Leading Changes

In Ghosn's leadership at Renault and Nissan Motors, he displayed the five core tasks of change of leadership thru his use of transparency, cross functional teams and direct contact with employees. By using these three tools, he was able to exhibit the five core tasks of change in leadership. These five core tasks being: develop and communicate purpose, establish demanding performance goals, enable upward communication, forge an emotional bond between employees and the organization, and developing future change leaders.

Ghosn's main goal was to bring Nissan back to profitability from having seven out eight years of annual losses. Ghosn's established transparency in the company in two ways, by using the media and cross functional teams. Using the media Ghosn was able to establish and communicate to the company and the world the his demanding goals and expectations for the company. In October 1999, Ghosn announced the Nissan Revival Plan (NRP) to the company and the media to show his intended changes. To show how serious Ghosn was about his goals, he publicly stated if the plan didn't go well after the first year, he and the entire executive committee would resign. Another instance of Ghosn reinforcing his demanding goals was when the purchasing team went to Ghosn to suggest their recommendations on cutting down cost by ten percent over three years. He responded by saying they were not aggressive enough and wanted the team to come back with a new recommendation to cut cost by twenty percent.

Under the NRP, the company created nine cross-functional teams with ten members per group, the groups then could create their own sub teams. Through the usage of these cross functional teams and their sub teams, five hundred employees contributed their opinions which in the end reached Ghosn. Using these teams he developed purpose and enabled upward communication. Ghosn wanted to avoid making assumptions in developing his goals and expectations for the company. He accomplished this by going out and talking to five thousand employees individually to get their opinion on the company. By showing that he wanted input from everyone in the company and not just from the cross-functional teams he was able to avoid the issues that plagued Provost Ronald Bunn in his restructuring of the University of Missouri. Bunn used a select group's opinion in addressing the restructuring of the university and thus encountered multiple objections and no sense of unity throughout the university. By talking to his employees, Ghosn was able to form emotional bonds and a union between the employees and the organization. He gave them a voice and the belief that their opinion mattered allowing the employees higher hope and expectations for the company. At JPMorgan there were numerous occasions in which a vice president has come down and asked employees on their input on how to group is and how to make it more efficient. When this was done, the employees knew upper management cared for the well being of the employees and the company thus giving the employees higher hope and expectations on the company.

By establishing sub teams Ghosn was also able to develop future change leaders. The sub teams that were created had multiple functions. One such example is the business development team. Their function was product planning, engineering, manufacturing, and sales and marketing. At the same time the phase out of products/parts complexity management team also were responsible for the functions of product planning, engineering, manufacturing, and sales and marketing. None of the teams were restricted to a specific function which promoted cross training of employees across the company. This practice also prevented employees from being restricted to specific technical skills. Enabling the employee to obtain a more well rounded skill set as they gained a comprehensive knowledge of organization and how all the sub units fit together. Having well rounded employees also allowed the company to have a stronger pool of individuals with leadership potential. The company was no longer limited to leadership candidates that specialized in only one aspect of the business. They now had people who at the very least had some exposure to most company functions.

Ghosn's philosophy to make changes when needed allowed him to avoid the mistakes of rapid upward mobility and creating short term performance pressures. A common mistake in business is promoting people when they are ready. This is evident by those in leadership positions at JPM. A number of supervisors and avp were promoted in the company before they were ready leaving them with incomplete skill sets and lacking overall knowledge of fund accounting. There have been a number of instances in which people that made a decision while at a certain level that was later discovered was incorrect. Unfortunately when the issue was discovered those individuals had moved on to a higher position. Because these individuals have already moved on they were never able to learn from their mistakes. In some cases they may not even know the decision was a mistake leaving a possibility of making that mistake over again.

Ghosn's philosophy also avoided creating short term performance pressures through making changes only when necessary and allowing people to fully develop before allowing them to move into higher positions.