Lee Iacocca

And

Carlos Ghosn

Pavithra Muthana
 Introduction

Both Lee Iacocca and Carlos Ghosn are from very well known automotive industries.
While Iacocca ails from the 1980’s, Ghosn is from the more recent past of the 2000’s.
Iacocca having worked at Ford Motors where he spent a majority of his career has been a
pioneer in the auto industry. His experience with Ford later helped in bringing about a
breathtaking change in the history of Chrysler. Turning around a company from the brink
of bankruptcy to a profit making company, he made history in the 1980’s when the
economy was still up coming. Ghosn on the other hand, revolutionized the way a
company worked in the more recent times where he brought about a historic revival of
not just Nissan, but Michelin’s South American unit and Renault too. Both being from
immigrant backgrounds, with a drive to succeed, and excellent upbringing, these business
leaders have shown how a leader is made and not merely born.

Growing Up

Lido Anthony Iacocca was born on October 15, 1924, in Allentown, Pennsylvania, the
son of Italian immigrants Nicola and Antoinette. Motivated by the pressure of an
immigrant family, Iacocca was driven to be the best. Growing up, Lido learnt many
significant lessons of leadership and responsibility the hard way, showing him that life
wasn’t going to be fair or easy. He believed that formal learning could teach a person a
great deal, but many of the essential skills in life are developed on your own. Iacocca
grew up learning the nuts and bolts of business from his father who worked as a hot dog
restaurant owner. Iacocca looked up to his father who taught him about the
responsibilities of money and the need for a strong drive and a great vision in order to
build a thriving business. He earned an undergraduate degree in engineering from Lehigh
University and later a master’s degree from Princeton University. Even as a teenager,
Iacocca decided that he was going to be an automobile company executive and focused
his studies in that direction. He secured a much sought-after engineering trainee job at
Ford Motors in 1946 right after his undergraduate degree, but put off his start until he
completed his master's at Princeton. He took up a course on the fundamentals of behavior
that helped him later at work to hire the right people. His key characteristics of leadership
in participating in the school elections, his ability to concentrate and prioritize his course
work, and his drive to be the best brought him all the laurels. His belief in the ability to
concentrate and use your time well is everything if you want to succeed in business or
anywhere was one more of the key factors that was prominent during his educational
term.

On the other hand, Carlos Ghosn, also the son of immigrant parents from Lebanon was
born in Porto Velho, Brazil, on March 9, 1954. His grandfather – a genuine pioneer with
a taste for taking risks was greatly admired by him. Although he never met him, he did
inherit his values. His father, Jorge, took over an air travel business and eventually kept
shuttling between Lebanon and Brazil. When Carlos was six, he returned to live in
Lebanon with his mother and attended a very prestigious Jesuit Institute, College Notre –
Dame. He was an exceptional student with the best of education. A liking towards
languages helped him master Portuguese, Arabic and mainly French which gained him
entry into the Mecca of science – ‘Ecole Polytechnique’ where he graduated with an
engineering degree and then went on to study at ‘Ecole des Mines’, graduating in 1978.
They lived on math courses and Ghosn believes that mathematical excellence is the
primary criteria for success. His education gave him a great deal including the ability to
move quickly from one issue to another and grasp essential points. A fondness for
precision, an aversion to approximation and the resources to take up intellectual
challenges was all evident as he went up the ladder in the later years. He also learnt the
value of hard work, the necessity for discipline and organizational skills. His upbringing
at various places even from a very early age helped in giving him an exposure. He had
always felt different and owing to his upbringing and there was always a need to adapt to
the environment and culture that he was in. Thus began his career with Michelin right
after his graduation from ‘Ecole des Mines’ where even with an excellent background, he
had to learn everything from scratch.
 Strategic Inflection Points

Joining Ford as an engineering trainee in 1946, Lee Iacocca soon moved from his branch
of engineering to the fast paced world of sales. His tenure at Ford taught him numerous
keys to management. The importance of risk taking at the right time, believing in oneself
and taking a decision, being a motivator to a company of eleven thousand employees,
being a good listener to his subordinate’s opinions and most importantly, being an
effective communicator. In 1964, he launched the Ford Mustang, although he faced many
challenges in convincing the board of its design to suit the American market. The
Mustang, thanks to brilliant styling and marketing, brought about a new wave of sports
cars and set a first-year sales record for any model giving a name to the generation. He is
seen as the Father of the Mustang contributing to its tremendous success. His patience
was paid off when he was made the president of Ford in 1970. In 1960 Iacocca was
named Ford's vice president of the car and truck group, executive vice president in 1967
and the president of Ford Motors in 1970. He earned a reputation as one of the greatest
salesman, always selling, whether products, ideas—or himself. In 1978, his life took a big
turn when he was fired from Ford by Chairman Henry Ford II for the mere reason that he
might take over the company, despite Ford posting a $2 billion profit for the year.
Although this left a deep scar on Iacocca and his family, Iacocca was not out of the car
business for long. Five months after his dismissal, he joined Chrysler as the President and
began transforming the company that was in deep trouble.

While Lee Iacocca spent his years at Ford learning the nuances of the business, Carlos
Ghosn a young man out of one of the best institute started his career as a management
trainee with the French tire maker Michelin. Soon he was managing a Michelin plant in
Le Puy, France. He was promoted rapidly through the Michelin organization, rising to
become head of research for the development of industrial tires by the mid-1980s. He
was then asked to return to his Brazilian homeland and head the company's problem-
ridden operations there as chief operating officer. At just over 30 years old, Ghosn was
responsible for a continent-wide manufacturing operation that needed to be brought out
of the pit. As a chief operating officer - CEO at Michelin of North America in 1988, he
identified the reasons of its failure and then began to bring it back. The South American
financial markets were turbulent during those years, and Brazil suffered from severe
inflation. Also, their competitors – Firestone, Goodyear and Pirelli had all been on the
scene longer than Michelin. Ghosn succeeded brilliantly by a strategy where he changed
the organizational structure of Michelin's South American operations, using a method
where he formed working groups consisting of people from different sections of the
organization, and from different countries. This way, French engineers met with Brazilian
purchasing managers to plot the development of a new product. This resulted in
improvements that had been missed when each department had acted in isolation. This
also showed that communication within the internal chain of command made a huge
difference to the decisions of an organization and in turn this affected the growth. Within
two years Michelin's South American division had turned a profit making unit showing
the first of his many successes. Ghosn became the president and then the chairman in
1990.In the United States he engineered a merger with domestic tire maker Uniroyal
Goodrich, and dealt with unionized Uniroyal Goodrich employees not by confronting
them, but by convincing union representatives that the flexible work rules were in the
best interest of employees on the factory floor. Here he had to learn to be an American
CEO adapting to the place and the people. Despite his track record, there was no
advancement at Michelin since it was family-owned, and its head, François Michelin, had
decided that his son Edouard as his eventual successor. In September 1996, he said
goodbye to Michelin and joined the money-losing French automaker Renault headed by
Louis Schweitzer, the CEO.

Success and Failures

Iacocca changed the face of Chrysler, bringing it from a sluggish moneymaker to a highly
profitable business. Chrysler was in total chaos with no coordination, no team work,
liquidity crunch, low morale and poor quality thereby losing consumer loyalty. Bringing
about numerous changes in the organization structure, he played a key role in its
transformation. He downsized the organization to a large extent, and reduced the expense
to a much lower break-even point and cut down costs and helping in its recovery and
growth.

He won an approval of a $1.5 billion federal loan guarantee in with the government in
1979, which were to be repaid starting the following year. Thus began his mission to
fight his way out almost like an economic equivalent of war. He began by setting an
example of leadership by reducing his salary to 1.00$ a year. By equality of sacrifice,
every employee contributed to the upcoming of Chrysler taking Iacocca as a role model.
His trust in the people helped them get through the rough times together, making them
believe that they could truly bring about the change. Iacocca brought in a president to the
board of directors to help in bridging the gap between the blue and white collar workers.
In the early 1980s Chrysler issued the K-car that was later improvised into the minivan
that became a best seller. Just as the Mustang reestablished the sports car for Ford, the
minivan was loved by the young family in need of room and efficiency and this
revitalized Chrysler. His team comprising of Steve Miller and Jerry Greenwald did a bulk
of the work in chasing the banks to strike a deal for the repayment of the loan and
endorsed a cheque for $4, 86,750,000, proving that the New Chrysler Corporation was in
business to stay. In 1982, things slowing began to pick up and good things began to
happen. The reduced their break even point all the way down to 1.1 million units and by
late 1982, as the economy began to heat up, so did the car sales. Finally, when the year
was over, they began to show profits and were no longer a ‘cash- starved ’, ‘struggling’,
‘financially troubled’ company but the nation’s number three auto maker. On July 13th
1983, exactly five years to the day since he was fired from Ford, Iacocca announced a
loan payback to the government making him a star and an achievement of an American
dream. Since then Chrysler has moved on to be amongst the top automotive company
upholding the name and values of Lee Iacocca.

Ghosn joined Renault in 1996 and saw that the company had several set backs of failure.
It was a centralized company where there was lack of communication, low morale and
discussions were done about everything and nothing as opposed to action and
implementation. Ghosn set out a plan of cost reductions in practically every area going
over everything with a fine tooth comb. He setup cross functional teams, presented
simplified standards and specifications to the suppliers and a decision was made to make
Renault’s prices more competitive. A losing a factory in Belgium was closed down
earning him the name – Le Cost Killer. He set benchmarks paying attention to
productivity and quality thereby guiding the company to make a comeback and Renault
flourished becoming the best selling brand in Western in 2000. In 1999, looking out for
contenders for a merger, Louis Schweitzer chose Nissan, injecting $7 Billion into this
deal. There were numerous risks involved considering the language, the place and the
culture but what Ghosn, as the CEO, had to do was to reawaken the passion, reconstruct
the vision, rediscover the rhythm and put things in place. What they needed was fire,
intensity and light. Ghosn assembled a team in Japan consisting of open minded,
competent, enthusiastic people from the France division of Renault with the complete
support from Renault itself. His appointment of Shiro Nakamura- the designer who
worked with Isuzu was initially seen as an outsider, before it resulted in new designs,
entering a unique market consisting of mini- cars and small vehicles. His strategy was to
make his team adapt to Japan and help the men and women of Nissan straighten out
Nissan rather than making them change to the European- French ways. On examining
Nissan from every angle, inside and outside Japan, suppliers, factories, union members
and customers, Ghosn figured that there was no vision, no strategy, no priorities and no
measuring tools. Also, the management was in complete chaos with absolutely no
deadlines and did not work with an aim to get profits. Ghosn implemented what people
called it – his method of cross functional teams to bridge the gap of communication and
broaden vision and ideas. He also announced the Nissan Renewal Plan on October 18th
1999 that included cutting purchase cost by 20%, closing five factories eliminating
almost 21,000 jobs and keeping fewer and simpler factories, freeing up capital by selling
the company’s shares to new shareholders reaching a goal of 500 billion yen to pay off
debts thereby dismantling the ‘keiretsu’ network where the companies weaved
themselves into a web of financial, human and business relationships. All this came as a
shock treatment to the Japanese who saw this as very precise, extremely factual and
highly deadline oriented. Ghosn was given the title of president at Nissan in 2000. The
day after he was given that post, Ghosn faced a tense annual meeting with the company’s
shareholders, one of whom criticized him for not having mastered the traditional bow
common in Japanese business circles. Ghosn responded calmly, with the financial figures
and business trends. Nearly bankrupt before he came, Nissan returned to profitability
within the year had is no longer seen as a sinking unit, but as a company that can grow to
great heights.

Values that make a leader

The values that Iacocca held was what helped him throughout his working tenure.
Iacocca was popular for his bold decisions and risk-taking abilities. However, he felt that
every business and every product had its own inherent risks that had to be overcome to
achieve success. He was proclaimed as a visionary who could see far beyond the day-to-
day activities of business and always looked at the big picture. Be it fighting for Chrysler
or his loyalty to Ford in even at times when the company began to turn into a
dictatorship, he stood by his morals setting a very high standard for himself. His choice to
stay on at Ford Motors even as he knew its short comings taught him the integrity needed
while dealing in an organization. Since Chrysler needed downsizing, there were many
instances where he had to personally tell employees the inevitable. However, he
empathized with them having been through the same keeping in mind his one goal to
revive Chrysler. This contributed to its success. He always thought differently from the
others and came up with innovative ideas. He also spoke up for what he believed in and
voiced his opinion in any changes needed. The redesigning of the Mustang to suit the
customers even before its production and the quick corrective actions that he took before
the launch of the K-series were achievements that have made history to this day. The
Mustang would have been a failure if it had been launched with the original ‘big built’
design. He was not afraid of taking unpopular decisions to solve major problems, bring
Chrysler out of the brink of bankruptcy. Iacocca's success could be attributed to his
ability to adjust to any kind of situation very quickly, adapting to the environment with
ease, and relentless questioning. His motivational act of cutting his salary to help in
Chrysler’s rebirth set an example to the other employees. This is a sign of a true leader
with character and values making him the symbol of success.
While Iacocca held values of integrity and loyalty in addition to various others, Ghosn
was a man who believed in looking at the facts and reality and then moving towards the
theory. His ability to actualize and reason with the employees at every level helped him
to find the pit holes in the organization and strategize for it. Also to be noted is his
innovation of cross culture functioning where the simple thought of bringing together
people with different ideas brought about such a drastic change. This shows values that
are instrumental in making a difference. His honesty in dealing with the Japanese, putting
across facts and figures in a very lucid way also shows his ability to lead an organization
with no hidden agendas. Most importantly, the respect shown for the Japanese culture in
adapting to their style of work, yet subtly bringing about a change wherever required only
for the sake of performance made a huge difference in winning their trust. However, he
showed steely attitude in making tough decisions right from the beginning in Brazil,
France and Japan with Michelin, Renault and Nissan respectively, focusing on how his
decisions would affect the organization in the long run, carefully making sure that the
sentiments of the larger public or his customers were not affected. He brought about a
different work culture owing to his belief in equal opportunity abandoning the system of
seniority. A true visionary with clear cut goals at every level has helped Nissan become a
global corporation.

Conclusion

Hard work, belief in yourself and the drive to excel makes a person achieve what he
wants. Iacocca had not only the above but a lot more qualities that has made him a folk
hero and will remain so for years to go. His upbringing and schooling being a backbone
to his life’s achievements teaches us many lessons that we can carry forward. His ability
to analyze and understand a problem and then take it up as a challenge to make it to the
top shows that success does not come at your doorstep, but it is to be pursued with a
vision in mind and a goal, taking the team with you along the way, guiding, motivating
them and standing up for them at every course of the journey. Believing in oneself is
something that every leader needs. But the belief that he can bring back a drowning
company to repay its loans and then rise to heights in a remarkable time is something of a
wonder. Carlos Ghosn on the other hand is one of the most efficient managers in the
world with extreme discipline in everything he does. His ability to analyze a problem,
pay attention to minute details and set up a completely new strategy has helped in the
revival of not just Nissan in a big way, but the Brazilian unit of Michelin and Renault
itself. Carlos Ghosn’s story shows how a man can reach heights by simply paying
attention to minute details, being through in every work aspect, adapting to every new
environment by first absorbing their culture and then working with to achieving goals
together. It also shows how goal setting, having a vision and adhering to the timelines
makes a drastic difference in any organization. We also learn the importance of
integrating. It helps you to understand the environment helping in development of one's
ability to listen, to observe, to compare—qualities that are very useful in managing. A
leader like Carlos Ghosn has brought out a change in the company by being a motivator
and a guiding factor in steering the company out of the dark. Both Lee Iacocca and
Carlos Ghosn with their unique attitudes and personalities have made history in the
automotive industry.

Bibliography

‘Iacocca – An Autobiography’ By Lee Iacocca with William Novak

‘Shift – Inside Nissan’s Historic Revival’ by Carlos Ghosn and Philippe Ries