Carlos Ghosn Was a Superhero in Japan Before His Fall

(Bloomberg Businessweek) -- For a country renowned for its cultural insularity, Japan’s business world has been remarkably open to foreign influences. In the early postwar years, the fabled management consultant W. Edwards Deming became a demigod there, introducing quality-control principles that would catapult the nation to the forefront of global manufacturing by the 1970s. Later, outsiders from the West such as Howard Stringer at Sony Corp. and Christophe Weber, the current chief executive officer of Takeda Pharmaceutical Co., would rise to the highest echelons of corporate Japan.

Yet it’s safe to say the country had never quite seen the likes of Carlos Ghosn. The brash Renault SA executive showed up in 1999 as the French carmaker combined with Nissan Motor, a company with massive debt, heavy losses, and a badly damaged brand. Renault was then a middling European automaker with a far-from-inspiring future. Ghosn had a reputation as a savage cost-cutter and first-class intellect, but he was an unknown figure in Japan. Even he would later say that he gave this salvage job only a 50-50 chance of succeeding.

Stylistically, Ghosn was the antithesis of the blue-suited, laconic business leaders who streamed out of Japanese universities during the boom years, valuing consensus-led decision-making, selfless dedication, and, above all else, decorum. He was a flashy, cosmopolitan executive who wore European eyewear and expensive tailored suits and spoke five languages.

His star power and fondness for blunt public criticisms and bold pronouncements were like a narcotic for the Japanese media. More fundamentally, with his Brazilian and French citizenships and partial upbringing in Beirut, Ghosn embodied what a Japan in the economically stagnant late 1990s craved: a globalized mindset and boldness to meet the economic challenges of a rising China.

And he delivered. Theirs was a union born of desperation, but Renault did revive Nissan, making Ghosn the oddest sort of national hero. Perhaps the most Japanese thing about him was his fixation on precise targets, continuous improvements, and cost-cutting. If you missed a number or blindsided the boss, watch out.

It wasn’t long before he was feted in manga comic books, mobbed for autographs during plant tours, and generally heaped with national adulation for saving a car company once given up for dead. He also became a global business celebrity. At glitzy auto shows the world over, his Davos Man vibe and turnaround track record made him the envy of car execs from Detroit to Stuttgart.

Ghosn’s magnificent career expanded at breakneck speed as he rose to chairman and CEO of Renault, as well as chairman at Nissan and Mitsubishi Motors Corp. after the car alliance broadened in 2016. He helped oversee this unlikely coalition as it became one of the world’s largest carmakers. Inside Japan he also became famous for his compensation packages, which, while reasonable by Western standards, dwarfed those of typical Japanese CEOs.

But the hero worship has faded. In 2016, “Le Cost Killer” threw a lavish party, replete with 18th century-costumed actors, at the Grand Trianon at Versailles to celebrate his civil wedding as well as his wife’s birthday. That didn’t look so good back in frugal Japan. Perhaps more dismaying was that, as the years unfolded, Ghosn seemed less like a brash outsider and more like an inept insider, just as the Japanese auto industry—from air bag maker Takata Corp. to Mitsubishi—was reeling from multiple scandals involving product quality and falsification of records.

Last year, just months after Ghosn handed the CEO reins to his successor, Hiroto Saikawa, Nissan announced a recall of 1.2 million vehicles in Japan after regulators discovered unqualified inspectors had approved vehicle quality. The practice had gone back years.

More sordid revelations were to come after Ghosn was detained on Nov. 19 by Japanese prosecutors on suspicion of understating his compensation in regulatory filings. He’s now being characterized by the country’s media as a garish, free-spending gaijin who used corporate resources to buy homes and bankroll a lavish lifestyle. Turns out the Japanese are like everyone else: Heroes who enjoy massive adulation on the way up get heaps of scorn on the way down.

Ghosn may have finally run out of turnarounds, but his place in Japanese business history seems secure, whatever unsavory footnotes will be attached. He saved a car company and did so with panache. He inspired a nation that needed a lift. Even if they’ve fallen out of love with him, that achievement won’t soon be forgotten.

To contact the editor responsible for this story: Howard Chua-Eoan at hchuaeoan@bloomberg.net

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