Wednesday, June 26, 2019

Carlos Ghosn: Hubris caused his shocking downfall

Inside Family Business

I recently came across this post on Forbes magazine by Frederic Kerrest, and he nailed it right in the head:

“Many startups experienced successful exits in 2013. Others crumbled to the ground. A common cause for those failures? Exhibiting hubris. It’s a big mistake that startups and established companies alike make. It lulls them into cockiness, complacency and a sense of invincibility and causes them to lose sight of what matters most-–making customers successful.”

Remarkable fall from grace

Such is the case of legendary Nissan, Renault and Mitsubishi boss Carlos Ghosn. Who would ever imagine that his arrest, detention and ouster by the board of Nissan Motors would happen so swiftly--in just a matter of four days?

Considered a titan of the industry, and the man behind the creation of the world’s largest carmaker, Ghosn was arrested in Japan last week. The New York Times (NYT) described the arrest as a remarkable fall from grace for a man regarded as one of the most powerful executives in the auto industry.

Ghosn has been credited with reviving Nissan and Renault, the French automaker, and eventually expanding his influence to Mitsubishi. He occupied the chairman and/or chief executive officer positions of all three carmakers and last year sold a total of 10.6 million cars.

What caused Ghosn to tumble? Lack of governance, transparency and the dreaded word, hubris. Aided by a whistle-blower, an internal inquiry at Nissan found that he under-reported his salary and used company assets for personal use. NYT reported that his own pay far outstripped those of his counterparts in Japan. He reportedly earned four times the pay of Toyota’s chairman in 2017.

There were also probing questions raised regarding Nissan Motor’s investment on luxury homes in high profile cities like Paris, Amsterdam, Rio de Janeiro and Beirut.

Why Beirut? The acquisition of a property in an exclusive neighborhood which Ghosn personally handpicked earned a huge red flag among investors and regulators, as Nissan did not have any significant investment in Lebanon.

The only plausible reason was that Ghosn had Lebanese descent and spent many years as a child in Beirut. He was also pilloried for bringing in independent directors to the board despite their lack of qualifications.

Lavish Lifestyle

His second marriage in 2016 was clearly high profile and was celebrated at Versailles with actors dressed in 18th century costume. The lavish event was great fodder for gossip columnists. His hero status was so big that his life was even chronicled in one of Japan’s famous cartoon comic books.

Unfortunately, Ghosn’s arrest completely wiped out whatever achievements he made in his career, starting with his 18-year stint with Michelin, the tire maker, where his leadership skills were discovered. After Nissan’s dramatic comeback, Ghosn earned the moniker as a no-nonsense executive with a penchant for cost-cutting and performance-based compensation.

Unfortunately, after multiple successes and heralded as a hero, hubris swallowed Ghosn whole.

It was apparent that he was no longer in contact with reality and felt an overestimation of his own competence, accomplishments and capabilities. If there is a better way to describe Ghosn’s actions in modern language, it is "pride that blinds" because it caused him to act in foolish ways that belie common sense.

This hero to zero chapter in Ghosn’s life reminds all of us to reflect and learn from a very important teaching taught by the Bible: “The spiritual descent of Lucifer into Satan is one of the most famous examples of hubris.”


SunStar website welcomes friendly debate, but comments posted on this site do not necessarily reflect the views of the SunStar management and its affiliates. SunStar reserves the right to delete, reproduce or modify comments posted here without notice. Posts that are inappropriate will automatically be deleted.

Forum rules:

Do not use obscenity. Some words have been banned. Stick to the topic. Do not veer away from the discussion. Be coherent. Do not shout or use CAPITAL LETTERS!