Organizational change at Nissan

From the videos and articles reviewed, it become very apparent that organization change is heavily dependent on appropriate leadership. Here, it is important for leaders to not only develop a culture of organization change, but inspire employees to improve upon this culture on a daily basis. Many of the most successful organizational change leaders were able to improve internal culture by mimicking the behaviors they wished to embed within the organization.

Carlos Ghosn of Nissan, is a very controversial business figure within the automotive industry. Through his leadership of Nissan, he was able to construct a corporate turnaround of Nissan through strategic alliances. These alliances would result in Nissan reducing its massive debt burden which threatened to bankrupt the company. It also provided Nissan with a strategic toehold in markets in which the automaker found difficult to enter. Finally, these alliances forced Nissan to engage in a much leaner and efficient business operation. Here, the organization was able to effectively cut costs, improve productivity and streamline administrative functions.

Prior to Ghosn’s arrive, the company failed to earn a profit in eight consecutive years. In order to orchestrate the turnaround, Ghosn had to remove established business practices. One such practice was that of Keiretsu. Within Japan, Keiretsu is a system in which OEM purchase stock of their competitors and partner companies. Through purchasing of stock of competitors and partners, it is believed that industry loyalty and cooperation is achieved as all parties have a vested interest in the success of each other. However, this practice tied up billions of dollars of Nissans capital which was needed to help pay down debt or invest in product innovations. Here Ghosn eliminated the Keiretsu practice to the dismay of many of his Japanese leaders and competitors. He then used these funds to establish alliances with European and Western companies. He also invested in process improvements and product development. Finally, he made the unfortunately decision to layoff workers and cut down on the companies bloated cost structure. Traditionally, Japanese employees are promoted based on tenure and age irrespective of performance. Here, Ghosn again departed from traditional Japanese culture and instituted a merit-based reward system. Here, organization change relied on departing from established norms and instituting new and innovative ideas to improve business performance and profitability. This was a challenge as Ghosn not only had to overcome the industry Keiretsu model but also traditional cultural norms in Japanese society.