Where did Carlos Ghosn go wrong?

Carlos Ghosn, the high-flying chairman of Renault, Nissan and Mitsubishi alliance - feted for leading one of the corporate history’s most successful turnarounds - was known for his connections and relationships. As Ghosn grew in power and stature, several of those relationships changed course. All but one. Ghosn’s former colleague at Renault summed it up well – “The one thing that has never changed is Ghosn’s relationship with money. He always thought it was a measure of success.”

That relationship seems to be at the heart of allegations that have led to Ghosn’s downfall.

Ghosn early years, attributes and success

Born in Brazil, to Lebanese immigrants, educated in France and working in Japan, Carlos Ghosn – with his mastery over five languages - was as international as a leader could be. Cultural malleability aside, two qualities differentiated Ghosn from other international leaders – ambition of unimaginable scale and a ruthless focus on delivering results. His radical restructuring at Renault (that earned him the moniker Le cost killer) and his now world-famous “Nissan revival plan” that rescued Nissan from near bankruptcy were two examples of just how focused he was in delivering results. 

Ghosn was smart enough to merge his ambition and results-orientated personality with more humane leadership attributes – relatability, active listening skills, communication with all stakeholders including with gemba – the factory workers, a balanced composure, “out-of-the-box thinking”, and an extraordinarily inspiring personality (“He could make you feel you could do the extraordinary”). Ghosn was an excellent problem solver too – he focused on people’s strengths refusing to be bogged down by their weaknesses. 

This aggregation of near-perfect leadership attributes helped Ghosn stitch almost impossible deals like the unlikely corporate alliance between Renault, Nissan and Mitsubishi, organizations that were otherwise at the antipodes of organization culture. Such heroic feats catapulted Ghosn to the heights of corporate success.

Ghosn transforms

As Ghosn grew and reached the height of his powers as the CEO, outsiders saw a gradual change in him. He grew distant from various stakeholders – reducing his grasp on problems and frustrating key stakeholders. He grew less patient, drawing criticism that he changed from collaborative to autocratic personality. Ghosn changed in his perspective too – from a geeky boss in ill-fitted suits focused on others and their problems to a sharp-suited corporate boss focused on personal reputation and preserving personal legacy.

Cut a long story short, the problem-solving, hands-on results-focused “angelic” Ghosn appeared to have transformed to a lifestyle focused “demon” preoccupied with personal wealth and societal status. 

What brought about such a drastic transformation?

The Core of leadership

At the core of every human being is a moral compass. A combination of nature (genes and brain wiring) and nurture (upbringing and life experiences) shapes this internal moral compass - and leads to gradual evolution of our core values. This moral compass determines our deepest motivations and manifests itself in our external behaviors.

There are two extremes of this moral compass that keep leaders in balance -

1.      Outward driven Moral compass- Individuals who have a 100% outward-looking moral compass tend to have external attributes - money, perks, status, job titles, materialistic attributes, acceptance from others - as their sole source of motivation.

2.      Inward driven moral compass - Inward looking individuals have a deep internal purpose that inspires them – they use external attributes merely to meet this purpose.

Let’s use money as an example. 100% outward moral compass driven individuals will treat money as a source of their identity or success and will tie their self-image to money. Such individuals will be motivated to go to any length to hoard as much money as possible regardless of need – sometimes leading to self-destructive or demonic behaviors. Money is an end in itself for them.

100% Inward-focused individuals first find a purpose - to serve the society or some other cause they believe in – and then seek money to meet that purpose. Money is a means to meet the end of their purpose.

Almost no human sits at either extremes. We all exhibit a mix of inward (altruistic) and outward (demonic) traits. If all of us - including you, me and Carlos Ghosn – have both traits in some combination, what decides which trait - our altruistic side or the demonic one - wins and finally translates to our behavior and actions ? That’s where external factors in our environment come into play.

External factors

The environment (culture, society, social mores, policies) plays a powerful catalyzing role in bringing out inward or outward tendencies.

1.      Coaches and especially mentors serve as sounding boards and play an important role in keeping leaders grounded. Work environments that facilitate/encourage such mentorship or coaching fan the altruistic tendencies of leaders and the inward compass gradually starts taking charge.

2.      Likewise, well-established governance, clear HR procedures for investigating grievances and strong support for whistleblowers helps keep a watch on demonic tendencies.

3.      Equally importantly, an organization culture that is built on transparent communication, respect for individuals, psychological safety nets for failure and a system that rewards behaviors - not just “results-at-any-costs” - goes a long way in keeping the outward compass – and demonic tendencies - in check.

Carlos Ghosn compass and external factors 

Ghosn clearly didn’t start out with a malicious intent of defrauding governments of taxes – if anything, he started his career at Renault on a very promising note and displayed all attributes of a successful honcho. Somewhere along his journey (circa 2005 when he was at the height of his powers as the CEO), power had gone to Ghosn’s head– said differently, his outward demonic tendencies got the better of him destroying an otherwise promising career.

Why? Lets now analyze Ghosn.

It is almost certain that Ghosn’s moral compass had a higher percentage of outward-focus–

1.      He clearly cherished money (“He always thought it was a measure of success”),

2.      External display of status mattered a lot to him (“With barrage of secretaries announcing his arrival, Ghosn’s visits resembled visits of head of state”),

3.      He craved external acceptance especially by heads of state (“Ghosn loved holding press conferences alongside heads of state”)

4.      He focused on self to the point of being ostentatious (“A new Louis Vuitton suit was ordered for each motor show and the PR team worked more for him than for the organization”). 

There is no denying the role of Ghosn’s strong outward-focused moral compass in his downfall - but external factors played a key role in accentuating the manifestation of that compass.

Ghosn was the all-powerful chairman and CEO – such a shameful accumulation of power is ill-advised for any setup, leave alone a Fortune 500 organization. The governance bodies of the auto giant prioritized his performance and his ability to deliver stellar results over the means he used to deliver those results – a costly oversight.

Nissan executives clearly disapproved of several of Ghosn’s actions but feared him and stayed mum. Ghosn likely treated the “no-questions-asked” culture at Nissan as tacit acceptance of his actions – this culture added fuel to his moral compass fire. 

There seems to be no visible focus of mentorship – neither did Ghosn make any attempts nor did any of the organizations talk Ghosn into cultivating one. 

Left with low to no oversight and zero inhibiting external factors, Ghosn’s inherently strong internal outward compass eventually reaching demonic proportions and his discretion quickly degraded to indiscretion.

Epilogue

As global leaders watch in horror at the downfall of the once-invincible Ghosn and wonder what went wrong, they would do well to recall Sir John Dalberg-Acton's quote - 

Power corrupts and Absolute power corrupts absolutely. 

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Sections of this article have been taken from the Financial Times article on the downall of Carlos Ghosn

I would love to hear your views. Please leave a comment in the comment box below so I can learn from your experience.

Raja Jamalamadaka is a Harvard educated TEDx and corporate speaker, entrepreneur, mentor to startup founders, and winner of "Marshall Goldsmith award for coaching excellence" for being top 100 coach to entrepreneurs. He was adjudged a LinkedIn Top Voice 2018 for being one of the platform's most insightful and engaging writers. His primary area of research is neurosciences - functioning of the brain and its links to leadership attributes like productivity, confidence, positivity, decision making and organization culture. If you liked this article, you might like some of his earlier articles here:

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