Published on April 1st, 2018 | by Maarten Vinkhuyzen0
Renault–Nissan Merger — A Good Idea, Collaboration More Important
April 1st, 2018 by Maarten Vinkhuyzen
Bloomberg recently reported on rumors that Renault and Nissan are in talks to come to a single stock notation on the exchanges. It would make things easier and create extra shareholder value. But it is not a goal, just a tool to reach their goal.
Carlos Ghosn will reach the age of 65 next year. Most top executives with a resume like he has stop at 60 to enjoy life and have some nice functions on the boards of interesting companies. Carlos Ghosn just signed on for another 4 years, with the explicit goal of making the Renault–Nissan Alliance irreversible.
With recent examples of the splits of Ford–Volvo, GM–Saab, and Ghosn’s often cited example Daimler–Chrysler, single ownership is no guarantee for an irreversible merger — something the recent sale of Opel–Vauxhall to PSA after 90 years of GM ownership underscores.
Ghosn has remarked on the many differences in culture, history, national pride, and company pride that make a merger difficult. The last 15 years, he has worked on building connections and understanding between the two companies, always emphasizing that they are two independent companies and equal partners in the Alliance. Whatever the share and voting structure of the ownership, one partner should not dominate the other.
Ghosn is probably the champion of communication between various parts of the organization. He started a reorganization by creating Cross-Functional Teams (CFT). These are teams made up of people from key functional sectors in the business — for example, someone from Marketing, Human Resources, Engineering, Manufacturing, etc. Importantly, this includes members from different levels in the companies’ hierarchies. This brings knowledge and creativity from different parts of the organization together and can lead to new solutions for the problems of the company. Ghosn combined this with laissez-faire leadership and cross-cultural management.
To build Renault, Nissan, and Mitsubishi into a single organization, the Renault-Nissan Alliance BV in Amsterdam functions as a coordinator of the activities of the member organizations. On September 15, 2017, it launched the mid-term plan Alliance 2022. The three alliance members followed the next month with their own mid-term plans to fulfill their part of the goals of Alliance 2022. Nine members of senior management of Renault and Nissan are appointed Alliance executive/senior vice president and they are leading mixed teams to accelerate the convergence in nine key operational areas. This is again Ghosn’s favorite way of integrating organizations with Cross-Functional Teams.
The three separate companies will still exist in 4 years, with their own history, culture, and pride. But there will be so many cross connections that functioning as an independent organization will no longer be possible. There will be one engineering department, one production and manufacturing department, one human resources department, one purchasing department, etc. These changes are easier to implement when there is a single owner structure above the three companies, but that is not really needed.
The example of Royal Dutch Shell shows that it is not necessary to have a single owner structure. From the creation of the joined company in 1907 until the restructuring in 2004 both mother companies, Shell in the UK and Royal Dutch in the Netherlands, kept their legal structure and their listing on the stock exchanges. The only activity of these two companies was owning 40% (Shell) / 60% (Royal Dutch) of the single joined company.
Applied to the EV future of the Alliance, these CFT can bring new élan to the design of the next generation of electric vehicles. Nissan can use a CUV/SUV in the USA with the Outlander powertrain. Renault could use the Nissan ePower in its Twingo. Mitsubishi could use a successor of its i-MiEV based on the Twingo ED (known as the Smart ForFour ED). That’s just to name a few examples of cross fertilization that further cooperation makes possible.
And anyone interested in EVs and following these three companies can think of a dozen more interesting developments.