Ghosn on Growth & Collaboration

During the New York International Auto Show in late March, Ghosn made some observations about Nissan’s approach to the market, observations that have applicability to a wide range of people, be they in automotive or not.

A few years ago, it seemed as though when it came to automotive managerial understanding, expertise, and execution, the name Carlos Ghosn was in the first sentence. The man who became CEO of Nissan Motor Company—a man born in Brazil, who was named to head a Japan-based company, a seemingly unthinkable thing at the time—and CEO of Renault just five years later—an addition to his Nissan job, not a different one—was clearly an individual with few peers.

In March, something happened that doesn’t happen very often. The Toyota Camry was outsold in the U.S. market. It was beaten by the Nissan Altima. So credit to Ghosn’s team for making a highly competitive car. (For those who are keeping score, the difference between the Altima and the Camry: 37,763 to 37,663. Yes, 100 vehicles. To be fair, it should be noted that from January through March Camry has a comfortable lead: 100,830 to 86,952, according to Autodata.)
During the New York International Auto Show in late March, Ghosn made some observations about Nissan’s approach to the market, observations that have applicability to a wide range of people, be they in automotive or not. These are the sorts of views that made him the managerial icon in years past. Were people not so easily distracted by seemingly shiny new things, his stature would still be high. Figuratively speaking.
Ghosn talked about market share. About how Nissan has about 8% of the U.S. market, and how the goal is to get to 10. There are plenty of ways to get there.  Plenty of ways to game the numbers. But Ghosn unequivocally stated: “What is important for me is that any evolution should be sustainable. If we move up, it should be sustainable, not based on sales tactics that we cannot maintain. The 10% milestone for me is fundamental.”
He is insistent that they get to 10%, and he is confident that they will do so by 2016. But note that he talks about how it is important that it is a sustainable growth, not something that is achieved then exhausted, like someone who barely manages to agonizingly make that 10th pushup, only to collapse in a heap on the floor muttering “Never again.”
Reaching that goal in the U.S. market is part of the Nissan “Power 88” plan that Ghosn announced in mid-2011. He explained, “In defining Power 88, the word Power symbolizes our goals for brand and sales development, combined with greater focus on the overall customer experience. The numerals 88 represent our targets for achieving 8% global market share and a sustainable 8% operating profit margin. The six-year timeframe reflects our confidence to make the necessary strategic investments in products, technologies and geographic growth that will benefit the company far beyond the end of the plan.”
And he explained what would be fundamental in achieving that growth: “Under Nissan Power 88, we will deliver one new vehicle every six weeks, on average, for the six years of the plan. That means broadening our range of models not only for Nissan and Infiniti, but creating new vehicles to support the return of the iconic Datsun brand.”
This is aggressively paced improvement.
In New York he said of the 10% goal: “The most important thing to me is that we should reach it, and then jump to another milestone. We should not be at 10% at the maximum of our capacity then fall back after it has been reached.”
In other words, he wants solid, sustainable growth. Not the post-pushup posture.
Another thing that he discussed was collaboration, or, as might be more accurate to say, “co-opetition.” An expansion of the Nissan powertrain plant is underway in Decherd, Tennessee, where Mercedes-Benz four-cylinder engines will be produced for the Mercedes C-Class that will be built in the Mercedes plant in Tuscaloosa, Alabama, as well as for Infiniti vehicles.
Nissan, Daimler, and Ford also have a strategic alliance on the development of fuel cells.
Ghosn explained the sense of having collaborations like this: “Suppose I want to develop a fuel cell by myself. Say it will cost 100. So I will have to pay 100. If I work with Daimler, it won’t cost 100, but 120 because we know it is less efficient to work across companies—there are different systems, languages and ways of doing things. It will cost a little more. But my cost now is 60.”
What’s more, he said, there is likely to be a better fuel cell developed because there are more engineers involved, who have different cultural perspectives.
Then with the third partner, again the cost will go up incrementally, but the investment that any one makes is still less than would be the case if they were to do it own their own. In addition, Ghosn pointed out that when the development has been completed, there will be both more massive scale for parts and modules, but there will also be the development of standards, as well as a much broader commercial base for the technology.
“The fact that Ford, Daimler and Nissan are working together doesn’t mean that there is less competition between us,” he said.
Ghosn said that he believes that there will be more collaborations—on engines, and transmissions, and electric vehicles—going forward. “Developing products on a solo basis is possible,” Ghosn said, “but you’re going to have to be very big, have a very large scale.”
Which is why Nissan, as it pursues its growth strategy, is going to undoubtedly have more partners on technology development and production.
Smart man. Still.