebanon, and some Beiruti newspapers mentioned your name as a possible candidate for the Lebanese presidency in 2007. Do you have a political ambition? Critics of the candidacy argued that Carlos Ghosn would never accept a job that was less challenging – and rewarding – than his current job in Japan.
I have no political ambitions. I don’t think being a president of Lebanon is less challenging; I think it is a completely different challenge. The difficulty of the task cannot be underestimated by anybody. If you take a job – no matter what the job’s importance may be – it is not so much for self contentment, it is mainly to provide results. If you think you can provide significant results for the people who have elected you or designated you, then you should take it. If you are skeptical about it, you should not even try.
An entrepreneur par excellence, you have become a role model for millions of young Arabs working in all domains. If you were to give them advice on what do to do with their lives, what would it be?
If I have any advice to give to the young Arabs, I would tell them to aim high. There is a lot of potential in the Arab world, particularly in one that is completely connected with the rest of the planet. If I were to offer advice to someone trying to establish a new venture or to move in a new direction, I would make three recommendations.
First, make sure you are aware of the huge opportunity you have in front of you to have an economy that is opening up and in which a lot of things have to be done. Second, do not hesitate to take risks by carrying projects in order to contribute to the development of the Syrian economy. You may reap a huge reward from it. Third, never forget that success never comes after the first attempt. Do not be discouraged if you are facing adversity at first. Success is often the child of many attempts.
Published in Forward Magazine (July 2009).