Carlos Ghosn was born in Porto Velho, Brazil to parents of Lebanese origin. He spent his first years in in Porto Velho and in Rio de Janeiro before returning with his mother to their ancestral homeland of Lebanon, where he studied in French language schools. Although he spent most of his youth in Lebanon, he cherished his memories of Brazil, and longed to return some day. As a boy, he enjoyed the study of history, languages and literature, but family influence and practical considerations pointed him toward the study of engineering. At age 17, after completing his secondary education in Lebanon, he traveled to Paris for university study, engineering degrees at the École Polytechnique and the École des Mines de Paris. On graduating in 1978, Ghosn took a job with French tire manufacturer Michelin, a company with substantial interests in Brazil. Rising from plant manager to head of research and development, he was thrilled when an opportunity arose to transfer to the land of his birth. At 30, he became chief operating officer of Michelin Brazil. At the time, Michelin’s operation in Brazil was struggling. The country as a whole was experiencing hyperinflation, and was losing money. Ghosn, who is fluent in both French and Portuguese, enjoyed a deep understanding of both French and Brazilian cultures and created an inclusive work environment for workers of all nationalities. Under his leadership, the company returned to profitability in only two years.
Ghosn would happily have remained in Brazil, but his success there led to his appointment as president and chief operating officer of Michelin North America. Michelin had recently acquired the Uniroyal Goodrich Tire Company and Ghosn was tasked with restructuring the merged companies. The merger was a success and Ghosn was promoted to chief executive officer.
Ghosn’s talents attracted attention beyond the tire industry. When the troubled French automaker Renault offered him an executive vice presidency, Ghosn seized the opportunity. Not only was the move from supplier to manufacturer a step up the industrial food chain, but Ghosn’s new position also returned him to South America. Renault placed him in charge of advanced research and development, manufacturing and purchasing throughout the company, and placed him at the head of all Renault activities in the Common Market of the South (Mercosur), a vast region comprising Brazil, Argentina, Paraguay, and associated member countries in South America. Ghosn undertook a radical restructuring of the company that earned him the unwelcome nickname “Le Cost Cutter.” Nicknames notwithstanding, Ghosn restored Renault to profitability, setting the stage for the company’s further expansion.
Ghosn’s successes in Europe, and in North and South America, would soon lead him to yet another continent, and the greatest challenge of his career. When Renault entered into an alliance with Nissan Motor Co. in 1999, Ghosn was tapped to become chief operating officer of Nissan in Japan. Ghosn faced an unusually difficult situation as the first foreigner to head a major Japanese company. With nearly $20 billion in debt, and annual losses of over $6 billion, Nissan was near bankruptcy.
Ghosn believed only drastic action could save the company. He broke with deeply entrenched Japanese business practices to execute the Nissan Revival Plan. At the outset, he cut 21,000 jobs — roughly one in seven — closed five plants, eliminated seniority-based promotions and dismantled the keiretsu system, buying out suppliers who held long-term sales agreements as well as stock in the company. He brought in French and American managers to work side by side with Japanese ones and instituted English as a corporate language for a multinational workforce. To assure the entire company of his commitment to his goals, he promised to resign, along with his management team, if he did not meet precise targets of profitability and debt reduction within three years.
In fact, he reached his goals ahead of schedule. Nissan began turning a profit within the first year. Under Ghosn’s leadership, the firm’s production has more than doubled and its debt has been eliminated. The company has expanded into new markets, including China — Asia’s largest single market — and Nissan now employs thousands more workers than it did when Carlos Ghosn first took over.
Ghosn was promoted to chief executive officer of Nissan in 2001, a post he would hold for the next six years. Once regarded with suspicion by the Japanese press and business community, Ghosn has become a sort of folk hero, his achievements celebrated in the press and even in a Japanese manga comic book. He recounted his experience in a bestselling book, Shift: Inside Nissan’s Historic Revival.
In 2005, Ghosn was chosen to serve as CEO of Groupe Renault, making him the first person to run two Fortune 500 companies simultaneously. He became chairman of the board of Renault in 2009, and in 2013 added the chairmanship of Russia’s AVTOVAZ automaker — producer of Russia’s Lada brand — to his already awe-inspiring portfolio of responsibilities in Western Europe and Asia. He became chairman of Japan’s Mitsubishi Motors in 2016, and relinquished the chairmanship of AVTOVAZ, which remains a Groupe Renault subsidiary. The four companies he headed over the course of 2016 sold 9.96 million vehicles that year. More than one in every nine cars sold worldwide in 2016 were produced under Mr. Ghosn’s leadership. He has been the subject of numerous business school studies and popular books such as Turnaround and The Ghosn Factor.
Ghosn stepped down as CEO of Nissan in 2017, while continuing to serve as chairman of Nissan and Mitsubishi, and as chairman, president and chief executive officer of Groupe Renault. All the companies of Groupe Renault share purchasing operations and some cross-brand manufacturing, but each retains distinctive design elements and brand identity. Ghosn is squarely facing the challenges of the future, in the fields of electric vehicles and of driverless, or “driver-assisted,” cars. In 2007 he committed $5 billion to the development of an affordable zero-emissions vehicle. The electric Nissan Leaf debuted in 2010, and soon became the world’s bestselling zero-emissions vehicle. Nissan is also producing a driver-assisted automobile, the Serena.
Carlos Ghosn maintains both French and Brazilian citizenship. He and his wife, Carole, have homes in France, Japan and Brazil. His work travel is scheduled six months to a year in advance; in a typical month, he divides his time between a week in Paris, a week in Japan, and the remaining weeks in the United States, Morocco, Russia, Indonesia, and wherever else Groupe Renault’s far-flung operations may demand his attention. In his understandably limited spare time, he serves on the International Advisory Council of Tsinghua University in Beijing and the Strategic Council of Saint Joseph University in Beirut.
Not long after French automaker Renault acquired a controlling interest in Japan’s Nissan Motor Company, Carlos Ghosn was installed as president and CEO. Traditionalists were scandalized at the thought of a foreigner taking charge of this icon of Japanese industry, but the situation at Nissan was bleak, and a new approach was plainly called for. Ghosn promised to turn the company around in a year.
Carlos Ghosn was born in Brazil and earned his engineering degrees in Paris. He joined Renault in 1996, and in a short time earned a revealing nickname, “Le Cost Cutter.” He has lived up to that name at Nissan. In the first year, Ghosn sold off old subsidiaries, breaking up the traditional keiretsu network of suppliers and affiliates on which Nissan, like other Japanese manufacturers, had long relied. Ghosn’s strategy worked, and by the end of the year, the company, which had reported billions in losses, was now showing billions in profit.
Ghosn has become a hero in Japan; his managerial exploits have even been portrayed in a comic book. Having saved Nissan, he was tapped to serve simultaneously as president and CEO of Renault. By coordinating the design and manufacturing programs of the two companies for maximum synergy, he has built an automotive empire that circles the globe. Today he serves concurrently as chairman, president and CEO of Renault, and as chairman of the board of both Nissan and Mitsubishi Motors.
You’ve had such an international career. Where did you grow up?
I was born in Brazil, spent there the first six years of my life. Then, for family circumstances, I went to Lebanon, where I spent the following ten years going to a French school in Lebanon, and then after this went to Paris. In Paris I graduated from two engineering schools and started my career with a company, which name is Michelin, thinking about going back to Brazil because they were developing a big project in Brazil.
In fact, I spent probably seven years in France before going back to Brazil, which finally happened. I didn’t stay in Brazil as much as I wanted, but I still spent four years.Then I had to come to the United States, where a lot of important things for the company were happening at this time, particularly the acquisition of a competitor, which was Uniroyal-Goodrich. So I had to put the two companies together and run them up to 1996.
I spent seven years in the United States, but then a headhunter approached me and asked me if I’m willing to join the car industry, which obviously is something that anybody working as a supplier would like to do, because then you are at the top of the food chain. I joined Renault then in 1996. I went from the United States to France. I was about to stay there for a long time but events decided differently, because in 1999 an agreement — an alliance — was signed between Renault and Nissan. Nissan Motors at that moment was not in very good shape and looking for a partner to be able to get out of the difficulties in which it found itself, and Renault was looking for a way to increase a little bit of their scope worldwide by finding the right partner. The alliance was signed in 1999. I headed for Tokyo, where I took the responsibility of Nissan as president and chief executive officer, and that’s what I’ve been doing for the last five years. And what is planned is, next year, in April 2005, after the shareholder meeting, I will become president and CEO of Renault at the same time that I will be keeping my responsibility as president and CEO of Nissan.
How did you decide what you wanted to do?
I don’t think I decided exactly what I wanted to do. I decided where I wanted to be. This is the way it came. I was a student in France, and I wanted to come back to Brazil, and particularly I wanted to come back to Rio de Janeiro, which is a city I still love a lot and I appreciate a lot. I was looking for an opportunity after I graduated as an engineer. In fact, I went to Michelin because Michelin had a big project in Brazil, and they were looking for students who had ties with Brazil, spoke Portuguese, knew Brazil, and had a French education. So I was the perfect profile for this, and as this project was in the State of Rio de Janeiro, and not very far from the City of Rio de Janeiro, I decided to go for it. So I wouldn’t say that I was deciding on what to do. I decided basically on where I wanted to go, and this is the way the career started.
Is it possible to plot a course or, I mean, does one find a career or a calling, or does it find you?
Carlos Ghosn: I don’t know if in absolute terms you can answer this question, but if I have to answer this question I will tell you, no. There is no course. There are opportunities that come, you take them or not, and this defines the course of your life.
I studied engineering and went to Michelin because I wanted to go to Brazil. I ended up going to Brazil, but much later, and then I was very successful in Brazil and I thought that this would keep me in Brazil for a long time. I was wrong, because being successful in Brazil precipitated me moving to the United States, which was a great opportunity for me. At the same time, I was very sad to leave Brazil. When I left Michelin to go to Renault, I was attracted by the car industry. I always had been attracted by the car as a product, and the industry by itself, and I thought I would be staying probably most of my professional life in France. But I ended up staying two years and a half, because all of a sudden this alliance came, and the prospect to work in Tokyo and heading a Japanese company was not something that I had ever dreamed of, or planned for it, or plotted for. It just came, and I had to say yes or no, and when opportunity came I took it, and I ended up spending five years — probably the most exciting professional years of my life — in Japan.
In 1999, you went to Japan to serve as chief executive officer of Nissan. What was that like, as an outsider, taking over this established Japanese company?
I was thinking, at that time, that first — I had probably a 50 percent chance of being successful and 50 percent chance of not being successful — and if I was not successful, well, that was it. It was the end of the career, because you could not expect, being in such a highly visible position, to come with an even average result and expect any interesting career after that. So I knew it from the beginning, but I took it, because I thought that if anybody has been prepared in his career to take this kind of challenge, it was me. Going through different countries, working in different continents, facing different challenges, different people, I’ve been through this. And coming to Japan as a foreigner, I was probably very well prepared — having faced different cultures and different countries — to approach Japanese culture with enough attention, curiosity and respect. At the same time, with enough focus on reviving Nissan to be able to pull it off. So I gave myself a 50 percent chance, but I was very excited.
On top of this, it was a tremendous learning experience. I was going to learn about Japan, about Asia. For the first time I was going to be really in charge of a company. So far, I had been a member of an executive committee, a member of a team. I was proposing, but not giving the final word, and this time it was. I was in charge and it was a different thing, and I liked Japan.
I liked Japan for very subjective ways or things. I liked the strong identity of Japan. I respect Japan for being a country with no resources, very small, not a very significant population, and still being the second largest economy in the world. The punctuality, the technology, the dedication, the loyalty, the simplicity, the modesty of the Japanese, all of this attracted me a lot. So I really found myself in a situation where I could make a difference, and you always want to put yourself in a situation — even a very tough situation — where you can contribute and make a difference, and this opportunity was given to me, so I didn’t want to miss it.
In 1999, Nissan was a heavily indebted company, more than $20 billion in net automotive debt. It was a company which lost market share for at least the ten years preceding 1999 in all the markets. It was a company with a weakening brand, a bland product lineup, and an average operating margin of one percent — which is very low for the automotive industry — and most of the years were unprofitable. The net income was negative, the return on invested capital ridiculous, less than one percent. That was the situation in 1999. People were anxious, frustrated, afraid, not confident about the future. In 2004 — I can talk about the official results of 2003 — this company erased completely the debt. We’re cash today. The operating margin is at 11 percent, which positions Nissan in the top level of the industry. The return on invested capital is more than 20 percent, again at the top level of the whole industry. The growth has been at ten percent two years in a row in a flat market. And probably one of the coolest product lineups on the market today. I’m not talking about it, because these are our babies so we can’t be objective about them, but I’m talking about what the press and the media is telling you about the cars you’re seeing on the streets.
The most important step, the first one, is, in 1999 the company did not have any vision, any sense of destination, any sense of purpose. We had to establish a simple vision shared for the future. The second important point is the fact that you’re going to have to keep your eyes on people’s motivation, particularly when they have some difficult things to do, and we had a lot of difficult things to do. We had to close plants, reduce head count, unwind cross shareholding, sell assets, at the same time investing in a lot of products for the future. It was not easy, but it was very important to explain why we had to do this and where we were going. But this is not sufficient, because if you have a good vision and you explain what are the action plans, people will not believe you unless you come with very strong commitments, and we made commitments. I made a personal commitment, saying that if the company was not profitable — the first year of the plan — I would be resigning, and with me all the members of the executive committee. We said also that if the debt was not cut by half in three years we would also be resigning. So we gave three very strong commitments, and we put our head on the table, saying “There will be no other plan. That’s it.” And if there was another plan for Nissan, it would not be carried by us.
Finally, you have to deliver results, because the vision is good, motivation of people is good, your commitment is important, but if you don’t have results no leadership will ever last or be accepted. So you have to come with amazing results that people believe were not possible, and you have to come with them as soon as possible.
So if you follow these four steps — which obviously are easy on the paper and much more difficult in reality — and you do them in a way which is transparent, honest, truthful, that nobody thinks that you’re playing with them or you’re manipulating them, then the bottom line is that you establish confidence, the trust, the credibility, the respect inside the company, and people will be willing to go the extra mile with you. They will be willing to face many challenges which would appear to other people as daunting, and they will be able to make commitments that for other people would be foolish.
Were you concerned about the reception you might receive in Japan as an outsider? You were challenging a lot of the ways Japanese companies traditionally operate.
I was expecting a negative reception in Japan — but in a certain way I was prepared for it — because obviously I don’t know why the Japanese public would trust somebody coming from outside, with a limited experience in Japanese corporation, limited experience of Japanese culture, trying to take care of a company which is one of the most renowned names in Japan, which has been struggling at least for the past ten years. So when I was received in Japan, I was received with a lot of skepticism, obviously some criticism, some negative comments, but most of the public was, I would say, skeptical. Skeptical because, from one side they said, “Well, this guy has courage to come in a situation that he did not create and try to shore up a company which has been in trouble for Japanese society for such a long time.” On the other side they said, “But what is he going to be able to do that Japanese management was not able to do for the last ten years?”
I was very happy to have skepticism and not significant animosity against me. This put a lot of pressure on me to deliver results quickly, because skepticism is an unstable situation. It can go to support or it can go to resistance and negative attitude. The difference is how much can you transform the reality into something better. This put a lot of pressure to deliver results quickly, and that’s why we were able to come with a plan three months after I assumed my responsibility, and committing on results already on the first year of the plan. I wanted to make sure that I will have the attention of the public, and hopefully get the public to judge on the results and not on intention, or not on origin, and not on gender, or not on culture, and as you know, that’s what ended up happening.
As you know, we had to make a lot of changes in Nissan. Any one of the many changes that we have done would have been headline news in Japan. I received a lot of advice when I arrived from outside people — Japanese and non-Japanese — saying, “You know, there are a lot of things in Japan that you can’t do. You can’t close a plant. You can’t reduce head count. You can’t unwind cross shareholding. You have to respect the keiretsu. You have to respect the seniority system. You have to guarantee lifetime employment.” You know, a list probably of about 80 or 90 things not to do in Japan. And I was very quickly faced with a situation. I accept all this advice and I have to pack my luggage and go back to Paris and just let somebody else get a shot at it, or I’m going to have to transgress many of these advices.
On October 18, 1999, when I announced the Nissan development plan, I went against the 80 advices which were given to me, and in fact, the plan shocked Japan, because a lot of old way of doing things were really not respected into the plan. But I think what made the public, in general, wait and see or give us the benefit of the doubt is there were some commitments behind it. These commitments involved top management more than anybody else in the company. That’s what gave us a little bit of a benefit of the doubt. And then when the results started to pour in, and people started to see transformation of the company — and transformation of the company shows first in the employees of the company, because they speak about the company more than anything else.
We have 130,000 people worldwide, half of them being in Japan. These people have families and friends, and they speak. They convey the image of the company, so either they are happy, they are hopeful — if they are more confident, if they trust, if they work hard, people around you are going to look at you and say, “Well, there is something right that you’re doing.”
If, on the contrary, they are skeptical, they are critical, they are anxious, they are nervous, then you’re not going to be given any other chance. I think the people of Nissan carried the plan from the beginning, and they were at the beginning — at the start of this report that we got from the Japanese public — the rest of the story you know.
But I was grateful that I was at least given the benefit of the doubt, and I could not expect more than this. I didn’t want more than this. I just wanted to be given the chance of delivering, and I was given the chance of delivering by the Japanese public. And today, Nissan is a hot story in Japan, as you know. This is because it’s a tremendous tribute to the capacity of a company in Japan, by being focused on the right objective, to make changes very quickly and obtain significant results.