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Carlos Ghosn: Nissan and Renault Partnership Benefits from Differences

February 2006

STANFORD GRADUATE SCHOOL OF BUSINESS—Getting employees to work together to produce products that are attractive to customers is the key to success in 21st-century business, says Carlos Ghosn, who is credited with turning around Nissan Motor Co. and who today serves as president and chief executive officer of both Nissan and its partner Renault.

Getting large numbers of employees to follow the same vision can be a challenge—a challenge that is magnified when two companies from cultures as different as Japan and France are partners.

"You can make companies work together even if they are on different continents," Ghosn said. One company does not need to take over the other, nor is it crucial for both companies' cultures to meld into one. Preserving distinct styles helps each company's employees identify with their employer and stay motivated.

He cited three simple principles that govern the Nissan–Renault alliance.

  • The first is respect for identity: "Renault is Renault. Nissan is Nissan. Japan is different from France," Ghosn said.
  • The second is respect for autonomy: Decisions about Nissan shouldn't be made in Paris, and vice versa.
  • Finally, Ghosn said, "We don't work together for the sake of working together." Every joint project or decision has to further the companies' bottom line.

Ghosn spoke Feb. 13 at the Stanford Graduate School of Business as part of the student-sponsored View from the Top speaker series. The talk was cosponsored by Looking Ahead, an undergraduate speaker series, and the Business School's Global Management Program.

When Ghosn joined Nissan in 1999, he was plunged into an unfamiliar culture. Furthermore, he knew employees were wary of him because he had developed a reputation as a cost-cutter. "I was trying to be as friendly as possible," Ghosn recalled.

Managing across cultures can bring rewards as great as the challenges, said the executive, who was born in Brazil and educated in France. "When we are all alike, we don't learn anything," he said. "It's comfortable, but we don't learn."

As for winning over customers, Ghosn said the key is to draw them in with innovative, exciting products. Only after that will they begin to trust the company and its products.

"Trust never comes first," Ghosn said. "Trust comes at the end."

Customers are also the drivers when it comes to change and innovation in a company's product line, Ghosn said. "Go back to your consumer," he said. Customers are the ultimate arbiters of what technology will be a hit, so getting information from them about what they want is critical.

The wide-ranging talk, which was mostly a question-and-answer session with the student audience, touched on issues facing the automotive industry as well. Ghosn explained why he doesn't expect Renault to enter the U.S. market anytime soon: "You're going to have to dedicate everything you have" to succeeding in the United States. Renault is focusing on other parts of the world, and an entry into the U.S. market would mean abandoning those plans.

And he predicted that hybrid vehicles will remain a relatively small part of the market for the foreseeable future. Hybrid technology is very expensive and people don't want to pay for it, he said.

When a questioner asked Ghosn, who has four children, how he balances work with his family life, he said it was "very difficult." He recommended focusing on the quality of the time spent with family. For example, he tries not to work on weekends so he can focus on his family when he is home. "If you think in terms of quantity, how much time, you've lost already," he said.

When asked about the future of American car manufacturers, Ghosn pointed to his experience at Nissan and said no one should write off any company. "There is no doomed company in the car industry," he said. "Our industry is an industry of turnaround."

He was made president of Nissan in 2000, one year after joining the firm as chief operating officer, and became CEO in 2001. In April 2005 Ghosn was named president and CEO of Renault as well. He previously held executive positions with Renault and Michelin. Ghosn is on the board of directors of Alcoa. He graduated from Ecole Polytechnique and Ecole des Mines de Paris with engineering degrees.

—Margaret Steen

Related Links

Video File, 52:28 minutes

Other View from the Top speakers

Global Management Program

Center for Global Business and the Economy