Change Management at Nissan
Change Model at Nissan
In its early years, Nissan quickly rose to become Japan's second largest carmaker, second only to Toyota. Its fame continued as it became one of the largest exporters to the Unites States. However, in the late 1980s, its position began to weaken and it began to lose ground. Competition from rivals, in addition to an appreciation in the yen contributed to Nissan's fall from grace. In 1987, Nissan made moves to double production capacity in response to a booming Japanese economy. However, in order to do this, they incurred more than $22 bn (IBS Center for Management Research, 2003). This move might have signaled the beginning of the end for Nissan, had it not been for a manager who was known for his ability to turn failing companies around.
In 1999, when Renault bought Nissan, the company was in bad shape. High production costs, poor investments, and a weakening economy were all connected to the near failure of the former giant. Purchasing Nissan was a big risk for Renault. If they could not turn the failing automaker around, it could jeopardize their own position drastically. Due to the high stakes involved, Renault hired Carlos Ghosn to pull them out of financial ruin.
How Did Ghosn Accomplish Change?
Carlos Ghosn came to Nissan with a reputation. He was known as the "cost killer." In the past, he had a reputation for making drastic cuts, which had a positive effect on the bottom line, but that created unemployment and other unwanted conditions in the area. The Japanese were apprehensive of the changes that would come. However, much to their surprise, this time Ghosn's plan included a major restructuring of the supply chain. His plan included centralizing purchasing activity, including services as well as goods in the global purchasing strategy, and decreasing the number of suppliers. The plan worked and soon the company was back to profitability, and almost a year ahead of schedule.
. In an interview with CNN, Ghosn attributes his success to the ability to instill a sense of vision in the employees (Benjamin, 2005). He also added, in the same interview, that failing to connect with their people is the number one mistake that managers make. Ghosn recognized that not only had Nissan lost its connection with its employees, it had lost connection with its customers. He began a plan to launch new products in order to reestablish the brand in the minds of the public (Nissan, 2010). Ghosn did not focus on short-term goals as much as he concentrated on long-term goals and sustainability (Capgemini, 2007).
One the key obstacles that Ghosn faced was bridging the cultural gap between himself and Nissan's Japanese workforce. Ghosn embraces differences in others and uses these differences to try to learn something. Ghosn's background prepared him for life in the global marketplace. He was born in Brazil, then moved to Lebanon and France. His move to Japan was not the first time that he had been plunged into unfamiliar territory (Bloomberg, 2004). These life experiences prepared him for the experience.
However, that is not to say that Ghosn was not aware of the imposition that he would make on traditional Japanese management styles. He immediately fired all Japanese management so that they could not give the impression of being unsupportive of the managers who had just invaded their space and were changing traditional Japanese management style (Keller, 2003). He knew that he had to eliminate any attitudes that would not be conducive to the change.
Ghosn and Change Models
Let us now look at how Ghosn accomplished change using several popular change models. The first model that we will explore is the model suggested by Kurt Lewin. In this model, one can view the company as a block of ice. If you wanted to change the shape of the ice, one would first have to melt it and then pour it into a mold and reshape it (Ritchie, 2006). This is what Ghosn did. He saw the flaws in Nissan's structure and made the change plan. He then tore down the old structure and reformed it so that it was more streamlined and efficient.
Ghosn's method of change can also be explored using Kotter's 8-Step Change Model. In this model, step one: create urgency, was already in place. Ghosn was brought on board in an atmosphere of urgency. If he could not turn the company around quickly, it was soon to fail. Ghosn was already a part of a powerful coalition at Renault, but when he fired the Japanese managers, he did so because he knew they would not be on board with his plans. Step three was the Ghosn's key tool for creating change. Ghosn created and instilled a clear company vision in his employees. He communicated it to every member of the staff. Removing the Japanese managers was a way to remove obstacles to his success. Bringing the company to profitability was one of Ghosn's short-term wins. Ghosn worked to build on the change and to anchor the changes in corporate culture by focusing on new products and building a new brand. Kotter's model offers an easy organization of the steps that Ghosn used to achieve change.
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