When the slick new 350Z rolls off the assembly line in Japan this summer, it will mark another milestone in the comeback of Nissan, the Japanese automaker that was close to bankruptcy just three years ago. The first of the sexy sports cars will be driven by Carlos Ghosn, Nissan's president and CEO and the engineer of the company's dramatic turnaround. Still, Ghosn won't be tooting his horn too loudly. "Our objective is to position Nissan in the top rank of the car industry," he says. "Until we get there, there will be no rest."
Ghosn deserves a little bit of a breather. In February, he announced that the goals mapped out in the Nissan Revival Plan, the detailed blueprint for the company's comeback, would be met a year ahead of schedule. Those goals include returning to profitability, reducing purchasing costs by 20%, increasing operating margins to 4.5%, and cutting the company's debt by half.
A recovery of that magnitude would be remarkable under any circumstances. But for Ghosn, Nissan presented a special challenge: The company is Japanese; he is not. Ghosn, a former Renault executive who earned the nickname "Le Cost Killer" in France, was dispatched to Tokyo after the French company bought a controlling interest in Nissan in 1999. During the 1990s, Nissan had only had one profitable year, and the company was reeling under $12.6 billion in debt. Both DaimlerChrysler and Ford had taken a look at Nissan but backed off. "When I started in June 1999," Ghosn says, "the company was considered to be lost. When you are the last bidder, you know that you are going to have to make a difference or there is no future."
How did Nissan go from endangered species to highly charged powerhouse? In an interview with Fast Company, Ghosn offered directions for a turnaround.
Start with your final destination. "One of the biggest signs that a company is in trouble is when the employees are confused about strategy and priorities. My first act was to move from a state of confusion to one of clarification. I needed to explain what we had to undertake and why we had to undertake it and then outline the best way to do it."
Listen closely, then pick your own route. "When I came to Nissan, I engaged in what I call 'active listening' with as many people as I could. I also got a lot of advice from outside the company, most of which was very conservative. People told me, 'You can't go fast in Japan. You can't close plants in Japan. You can't reduce head count.' I listened carefully, even to the opinions that totally contradicted my own beliefs, to make sure that when I made my decisions, I hadn't missed anything."
To change a company, change minds. "One of my vice presidents said, 'Carlos Ghosn's biggest task was not to restructure Nissan; it was to restructure the minds of the people inside Nissan.' It was tough, because this was a company where you could underperform for a long time and still get promoted.
"My goal was to find existing assets in the culture that I could use to leverage change. The Japanese people are very pragmatic. They are always a bit suspicious of big ideas, but they believe in results and statistics, and they measure everything. So we said that the quality of management is not a fuzzy concept. It can be measured, and we're going to base that measurement on performance. Because a car manufacturer is mainly a culture of engineers, they understood this, and it worked very well."
Faster is better. "From a management point of view, speed is of the essence. When you arrive at a job, you have a limited amount of time when people are willing to give you the benefit of the doubt. Also, Nissan's financial situation did not allow us to take a long time. But you also need to devise a plan with quality and depth — one that's detailed enough to execute when it's time for action. The Nissan Revival Plan was built in three months, but had it been humanly possible to do it in one month, I would have done it."
Put yourself on the line. "If you ask people to go through a difficult period of time, they have to trust that you're sharing it with them. So I said that if we did not fulfill our commitments, I would resign. I was not responsible for our situation in 1999. But when you accept the top job in a company, you assume its past, present, and future. I told my critics, 'Don't judge me on a good speech. Judge me on my results. Be very cynical. Be very cold. Look at the profits, the debt, the market share, the appeal of the cars. Then judge me.' "
Linda Tischler (email@example.com) is a Fast Company senior writer.