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Carlos Ghosn: Global Alliances Critical for Any Company's Survival

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Carlos Ghosn: Global Alliances Critical for Any Company's Survival

The Nissan-Renault CEO says the more car manufacturers join forces, the more they can afford the technology expenses required for innovation.

Carlos Ghosn, CEO of Nissan and Renault, is not standing still. He talks fast. He may be thinking even faster. On his appearance at the student-run "View From The Top" leadership speakers series November 16, his rapid-fire thoughts on cars, global alliances, and looking for mistakes upheld his style as a man who is looking ahead and not wasting time.

Ghosn

Ghosn's intensity and his track record — pulling Nissan back from the edge of bankruptcy — certainly put him in the running for the business salvation stratosphere already occupied by Lee Iacocca. A longer view of automotive history will make that call. For now, even with Nissan-Renault's recent somewhat off the mark sales performance making analysts raise their eyebrows, Ghosn is confident, pressing ahead, and thinking big. And not necessarily about selling cars in the United States.

Vehicle sales in the United States, Europe, and Japan are either stable or declining, said Ghosn, who is looking to new markets such as India, Russia, China, Brazil, and Africa — where sales are expanding an average 20 percent annually. For perspective, Nissan's U.S. sales so far in 2007 have risen just 5.5 percent. People in these rapidly developing markets want all kinds of cars, he said, but the biggest demand is for the most economically accessible model — a $3,000 car.

Nissan-Renault is partnering with two major automotive manufacturers (Ashok Leyland and Bajaj Auto Ltd.) to make light trucks and an affordable entry-level car. Ashok Leyland will build light trucks, and Bajaj Auto will focus on that $3,000 car, planned for a late 2011 rollout.

It's another cross-cultural, global alliance that Ghosn thinks is absolutely necessary now for any company. He's a perfect example of how it can work. He's a polyglot born in Brazil to Lebanese parents, educated in Beirut and Paris, and the first non Japanese to head a major Japanese corporation.

And recently it looked as though he might add an American company to his jobs, although talks ultimately failed for a possible top management position at General Motors. Ghosn was asked about that and answered with an analogy that would have done him well in a stand-up comedy competition. "Suppose you want to marry somebody and the father is very favorable, but not the bride."

Relationships based on that set of circumstances, he said, "you'd better not pursue because that relationship will never be happy if there is no mutual appetite."

When Ghosn arrived at Nissan in 1999, a mostly welcomed chief, he began to look at relationships and culture within the company and made changes — not all of them to be found in a typical management handbook. The thing to do, he said, is to find mistakes when they're small. "Small is solvable." The worst thing a manager can do is to hide a problem and let an organization "deviate from the course too much before you make the correction."

Failure is important to good management, he said. If you create an environment where people are looking for mistakes, looking for dysfunction, that's very powerful."

The best management lessons, he said, "are coming from real life. If you don't know what to do, look around you."

Ghosn's path continues hurtling toward the future of cars. Renault announced this week that it's talking to Shai Agassi, whose bold promise to put an electric car in every driveway has already produced big investors. At Stanford, Ghosn talked about what's on the road now — vehicles that consume too much energy and too much fuel and soon will be obsolete.

In his vision, the barrier is cost. He estimated that less than one vehicle out of a thousand today is a hybrid or an electric. And while buyers want their "green" vehicles affordable, he said, economies of technology investment must be achieved. "The more car manufacturers join forces, the more you can afford the expense required," he noted.

He's listening more and more to consumers, no matter what. "We used to do cars we liked. It's good that you love the car, but an engineer in the United States will imagine a very different car than the one that will be driven in Mumbai." Ask who is the target customer and design a car for that person, he said. Example: In Mexico, Nissan will continue to manufacture a particular model of car that's ancient by current standards but has become a cherished icon in the Mexican taxi trade.

And he talked about working with companies such as Google, Apple, and Microsoft to add something else to the technology packages available to drivers. He figured many spend at least two hours a day commuting "where there's nothing you can do but listen to music or talk on the phone." If carmakers try to create those new products on their own, "we're not going to get very far on our own."

For all consumers' talk about fuel efficiency, however, he made sure he told this story of what happened recently at a Tokyo auto industry show. On display were a tiny, low-carbon footprint concept car and the 480 horsepower — non-energy-saving — Nissan GTR.

Which one drew the biggest crowds? With perfect timing, he paused, then said: "The GTR."

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