Carlos Ghosn of Nissan/Renault: Look Ahead, Dont Stand Still

Carlos Ghosn of Nissan/Renault: Look Ahead, Dont Stand Still


>>
[Applause]
Carlos Ghosn: It’s better always to enjoy applause before
than after.
>>
[Laughing]
SPEAKER02: Mr. Ghosn, thank you for joining us today.
I would like to open by asking you how you approach
leadership,
strategy, and execution differently at Nissan versus at
Renault, given
that each company has very different cultural contexts.
Carlos Ghosn: Well, you know, the French — the French way
of
managing and the leadership in French expresses itself in a
completely
different terms than Japan.
I knew it from the beginning.
So in a certain way you have some fundamentals which are the
same,
umm, and we’re gonna probably talk about what are these
fundamentals
but the way you exercise these fundamentals are completely –

completely different.
In Japan, I don’t run meetings the same way I run them in
France.
I don’t reward people the same way than I do within France
and what is
expected with me in term of communication we don’t do the
same things
in Japan.
They are not — the tools are not the same, the words are
not the
same, the way even you shape your strategy’s not the same.
So what we have to do when you are in a situation where you’
re
managing two different culture is you want to make sure
about what is
the content, which usually is very common, and then, what is
the
packaging of the content which has to take into
consideration with how
they consideration the culture.
And I can tell you that when we’re talking about France and
Japan but
it’s varied between the United States, or China, or India.
Every time you have to make sure about many difference about
what’s
the content in what do I need to do?
What is the essence of my message?
And, second, what is the best way, what is the most
efficient way to
make this message go through?
SPEAKER02: When you joined Nissan in 1999, the company had
been
suffering from major losses since 1973 and only three of its
48 models
were profitable.
You turned the company around and restored it to
profitability within
two years.
As both the company outsider and the first foreign CEO of
the company,
how did you earn the support of your team and motivate them
to execute
on your plan?
Carlos Ghosn: Well, you know, 1999 the situation was really
bad in
Nissan and when you are, you know, taking responsibility for
a
situation which is bad it’s — it also is France because we
don’t know
to explain the situation to people that they know already.
They know that.
>>
[Laughing]
Carlos Ghosn: And you need to know also that the solution is
always
here.
We don’t is to look — we don’t need to invent a solution.
We know that people know already that it’s bad.
And second, that the solution exists but it’s buried inside
the
company.
So your job is very simple in a certain way, is just make
sure that
you make the very lucid diagnosis of the situation.
Very lucid.
No emotion, no, you know, sugar coating, no politics, no
complacency.
Extremely lucid assessment of the situation and listen to
what people
have to say to a very simple question.
Why are we in this situation?
What you think can we improve?
What are the things that should be done?
Then you have your own personal doing but with other
priorities
because you end up with a laundry list of measures that
needs to be
done and obviously you cannot work on 120 objective or on
200
objective.
You need really to concentrate them into two or three
because that’s
the only thing you can absorb at the level of big
organization.
Make sure they are the right one and start to work on them.
So, you know, in Nissan, in 1999, everybody knew that Nissan
had the
problem.
The only thing that nobody recognize that the problem was in
his own
area.
You know?
If I was in sales, I was blaming the product planner that
they were
not able to come with a car competitive with Toyota.
If I was a product planner, I said I have a great product
but the
design is not good.
The designer said what the engineers are messing up with me.
So everybody in a certain way felt good about what they were
doing but
the company had the problem.
So you need to change this by saying, okay, we understand
that all the
guys are not doing their job but what we want for you is
what you can
do, you know, in your own area, even if you think it’s not
very
important, what you can do in your own area in order to
solve — to
solve the problem.
So lucid diagnosis, no complacency, finding the bits of
solution
inside the company, put them in perspective, put them into
priorities,
put it in a way which is attractive.
You know?
Because what is management about?
Management and particularly leadership is about asking
people to do
things that they do not want to do.
That’s it.
That’s management.
>>
[Laughing]
Carlos Ghosn: That’s what it’s about.
I mean, you don’t manage a situation where everything is
okay.
You know?
That’s not management.
That’s supervision, that’s administration.
What’s really management and leadership?
You’re gonna ask — you’re gonna have — okay.
Say people don’t want to cut head count.
They don’t want to restructure, they want to, uh, you know,
close down
plants, they don’t want to retreat from market where they
have been
for many years, they don’t want to stop some activities,
they don’t
want to sell assets.
They don’t wanna do that.
Okay?
So the very simple question of management is, how do you
bring them to
do this, and keep their motivation, and be convinced of
doing the
right thing?
That’s management and that’s leadership.
And for this, the basic element is, put it in perspective,
give
yourself an objective that everybody say, oh, that’s what we
want to
achieve so it helps them go through a tough situation where
they will
do things that they don’t want to do but they know it’s for
the — for
the right thing.
And this is Nissan story.
That’s exactly the Nissan story.
You know, when I arrive in Japan, 1999, one of the reason
for which
Nissan was in trouble was there was a lot of decision which
needed to
be taken five years ago were not taken.
But a lot of people used to tell you, you know, you are in
Japan, you
cannot close a plant, you cannot reduce head count, you
cannot undo
cross share holding, you cannot touch the
[inaudible], you cannot
touch the seniority system, you cannot, you cannot, you
cannot do.
You had a lot of thing that is nobody wanted to touch.
So there was absolutely no way you gonna fix the company
without
touching all these taboos.
So we start to say, okay, look.
Are we all committed to say we’re gonna come back to profit
and we’re
gonna grow this company again?
Yes.
No doubt.
Unanimity.
Okay?
Let’s commit to this, we all commit to this and say, okay,
now we’re
gonna start to explain what is the role and as you know the
Nissan
revival plan challenge every single taboo because you done
everything
which was forbidden and people say you would not be able to
do but
with clear commitment to return to profitability in the
first year —
within the first year of the plant.
So that’s the way you drive people, you know?
That’s what management is about.
Put in front of them something that they want really to do,
to
achieve, that is really significant for them.
Significant for them not only theoretically but
pragmatically they are
all connected with this victory that they are proud of
having revived
the company but it was good for them for their salary, for
their
career, for their compensation, for their stock options, for
their
benefits, for their retirement, for everything.
Then after you align this now you say, now we have to lose
jobs.
SPEAKER02: At the end of this year, you are planning to
launch the
Nissan Leaf, an electric vehicle that uses lithium ion
battery
technology and will be one of the early zero emission cars
on the
market.
Carlos Ghosn: Mm.
SPEAKER02: Incidentally, as part of our first-year
curriculum, we
watched the movie “Who Killed the Electric Car” and I
understand that
you’re collaborating with that movie’s producers to create a
sequel
called “Revenge of the Electric Car”.
>>
[Laughing]
Carlos Ghosn: It’s true.
>>
[Laughing]
Carlos Ghosn: No, it is true.
It is true.
There are a film like that.
We spend many hours with them and they came to Tokyo, and
they filmed
the car, and hopefully it’s going to be an interesting one.
SPEAKER02: What is your strategy for driving adoption and
becoming a
leader in the electric vehicle market in the U.S. and
globally?
Carlos Ghosn: Well, you know, first, if you want to
innovate, if you
want to innovate, you have to accept from the beginning that
a lot of
people are gonna think that you’re a fool, you’re playing
with
shareholders’ money, you’re taking bets that should not be
taken, that
there would never work, etc. etc. and that’s exactly what
we’re
hearing today.
That’s exactly what I’m reading today.
And it’s absolutely unbelievable, unbelievable to see how
much
short-sighted, how much short-sighted — probably the media
and a lot
of analysts are about what we are — how we understand the
situation
in which the car industry is.
So we decided, after analyzing everything to say, okay, zero
emission
is the way to go.
Doesn’t mean that all the cars are going to be zero emission
but there
is a huge and tremendous boulevard for the development of
the zero
emission cars and we can spend a lot of time explain that
but anyway
obviously today people — we’ve invested already $6 billion
on this
project and people say, well, you know what?
If this is not gonna be a big success it’s gonna be a
tremendous — a
tremendous way on the performance, the financial performance
of the
company.
First, I think it’s going to be a tremendous success and I
think this
is going to be the way of the future and we can spend a lot
of time
explaining it but what I’m gonna tell you is that, umm, we
are in the
final phase before the launch.
The launch will come by the end of 2010.
In fact, it’s gonna be mass marketed in the United States
starting
November or December 2010, the same time in — in Japan.
I understand that even we showed the Leaf in Stanford
campus.
Professor, I think you’ve driven it.
I mean, the only — you have to go into this car, drive it
to
understand that’s who we are.
That’s not the kind of enhanced golf cart, you know, where
you have to

>>
[Laughing]
Carlos Ghosn: — this is a real car and on top of this, the
basic
assumption is, it’s affordable, makes a lot of sense, and
we’re
offering the zero emission as a premium.
We’re not asking consumer to pay for the zero emission.
That doesn’t work.
Is you gonna get the zero emission as — as a premium.
So, again, you have to have a vision, this vision has to be
based on
understanding about the dynamics of the market, globally,
and then you
have to pursue this vision.
No matter what you have to build motivation inside your
company.
This is easy because you’re saying, okay, we wanna be bigger
and a
technology that is meaningful to the consumer and all the
Nissan
people, all the Renault people are buying into it.
Then we need to come to the consumer and tell him, you know,
tell the
consumer, that’s a great product which is affordable and on
top of
this is gonna allow you to drive without the guilt of the
melting of
the icebergs, and the change of the seasons, and the
temperature, etc.
Umm, I think it’s gonna be very powerful.
But again, before it starts, there’s always a doubt.
And now we are at the period of time where a lot of people
are
throwing at you a lot of stones by saying, that’s not gonna
work, and
then you have a lot of comments from competitors saying, you
know,
you’re too much rubbish.
Is not gonna work.
But honestly, what do you want competitors to say?
Is this — he’s in the right direction?
I say, okay.
>>
[Laughing]
Carlos Ghosn: He is the right direction.
And where is your car?
I have no idea where is your car.
What’s your situation?
>>
[Laughing]
>>
[Clapping]
Carlos Ghosn: I’m absolutely — I mean, we open — we open –
– already
in the United States we open the possibility for people
already to
be — we want to be on the list for the — for the electric
car.
We had more than 35,000 people already — I’m not talking
about the
Fiats.
Obviously Fred Smith from Federal Express, and the postal
services,
and the electric company all of them want — want to order
the car by
the 10,000s.
We’re not talking about that.
We’re talking about, you know, the people that say, okay,
this is a
good thing, and we want it to happen and particularly if
you’re
telling me it’s going to be at the same price than the
regular car.
I wanna go for it.
So I think it’s gonna be very powerful.
Carlos Ghosn: Nissan and Renault have a unique alliance in
which
Renault has a 44 percent ownership stake in Nissan, Nissan
has a
15 percent ownership stake as Renault, and you act as CEO of
both
companies.
What are the unique opportunities and challenges of this
relationship
and how do you handle conflicting interests between Nissan
and
Renault?
Carlos Ghosn: Well, that’s a — that’s an interesting —
that’s an
interesting point.
You know, we have been — we have been in this alliance for
the last
ten years.
We are probably the two companies with the most sustainable
track
record in term of alliances because practically every single
other
alliance that happened in our industry was blown away.
Everything.
I remember in 1999 we made the Renault-Nissan alliance
immediately
after the DaimlerChrysler alliance.
Daimler and Chrysler came together and then Renault-Nissan
came
together, and then DaimlerChrysler — of Mitsubishi — and
when the
DaimlerChrysler alliance came together and we came together,
there was
a lot of commands.
DaimlerChrysler was this is an alliance made in heaven.
Two very rich and powerful company and attractive brands
coming
together they’re going to do a lot of things and change the
world.
And when Renault-Nissan came together to say two mules
doesn’t make
a — a horse.
>>
[Laughing]
Carlos Ghosn: Wall Street Journal 1999, I have all the track
records,
all the media.
Everything.
Okay?
>>
[Laughing]
Carlos Ghosn: Nobody talk about this but we have — we have
everything there.
Okay.
The two mules started to work and then the two beautiful
people
started to work and at the end of the day, after ten years,
DaimlerChrysler, Mitsubishi, you know the story, and we’re
still
there.
Which means that it’s better to be a mule than a horse in
the car
industry.
>>
[Laughing]
Carlos Ghosn: More resistant.
More resistant to the shocks and to the problem.
This is due to the fact — to the fact that we had a very
pragmatic
approach.
No grandeur scheme of, you know, we’re too different and we’
re gonna
be one, and all the machine are gonna be taken to one place,
and we’re
gonna have a superior holding company.
It doesn’t work.
It doesn’t work. We took the alliance as a marriage between
two
people.
Okay?
When two people marry — I know that probably some of you
are not but
those who have some experience in marriage, uh, nobody want
become the
other.
You know?
If my wife was saying me we’re gonna become one but how
about you
become like me?
>>
[Laughing]
Carlos Ghosn: I’m not sure.
I’m not sure I’m gonna be very happy and exactly the reverse
same
thing.
I’m not gonna ask her that.
So being different is very important.
Remaining different is very important.
Having common goals, having common strategy, but at the same
time have
your own autonomy, cultivating things together but even —
let me —
this is very important.
Diversity within uniformity, you know in commonality with
autonomy.
That’s the way the world works.
That’s the way it works.
So in a certain way, we try to inspire ourself from the
basic
institution of human being — of human kind by saying, we
need to make
sure that, you know, even for the sake of business sense, we
do not
violate common sense or human common sense.
We need to always to maintain, look out.
And frankly the result has been that even there they have
been a lot
of pressure on me to try ask say, why don’t you make a
merger between
the two company and you don’t get one team, etc.?
It doesn’t work.
I cannot make one team of Japanese and French managing a
company which
would be neither Japanese nor French.
I can’t.
It doesn’t work.
Identity is the basis of motivation.
Identity is the basis of success.
It’s basis of performance.
You need to connect to something.
You need to make sure that you working for your own team,
for your own
country, for your own etc.
You need to belong to something in order to concur the
world.
If you don’t know why you’re doing this, you gonna lose your
motivation.
So we have been following this very pragmatic approach.
Obviously there have a lot of conflicts, there have been a
lot of
difference, but every time came back to this common sense
about, you
know, if there is no win/win, we don’t do it.
We’re not gonna force one decision from one company to the
other.
Decisions for Japan — for Nissan are being taken in Tokyo
always;
decision for Renault always taken in Paris.
Don’t confuse the — the two company but at the same time
always push
for more synergy.
They have a lot of things in common, putting things in
common, always
for the sake of each company benefit.
If you maintain this kind of culture, extracted not from any
book
because there is no reference but extracted from common
sense, you can
go — you can go very — you can go very, very far.
And frankly I think because Renault and Nissan and Japan and
French —
Japanese people and French people are so different that it
was obvious
for everybody.
When you start to see that, oh, you know, maybe the two
companies are
very similar.
We’re gonna merge them together.
Now, here — here comes trouble because there are multiple
identities
within each company and if you don’t respect them, you gonna
get in
trouble — you gonna be in trouble.
That’s why there was absolutely no merger with worked in the
car
industry.
All of them are being sold, or collapsed.
You know in look at Saab being sold, and Jaguar being sold,
and Daim
— Chrysler, look what happens with this Chrysler after the
grandeur
story that we have been told in 1999?
I mean, you have every single example which happened.
It was not respected and it was not respected because it was
violating — violating common sense.
We are the only surviver in this.
And that’s why people say why?
When I ask the question of time.
Yeah.
It’s a question of time before we gonna see problem.
No, we not gonna see problem as long as we maintain the same
pragmatic, prudent — prudent approach to the — to the
lines.
Carlos Ghosn: How do you identify leadership potential in a
person
and how do you attract and develop the best and brightest
people in
your organization?
Carlos Ghosn: That’s interesting.
There are some basic condition and if you don’t see them,
forget about
leadership.
>>
[Laughing]
Carlos Ghosn: First one, very simple.
Very simple.
I have my first test.
First one.
If somebody doesn’t listen, no way.
Very simple.
You sit down with anybody, you start to discuss etc., if he’
s not
listening to you, even when you — and the test is, you
start a boring
conversation.
>>
[Laughing]
Carlos Ghosn: Obviously, no.
Because if you’re very interesting it’s very easy for your
listening.
Oh, no, no.
You go for a very boring conversation.
You know?
>>
[Laughing]
Carlos Ghosn: And if the person really listens and really
try, etc.,
that’s a very good start.
A leader first is a listener.
There it is.
That’s absolutely basic condition.
If you’re not a listener, you’re never gonna — you can be a
leader
but you’re not gonna get very far.
The second basic also condition is, I’ve never seen such a
thing as a
boring leader — leader.
Nothing.
Leader is always somebody interesting.
Somebody who can connect with you.
Very important.
Very important.
I mean, so if I’m sitting with somebody and, you know, after
15
minutes I wanna go to the next meeting, I know it’s — it’s
not very
good.
So ability to connect, ability to be interested, and being
interesting
is also a very important feature.
And you know this isn’t something that you don’t learn in
school or in
university.
It is developed by yourself.
Everybody has his own skills, etc. so I would say being a
listener,
being able to connect with people are two absolutely basic
condition
for leadership.
For the rest, you know, efficiency, ability to communicate,
openness,
curiosity, intelligence, etc., that’s fine.
I have seen great leader who are not smart.
You probably know enough of them that they are not smart.
They’re very common.
>>
[Laughing]
Carlos Ghosn: No, but it’s true.
I mean, they’re not smart.
And we’ve seen a lot of people extremely smart who never —
never were
able to take any leadership position.
So I don’t think this is something discriminating.
I have never sen a leader who is boring or at least at the
beginning.
He may be boring after — after five or whatever and
somebody who
don’t listen, who observe or try to see, okay, what’s the
situation in
which I am?
Carlos Ghosn: What role have mentors play in your life and
what
advice do you have for us in finding mentors in our careers?
Carlos Ghosn: Oh, it’s very important.
Mentors.
Very important particularly but they teach you what not to
do.
[pause] I had many bosses in my career because I started,
you know,
like a simple engineer and I learned as much with the —
from the
managers or the leaders who are making a lot of things which
shock me
as from the people who are inspiring me.
Both of them are very important.
Why?
Because the guy, you know, who is your boss, and all of a
sudden you
say, well, you know, he doesn’t communicate well, I’m not
motivated,
etc., you’re learning.
You’re learning.
You’re learning the basics because you’re gonna to always
think every
time when you will be in a leadership position, I don’t
wanna become
like X, Y, or Z who were my leaders.
I wanna make sure I’m interesting, I’m sure I’m associating
people,
etc.
So the mentors are positive and negative.
You have the people who are gonna teach you what are
mistakes not to
do and there are the people who are gonna inspire you by
saying, well,
I would have never thought about this and I think this is
very, very,
very powerful.
So you learn from both and it’s — that’s why it’s very
important to
listen, and observe, and, you know, some people say, you
know, I have
a boring boss, you know?
I’m not learning anything.
Wrong.
Wrong.
You have a boring boss?
It’s an opportunity to see why he is boring.
What are the things — what are the things that I will learn
that I
will never have to do in the future so I am not boring for
the people
who are the my team?
If you have a great boss from the beginning you think — you
gonna
think it’s very easy, you know?
Because the guy’s interesting, and the objective is being
hit, etc.
you’re not gonna learn as much as if you would be facing
adversity
from the boss who has a lot of imperfection.
Obviously if you — if all your bosses are of this type, it’
s bad also
because you never know what’s — you know, what is true
north.
So having some of both is very — is very important.
I was blessed by the fact that I had both and frankly I
learned as
much from one than from the — from the others.
SPEAKER02: So while auto sales in the U.S. have remained
flat or
declined over the last few years, auto sales in many
emerging markets
continue to grow at a double-digit clip.
How is this dynamic influenced Nissan and Renault, and how
do you
envision it impacting the global auto industry?
Carlos Ghosn: Well, that’s — that’s a very important factor
because
we — we all know that the car industry is moving from north
to south,
and from west to east.
[pause]
In a kind of summary.
The demand, obviously the United States, Japan, Europe, are
gonna
continue to be important market but I don’t think growth is
gonna be
an important factor in these markets.
Growth is gonna come from new markets.
Obviously we all know China, India, the Middle East, South
America,
but also from the country of the future which are gonna be
the next
wave coming.
Indonesia, Iran, Iraq, Vietnam, Mexico, some part of South
America,
maybe some countries in the Africa.
This is the next brick.
And, you know, we have a short memory.
You know, I remember in 2000 — in the year 2000, ten years
ago, not
so much.
We used to sell 20,000 cars — ten to 20,000 cars a year in
China.
China was maybe the number — in the car industry it was
market No. 20
or 25.
In 2009 it was the largest market in the — in the world.
And I think it’s gonna be sustainable and we sold 700,000
cars in
China in ten years.
And this is becoming one of the largest market of — of
Nissan.
So today what I wanna know is, in ten years, what are the
countries
that’s probably not like China but are gonna see this
tremendous
growth?
So you look at the potential, you look at the resources, you
look at
the population, you look at the mismanagement.
Usually the more the company is mismanage — the more the
company —
or the country is mismanaged, the more potential it has,
particular if
it has natural resources.
So you look at the leadership, uh, you look at the
resources, and then
you can start to list what are the countries which has the
most
potential for the next ten years.
Some of them may not realize it because mismanagement may
continue or
aggravate but some of them are gonna fix their problems and
then all
of a sudden they’re gonna be there.
So Renault-Nissan, what you’re trying to do is take all
these
countries which are the next generation of bricks and trying
to
establish a presence in them.
Some of them will not bloom but the one who will bloom will
be — will
be really worth it.
SPEAKER02: Umm, what advice would you give to newly lamented
MBAs and
what mistakes have you seen them make in the early stages of
their
career?
Carlos Ghosn: Uh, what advice I can give new MBAs?
First I think — I think the first one is that don’t plan
too much.
>>
[Laughing]
Carlos Ghosn: Doesn’t work.
For me it didn’t work.
Frankly, don’t plan too much your career because what your
gonna be
facing in life is probably more powerful and much bigger
than you ever
imagined.
So if you’re following your man, you may miss a lot of
opportunity
coming from the side but you may not even look say, oh, I
need to
continue on my plan.
Okay?
Even though on the side you gonna be huge opportunity coming
you don’t
look at them.
So don’t plan too much or be flexible on the planning.
You gonna have a lot of ordeal, particularly in the period
we’re
getting in, 2010, 2020, I think there’s gonna be a lot of
transformation coming and there are gonna be a lot of
opportunity so
be flexible.
Umm, no matter where you start — you know, some of you have
already
jobs, some of you don’t — no matter what you gonna start
with but if
you really, really put your heart and it and your dedication
in it, at
the end of the day you always gonna be great.
I never seen personally in my domain anybody working very
seriously,
wholeheartedly, with a lot of motivation, openness on
anything and at
the end of the day do not prevail.
Never seen it.
It’s a question of time.
It’s a question of patience, a question of drive, that’s
very —
that’s very important.
The third — the third thing is it’s also something very
important.
Don’t work for recognition.
>>
[pause]
Carlos Ghosn: It’s an illusion.
Somebody was saying, “If you want recognition, buy yourself
a dog.”
>>
[Laughing]
Carlos Ghosn: Don’t work for recognition.
You gonna be disappointed.
You gonna be disappointed.
Work for yourself, obviously work for — no matter what are
your on
objective, if you wanna become wealthy, if you wanna, you
know, I
mean, work for yourself.
Work for yourself.
I’m not saying that you need to be egocentric looking.
No but I think do not put too much emphasis on the outside –
– what the
outside’s gonna be bring you because you gonna be
disappointed.
You gonna be disappointed.
And I wanna tell you why it’s so important to hold this
line.
Umm, because when — when you have to make hard decisions
and probably
some of you will have in the future, you gonna be alone.
Do not think that this is a team.
No, it’s not true.
At the end of the day, the guy who is gonna make the
ultimate decision
is one and this guy’s gonna do it alone, and he’s gonna do
it based on
his own value, and his own beliefs, and his own analysis
transmitted
by his team or whatever but at the end of the day he or she
is doing
the decision.
And when you carry the decision, you’re gonna be bombarded
no matter
what.
So if you’re looking for an outside recognition it’s gonna
melt you
down.
You’ll say, oh, my God, it’s not working.
Everybody — no.
No.
You need to have your own strength, you need to have your
own beliefs,
make your own analysis, and carry — and carry the
decisions.
Let me give you an example.
Obviously I’m gonna take the easiest one which is the Nissan
revival
plan in 1999.
When we announced the plan in 1999, October 1999, when we
were
announcing a lot of restructuring measures, a lot of tough
decisions,
umm, obviously the public opinion was a little bit shocked
that it was
too severe.
The financial market applauded it and said, oh, finally,
somebody, you
know, doing what is right but the share collapsed.
50 percent.
The Nissan share went down.
They didn’t care.
They say, oh, it’s too risky.
You not gonna be successful, etc.
So you’re standing along, you’re doing what’s right, with
the public
opinion upset, political parties up set, financial market
letting you
down, you know?
And you’re only when you’re employee in the dark, you know?
And you say, okay, we’re gonna make it and in one year we’re
gonna be
profitable, in two years we’re gonna be profitable.
So if you’re asking for recognition, you’re in bad shape.
You’re in bad shape.
I’m gonna tell you, if you’re asking for recognition even if
you
succeed ’cause you can say, okay.
After one you made it.
After two years you made it, etc.
Now the glory.
Not at all.
Not at all.
>>
[Laughing]
Carlos Ghosn: Not at all.
When we made the profit of Nissan in 2000 — in 2000 — in
the first
year in 2000 the press started to say, yeah, you know what?
Maybe cook the book, you know?
>>
[Laughing]
Carlos Ghosn: 2001, you repeat it.
Yeah, but it’s easy to cut costs.
It’s different to grow the company.
Now you start to grow the company yeah, but where are the
hits?
You didn’t do any car that now become very famous.
Now you do a car very famous can say, hey, where’s your
technology,
man?
You’re late in technology —
>>
[Laughing]
Carlos Ghosn: You’re going always to have something wrong.
No matter what.
So if you looking for the outside things, you gonna be a
little bit
mistake.
You need to have it in you and making sure that you’re
looking at the
right indicator of your own people.
SPEAKER02: With that, we’d like to open it up for questions.
Uh, please raise your hand and wait for a mic before asking
your
question.
We have one here.
>>Hi, thanks, Carlos, for being here.
My name is Igor.
Sorry for the jacket.
>>
[Laughing]
Carlos Ghosn: Actually, I like your jacket.
You know?
>>
[Laughing]
>>Umm, I am from Brazil and I would like to — we are
hearing a lot
about Brazil lately and some people even consider that it is
almost
like a bubble, that it is just too much hype around it.
I’d love to hear your perspective about the country and what
Nissan
and Renault have planned for the country.
Carlos Ghosn: No.
I think — I think Brazil, it’s a story which is long due.
A long due.
Brazil has a lot of potential.
Obviously I’m — I’m not talking out of emotion.
I’m born in Brazil, I’m Brazilian, etc., but I think on
objectively
Brazil has a very big future and frankly it’s coming late.
The question is not it’s a bubble.
It’s not a bubble.
It’s an anti bubble.
It has been a very long time that we should have seen what’s
happening
today in Brazil already in Brazil.
Brazil has everything.
Every single thing you look at in Brazil has it.
You know?
Good demographic, young population, huge territory, all the
resources,
energy, I mean, technology, now, you know, democracy.
I mean, it’s an important element.
This is a stable country, you know?
Maybe still some mismanagement, etc.
No.
Brazil has a lot of potential.
Frankly this is not a bubble and I think Brazil is really
well below
its potential and for Renault-Nissan this is one of the
priority
market for us in term of investment and in term of — of
penetration.
Brazil is long overdue.
What we’re seeing today should have happened ten years ago.
I’m —
I’m glad it’s happening, you know, and I think there is more
to come.
There is more to come.
SPEAKER02: Okay.
We have a question over here.
>>Umm, so we talked about the, umm, goals difference in the
emerging
markets versus developed markets and I’m wondering what’s
the
indications that you see in the market dynamics, in the auto
industry
overall, and do you see the companies — the local
companies, umm, in
those emerging markets as a threat and how you would just
sort of
start your strategy going forward.
And also just a — like, listen to it.
We’ve seen a number of Chinese companies acquire assets,
umm, and form
brands and what’s your view?
Do you think it will be successful or not.
Carlos Ghosn: Okay.
Well, I think, you know, first thing I think —
>>
[pause]
Carlos Ghosn: — in the next ten years in the global market
you’ll
have at least one large Chinese car maker at this point and
you’ll
have one Indian, uh, large car maker.
I have no doubt about it and it’s normal.
You’re gonna have a shrinking of the western northern car
makers.
They’re gonna come together and make alliances and at the
same time
you gonna have something generate — we don’t know who, we
don’t know
how, we don’t know when, but it’s coming.
No doubt about it.
That’s No. 1.
No. 2, this will be facilitated or the emergence of the big
Chinese
and the emergence of a big Indian by how short-sighted the
other car
manufacture gonna be.
If we’re short-sighted, we’re not only gonna have one
Indian, but two;
we’re not only gonna have one China, but five, etc.
What does it mean?
Very soon — I’m gonna give you an example.
When Ratan Tata came with the Nano, you know, a lot of
command says
this is a joke, this is not a car, etc. etc.
No, no, no.
That’s a threat.
If we neglect the Nano, we’re gonna have an Indian car maker
coming
with the new segment of the market, three, 4,000-dollar car
that
nobody’s doing, and he’s going not only to take by storm the
Indian
market, but start develop a lot of emerging market and we’re
gonna
repeat the story of the Japanese industry versus European
and U.S.
industry and the Korean industry versus Japanese, which
always start
with, I bring a cheaper product and then I move up.
That’s the story of the Japanese industry.
You know, when the Japanese industry started 40 years ago,
it started
with cheap, small, low-quality product and it moved up.
And today it’s a major part of the car industry with every
single
problem.
Korean did the same.
They came with a cheaper product than the Japanese and are
moving up.
Well, the Indians and the Chinese can do the same and if we
are
short-sighted and say, oh, yeah.
$4,000 car, there’s not a market for me.
I don’t know how to do it, we’re gonna help generate more
and more
Chinese and Indian.
So because of this, you know, because we’ve seen this threat
now, what
we’re doing is we are allying with Indian and Chinese car
makers to
make sure that we’re not gonna be surprised by something
like this.
Okay?
So this is gonna slow down a little bit the emergence of the
pure
Chinese or the pure Indian.
But still I think it’s very unlikely that you don’t have at
least one
Chinese or at least one Indian to become global eventually
by
acquiring assets or making alliances with other — other
major —
other major company.
But I don’t think you gonna have many of them.
SPEAKER02: I have a question in the back.
>>Hi, thank you for your time.
Brandon Nolstien, second year MBA, Joint North Engineering
School.
Umm, by going all electric with the Leaf, you’re making a
very
different bet than either Toyota or GM is making and I was
wondering
if you could talk a little bit about that and how you see
green cars
in the future?
Carlos Ghosn: Yeah.
Well, you know, we — we — the green car started with
Toyota taking
the leadership with the hybrid.
They took the leadership on the hybrid and then Honda came
with the
me, too product; and then Nissan with the me, too product;
and then GM
and everybody came with a me too product; and then already
taken the
leadership technologically and in term of brand by
introducing the
hybrid.
That’s fair.
Umm, and with all the development of the hybrid, plug-in
hybrid, the
mild hybrid, the green hybrid, etc.
The next step is zero emission.
On the zero emission, we believe that there is a market, not
detriment
of the hybrid.
There is a market for hybrid but there is a market for zero
emission.
We said, okay, we want to be the leader on zero emission.
This is gonna be good for our brand, we think there is a
good market,
and we have the technology for that.
So I don’t want you to think that we’re doing zero emission
and
electric car on detriment of hybrids because we have
hybrids.
But on hybrids we recognize the fact that the leadership is
already
taken.
Okay?
We’re followers.
We’re gonna bring cars on the market, we’re gonna satisfy
market
demand, but we would never be recognized as leaders in
hybrid and, in
fact, nobody is going to take this out of Toyota.
It’s too late.
We wanna take the leadership on electric car and we don’t
want anybody
to take it from us because we think objectively there is a
specific
market for electric cars.
Why I think there is a specific market for zero emission
cars and not
hybrid, and not anything else.
Three reasons mainly.
And, in fact, three questions.
If you answer yes to the three question, then you say, okay.
Zero emission cars gonna be part of the future.
The first question is, do you think — very simple — do you
think
even though price of oil is unpredictable, do you think that
there is
more chance price of oil in the future go up or down?
Okay.
So, uh, if you say, yes, there is more chance that it goes
up, well
then, you are on the right path for electric car.
If you think, no, no.
This is fake.
Oil, there is plenty of it and it is going to go down to
$20, then
even you should not even do hybrids.
You should — you should go back to gasoline engine.
That’s first question.
Second question, do you think that the constrains on
environment and
the regulation on the environment are gonna become stricter
or looser?
If you say it’s gonna become stricter, C02 emissions etc.,
then you
are also on the right path for the zero — the zero emission
car but
it’s gonna cost you more and more to emit C02 and this is
something
which is gonna make a difference between this technology and
the
others.
And the third one is, more strategic — strategic concern,
which is,
how much all the countries which are developing in the world
are
importing oil?
All of them.
China, the United States, obviously western Europe,
obviously Japan,
obviously — but even China and India, which are the two
power house
coming, they are big net importers of oil and there is no
chance, no
chance this is gonna change for the next 30 years.
So with all these superpowers — they gonna be superpowers –
– how long
are we gonna accept that their transportation sector depends
only on
one commodity and they are net importer of this commodity?
I remind you that if one major oil producer for whatever
reason decide
not to export oil — and this happened in the past — the
transportation system of most of this country is paralyzed.
That’s why it is considered a strategic issue.
So the only way — the only way to dis– disconnect this
strategic
issue is to bring electricity.
Why?
Because you can bring electricity out of oil, of coal, of
natural gas,
of nuclear power, of hydroelectric, of wind, of solar.
You can do it literally out of everything.
So if there is one commodity which would become very
expensive or
which become unavailable we can switch to something else.
You can’t in the case — in the case of oil.
So there are a lot of reasons for which, you know, we think
that there
is absolutely no doubt that the zero emission car gonna be
part of the
future.
Now, the big question is, is it gonna be 10 percent in 2020,
15, is it
gonna be five?
There is a lot of debate going — going on.
We are the most foolish today by saying 10 percent of the
market in
2020 will be zero emission.
Frankly, I think the numbers will move up and all the people
who are
today we think is gonna be 1 percent, 2 percent, 3 percent.
They’re gonna make a kind of rolling forecast which mean
every year
they’re gonna update the numbers.
You know?
So every day you don’t know what their position.
You know?
>>
[Laughing]
Carlos Ghosn: So you — we’re gonna discover — we’re gonna
discover
at a certain point in time there are 10 percent who are
probably the
most conservative.
It will take a very small crisis for all these numbers to
change.
It will take an environmental disaster, it will take an
energy crisis,
it will take a war in a country which is large producer with
some of
this control.
So we gonna see these numbers gonna go up and frankly the
likelihood
that this happen in the next ten years, for me, probably is
near one
that you gonna have something happening.
Even if it doesn’t happen, it still makes a lot of sense.
So we’re gonna see.
We have different opinions, we’re coming with different
technology.
It’s not either/or, you know?
We have our hybrids but it is where do you put most of your
resources
in order to create leadership?
SPEAKER02: I have a question over here.
>>Hi, I’m Clay Calhoun.
I’m an MBA one.
Before I ask my question in interest of full disclosure, I
worked on
the automobile task force at the Treasury Department, uh,
this summer.
Umm, and so I’d like — I’d really like your perspective on
broadly
how you think the restructuring of the U.S. auto industry
has changed
or hasn’t changed the game for Renault-Nissan and, more
specifically,
returning to your comments on reliance, whether you think
the
Chrysler-Fiat alliance has a chance of success or is
destined to kind
of follow the previous alliances into problems.
Carlos Ghosn: Uh, yeah.
We — are there any journalists in the room?
No?
>>
[Laughing]
Carlos Ghosn: It can be on the web site so we have to be
careful
here.
That’s all.
>>
[Laughing]
Carlos Ghosn: I’m sorry.
We are on the web site so I’m gonna have to be very polite
and very —
>>
[Laughing]
Carlos Ghosn: No.
You know what?
I — I mean, I read — I read the comment of Steve Rattner
and, in
fact, it happened that I was in a debate with Steve Rattner
a few
months ago in the Council of Foreign Relation.
We were together.
And Steve were very straightforward.
He said — he said —
>>
[Laughing]
Carlos Ghosn: — uh, General Motors we are not gonna abandon
no
matter what.
Too much employment.
Okay?
So it was clear from the beginning.
He said, “I’ve never seen people who are so polite and so
arrogant at
the same time.”
His comment.
>>
[Laughing]
Carlos Ghosn: No, no.
You know this.
You’ve been part of it.
He said it on record, it’s on Fortune, etc.
Uh, and he said that, uh, never seen a company which has
been as
mismanaged and where there is so much — so few, uh, sense
of
emergency.
But, you know, there is a new administration that could not
let GM go
because employment in that country, the impact on employment
was huge.
They said we had to do everything — everything we had to do
to save
Germans.
Okay?
And frankly I think is very factual.
Nobody, nobody in the industry — and I can tell you because
I’ve seen
many bankers, and analysts and they came to — and this was
before the
collapse.
Two years before.
Nobody would have predicted even in the wildest scenario and
the
wildest dream that General Motors would become majority
owned by the
U.S. government.
No.
Nobody.
Nobody has seen this scenario.
Nobody.
Okay?
So which mean that we have to be very careful when we
imagine the
future that it may always surprise us by what type of
solution are put
into place.
This is for General Motors.
Now, for Chrysler, back to Steve Rattner.
He said it was 4951 — no.
It was — yeah.
It was 49-51 to let him go and he would give it to Fiat.
His comment.
And at the end of the day he didn’t say exactly how it
happened but
probably inspiration is we have — you have to let it — you
know, put
it on the 51 and let it — let it, uh — let’s give it a
try.
The bottom line of this is the major element here was end
product.
The major element here was protecting activities.
It was not so much about potential on the market or
competitiveness of
the companies.
And frankly it’s totally normal because the French
government moved to
sort of guard the industry because of employment, Japanese
government,
uh, moved and put a lot of cash and liquidity during the
dark days of
the crisis in 2008 and 2009 because of employment.
Everybody look at the industry with the prism of these guys
are big
employers.
We can’t just let it go.
So this being said, this being said which mean that the
companies have
been supported not in function of their merit or their
potential but
because of how much damage this can create to the
employment.
Umm, in the industry there is no impossible nation in our
industry and
I’m really well positioned to tell you that because in 1999
nobody
gave a clue about Nissan being able to survive and we’re
doing very
well.
So I would — I would not insult the future by telling you,
uh, there
is no chance.
There is always a chance.
Depends on how you manage, how much focus you put into it,
and did you
make the right decision.
So I think — I think it’s still an open — it’s still an
open story.
SPEAKER02: We have a question over here.
>>Good afternoon.
Good afternoon, Mr. Ghosn.
Excuse the getup once again.
Given what —
>>
[Laughing]
>>Given the comment that is you made about the differences
between
Nissan and Renault, and the demands on a CEO’s time, and
that
synergies will be achieved and have been achieved across
companies
multiple different ways, it’s not immediately apparent to me
that
having a single CEO is always the right choice.
Why has that been an effective choice in this alliance?
Carlos Ghosn: Yeah.
I think you’re totally right.
I’m not gonna tell you that single CEO for two companies is
the best
choice.
And, by the way, when the alliance started, there was no one
single
CEO.
Louis Schweitzer was the head of Renault,
[inaudible] was the head of
Nissan, I came as the head of Nissan two years after I was
CEO of
Nissan, so Louis Schweitzer was heading Renault, I was
heading Nissan.
We were working together. in 2005, Louis Schweitzer wanted
to retire
and obviously he said, you know, you should be my successor.
I would say, yeah, but the problem is, I’m not gonna abandon
Nissan.
So how can you be successor at Renault if you don’t wanna
abandon
Nissan?
Because I thought Nissan was still not completely, you know,
reestablished even though the results were good, etc.
So we come to the conclusion that I would manage both.
Everybody thought it’s crazy.
How can you manage?
Two different company.
Two different yeah.
Etc. etc.
But I think this was the most reasonable solution not in
absolute term
but at least for the temporary period.
When the crisis started, when the crisis started, I was
realistic
enough to say, okay.
You can’t manage completely being the COO, the CEO, and the
chairman
of both companies at the same time.
You can’t.
So I’ve given up the COO responsibility by nominating one
COO at
Nissan and one COO at Renault.
Shiga is chief operating office based in Tokyo, Pelata,
Patrick Pelata
is COO based in Paris, and they follow the day-to-day
operation and
they make sure that nobody’s gonna say, you know what in
where’s the
boss?
We need an answer here.
They’re answering all the question connected with me.
Okay?
So I’m keeping CEO role and chairman of both company and
delegating to
the COOs.
Is it gonna be like this in the future?
I don’t think so.
We can come back one day in a situation where you have two
different
CEOs and you have the kind of board of the lines which is
chaired by
one of them or a third — a third person.
So I don’t want you to think that this is the only solution
to manage
the lines.
A lot — I mean, we have been very, very pragmatic into
shaping it.
>>Umm, thank you so much for joining us today.
I had actually had a similar question that was asked by this
young man
here and it’s related to the goal — the role of the public
sector and
the government in the industry in the future.
You were talking about oil, which is an adjacent industry,
which, 30
years ago, was more than 75 percent privatized but today is
more than
90 percent owned by the public — by the public sector and
given what
happened in the U.S. last year and also given that in China
it’s very
typical for the government to force foreign players to have
some sort
of local joint venture, I was wondering how you think that
might
affect the dynamics of the industry going forward in the
next few
years.
Carlos Ghosn: Well, you know, I personally was not shocked
by what
happened in 2008 and 2009, that the government intervening
particularly to save employment.
I was not shocked.
I think it’s normal.
In a situation of crisis where there is no more rules where
the whole
system’s shut down, somebody’s gonna have to step and the
market
cannot step.
I mean, only government can step.
And why they intervened with the car industry they need to
intervene
with other industries just because they are large importers.
That’s it.
The government we are driven by the fact that they don’t
want
unemployment to go through the roof.
That’s a major motivation.
They don’t care about the cars.
A lot of people — they don’t care about us.
I say, okay, if I don’t have a national producer, I will
have somebody
else.
I mean, in the United States I would have no problem to let
one or two
companies collapse because we have so many in capacity
existing
competitors I’d be glad to take on this position.
The question was employment and frankly not only the U.S.
and I think
it’s totally normal and I was expecting it and I think it’s
sound that
we don’t give the impression to society that there is a
problem, there
is a shock coming, and everybody retires, or everybody
hides.
People have to stand up and face some of the problems and I
think
they’ve done the right things even though I’m not a public
interventionist, I’m not a politician, but I think what
governments
have done during this crisis were the right things to do.
Because when this crisis hit, all the companies were hit.
The good ones and the bad ones.
The competitive ones and the not so competitive ones.
Everybody was hit.
It’s like, you know, you taking an athlete and you take a
sick person,
you put them in the room and you — you stop oxygen.
Well, both of them are gonna die.
Maybe the sick guy is gonna die a little bit faster than the
healthy
guy but the healthy guy is gonna die also if you don’t
reserve oxygen.
That’s exactly what happened with the cash situation in
2008.
We were all under threat.
It was a question of time.
Government cannot stand — say, okay, you know, we’re gonna
let the
market forces — what market forces?
There was no more cash.
The banks were not working, you know?
There is no market forces at all.
We just have to establish common sense.
So I think — I think common sense was established.
Why some governments it took some time to react because
frankly they
did not know what was going on.
I personally spent a lot of time with authorities in Japan,
with
authorities in France, to explain what was going on.
And frankly this helps a lot for them understanding that
there was not
a manipulation.
This was a real need.
Federal government in the United States and — and the Fed
reacted
very well because they started to listen to everybody what’s
going on.
Tell us, when — when is the cash re-established or not?
I think — I think most of the job done in 2008 and 2009
there were
mistakes but overall the reaction was sound.
It’s not visible today.
Probably in five years down the road when we analyze this
fact we will
recognize the fact that many good things — many good things
happened
during this period.
So back to your question.
I am not so favorable to public intervention into markets
but I think
there are two cases where it’s necessary.
The first thing is when there are no more rules. All of a
sudden
there is a collapse.
Okay?
Government has to step in.
It was a case 2008-2009.
The second reason is when you want to start something
important.
For example, I’m gonna give a technological point.
Batteries technology today is something which we know is
essential for
the next 20 or 30 years.
The research on battery is mainly concentrated between
Japan, Korea,
and China.
The U.S. government, conscious of this, is saying this
cannot be.
We need to encourage development of research and development
in the
United States and they are putting money in it, and putting
incentive,
and encourage company.
That’s part of the job governments need to do.
Recognize on a macro level that there is something big
missing in the
country and say, okay, we need to establish the incentive
and the
conditions to be able to bring back to the country.
The Indian government is doing that, you know?
I was in India a very long time ago.
I say, there’s no battery company in India.
You know?
India is proud saying we are the country of knowledge.
Okay.
That’s great.
Where is the battery technology?
It’s missing from India.
And they are thinking about putting a kind of package to try
to
encourage company to move into the sector.
This for me makes a lot of sense.
These are the two conditions which you require governments
to
intervene and create the condition for the market to — to
start and
to perform.
SPEAKER02: Mr. Ghosn, thank you so much for being with us
today.
Carlos Ghosn: Thank you.
>>
[Applause]
Carlos Ghosn: That’s for me?
So this is my size?
That’s my size?
>>
[Cheering]
>>
[Applause]
Carlos Ghosn: Thank you very much.
Thank you.
>>
[Applause]

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