CEO Carlos Ghosn of Renault-Nissan Alliance on Innovation



>> On behalf of the entire Stanford
community, thank you so much for taking the time to talk with
us today. I'm delighted to get the chance to, to
have this conversation. I'd like to structure the interview around
two forms of leadership. Your approach to leading the global
alliance. And then, secondly, Renault-Nissan's,
leadership in both electric vehicles and autonomous
driving. Two things, I'll promise all my questions
won't be as long as this first one, and please excuse my,
my French accent. But, if we could go back to 1999, you were
the, the deputy CO of Renault, which at the time was, I
think, 44% owned by the French government. As the dean said, Nissan was hemorrhaging
money. I believe you, you found later only four
of 43 models that sold were profitable, that had lost domestic market
share for, for 27 years in a row. 27, 21 billion dollars of debt, Daimler
Chrysler, the world's biggest car maker at the time. >> You know, did their diligence, backed
out of an acquisition they, they said they would be better off putting five billion dollars in a shipping container
and, and put it in the ocean than investing in Nissan, Louis Schweitzer the CEO of
Renault told you he was willing to bet that company's future on the alliance with
Nissan. But only on a condition that, that you
would agree to lead the recovery. And I guess at a personal level your wife
and four children had just moved back to Paris
from the US. And you didn't speak Japanese. How did you think about that, that offer
to go, go to Nissan? >> [LAUGH]. >> Well look I think from time to time you have opportunities coming, you are not
expecting them. You just have to make a decision, you take
them or not. Independently of how much chance of
success you have, it's I would say irrelevant,
even if, I consider I have 10% of chance of
being successful, I would have taken it because, You know, we all want to make
something which outlasts us in a certain way, something where you're
bringing a strong contribution which is measurable, which is
visible where you can really you know say that there was
a before and after. And this was this huge opportunity. Obviously, it was a complete mess in my own life, professional life, personal
life. Because we were, you know, coming back
from the Unites States, settling in in Paris, you know,
buying a house, etcetera. Kids were moving to the French, to the
French system. All of a sudden tell them, we're gonna go
to Japan. And nobody spoke Japanese, nobody knew
anything about Japan. But, you need to make choice. I, so from the beginning this was a huge opportunity, obviously extremely
dangerous because you had no, certainty of any kind that you would,
you would prevail but I had no hesitation. I mean I, from the beginning I said, well,
that's it. That was, I was expecting something like this, to happen and, I took it
immediately. >> Can you, can you tell us a little bit about what your first day at Nisan was
like? What, what do you do in that situation? >> Well, you gotta be disappointed
because, you know, when you arrive the first day. I mean, first day, you arrive in Japan. You don't speak japanese, you know,
everybody who has been educated into the Western
system. The knowledge about Asia is pretty poor
pretty, you know, simple, simplistic. I didn't speak Japanese I didn't know too
much about Japan. I obviously had Japan in the back of my
mind because of the importance of Japan in the
car industry. And the first day I arrived, I, also, was
looking for my translator because without my
translator, I could not do anything. Just to get to know her, how do you make your phone call you know, what's the
name, list of name of the people that you need to meet first, people in the executive
company, the corporate officers. Where are the main location, the plant's
location of Nissan? What are the main technical centers of
Nissan? So I was, during my first, trying to establish just the communications
system, and the list of the places where I need to go, and
the people I need to meet. >> So, so I can think of a number of global consulting firms that,
that would've said that their core competency is to come
in and help you solve problems like this. You specifically didn't want outside
consultants? >> No. >> Why not? >> No. This is, this, I mean when you want to
turn around a company, you want to make sure that the
solution is coming from inside. I mean anything that looks like it's an,
it's an outside base solution. This is something which has been
fabricated by people coming out of the body of the
company. Maybe it's much smarter, maybe it's much
more adequate, but at the end of the day, everything is about
execution. And when it comes to execution, you want
people buying in. And people will never buy in as much as,
it is our plan, it's our own plan. So from the beginning I know I have been
contacted by so many consultant firms who wanted to
give a hand. Some of them proposed their services for
free. Even though it looks a little bit strange. I said no, because I wanted really the
plan to be Nissan plan. Made by Nissan, I mean I didn't even want
the Renault people to be involved into the internal,
the revival plan of Nissan. I want it to be done by the Nissan people,
mainly by Japanese people in Japan, but also the American Nissan people in the United States, European people in,
etcetera. So the solution comes from inside and
people would say, this is our plan and we're gonna
execute it. Maybe the plan would have been better with
a consultant. Maybe, it's not sure. But I can't tell you, when it comes to execution, you know, it could not have
been better. Because I had a 100% buy in, when the plan
was decided. And people knew that it was their own ideas, obviously remodeled, that were
going to be implemented. I had the complete corporate buy in. >> So, so can you tell us a little bit
about what you did differently or how you, how you, how you helped Renault help itself, or help Nissan help
itself? >> Well let me tell you. Let me the, the, no matter what is company
which is in trouble my experience shows me that you don't need to look for the
solution outside it's inside, it is, this is always
inside. You just need to look for it, obviously
solution is not unique. It's a bit of specific opportunities that
you're going to transform into a plan with priorities, with a timeframe, with
specific goals and with achievements. So I was just looking for it. I knew it was inside, I was looking for
it. And obviously the best way to look for it
is interview as many people as possible, particularly
people in critical process area. That's why you need to know a little bit
of industry, to know where you looking, where
you're looking for. Let me give you an example, 50% of the PNL
of the car company is purchasing. You know, I mean a Nissan has in 100 and
10 billion dollars sales a year. From the 110 billion dollars sales, you
have about 55 billion dollars of buying. We buy parts, we buy commodities, we buy services, we buy transportation, we
buy everything. So, if you don't buy well you can do miracles on anywhere you want, you're not
going to prevail. You need to make sure that your purchasing
process is in line, so number one, number one
priority. Number two, number two priority making
sure, for example, that you know exactly what
are the segments, on the market where you have the legitimacy so you can re-establish
your name. You can re-establish the brand into this
particular segment. So, you need, first, to, to establish what
are the priority, and then you say, okay. Why am I, even though I have a Keiretsu,
why my purchasing cost is much higher, than, for example, the Renault purchasing
cost, which was a smaller company? Why? Why Honda and Toyota is making so much
money, while Nissan, which is having the same work force, the same engineer coming from the a, same
university. Part of the same culture, did not get
results. So little bit little, you go to a very
common sense approach where you say, these are
the most important processes. Let me go and see the people who are in charge of the process or around this
process, interview them. What's wrong? What do you think is wrong? How can we fix it? Okay, so obviously solutions are going to
come like this. But, by listening to hundreds of people
into this process, I can tell you that the solution comes
very clearly. Now, people usually avoid the dramatic
solution. For example,we had over capacity nobody
want to talk about shutting down plants in
Japan. Why, because it is something which is
sacred, no, you know shutting down a plant in Japan is something that
nobody does, nobody do. I mean it's something that has to be
forced at a certain point in time. Dismantling the [INAUDIBLE]. Nobody's going to tell you [INAUDIBLE] is
not working. People are going to tell you, yeah, we're
buying at the higher price. And then you go see the people in the
[INAUDIBLE] and they tell you why they have to sell Nissan at the higher
price, than Honda and Toyota. So interviewing, asking question, in a
very simple way. And then it's gonna look, it's gonna look
very clear. People contribute to it, they may not like
the final shape of the, of the plan. But if you commit to results, everybody joined. >> So it, I mean it may look like common sense in retrospect but I, I think every
expert you would have talked to at the time would
have said hey, you know, there's the Japanese way of
doing business. >> Yeah. >> And, and, and this is how things are
done. And, and every class you would take in how to do business in a global environment
would say you respect local cultures and, and, but how,
like what gave you the confidence to, to challenge
the status quo? >> No, I am, I am not gonna challenge you
know, what you're learning at the university,
particularly telling you that, you know. But, but when you go and you are a
foreigner and you're going to Japan, you're going to Japan for
one reason, and that's it. It's turning around the company, period. That's what people are expecting from you. How much work, what do you do, if, if, if, if you have problems, if you have
remorse, empathy. Nobody cares. Fix it. That's it. That's the message, fix it. You accept the job, you have to fix it. We had, two main problems. One of the main problem of Nissan is that
we are $20 billion of debt in 1999, and no
Japanese bank, and you know how flexible Japanese bank can be
for a Japanese company, no Japanese bank wanted to lend
any money to Nissan. So we were facing a cash crunch. Okay, this is immediate death, okay. So we need to reestablish the thrust on it
and cut the debt, second you need to come back to
profit for ten years. Nissan had 1% average operating profit
while Honda and Toyota were around 7 to 10%. We had about 1% on return invested capital where our main competitors were more than
10%. There was something wrong. You need to re-establish, you re-establish
this. Put it, put it right. So I knew from the beginning that what was
expected from me is, fix it. Fix it. So if, if, when you know you need to fix
it, you, you can say, okay, I'm gonna make as many changes as necessary to fix the problem, nothing
more. Nothing more. So changing the habits, if there is no
obvious results, you shouldn't do. But when you know that fixing the company
is gonna force you to change some habits. You need to say it, you need to explain
why you are doing it, and particularly you
need to commit to the results, because people don't like
change as long as there is no commitment to specific
results behind the change. Now if you commit to specific results,
they may give you the benefit of the doubt, and that's exactly what
happened in the case of Nissan. As you know I spent three months building
the plant listening to the people, and everybody told me we cannot
shut down the plant in Japan. You cannot dismantle the Keiretsu in, in
in Japan. You cannot challenge the seniority system
in Japan. You cannot put younger people in top jobs
in Japan, diversity, etcetera, etcetera. I mean the list of, you cannot do this and
that, was huge. So I had two choices, first choice I
listen to all of this, then the consequence is, I take
back the family. I take back my bag. I go back to France, because there was
nothing I could do. The second one is, I need to fix it. Then, I need to say, okay, I cannot do
everything, but let's do the changes that are gonna
deliver results. So I have dismantled the Keiretsu of
Nissan. Not because I consider the Keiretsu was a
wrong solution, but I said the Keiretsu didn't
work for Nissan. It's working for Toyota. It's working for Honda. Good for them. It didn't work for us. That's why we're changing it. I challenge the seniority system by
saying, it's not I'm, I'm, I have nothing about people who are 50 or 60
or 70 years old. But I don't want a segregation against
younger Japanese people who have a lot of talent, and who cannot access the jobs of responsibility, even though they
deserve them. So I turn it around. I, I consider that we need to stop the
segregation against young people into the system, and always
with a specific objective. Keiretsu, again dismantling the cross
shareholding with many companies. I've done everything but every single
time, explain why. And particularly the most important thing,
I committed to resign. If one year after we started the plan, the
company would not be in the black, and I said we're gonna divide the debt of $20
billion dollars by, by two within the, within
three years term. And that the company growth would resume
after having 10 years of decline. And, I said if any one of these objectives
is not met, I'm out. And, obviously with me, all the members of
the executive company. So, this commitment, which was very
strong, because this was not a commitment in a board room, this was
a commitment on TV in front of the public,
so everybody knew that, you're gonna have to deliver,
or get out. give, give me and give us the benefit of
the doubt. The rest of the story, you know it. >> [COUGH] So, I mean, Nissan had gone through many strategic plans
previously and I think you famously said, strategy is five
percent of the answer and execution is, is 95%. So, so what does that mean, and how did
you actually, what did you do differently? >> Well, you know the, the five percent
yeah, I said, yeah, five percent of the challenge is the
strategy and 95% is the execution. This, I said it as CO of Nissan, I said it
also as CO of [UNKNOWN] and I said it as deputy CO of [UNKNOWN] when I said, the
first time, it was mainly in France. And I was to my, to the top management of
[UNKNOWN] in France. Because there was a tendency in the
company to spend too much time on strategy and leave the
execution for other people. And this is where I said, yeah, strategies fine, it's very important, but it's only
five percent. If you don't go to execution after this
the, the delivery and the promise of the company is gonna be
very weak. I really, I really believe it. Now it doesn't mean that strategy is not
important, but when you establish North. And you know exactly where north is for
the company. You've done something very important
because you're giving the direction. But if you don't start moving North, if
you don't start mapping, and establishing milestone,
you're never, you're never gonna be getting there. You're never gonna be getting there. You know, in the car industry, if you
noticed, when you see the evolution of our industry for the last 30 years,
there have been a tremendous change. A lot of companies which were number one,
number two, number three worldwide downgraded and weakened and a lot of
newcomers coming up. If, when you take a look to the new,
leaders of the industry, all of them have one
thing in common. Obviously, you have the Japanese, you have
Germans, you have Koreans, you have
Franco-Japanese, you have everything. There is one thing in common, is the discipline of execution and the importance
of processes. In our industry, at the end of the day,
yes, strategy is important. But at the end of the day, the most
disciplined organization, the, the organization which gives a lot of
importance to processes end up prevailing. Who's number one in our industry today? Toyota. Who's number two? Volkswagen. Who's number three depending if you
consider volume or revenues. Let's say it's between General Motors and
ourself, Renault Nissan. Who's number five? Hyundai. Hyundia Kia. What a change compared to 20 years ago. When you take a look to the classification
of this industry 20 years ago, it's a complete, it's a
complete change. What's in common for at least four out of
these five top companies? Big discipline in execution, a lot of im,
importance given to processes. It's not sufficient, but this is where the
difference is being made. >> [COUGH] One of the stories I, I liked
for your initial arrival in, in Japan was you decided the executives would've
been too far removed from, from the product, from
the car. And so you moved your executive meetings
to the test track. Can you talk about that a little bit? >> Oh, that, that's, I mean, our industry
is an industry around the product, and everything starts
from there and ends up here. It's, it's, I don't think you can consider
anybody to be at the top of our industry without a strong contribution in term of product
whatever it is, technology or quality, or reliability or a
perceived quality, or pricing. Everything is around the product. So, understanding the product is
absolutely fundamental. And, asking top management in our industry, no matter what is their
function. They can be key financial officer, they
can be specialists of HR. They don't have to be engineers and
especially have a good product. But the fact that they put themselves in
the shoes of the consumer, listen to the, the,
the advantages, the weaknesses, the
opportunities, comparing our product to the one of the, of competitors
is absolutely essential. [COUGH] So maybe back to what you talked
about for discipline, at Michigan, sorry, in
Michelin, your second job out of training was, as the dean said,
manager of a factory that, that made huge tires for
heavy equipment. I checked our most recent employment
report, and, and there were no factory managers, leaving
Stanford Business School. Are there things that you learned there
that, that affect your decision making process as the CEO of two
global manufacturing companies? >> Yeah. I mean, I, I I consider that the, what we call manufacturing today or mon,
the monozukuri. I use a Japanese term of monozukuri. Monozukuri is everything which covers, product planning, engineering,
manufacturing, supply chain. This is all the area of the company where
the product is born. Okay. Versus marketing distributing, selling,
financing, et cetera. This area of the company, particularly for
products which are not commodities, products which are changing all the time, absolutely
essential. And having, starting your carrier, in my opinion, starting your carrier in this
area where you are at the crossroad of many things turning around the product is
absolutely essential. I wanted to be in manufacturing because in
manufacturing, first you deal with people. Second, you deal with the product. Third, you deal with the supplier. Then you deal with quality. So everything in one place. And manufacturing the plant is, the on,
the first place where the product is born. Before the manufacturing, the product is
just a fiction. It's on a computer. It's on a design, but the first place where the product exists is in
manufacturing. So I wanted to start in manufacturing, and
frankly, I don't, I don't regret it. But I can tell you some of our top
executives both in Renault and Nissan, not all of
them, but some of the top executives, often come from a
background of what we call monozukuri, and a lot of them
from manufacturing. >> [COUGH] So, going on perhaps a decade,
of running simultaneously two, two global
companies, how do you get the stamina to, to keep going and to stay fit, you know, personally and, and
mentally and physically? Well, you know, [COUGH] somebody said,
with a little discipline, you do little things. With a lot of discipline, you do a lot of
things, and with total discipline, there is
nothing which you cannot do. There was a lot of discipline. I mean, obviously, because you're gonna
move from one word to the other, from one culture to the other,
from completely different company. You have jet lags, organization, people
are expecting you when you come down from a plane after 14 hours flight to be
fresh and ready for them. They're [LAUGH] they're not expecting the
CEO to come and say, oh my God, this jet lag he cannot answer a
question. They want you to be on the go all the
time. So this requires a lot of discipline. You have to organize yourself. If, if you know you're gonna do this job
and you accept the job, you have to organize yourself in
order to do it. It's tough, but there is a solution. There is, there is a solution for it. But it requires lot of choices, personal
choices. There are a lot of things you cannot do,
you know. There are a lot of things you can do, but
you gonna do them within a certain order. And, but, particularly with a lot, with a lot of discipline. >> Can you give us some examples of, of
how you, how you've done that personally? >> You know, I can, I can give you I can
give you my, my program >> [LAUGH] >> The most simple thing is give you my program for this week and next week, for
example. I mean just not to go. Yesterday I was, into the pre inauguration
of a new plant that Nissan is building in
Brazil. So a lot of people are gonna say, yeah,
lucky you. You were in Rio Janeiro/ You, you, you,
there's no complaint. [LAUGH] But I was in Rio Janeiro. In, in fact in the state of Rio Janeiro in
Resende, I reviewed the new plant of Nissan, which is going to
be inaugurated in April. So I was spend the day in Resende. Took the plane, flew, I am here today. Later I'm going to our, research center,
that we have opened in, Silicon Valley in order to make sure that we understand what the startup are doing, particular around
autonomous driving. We're, we're gonna probably talk about it. So, Wednesday night, tomorrow night, I'm
going to our, headqua, headquarter in the United States, which is
based in Nashville. We're gonna have a review with all the North American team about, about the
performance. I'm gonna visit Kenton, Mississippi
Friday, which is one of our large plant, on, on, on Friday. Then I'm flying for Japan. Next week I would be Monday in Tokyo. I would be in Tokyo from Monday to,
Friday, executive committee, board meeting, corporate officer meetings,
investment committee, et cetera. You go through all the elements, and then
I'm flying for Paris. I have my schedule for 2014 booked
already. That's so we [LAUGH]. Now you can't, I mean, you, you have to
accept that. I mean, I know exactly where I'm gonna be
hopefully, [LAUGH] in December 2014. All the board meeting of both company
already set, executive committee, the visit to the
plant. Everything has to be organized. If not, there is no way you can do
everything you have, have to do. From time to time, you have accidents. From time to time, there are accidents,
but fortunately, I'm surrounded by professional people who can adapt to the
situation and make the necessary changes. You know, how do you do it? It's possible, but it requires a lot of
discipline. >> You think there are any, any
fundamentals about leadership that, that transcend a specific
company or industry? I mean, do you have a personal leadership
philosophy? [COUGH]. >> yeah, but, you know, leadership also
depends on the time. I don't think if you're a good leader
today, you're gonna be a great leader ten years down the road or 20
years down the road. And I don't think that the great leader of today would have been a great leader 20
years ago. I think it's adapt to the time. If I take today and the foreseeable
future, there are some attributes, in my opinion, which are absolutely necessary
for leadership position, particularly for companies but not only
for company. And the number one, the number one
attribute, I think, is what I call, empathy, the capacity to
connect with people. That's extremely important. Why I am telling you this because, you
know, I, when I look at the alliance, we have about
450,000 people working in the alliance. Our first group of people, are Russian. This is the largest number of employees we
have. Are Russians. The second largest group of employees we
have is Chinese. The third largest group we have is
Japanese, and the fourth is French. And then you continue like this, and you have American, you have British, et
cetera. And when you have 450,000 people, with
very large group of people spread all over the world, the capacity to connect, the capacity to understand, the capacity
to get out from your own reality and try to see
what's on the mind of your own people who are fighting on different fronts is, is for me absolutely
essential. And is gonna continue to be essential for
many years to come. This is basic attribute. Frankly, if, if I find somebody in my team
and he has no empathy, he doesn't have the capacity to connect, I think it's
gonna be very hard for him, to be in leadership
position. Now, being emp, having this empathy, this
capacity to connect is not sufficient. I'm saying it's a basic and absolutely
necessary condition for leadership. Obviously, you have other attribute, but
you're asking me some of them. I'm telling you I consider empathy is, is
the, probably the most important really. >> And I think you already said this. Would you say that decisiveness is number
two. Is that, I mean, you've
>> What was the second one? >> Decisiveness you talked about, like,
the flip side of empathy and, and
decisiveness. >> Yeah decisiveness is number two, but decisiveness doesn't mean a quick
decision. Decisiveness mean adequate decision at the
right time, and the right time may not be the quick time. You know, particularly that is something I
learned in Asia, because obviously when you take a CEO job in a company, you
learn a lot. You learn a lot. One of the thing I learned particularly in
Japan that from time to time making quick decision, is gonna hurt the execution of
the decision because, I think, what do you
want? When you make a decision, what do you
want? You want to transform reality. You don't want to make a decision for the
sake of making a decision. You make a decision because you want
something to change. So, your goal is the thing changed. That's your goal. So the question now is, when should you
make the decision in order to make sure that this thing has changed
in the fastest, period of time. So from time to time, you have to wait to make the decision because you're
preparing people to execute. From time to time, you need to make the
decision very early. From time to time, a little bit late. But when I say decisiveness mean capacity
to take the decision at the appropriate time because at the end of the day, what
you need is, reality changes. That's, that's your goal. >> So, [COUGH] I know we promised we'd
talk about electric cars as well. and, and, I mean, but your alliance has
made, has made, you know, tremendous investment, you know,
billions of euros in, in zero emission vehicles. at, at the New York Auto Show in 2011, you
know, I think you set a fairly public goal that you would
double sales of the Leaf in 2012. Didn't really play out that way. What do you think happened, and, and what
needs to change to move the Leaf and other electric cars from, from niche players into mass market
leaders? >> Yeah. Well, you know, I, I considered that, the
future of our industry is based mainly from, still with
oil, but second with electricity. When I say electricity is purely electric car or electrified, electrified
power track. There's no doubt about it. So you see multiplication of the hybrids,
mild hybrids, true hybrids, flex fuel, electric
cars were moving into this direction. One of the reasons for which electric cars, now I'm talking about true electric
car, is not moving as fast as we'd like it to
go, is the lack of infrastructure. We're seeing every single time a city, a
state, or a country put the investment in term of infrastructure
in the sense of electric car move up. We are selling today in the United States
3,000 Leaf a month, 36,000 cars. So you're gonna say, oh yeah, but, you
know, 36,000 cars in the United States out of, we sell more than 1 million
cars in the United States. You're gonna say it's peanuts. Yeah, but it's a huge change because
people buying the Leaf today. We have the highest level of satisfaction
of any other car that they, that they buy, and most of them
don't want to change. I mean they buy an electric car. They use an electric car. They've established their routine with the
charging system, et cetera. They just love the car, and they wanna
continue with it, and it's increasing. The last three months, the most sold cars
in Norway was electric car. It was a Leaf. So, the Chinese have given to ours, themselves objectives in term of electric
cars, but they didn't bite the bullet yet
because there is no, Chinese technology for
electric cars. They're waiting for Chinese carmakers to
really master the technology of electric cars in order to
hit it. Japan is, is, is putting a lot of
incentive. The charging system in Japan is really
developing. I have zeroed out on the fact, electric
car is a big part of the future. Where we don't control, and we are a
little bit frustrated in the speed at which the charging
infrastructure, is, is, is spreading. Now I can tell you I was, you know, I
think two years, two years ago, my daughter, who was
on the campus was driving a Leaf, and at a certain moment in
time he stopped a moment in time she said, okay, I need to
charge the car. I said, well, it's interesting, let's go
to the charging station, and at that moment there were only two charging
station on the, on the campus. But, both were occupied. So, I said so what what you do now? I said well I can't drive the car I need to wait for the these two cars to be
removed so. It we've seen the charging system is a
real concern before we see it take off of, of the sales, but
it's coming. It's coming because lot of cities, lots of
states are investing. Some only in the United States. But France, Japan, China, we are signing an agreement with cities with different
cities now. It's coming. I have zero doubt, Tony. It's much slower than we thought, but it's
not slow, because the technology is not ready, it's slow mainly, because the infrastructure is not moving fast
enough. >> You were here visiting the engineering
school in May, to talk about autonomous vehicles, can you just share your thoughts about why your, so excited about
autonomous vehicles? >> Well, autonomous vehicle, because in
fact we are moving from a period of time where the car is a
slave. You, know you break you start, to a
partner. Now he's giving you information, adding
that to what you want, and we have the pieces of technology
to do it. What does it mean, the car is your,is your
partner. For example today we have the devices in
which you get to the car, the car can measure your temperature,
it can define what's your mood. It can switch the music you, adapted to
you function of excited your angry your frustrated you're
happy it can lower the temperature into the car, or or heighten
it, it can detect an accident one or two miles in front of
you and. Change the lane or slow the temperature,
or re route, re route you. There are a lot of things when the car can
become your partner. I mean you don't have to decide, it will
decide for you. As long as you have preprograming for it. Why I think autonomous driving is going to
be a big thing for the car industry. A lot of objective reason. The first one is we want zero accident. Any car company would like zero accident. The only way you move to zero accident is autonomous driving, because 95% of
accidents happen on the street. Are human mistake. If you had make too many mistake, you made
it past you. That's number one. Number two, a baby born today has 3% of
probably living to be 100 years. A lot of people lose their driving license
at 75, 70, 80 years old. So, if you can imagine the big part of the
world population, moving toward 100 years old, and you start losing your driving
license at 70, 75 years old, you have a problem. Because the last one years are gonna be difficult without autonomous
transportation. The only way you're gonna solve it is
autonomous driving, because autonomous driving you can be handicapped,
you can have a lot of physical problem impairment and you can
still get into the car, input the address and the car will,
will drive you there. So, for me, it's in need, in term of
safety, it's a need, in term of expansion, of
autonomous, of autonomous, transportation. It's good for us, because it's an
expansion of our market, but also, it's gonna be an essential element
for, for senior, for senior people. And the pieces of technology are ready. We, we have the different technologies
that allow us. Our estimate is today, we have already
announced officially that autonomous driving will take place as mass market of
cars by 2020. We have already authorization in Japan. And I know that we have, there some
authorization in the Unites States to allow autonomous
driving testing, on the road. >> So my last question before I open the,
open it up to the floor for, for Q&A. The question that, that the dean asks all
of us when we apply to Stanford, Business School is what
matters most to you and why? How would you answer that today? >> What matters most. Well, you know, I think what, what matters
most is, [BLANK_AUDIO] Making a difference. That's what matters most. I mean, making a difference. I mean, it can be professionally but it
can be socially, it can be the father, it can be as professor,
as a [UNKNOWN]. You wanna make a difference. That's what matters most. You, you, you wanna say, well, you know,
I'm dedicating part of my life to do this. I wanna have the impression that I made a
difference. No matter how you measure this difference,
but the way you measure difference must be
important for you. Okay? I think that's what matters all the time,
as long as you think you can make a difference, while you
have the motivation to pursue whatever you're pursuing. And I'm not talking only on the field of
professional life. I'm talking also on the field of a
personal life or on contributing to [UNKNOWN] or contributing
to other, to other things in life. I think this is for me the most important
thing that you can see that what you're doing is something where you know that if you were not there things would have been
different. And hopefully by you being there, you
know, part of a team or part of a company, it's gonna
get better. But, obviously when you turn around the situation, you have a huge satisfaction,
because you say, you know, I was here, I was part of
the team who made this transformation. Okay, so it's obvious, but in some other
cases it would be a bit more difficult to see. >> Thank you so much. So we'll move to questions from the
audience. This session's being recorded, so it's
important to have a microphone before you ask a
question. So please raise your hand and one of the
ushers will bring the microphones around. [BLANK_AUDIO] >> Thank you very much for the interview. So I have a question about determining
models for the monozukuri. It means trading something in Japanese and
you said in your sun, monozukuri covers everything, every step
in value [UNKNOWN] from R and D to marketing, and my sense is in Japan,
sometimes the Japanese companies too much focus on monozukuri and they
focus R and D on technology. Trying to have some innovation from the
technology side and they failed to attract their customers
in the market. So my, my feeling is they should shift, on
the mindset, on mono, monozukuri and try to focus more
on the market side. So, what, what do you see this trend, and
how, how do you think the monozukuri. Hinders the Japanese companies to try to
articulate the demands in the East. >> yeah, I think it's a great observation to say Japanese company have a tendency to
try to create innovation out of technology too
much versus other company who gonna go and try to
assess. Or needs, or aspirations from from, from,
from, from consumers. That's why I believe that alliances
between companies of different cultures are so
powerful. Because each one brings with his own
culture, his own strength. And in our case if you can marry the
strengths of the monozukuri Japan. Through the creativity which comes with
French approach. As you know, we have a partnership with
Daimler with which we, we develop, also a lot of
technology. So, when you bring companies, as long as
the company remains autonomous, obviously, because if you merge all of
these automatically you're gonna blend. Everything into one culture, and you gonna lose, some, of the benefits, from
diversity. As long as you can make companies with
different culture working together. You gonna get the best out of every
single, single culture. But I agree with you. And, and that if, if you have, if you are
monocultural, the risk of you being. Too much benefiting from your own
strength, and ignoring your own weaknesses, they are
very big. That's why having Japanese company working
with the German company working with the French company is
such a delight, because we come to solutions that we could
have never imagined by our self, no matter where
we're coming from. So I totally agree with you. That's why I think Japanese companies
coupled with other companies as long as they know how to make these things happen
can be extremely, extremely efficient. >> From back there? >> Hi, I'm Linas from MX program. Thanks for coming, my question is about
common sense. You talked about whether you arrived in
Japan, and you used your common sense to make some decisions, to change the, to make
some decisions about the prob process, things
like that. But my observation is that a lot of
leaders, they all of the common sense that you are talking,
you talked about. I want to know how to, how to get the
common sense. [LAUGH] Did you, how is, on the first day when you're working, or what's your
process, thanks. >> Yeah, well, you know, Yeah, how do you get common sense. This is an interesting question, no? >> [LAUGH]. >> How do you get common sense. Well, you know, common sense, common sense
means, we are human being, we have aspiration, and from time
to time we get off track. No matter who we are, at what position we
are, we get off track. And common sense is what bring you back on
track. When I went to, when I went to Nissan. Common sense indicated that I was coming
to Nissan and accepted in Japan for one reason, which is
fixing Nissan, period. I was not there to make a show. I was not there to lecture Japan, about
what needs to be done. Even though a lot of people, you know,
were calling for these kind of things. So every time, I never deviated from my
mission, because I had this, whatever we call it,
common sense, bringing that by saying you know you're
here, you're in this job, because people want you to fix
the company, period. Okay? That's common sense, common sense means go
back to the basics, go back to the fundamental needs, and make sure you understand, you know, what's your
contribution. Whats the expectation? What the expectation from you. I agree with you from time to time people
lack common sense, very unlikely they gonna to leadership position
in my opinion particularly in the business
world. Very unlikely, some of them escape, but
the most frequent thing is that people lose
common sense. After they come to leadership position,
and this is a real risk. That's why I think having strong teams,
and strong wars which are focused on these other essential things we
need to do, are absolutely important. So, if you use your common sense some
bodies going to remind you, you know. That's why you are here, and that's what
you're expecting from here. But I agree with you. It happens that you can lose your common
common sense. >> In the back row over there. >> Hi. I'm Alex, a second year MBA student. I'm curious to get your view on developing
countries boost for a company, your company perspective, as
well as a student, how. Can we capture the gross in emerging
countries? >> You know, there are lot of literature
today on emerging markets, three years ago as you know four
years ago, it was sky was the limit, today a lot of people
say this is the end of it, this was just a bust, et
cetera. Emerging market are here to grow, and are
here to grow for the long term. They're not all growing, they're not gonna
grow all on the same rate. Brazil is not gonna grow at the same rate
than China. It's not gonna grow at same rate than
India and Russia. Or Myanmar or Vietnam or Cambodia or Mexico, everyone has different reality,
but there are some things which are absolutely
fundamental is that all of them are going to grow. And depending on the field that you are
considering, you have, you can estimate what kind of growth is
going to happen. You don't know what's the timing of the
growth. How much time it's gonna take, but you
know what is the size of the gross. Let me give you an example, and I'm gonna
come back to the current history. Today you have about 700 cars per 1,000
residents in the United States. You have about 500 cars per 1,000
residents in Europe, okay? You have less than 100 cars per 1,000
residents in China. You have less than 50 cars per 1000
residents in India. You have, less than 200 cars per 1000
residents in Russia. You have less than 300 cars per 1000
residents in Brazil. Imagining that Brazil, India, Russia, and
China,, are gonna remain at the lower level of modernization than
Europe is ludicrous. All these countries are gonna grow, and
their gonna reach at least the level of Portugal, or Spain, if
not, if not more. So, when you are in China, in the case of China, at 100, less than 100 car pool
[UNKNOWN] inhabitants. And Portugal is at 500. You can imagine that the Chinese market is
going to continue to grow a lot, particularly
when you know that the government of China is
investing massively in infrastructure, which is one of the
limitations for which. Maybe it's not going to happen. Investing massively in infrastructure,
investing massively in education, investing massively in
everything which is going to trigger this will to have autonomous, autonomous
transportation. So, back to your question. I think the are huge and tremendous
opportunity. For companies, for young people. You know, I was, two days ago having a lunch with a Brazilian entrepreneur, and
he was telling me, you know, if I was 23
years old today, I would go to Myanmar. He's Brazil. I said why. He say, well I see in Myanmar the way
Brazil was 30 years ago. 60 million inhabitants, very rich country,
it couldn't be totally mismanage willingness to open to open the
country, and I say you know, I have the impression that I
know how this is gonna go, and I want to benefit
from it. So, you're gonna have a repetition in a
different way of stories, but my point is emerging
market are usual opportunity, as long as you have
the recidity to analyze each one of them by
itself. And see all the metrics, which matter for
your industry or your area of of interest, but it's not gonna be linear,
you're gonna have ups and down, and stabilization and consolidation and
then, acc, acceleration. Without any doubt, the usual opportunity. >> Over here on our stage left. >> Thank you for your presentation. My name is Chris Davis, I'm doing a
Fulbright Scholarship from London. It's probably a very simple question but,
in terms of personality traits or common themes, either in, what, what do
you need to be in your position? Or similar roles at your level in terms of common personality traits to be
successful? >> frankly, I don't think, I don't think
you have a lot of things in common between, if you take for
example the 1,000 largest companies in the world
today, I don't think you can say there is something
common for these people. And you can, I mean I can see personally
because every year I go to uuu, which is the largest concentration of
CEO in the world at a certain place. And we meet a lot of people, you know. And it's very interesting because we meet
Russians CEOs, and Chinese CEOs, and Indian CEOs and
Brazilians and Vietnamese and Cambodian. And they're coming all over the world and
you say, oh, oh, there must be something common
between all them. No, No, The approach is completely
different. I don't think you can say there is one
single attribute or a little bit of commonality between,
between all these, all these people. I don't think so. Certainly, there is, all of them want
somehow to contribute, that's for sure. A lot of them do not take no, for an
answer. You know, there are some things like this
but [UNKNOWN] in term of personality approach, drive, I don't think there is
something, there is something common. >> Okay, this will be the last question. Is there, back here, back row again? >> Thank you very much for taking the time
to talk to us. On your point about electric cars, as you
well know, building out a electric charging infrastructure
both has chicken and egg problems. Someone has to move first. And it's a highly regulated space. So, as we're a group of MBAs, what's the
one thing that you would recommend that we, as MBAs, focus on if we
wanna see that built out? >> I, I would say today, we are
concentrating, that being, a large company, who are investing on
electric cars are concentrating on these areas of the world,
where leaders of the countries see a problem behind too
much dependence on oil. And CO2 emissions being not something fabricated, artificially but, a real
threat, okay? So whenever you have these two elements,
then, you are, we around the table. I'm gonna give you an example. I sat down with, I'm Brazilian, I sat down
with the President of Brazil. We are talking electric cars. Immediately I've seen that she was not the
believer in electric cars. I said okay, that's fine, no problem. We're not gonna concentrate our efforts on
Brazil. We are concentrating our efforts on China. We're gonna concentrate our efforts in
Japan, we're gonna concentrate our efforts in the
United states. Because there are leaders here who are
saying, well you know what? Too much dependence on oil, is a problem. And CO2 is not something fabricated it is
something real. And if you don't pay attention to this,
we're gonna have serious, serious problem. So, what, what I would like to tell you
is, as, if you wanna go into this area, which is environmental friendly transportation,
in particular with electric cars, first you need to make sure
that you're leading with people who don't consider it only as a business,
but consider it as a must. I mean, when you have a problem of the
size of the CO2 emission, and you have the solution to this problem, you just cannot
ignore it by saying, you know what? It's not the time. I'm gonna wait until something happens
before I jump in. No we have a solution. We have the technology. We need to move it in, and we're gonna
have to find our way to make it a reality a reality of
the business. From time to time it may take, it may take
a lot of efforts, it may take a lot of investments,
your efforts cannot be rewarded. But when if we take off, in my opinion,
it's gonna be absolutely tremendous. So my point is, just find allies, who are,
not only see it as an opportunity, but are convinced
that it is the right solution. And the technology in term of battery, motor, inverter, everything is moving very
fast. So I don't think we're gonna add too much
to it. Everything which is around the charging
system still needs, to evolve. Lowering the cost of the fast charging
going to systems that allow you to charge the card in a very
convenient way. When we started with the fast charging, we
had the 40 minutes charge. Now we are at 20 minutes. We have offer from some suppliers coming
to less than ten minutes. Where people are offering us a system
where when you're driving youfr car on a highway, you can charge through
the, through the wheels. That means, there is an explosion of ideas
coming, and I think this is where innovation is gonna
take place. But I have no doubt on the fact that the technology that will protect the
environment, and [INAUDIBLE], at the same time the explosion of autonomous
transportation, particularly through the development of emerging
market, is a huge one. >> So, thank you so much for, for spending
the time with us today. And on behalf of the entire Stanford
Graduate School of Business, Mr. Young, thank you for your time, and
thank you for coming. >> [NOISE]. >> Thank you, thank you very much. >> Thank you.

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