The Renault Nissan alliance is a great example of a cross cultural long standing alliance. Created in 1999, the alliance is constructed in a way whereby Renault and Nissan work closely together in design and production of cars. Additionally they joined forces through a joint venture to run joint operations like purchasing and engineering. In 2016 Mitsubishi also joined the alliance.
The alliance is highly successful in the sense that it delivers synergies and major cost savings for all involved partners. Most of the credits for this successful alliance were attributed to Carlos Ghosn, CEO of the alliance. Ghosn also serves as Chairman of all three companies: Renault, Nissan and Mitsubishi. The alliance is closely aligned and executive sponsorship is solidly safeguarded among all partners.
Until the news was announced last Monday that Carlos Ghosn was arrested in Japan for underreporting his compensation and misusing Nissan company assets. What this will mean for the alliance, is something we will find out in the near future. In the press, Ghosn was cited as being the linchpin of the alliance. Thus his arrest will impact the alliance, like it immediately impacted the shares of all three companies. Assuming that the alliance governance structure consists of more than just Carlos Ghosn, and based on the clear benefits the parties gained for almost 20 years, the alliance is designed to survive.
It is the type of crisis situation no alliance or partnership would like to face. Still, news like this might be helpful in your alliance. Helpful in the sense that it can serve as a wake up call to think about your alliance governance structure and operation once again and ask yourself questions like:
- Is the governance structure in balance and build to last; can it survive a major crisis?
- What happens if a key person suddenly disappears from the company and the alliance?
- Is there a good working relationship between the members of the governance committees; will they pick up the phone to quickly and jointly handle a crisis before it escalates?
- Do you perform regular alliance health checks to prevent smoldering issues from becoming a crisis?
Even though it will be difficult to prevent things like what happened to the Renault Nissan alliance, make sure that you are on top of potential issues in your alliance. After all, every alliance has room for improvement. So, make sure to include the creation of an action plan to improve the things that need attention in your alliance.
PS: In 2019 my alliance partner Anoop Nathwani and I will organize two-day Alliance Masterclasses in the Netherlands, in the UK and in Singapore. Alliance governance, communication and health checks will be among the topics on the agenda. Registration for the class in the Netherlands is now open: click here for more information