Case Study:
Empowerment Facilitates Change
Nissan Motor Company was on the brink of bankruptcy when French auto maker Renault
purchased a controlling interest and installed Carlos Ghosn as the effective head of the Japanese
automaker. Along with Nissan’s known problems of high debt and plummeting market share,
Ghosn (pronounced “gone”) saw that Nissan managers had no apparent sense of urgency to
change. “Even though the evidence is against them, they sit down and they watch the problem
a little bit longer,” says Ghosn.
Ghosn’s challenge was to act quickly, yet minimize the inevitable resistance that arises when
an outsider tries to change traditional Japanese business practices. “I was non-Nissan, non–
Japanese,” he says. “I knew that if I tried to dictate changes from above, the effort would
backfire, undermining morale and productivity. But if I was too passive, the company would
simply continue its downward spiral.”
To resolve this dilemma, Ghosn formed nine cross-functional teams of 10 middle
managers each and gave them the mandate to identify innovative proposals for a specific area
(marketing, manufacturing, etc.) within three months. Each team could form subteams with
additional people to analyze specific Issues in more detail. In all, more than 500 middle managers
and other employees were involved in the so-called Nissan Revival Plan.
After a slow start-Nissan managers weren’t accustomed to such authority or working with
colleagues across functions or cultures-ideas began to flow as Ghosn stuck to his deadline,
reminded team members of the automaker’s desperate situation, and encouraged teams to break
traditions: Three months later, the nine teams submitted a bold plan to close three assembly
plants, eliminate thousands of jobs, cut the number of suppliers by half, reduce purchasing costs
by 20 percent, return to profitability, cut the company’s debt by half, and Introduce 22 new
models within the next two years.
Although [they were] risky, Ghosn accepted all of the proposals. Moreover, when revealing
the plan publicly on the eve of the annual Tokyo Motor Show, Ghosn added his own commitment
to the plan: “If you ask people to go through a difficult period of time, they have to trust that you‘re
sharing it with them,” Ghosn explains. “So I said that if we did not fulfill our commitments, I would
resign.”
Ghosn’s strategy for organizational change and the Nissan Revival Plan worked. Within
12 months, the automaker had increased sales and market share and posted its first profit in
seven years. The company introduced innovative models and expanded operations. Ghosn,
Empowerment Facilitates Change
who received high praise throughout Japan and abroad, is now Chairman and CEO of Renault,
Nissan Motor Company. Carlos Ghosn continues to influence the automobile industry. The
man who revived Renault in the 1990’s and Nissan in the 2000’s in now striving to save
Mitsubishi Motors. 69
.
Objective:
Explore the value of empowering employees to be part of the organization’s decision-making process.
Summary:
Carlos Ghosn used the process of empowering the employees at Nissan, a Japanese motor car company,
by having them function in teams to identify issues, concerns, and problems and recommend solutions for
improving productivity and the delivery of services to the customer.
Discussion Questions:
1)
What changes do you predict for the future of the automobile Industry?
2)
Discuss how a leader has facilitated change in an organization you know.
Teaching Points:
✓ Empowerment is a trait of the caring leader who is self-confident enough to share the decision-
making with her/his team.
✓ Empowerment is a simple concept popularized after WWII by a U.S. statistician, W. Edwards
Deming, who assisted Japan in rebuilding its economy via the use of Quality Circles (QC). He
taught that employees should be divided into teams of 6 – 12 employees who identified issues,
Empowerment Facilitates Change
concerns, and problems in their work area, and then offered their recommended solutions for
leadership consideration. He was adamant that the solutions adhere to the principles of
Statistical Quality Control. Also, he taught that if a recommendation was not accepted that the
team be given an explanation. pp. 171 – 173.
✓ Caring leaders will hire quality people, train them, assist in setting performance goals, assess
their performance, and together with the person – establish a developmental plan for the next
assessment cycle.
✓ Discuss the concept of “Using, not Abusing your Psychological Size” that you have over each of
your employees, p. 56.
✓ Stress the creation of a positive work environment. James Autry was a successful leader with
the Meredith Publishing Group. He relates that the success of his team was that the team did the
excellent work, all he did was provide the positive environment so they could do their work
effectively. pp. 5, 501.
✓ Identify the questions that your students can use to see if there is a need for empowerment at
their current organization or one about which they are knowledge enough to address the
empowerment issue. p. 160.
✓ Explore the success of Jack Welch at GE. He condensed his leadership success as being a “good
communicator and facilitator.” p. 161.
✓ Discuss the facets of an empowered workplace on p. 162. The key words are: Trust, Invest,
Recognize, Decentralize, and Cooperation.
✓ Table 9 – 3 provides a great laundry list of what a High Performing Team looks like. pp. 168 –
169.
✓ We also provide each student with a copy of our university’s Vision and Mission Statements and
ask how well we are doing in meeting our goals. We record their reactions anonymously and
forward them to our department chair.
Related AOL 6 Text Information to Support Your Class Discussion:
o Discuss how leaders can manage the “grapevine.,” p. 165.
o Share your personal experiences with the students concerning a manager/leader who “used”
rather than “abused” her/his Psychological Size and how it impacted your work morale. pp.
156 – 159.
o List the traits you have experienced with leaders who were/are effective communicators in
your career. pp. 346 – 349.
NOTE: We routinely research the subject of our specific case assignment to determine changes in
vision, mission, leadership team, new product development, financials, current national/global
news events, etc., prior to the class discussion. An example of this is found in the Introduction
section preceding our suggestions for using Case Analyses in your class. We have used Hewlett-
Packard as a sample for all the cases since this form of organizational information is fluid and
possibly time sensitive.