The Wall Street Journal, 13 September 2007 reports as follows: “This has been a tough year for Carlos Ghosn, chief executive of Renault SA and Nissan Motor Co. Accustomed to accolades for his bold approach to corporate turnarounds, Mr. Ghosn of late has endured criticism for slumping profits at both companies, sliding U.S. sales at Nissan, and persistent doubts that even a man of his prodigious energy can run two sprawling auto companies.”
From a User-centric EA approach, we are always looking for opportunities to fill gaps, reduce redundancies, improve processes, and fulfill user requirements. Often mergers and acquisitions (M&A) are viewed by the financial markets as an excellent way to accomplish one or more of these—as we often see the stocks of companies rise after an M&A announcement.Why does this happen?Because the two companies together form a kind of new target architecture that creates synergy as follows:
- Filling in each other’s gaps (they complement each other)
- Allowing them to consolidate operations and reduce overhead (where they overlap)
- Using the best engineering prowess from each to improve processes
- Better meeting customer requirements with a broader product set and greater customer reach.
Does a leader that spans across two companies, like Carlos Ghosn produce similar results like in M&A or are we simply stretching the ability of a leader beyond human means?
The answer is yes and yes.While the two companies have seen benefits from having the same leader for example, “Noting recent moves by Nissan and Renault to jointly develop engines and to expand car production in merging markets, Mr. Ghosn added, ‘all these synergies are facilitated by having a common CEO.’” On the other hand, “some industry analysts have questioned his decision to try and lead two car companies simultaneously.”
Like a rubber band holding these two car companies together, the question is will the rubber band hold and see the companies through to achieve the benefits of some degree of M&A or will the rubber band break because of the strains of leadership going too far.