Lessons for Business Leaders from the Downfall of Charles Ghosn of Renault - Nissan

The Downfall of Charles Ghosn and his Sudden Fall from Grace

Over the last few days, the global media has incessantly covered the fall from grace of one of the most flamboyant and charismatic CEOs (Chief Executive Officers) of the present times, Charles Ghosn of Renault-Nissan-Mitsubishi, the three way automakers alliance which is one of the world’s leading automobile conglomerates.

While the initial arrest of Ghosn on charges of misrepresenting his annual income and hiding his assets from the tax authorities seemed to be too trivial a charge to detain him, let alone arrest him, the subsequent revelations about his proposed merger of the two auto giants, Renault and Nissan, as well as the stiff opposition to this move from the Japanese have raised concerns whether Ghosn’s downfall is just a boardroom coup in disguise.

Indeed, the fact that he is yet to present his side of the story given the 20 day detention that the police in Japan secured mean much for him who at one point enjoyed celebrity status and near rock star adulation in Japan.

As this article discusses, the fall from grace of Charles Ghosn has several important lessons for other business leaders and CEOs in this Global Age.

The Perils of Being a Celebrity CEO and a Flamboyant Leader

To start with, Ghosn was not only a high flyer, but, was also someone who never hid his fame and the perks that come with it.

Indeed, for all practical purposes, he wore his celebrity hood on his sleeve, so to speak, and some media pundits speculate that this might have been the reason for his engineered removal as he was being seen as someone who was “too big for his shoes”.

This is an important lesson for aspiring and present business leaders who are both charismatic and flamboyant and one that they need to remember in the present times.

In other words, however much your personality and more importantly, contributions to your firm or company are, it is better to adopt a low profile from time to time and let others do the talking.

While this does not mean that all CEOs must be self effacing and be in the background, it does mean that sometimes it is better to stay away from the limelight at least temporarily so that there is not too much envy and resentment from your peers and subordinates as was the case with Ghosn, who was superseded by his Number Two in the organization.

Global Davos Men and the Backlash from Local Stakeholders

The next important lesson for CEOs is that in a Global Age, business leaders have to master the art of being global and local at the same time.

For instance, Ghosn was an Archetypical Global Citizen who straddled the West and East with equal flamboyance and ease though in recent years, he became more global than local.

Among the theories doing the rounds at the moment, one of them posits that while he was successful in a East meets West automobile alliance, his attempts to Take it to the Next Level with an outright merger between the French Renault and Japanese Nissan was not looked favorably by the latter who construed this as an attempt to shove the merger down their throats.

Indeed, Ghosn is often cited as a case study in leadership in business schools about how Global CEOs can manage the cultural challenges from working with diverse regional and country specific aspects.

However, as his detention shows, perhaps he overestimated the cultural homogeneity of the firms and underestimated the backlash from the Japanese in times when nationalism and protectionism are making a comeback.

In other words, Ghosn’s downfall can be thought of as the first shot against a Davos Man from inside the walls of nationalism.

Taxation Rules and the Necessity of Knowledge of Country Specific Regulations

Talking about Ghosn being a Quintessential Davos Man, it is worth noting that this moniker is often used to describe the Global Jet Set who converge in Davos every year for the World Economic Forum and who are known to be Global Citizens no matter what their nationalities are.

Apart from this, other CEOs can also be forewarned about not relying too much on so called independent and external auditors to sign off on the organizational financial statements and the tax returns of the top management.

Instead, they must do their due diligence with regards to the laws and rules of each country that their firms operate in so that they do not fall afoul of the very specific taxation laws there.

In other words, Ghosn, who is being accused of financial crimes, can be a warning for other CEOs to do more homework about how to adhere to the laws of each country. Indeed, it is no longer the case that the Davos crowd can do no wrong and with the rise of Trump and other populists, the Knives are well and truly out for them.

Concluding Insights

Lastly, Charles Ghosn never shied away from highlighting and some would say, advertising his successes in brining the three way alliance.

This might have led to some serious misgivings among some stakeholders who would have been petrified about what it would do to their positions in the future.

Thus, other CEOs might very well learn to play the celebrity and son of the soil game at the same time so that they do not end up like Ghosn.

To conclude, the present times have seen much churn and turmoil in the corporate world and hence, the case of Ghosn has several lessons for other business leaders.