It wasn’t all that long ago that Detroit talked of “the Japanese” as though the collective Japanese auto manufacturers were some sort of Godzilla laying waste to the highways, byways and American marketplace. They seemed indomitable. But things changed. And recently, GM’s vice chair Robert Lutz said that so far as he’s concerned, “the Japanese” that he thinks about consists of just two companies, Toyota and Honda. If we were to think back to, say, the 1980s and early ‘90s, there was another company that was keeping the people in Detroit up late at night: Nissan. But then, almost imperceptibly, it dematerialized, in effect. The vehicles that it produced after the first Altima and before the Xterra weren’t all that remarkable. Its Infiniti brand was almost absent. And then it became known that financially, Nissan was in the Stygian stuff. But recently, with products like the current Altima, the returned Z, and the Infiniti G35s, Nissan is clearly on the road back to relevance in the U.S. marketplace.
What happened is the subject of a just-published book by David Magee, Turnaround: How Carlos GhosnRescued Nissan (HarperBusiness). Magee opens his book in Canton, MS, where the company started building a $930-million, 2.5-million ft2, 250,000-unit plant in April 2001. In June 2002, while the plant was still being built, Ghosn, president and CEO of Nissan, announced, “Building products that meet the needs of the North American market is a vital ingredient to profitable growth.” They were upping the ante by $500-million, adding a million square feet and 150,000 units to the plant in process. Production will start in the spring of 2003. Trucks, sport utes, and cars—both Nissans and Infinitis—will come out of the plant. As people who are familiar with assembly plants know, Nissan’s Smyrna, Tennessee, plant has led the Harbour Report productivity study for the past eight years. I can only imagine that the new facility will be good. Very good.
But as Magee points out, at the end of the ‘90s Nissan was $22-billion in debt. Renault took 36.8% of the firm in March 1999 for $5.4-billion. Ghosn, who had come to Renault from Michelin, was named Nissan’s COO. In October of that year, Ghosn announced the Nissan Revival Plan (NRP), a three-year turnaround plan that he was committed to in more than a superficial way: He publicly announced that if the company wasn’t profitable within the three-year period, he and the rest of the company’s Executive Committee would resign. Magee writes, “Nissan was not only profitable in fiscal year 2000; the company posted its highest profits in corporate history.”
So what is behind it? The answer, I’m afraid, is nothing that you don’t already know. One part of it is commitment. Commitment at the top. Commitment through the organization. And if there isn’t commitment, then the uncommitted, no matter at what level, need to go. Another part is the use of cross-functional teams. In the case of Nissan and Renault, there were two distinct cultures, so by forming teams, the necessary inputs could be realized. (The NRP was based on the input of 200 direct people who were given three months to make recommendations.) And a key part is execution: Magee says that Ghosn believes that people should spend 95% on execution and 5% on planning—which I suspect is a slight exaggeration. Since NRP was accomplished, another initiative, Nissan 180 (one million additional sales by the end of FY 2004; 8% operating margin; zero net automotive debt), is underway.
In a speech at Stanford University in Nov. 2002, Ghosn told the assembled that he has three recommendations for those who would like to become CEOs: (1) “Remain open to opportunities.” (2) “Listen to the counsel of others...but do not be overly influenced by others.” (3) “Begin now to affirm your values.” Nothing there that you don’t know. You just have to dedicate yourself to making it happen.