Carlos Ghosn started by underlining that established companies have to support long-term strategy with short term results. This is a delicate balance, one his group experienced when starting to invest in electric cars during the financial crisis. There is an opportunity cost for long-term investments.

When the group invested in electric cars – remember that this was in 2007- 2008, not the best moment to make long-term bets – 1 billion euros per year for the three-four following years, these 1 billion euros were being taken from other investments, Mr. Ghosn said. His group made the bet it would be the technology of the future at the moment when it was going to strip the development of pick-up trucks, normal sedans, the development of diesel engines, etc. He considered they had to make the call. They had to make the call between the immediate need of the company, versus a certain vision, always risky, for the long-term. In a certain way, Mr. Ghosn asserted, “if you are a rookie CEO, forget about it. If you don’t – if you have shortterm results that are not convincing, forget about it. You can do it if you have some experience, you gain some kind of trust from the market that this is something that is very solid. If not, you cannot afford it. The pressure is too high”.

Stanislas Pottier reminded how multicultural the Alliance Renault-Nissan-Mitsubishi is, and wanted to know more about how to manage innovation in such a group. On innovation, the diversity of his group has been an asset, Mr. Ghosn said. For example, the development of batteries was compatible with the Japanese company, while digitalisation was more advanced at Renault. Add in China and Russia, where the group has major operations, and you can use the strengths of various cultures. Contrary to its competitors such as Toyota and Volkswagen, his group does not have one dominant culture. “We are diverse. We are not Japanese, we are not French – we are both, and we are proud of it.”

So, when you have a Group made by Japanese company, French company, all of them valorising diversity coming from China, from Russia, from India, etc., you are going to be able to capitalise on where people are very agile, where people are going to be reacting. At the moment when we have so much innovation coming our way, through artificial intelligence, to ndigitalisation of the company, total connectivity of our products, the car becoming a kind of personal mobile space where you are going to be able to do many things, this is going to require so many technologies. To be a diverse group, even though it is more difficult to manage, it is an opportunity. It is an opportunity. It gives you strength, and it is, for sure, an asset for longterm performance, Mr. Ghosn added.

The main human resource challenge for his group does not come from artificial intelligence, but from the impact of digital technologies on workers. You cannot replace 50-year-old engineers, since they have a lot of experience, but you can train them to do not just what they used to do, but something which is completely different. For the moment new technologies are not destroying many jobs, but some of this may be hidden by growth, Mr. Ghosn emphasized.

Asked about differences in Japanese and European work cultures, he said that in countries with a culture of loyalty to employees companies may go the extra mile to reskill them. On the other hand, in countries where this loyalty is relatively low, the strategy may be to reduce the work force and hire new workers, but this is limited by the types of people available on the market. For example, there is a scarcity of engineers, software and computer experts, and data managers, so you either have to go where these people are – for example India – or upskill your existing employees.

« Diversity is tough to manage, but it can deliver a lot of performance for your company. »

Carlos Ghosn

« Diversity is tough to manage, but it can deliver a lot of performance for your company. »

Carlos Ghosn

GOVERNMENTS AND POLITICAL TRENDS CAN BE DETERMINANTS

Stanislas Pottier emphasized the role of regulators, and Mr. Ghosn confirmed that a crucial relationship for a large group such as Renault-Nissan-Mitsubishi is with governments. They have a lot of impact on business since they can drive technology choices. For example, diesel represented more than 50% of cars sold in Europe because government policies favoured it. This was not the case in the US or Japan, in spite of having the same carmakers. In China more incentives are going to electric cars, so you have to adapt your strategy to meet that demand.

While companies have to pay attention to political trends and how they affect technology, consumers do not. They do not care about the engines in their cars; they focus on pricing, cost of ownership, resale value, and similar factors. But if governments are signalling that changes are coming – for example, the phasing out of diesel, it will influence their choices. So guessing where politicians are going and what the trends are is very important so that you know which technologies to support, said Mr. Ghosn.

Autonomous cars are the next big technology for which governments will influence consumer choices. Isolated incidents of accidents in prototypes will not untrack this. Worldwide 1.4 million people die from car accidents, which is almost as many as suicides (800,000), crime (500,000), and wars (300,000) put together. Autonomous cars could reduce this by 90%. “Because you are giving the car to a computer. It’s not going to sleep, text, or drink, so most of the reasons for car accidents are going to disappear. Politicians are realizing that this is going to improve road safety, so it will come”, he insisted.

Concerning the day’s theme of long term versus short term, Mr. Ghosn said that boards of directors have a major role to play to assure that companies have a viable long-term strategy. This has to be married to the short-term strategy. Increasingly, strategies where major societal concerns are successfully integrated will be more readily accepted by boards and shareholders.

However, while societal issues and investor and shareholder concerns may be the same around the world in the long term, they are not in the short term, said Mr. Ghosn. For example, in the US the new administration lowered emission standards, but this did not change his group’s policy, since in the long term this will be rolled back. Most investments will have an impact four or five year down the road, so you need to have a strategy for the long term and find the best way to get there through the short term.

« The crucial questions are, what we are going to do and what we are not going to do; and what we are going to do internally versus what we are going to ask our suppliers to do. »

Carlos Ghosn

« The crucial questions are, what we are going to do and what we are not going to do; and what we are going to do internally versus what we are going to ask our suppliers to do. »

Carlos Ghosn