the Man Who Turned Around Nissan

In October 1999, after the teams had made their analyses and had presented their proposals to the executive committee, Ghosn was able to announce his strategic plan for the revival of Nissan in a public presentation. At the same time this plan was simultaneously announced to all of Nissan’s 148,000 employees. In his address Ghosn even dared to claim that Nissan would have no debt by 2005.

In short, the plan consisted of the following, long delayed, drastic measures:

1. Fewer and simpler factories. Nissan had too many factories and was using only 53% of its capacity. Therefore a reduction in the number of factories was necessary. 5 factories in Japan were to be closed. A taboo in Japan.

2. Reducing the purchasing costs by 20%, which also included the reduction of the number of suppliers (from 1145 to 600 firms). In his address he said “We are going to help those [suppliers] who are going to help us”.

3. Reducing 20% of general expenses, including marketing and administrative expenses.

4. Reducing the number of sales subsidiaries in Japan by 20%.

5. Freeing up currently non-strategic assets and applying these to the core of the business and thus significantly reducing Nissan’s general debt. This meant divesting most of Nissan’s holdings. For a Japanese company and Japan itself this was a shocking announcement because many historical, sentimental and personal bonds would be cut off. (Ghosn was outraged when he discovered Nissans ownership share in a competitor, Fuji Heavy Industries, manufacturers of Subaru cars.)

6. A total personnel reduction from 148,000 to 127,000 full time employees. Of the total of 20,000 lay-offs 16,500 fell in Japan! The only department which did not suffer from redundancies was R & D which was even allowed to hire 500 extra employees.

Ghosn took care that the plan was very precise, extremely factual and highly quantified. It even mentioned the deadlines set for each of the goals to be achieved. The plan left little room for misinterpretation.

His brutal cost-saving remedies are standard turnaround practice but he was able to make people understand and admit that Nissan had reached a point of no return. He concluded his presentation of the plan with a pledge that if he missed any of the targets, he would resign! The Japanese were impressed by Ghosn’s public commitment. Probably because of this courageous statement he had already then conquered the hearts and minds of the Japanese.

The Critical Success Factor

The Critical Success Factor of Ghosn’s successful approach in turning around Nissan was the installation of the nine Cross-Functional Teams (CFT) which were composed according to his ideas. The task of a CFT was to come up with recommendations, within its allotted discipline, to the executive committee, within three months. There was no choice because of the state that Nissan was in. There were no barriers to recommendations and this was a prerogative rarely given to middle ranks in Japan. Ideas that were accepted would be executed by the team that formulated them. This ensured not only realistic ideas but also commitment.

Each team consisted of ten professionals from Nissan and Renault with two leaders selected from top executive ranks representing different disciplines with common ground (for example purchasing and engineering). Each team had a pilot – acting as a secretary – who was responsible for the agenda, research and dialogue. A CFT could establish sub-teams which were charged with researching specific issues in more depth. At a certain moment some 500 employees across the company were mobilized in this project. Despite the use of interpreters, internal communication within the groups was, in the beginning, difficult, because of the languages used, Japanese, French and English. To avoid misunderstandings, Ghosn introduced a small company dictionary which contained 40 keywords in English and he further stimulated the French and Japanese executives to master English.

The results

In 1999 Ghosn had dared to claim that Nissan would have no debt in 2005. The way he worked, his personal commitment, his analytical mind, the quality of his strategic plan, the clarity in which he communicated this plan to all levels of the company and the trust he emanated, resulted in the astonishing feat that already one year after his arrival Nissan had a profit of 2.7 billion dollars and showed an operating margin of 10.8%! Now Nissan has even become the world’s most profitable major carmaker.

The future of the Alliance

Now, in 2006, Renault has a 44% share in Nissan and Nissan has a 10% share in Renault. Nissan is currently even more profitable than Renault. The logical aim of the Alliance is to cover the entire world with a minimum of duplication.

6 Tips For Starting a Business Despite the Recession

The daily news of doom and gloom about the current recession and the financial challenges facing the world might convince you that now is not the best of times for a mom to start a business. But despite the hard times, many moms are doing just that.

After all, if you have been let go or can’t find a job in the current economy, what have you really got to lose by starting your own business now? Why not chase your own dreams, rather than be dependent on another employer? Why not just take control of the helm yourself?

Because if you have a computer, a network of contacts and some marketable skills, you can launch your business from home with very little money and use your passion and sweat equity to make it a success.

But first, you need to do some planning and scheming to find the best business for you. Here’s some tips to get you started:

1. Make a list of your current assets. Include equipment like computers, printers, and cell phones; skills like writing, editing, web design, organizing; expertise with software programs and computers; a list of your network of personal and industry contacts; and the amount of capital you could invest in your business.

2. Brainstorm ideas for the kind of business you want to start. Don’t edit the ideas as you write them down, just keep going and list as many as you can. Then put the list away for a day and come back to it and then pick the top 5 ideas that excite you the most.

3. Do some Internet research using Google and Amazon to find web sites, books, and blogs that focus on your top 5 business ideas. Also look for potential role models of women who have already built a successful business in these areas. You might want contact them later to ask for an information interview to find out more about the ins and outs of a specific business.

4. Now, based on the information you’ve collected, write a short summary of your business ideas and the potential income for each. Be sure to include the links to resource sites, books, and the role models you’ve found. Think of these as a short pitch you might make to an investor to get them interested in your idea.

5. Assemble a focus group: people you trust who will support you in your entrepreneurial efforts and who will give you good feedback and advice. Do a presentation of your business summaries to them and ask for their input. Do not dismiss any of their ideas or comments. Just listen to what they say and write everything down for further review later.

Note: It’s best to select people who are already successfully self-employed themselves. You want a nurturing and informed group of people to help you evaluate your ideas. People who have never been self-employed often have negative and unfounded ideas about starting a business and will project their fears to you.

6. Finally, review all the information and input you’ve selected and choose the business you want to start. The best business for you will usually be the one that intersects on your points of passion, skills, and resources.