We Have A Lot of Challenges Ahead'

rlos Ghosn, the foreign boss at Nissan Motor, has been shaking things up at the dowdy carmaker. By doing the unthinkable -- turning Nissan's huge losses into profits -- Ghosn has become a corporate hero and unlikely pop icon in Japan. But are the changes he has made enough to secure the company's future? And will his revolutionary ideas catch on in Japan, desperate for a way out of its economic malaise? In an exclusive interview with TIME Tokyo bureau chief Tim Larimer, ahead of the launch of the bold new version of Nissan's Z car at the Detroit Auto Show this week, the Brazilian-born 46-year-old talks about his next great adventure: a branding makeover to make Nissan cool again. Edited excerpts: TIME: In Oct. 1999 you talked about how things at Nissan had to change quickly. Are you surprised today how fast things have happened?Ghosn: No, I'm not. You never approach a problem with one target. You have base targets and then maximum targets. You take into consideration obstacles, and how fast you can overcome them. We are on track here at Nissan. There was so much frustration in the company, and an expectation for something different, I knew I would be able to count on people. And I was not deceived. It's happened. TIME: People were already predisposed for change, then?Ghosn: Oh yes. It's easy to understand why. Our market share had declined, we were unprofitable, and we had $20 billion debt. This was causing a lot of frustration, and the development of new cars was not happening as fast as it could have. There was an expectation that we had to, once and for all, jump- start the company again. There was no room for fuzziness or vagueness. People were ready for change. I'm not saying everybody appreciates all the measures we have taken. But they knew it was necessary. TIME: But the conventional wisdom about Japan is that people here are resistant to change of any kind.Ghosn: A lot of things characterize Japanese people in general. We can debate them. But one characteristic we cannot debate is that they are very pragmatic. They are also very sensitive to reality. And the reality of Nissan was not hidden. It was crystal clear. Something had to be done. TIME: If it was so clear, why didn't Nissan itself figure this out? Why did it take you and Renault?Ghosn: The revival of a company requires many things to go right. You need many things happening concurrently to take off. The existence of a burning platform is important. But that alone isn't sufficient. You have to make sure that you have the right plan, that you build it the right way, and that the people assisting with the plan are the right people. You have to act fast and have some quick victories. We still have a lot of challenges to face. The most important factor is not the drawing of the revival plan, but the implementation of it. TIME: Has there been one moment when the light went off and people at Nissan said, this is it!Ghosn: It's a continuing process. The announcement of our six month results last year were important externally. Internally, they were not a surprise. Managers knew on a regular basis how we were doing. They had been following the evolution. The fact that on Oct. 30 we announced in a very analytical way everything we had done was obviously for the outside world a defining moment. TIME: What things about the company surprised you?Ghosn: We didn't have a proper and efficient marketing group before April 1, 2000. So we created a department and I can already see the difference. TIME: For example?Ghosn: Before I had very generic numbers and very generic trends, the sort of things you would read in the press. Today we know which competitors are doing well and which cars are selling well. We have an explanation for our failure or our success, and we have an action plan that we know when it will be released and who will be responsible for it. It gives everyone in the company much more motivation. Everyone wants to help when they see detailed analysis. TIME: So it's a defensive posture versus an offensive?Ghosn: Exactly. We lost market share in the domestic market for 26 years. It was 34% in 1974, and that was the peak. Now it's 17%. TIME: How important is it to close that gap?Ghosn: We're not driven by market share. We're driven by profits. We know enhancing profits without growth is difficult. Our approach is to focus on profit and at the same time prepare for growth. And we are only focusing on the markets where there is potential for profits. TIME: What are those markets?Ghosn: I'm not going to tell you what markets specifically. Two things happened in the first six months of 2000. In Japan, we continued to lose market share. At the same time we cut incentives. A company that wants to save market share does not cut incentives. But we decided that in certain markets we would not continue incentives because they weren't profitable. TIME: Of course you still have to sell cars.Ghosn: As long as you know that growth is the best booster for profit, you are going to do a lot of things right. If you look only at one aspect, you don't optimize the potential of the company. If you look for growth without profit, you may end up shrinking the company. We have no market share objectives. Our objectives are profitability and cutting company debt. TIME: How do you make Nissan sexy again? It's kind of like turning a frump into an ingenue, isn't it?Ghosn: You start from inside, unleashing the creativity and energy of people inside the company. We started to analyze our brand deficiency through the feeling and perception of people inside the company and measured it by comparing our product with our competitors' products. We also had to decide what do we want to be, and create an action plan with a specific target and timetable. We started training people who have a big influence on our product -- our designers, product planners, marketers, and engineers -- to get them inspired by one brand identity. When you have hundreds of people, each with their own specialty, inspired by one brand identity, then you have power. We are moving systematically to establish a clear and strong brand identity. We know it is going to take a long time, but the prize behind it is huge. It is going to take many, many years. TIME: So what is this brand identity?Ghosn: I can't tell you that today! If I tell you, some readers might go to our dealers and say, hey, I read all about this, tell me more. And our dealers will be embarrassed. TIME: So when do we find out?Ghosn: We'll talk a bit about it in Detroit. Then we'll follow it up at the Tokyo Motor Show in October, where we will show another list of new products. We want to avoid the frustration of talking too much about our products. In this industry, talk is very easy. What is more convincing is what you do. TIME: So you won't be having a big Super Bowl ad announcing Nissan's comeback.Ghosn: No. It is very important that we show the brand more than we talk about the brand. This is our strategy. TIME: Is there a risk that if you don't tell people what they should think about Nissan, they will come up with their own idea?Ghosn: We'll be guiding the public, step by step, by unveiling part of the brand. We want to go from a position of brand neutrality to one of brand power. We know we are not coming from a position of strength. TIME: But it can't get any worse, right?Ghosn: The same place can be seen by different people as good or bad depending on where they are coming from. If you're coming from hell and going to purgatory, it's a nice place to be. If you're coming from heaven, you aren't going to like it. In a sense we're coming from hell. We have to make a difference and do it fast, because the stakes are huge. TIME: Can you give me a few hints about where you are going?Ghosn: We are looking at things that worked well in the past, the strong parts of our heritage. TIME: Obviously the new Z car is about that. When companies try to reinvent themselves, they often run from the past.Ghosn: There's a difference between the past and history. We're interested in our history. The past is what happened in the last 10 years. And that wasn't so good for us. We're looking at the strong areas of our heritage, and abandoning everything else. We're not saying, it was night before and now it's light. No. We had a very difficult period during the 1990s, yet, in this difficult period, there were strengths to build on. We are doing that. TIME: That must be important for the morale of the employees who have been at Nissan for years.Ghosn: The major element of our plan is to be lucid and objective. There is no place for compromise or politicking about strengths and weaknesses. Nissan has enough strengths; we don't have to fake it. TIME: As a foreigner, what did you have to do to bridge cultural gaps here at Nissan?Ghosn: When you go to a country that is not your own you have to be prepared to live and adapt to that country. It should be an enjoyable experience and a learning one. I came to Japan with a lot of interests, a strong will to learn, and with a lot of respect for the country and its people. I didn't come with a preconceived plan. I came with a clean sheet of paper. Did I have to do some artificial things to adapt? No. I have been living in an authentic way. And I like it. I'm also trying to learn Japanese, not because I have to, but because I would like to. Living in a country without understanding the language is miserable. I'm doing things here because I want to. TIME: What about Japan has surprised you?Ghosn: I had a very vague image, although a positive one, of Japan. But I considered it important not to start work with any preconceived ideas. So I had to erase what I thought I knew about the country and start from zero. What struck me was how much people questioned the state of the economy and the country itself. The second thing that surprised me was the strength and the quality of what Japanese call 'gaman' -- the base of Japanese society. The involvement, the loyalty, the intensity that people show for their company is amazing. It is certainly the strength of Japan and it will continue to be in the future. TIME: Has it been harder at Nissan than elsewhere you've worked?Ghosn: At Michelin and at Renault I was mainly part of a team focusing on the revival of a company. This is the first time I am really in charge, with total responsibility. There are more things at stake and more consequences for the company. There is no compromising; I am in charge, so I have to succeed.