February 2, 2017 2:30 pm JST

The many lessons of Ghosn-sensei

Reflections on the Nissan chief and his My Personal History series of essays

ATSUSHI NAKAYAMA, Nikkei commentator

A line at Nissan Motor Kyushu's plant

What does Carlos Ghosn mean to Japan? Although the Nissan Motor CEO was modest in describing his life and career in his series of autobiographical essays published in The Nikkei, anyone would agree that he has changed post-bubble Japan.

Ghosn has never been afraid to question what are seen as the golden rules for success in corporate Japan. Before the economic bubble collapsed in the 1990s, the general thinking in the Japanese business world was that there should be no winners or losers. But economic activity inevitably creates these gaps, and trying to stop that from happening contradicts economic rationality.

Ghosn has challenged such Japanese corporate institutions as lifetime employment, the seniority system and keiretsu -- the close-knit web of companies cemented by equity ties, investments and other business relationships. The fact is, they had already become irrelevant when the postwar economic boom ended. While many Japanese people no doubt were aware of this, "no one wanted to take the tough action needed" to solve such problems, Ghosn wrote in his "My Personal History" series.

While he did cast a critical eye on these practices, he never wrote them off as entirely without merit. "A wage and promotion system based solely on seniority produces negative effects," he wrote. But Ghosn also stressed that he did not think lifetime employment and keiretsu were totally useless. When it comes to introducing reforms, his criterion is as simple as it is pragmatic: Is the current method working? This straightforward approach is how he convinces people around him to embrace change.

What borders?

In addition to spurring reform in Japan, Ghosn also deserves recognition for another major achievement: globalization. In "pre-Ghosn" Japan, being global meant manufacturing high-quality products domestically and selling them overseas. But focusing on the supply of goods is merely an extension of an export-driven economy.

The breakup of the Soviet Union and other events ushered in the era of globalism, which coincided with the collapse of the Japanese bubble. The concept of the borderless movement of people, goods and money -- so foreign to most Japanese businesses -- came naturally to Ghosn, who was born in Brazil, educated in France and worked for many years in the U.S.

Nissan was probably the first Japanese company to fully embrace such ideas as performance-based pay and workforce diversity. The auto industry was the symbol of the old model of internationalization -- made in Japan, shipped abroad -- and it was there that the old corporate cultures were perhaps the most deeply entrenched. Nissan fell on hard times, but under Ghosn, it had the advantage of experiencing globalization before its rivals did.

Did he have the magic touch from the start? Waseda University associate professor Jusuke Ikegami, who has studied the executive for years, says Ghosn's story is one of continuous growth. He was headhunted by French tiremaker Michelin when he was a science major at university and was put in charge of a factory while in his 20s. He continued climbing the corporate ladder, taking charge of the company's Brazilian and North American units, then becoming the No. 2 executive at Michelin. He went on to become executive vice president of Renault and eventually Nissan's CEO. The bigger the organizations he headed became, the more he learned.

As head of the Renault-Nissan Alliance, Ghosn decided to bring scandal-hit Mitsubishi Motors into the fold. How far will he go? Only he knows the answer. But one thing is certain: As he wrote in the final installment of the series, he will never stop learning.

Whether a person or a company, the desire to learn and grow is the first step toward success. Ghosn's strong will is why he has continued to influence the auto industry and Japanese society for 18 years.

Read more installments of My Personal History: Carlos Ghosn

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