TOKYO -- A string of leaders, from former board member Ross Perot in the 1980s to current CEO Rick Wagoner, have tried to fix General Motors' insular culture.
Now comes Carlos Ghosn.
He is using his trademark - logic and performance metrics - to sell GM's management on the merits of joining his Nissan-Renault alliance. But he's realistic about the size of the challenge, as word leaks out that GM teams studying the alliance are tepid at best.
Without top-level support from GM brass willing to force change down through middle management, "It's over," says Ghosn. "Forget about it."
Over the past seven years, Ghosn's demanding financial targets have forced sometimes-reluctant managers at Nissan Motor Co. and Renault SA to work together, even as the companies remain independent (see story, Page 38). Ghosn knows that only a similar top-down management mandate could force GM's culture into a three-way alliance.
Some of GM's organizational fiefdoms - famous for putting their interests ahead of the company's - would be weakened by an alliance with Renault and Nissan. Their unwillingness to work with outsiders has scuttled a string of alliances with carmakers in Europe and Asia. Ghosn's pitch is that such insularity has cost GM dearly in terms of sales and profit performance.
"You have to choose: Do you want performance, or do you want control?" the CEO of both Renault and Nissan said in an hour-long interview with Automotive News at Nissan's Tokyo headquarters.
Alternately relaxed and impatient in a Nissan conference room, Ghosn occasionally showed signs of being irked by media criticism of Nissan's current weak sales, which he had predicted months ago. "I'm glad to see that the press thinks Nissan is struggling," with operating margins "above 8 percent," he laughed sarcastically. Teams from General Motors, Renault and Nissan are exploring the pros and cons of GM's joining the alliance. They are scheduled to report their findings Oct. 15.
On Sept. 18, Automotive News reported that GM CFO Fritz Henderson briefly discussed a possible alliance with Ford Motor Co. CFO Don Leclair after Ghosn's overture to GM.
In addition, The Detroit News reported Thursday, Sept. 21, that the GM study teams are insisting on a limited scope for platform and parts sharing, to the frustration of the Nissan and Renault sides.
A spokesman for Ghosn says he remains committed to exploring the alliance with GM despite the GM-Ford talks. The spokesman would not comment on The Detroit News' report.
Reuters reported last week that Nissan and Renault may start talks with Ford if GM drops out of the alliance discussions.
GM's board would have to approve any alliance. But board approval isn't enough. GM's management would have to set up organizational structures, incentive plans and formal targets for cooperation if a three-way alliance is to work.
Ghosn declines to outline possible structures for a future three-way alliance. "You have to shape the solutions and the structure as a function of who is joining the alliance, which today is not very clear," he says.
Even if an expanded alliance uses incentives and goals similar to those that eventually led French and Japanese engineers to trust each other, there is no guarantee of success.
GM has a long history of failed alliances. Those with Isuzu, Fiat and Subaru maker Fuji Heavy Industries fell apart.
But executives at Renault-Nissan remain undaunted. After all, when their alliance was formed, they were given little chance of getting a Japanese carmaker to accept new management directions from a French company.
"We went through it," says Carlos Tavares, Nissan's executive vice president for corporate and product planning. "We never said it was easy."
Says Michel Gornet, Renault's executive vice president for manufacturing: "It depends on the willingness of the people to do something or not." Forming an alliance doesn't work "if the only purpose is to make a report that says, 'We met.'"
The Renault-Nissan alliance was an "every-day task," says Ghosn. "People who are different and come from different companies will not work together naturally." Management had to "massage the structures and the standards and the incentives and everything to make it happen," he says.
For example, Ghosn set a target for joint purchasing: 30 percent of the combined companies' purchases had to go through a formal organization devoted to the task. That was later raised to 70 percent.
Ghosn also set platform-sharing targets. Early on, the stated goal was to have 10 platforms shared by both companies by 2010.
Today, engineers who have seen the benefits of sharing parts and components do so not to meet common-platform targets but to meet cost and profit targets. Ideas for joint projects bubble up from the organization, rather than being imposed from above.
There would be plenty of suitable projects for a three-way alliance, says Andy Palmer, Nissan's vice president of the light-commercial-vehicle business unit. Add GM to the mix, he says, and "there's another tree to go picking. There's some low-hanging fruit on their side, and they'd see some on our side."
Even so, some within GM are likely to resist.
"We're not naive," says Ghosn. "We know that discussing having a third party join the alliance has a lot of enemies." They include people who see an alliance as contrary to their interests and those who fear a loss of control.
Under the rules of the Renault-Nissan alliance, GM's top management would retain a veto over each project - just as Renault and Nissan managers do. Those rules include a respect for the other company's independence and culture and an ironclad requirement that all joint projects be win-win. If GM didn't agree to a proposed project, it could opt out while Nissan and Renault went ahead. Or the project would be canceled.
The alliance makes a distinction between cultures, both corporate and national, and business rules and management, says Tavares. "It's possible to respect the culture and change the management way," he says.
For example, Ghosn and other managers who joined Nissan from Renault did not insist that the Japanese company adopt French-style internal debates. But they did insist on meeting sales and profit targets and demoted those who fell short. That had not been the case as Nissan slid to losses in eight of the previous nine years. GM similarly has been reluctant to demote managers who fell short.
Some at GM might be threatened by the performance-driven alliance's relentless focus on the bottom line. So be it, says Ghosn.
"I challenge management on performance," says Ghosn, "and offer the alliance as one way to improve performance."
You may e-mail James B. Treece at [email protected]