Tsuru no hitokoe. The Ghosn case in 5 minutes

According to Japanese media, there are 2 versions of Carlos Ghosn. The old version, who was modest and saved Nissan, and a new version, the CEO superstar. The tale of 2 Ghosns gives sense to what was, both at the rise and the fall of Ghosn, extremely difficult for the Japanese to digest.

The beginnings

The old Ghosn arrived at Nissan in 1999, when the company was US$19 billion in debt. He put on a factory jacket and started talking to his employees, displaying a humble image. However, he tore apart the very identity of the then 66-year-old car manufacturer.

Japanese companies are often organised in keiretsu or associated businesses. A keiretsu is a sort of conglomerate that consists of a variety of industries; it typically holds banking, insurance, manufacturing, food, distribution, media and more businesses. Keiretsu support each other regardless; they order from each other, finance each other and promote each other. Nissan was no exception. Ghosn however removed Nissan from its keiretsu and started sourcing for parts and material cheaper elsewhere. He brought in a large team of non-Japanese confidants, closed 5 factories and fired 21,000 people. Within 3 years and with very un-Japanese practices, the company was profitable.

Against Japanese corporate traditions

Many foreigners fail when appointed to C-Level jobs in Japan; corporate culture is essentially different from Western governance. Ghosn looked beyond what could stop Nissan’s success. He removed the ever so Japanese lifetime employment and made room for younger managers. He stopped various research programmes and taught the company to focus on making money first. He paid people according to their achievements rather than their seniority. Finally, he hired foreigners who didn’t understand the intricacies of Japanese corporate culture. Difficult decisions, but as he was publicly credited for turning around a Japanese icon, he could afford to do so. These were the times of the good Ghosn.

Unfortunately, he was also much more flamboyant than the average Japanese shacho or CEO and, receiving a salary of almost US$17 million per year, he made a lot more money than his Japanese peers. Salaries, in general, are relatively low in Japan due to the country’s isolation and the lack of labor mobility with the rest of the world; Ghosn’s lavish and un-Japanese lifestyle was consequently criticised, well before the 2018 scandal.

Abenomics’ paradox

It’s easy to understand why the “new” CEO superstar Ghosn consumed his “goodwill credit”, but there was obviously much more going on: Japan was losing grip on Nissan in terms of ownership, technology and tradition. Renault was blamed for it and Ghosn was the public figure held responsible for it.

This phenomenon is at the core of Japan’s paradox today. Unless the country, in need for economic reform, globalisation and immigration, takes swift action, its GDP will decrease dramatically; at the same time, corporate culture changes very slowly and is resistant to change. Ghosn’s rise and fall supports the conservatives and represents a true risk for further isolation.

Tsuru no hitokoe

One thing is clear: Carlos Ghosn disrupted, and Japan reacted. It is however not that simple to blame either one. The Ghosn case is not only about a person who might or might not have put personal gain before the interests of the company, it’s a culmination of identity and cultural conflicts.

In Japanese tradition, the crane or tsuru is a bird that stands for longevity and faithfulness, but when the crane sings, loudly and in a high pitch note, the Japanese use the expression tsuru no hitokoe, or the “crane’s word”. It refers to authoritarian, statements of powerful people. The expression comes to mind when looking at the Ghosn case.

(This article uses several publications as sources, but especially John Gapper’s excellent “What Japan Inc. really thinks about Ghosn, Nissan's maverick savior” published by Nikkei)
Authored by: Yves Helven