Editor’s note: This article is from Krypton 36 “Future Automotive Daily” (micro-channel public number ID: auto-time), Author: Xiao Cheng Yi.Author | Cheng Xiaoyi
Edit | Xu Yang
“Selling cars in high season, whole people in low season.” Now in the cold winter of the automobile market, the CEO’s job, which is regarded by many as “the pinnacle of life”, is also getting worse and worse.
The record is not good, and the position is not guaranteed.In the past 11 years, Ford China has replaced eight CEOs; Ghosn has been arrested, and has performed in a series of escape dramas, and Renault, which he previously headed, has not yet selected a CEO.In addition, BMW, Volkswagen, Audi, Ford, Fiat Chrysler, Peugeot Citroen and other car companies have the experience of the CEO being absent from class. This is another important responsibility of the car company CEO, which is responsible for the scandal or poor performance of the company.Pay in time.
BMW’s current CEO Oliver Zipzer Source: newsbeezer
As the leader of the company, the importance of the CEO is self-evident. Sometimes a good coach change can turn the tide.Steve Jobs regained handsome India, led Apple to unprecedented profits, and is still the world’s highest market capitalization company; Alan Mulally pulled Ford from the brink of bankruptcy and survived the 2009 American auto industryThe crash period; Satya Nadella boosted Microsoft’s market value by $ 250 billion in three and a half years.
Warren Buffett considers the quality of the management of the company he invests in as the core variable. “Every company Berkshire acquires must have an administrator worthy of his appreciation.
However, the quality of the CEO and management of the company is indeed important, but it cannot change everything. Instead, frequent replacement of the CEO will cause the company to pay greater costs.
01 CEO after class, paying for mistakes
Since 2019, the biggest gossip in the automotive world is Nissan’s coaching change.
In November 2018, Nissan’s former CEO Ghosn was arrested, Nissan’s car profits plummeted, and 125,000 people were laid off globally. So far, the stock price has evaporated by almost half.The entire group is shrouded in the shadows of cleaning and internal fighting. Even the new CEO Makoto Uchida, who helped Nissan to stabilize sales in China in 2018, is difficult to resist.Affected by Ghosn’s flight to Lebanon, Nissan shares continue to fall.
Nissan’s share price trend from October 2014 to January 2020 Source: Futu Niuniu
As Buffett once said, when a manager known for his brilliant performance takes charge of a company known for his poor performance, the company’s reputation will remain unchanged.To turn things around, Nissan needs radical innovation from top to bottom.
Thierry Bollore, the former CEO of Renault, also in the Renault-Nissan-Mitsubishi alliance, has also suffered from “seat”.Bollore was Renault Chief Operating Officer (COO) during the Ghosn era, when he was considered Ghosn’s heir.Two months after Ghosn’s arrest and imprisonment, Bolloré became Renault’s CEO, but Renault chairman Jean-Dominique Senard never really reassured him.
“From an operational point of view, I don’t know where my mistake is.” Although Bollore continued to argue with the Renault board of directors and appealed to the French government (the French government holds 15% of Renault’s shares), but stillHe was forced to leave in October last year.Today, Renault’s chairman, Sennader, has not elected a CEO who is satisfied with him.
Frequent personnel turbulence and “no heads of the group” have increased Renault’s performance pressure.According to Renault’s previously released financial data for the third quarter of 2019, its third-quarter revenue was 11.296 billion euros, down 1.6% year-on-year.The Chinese market also performed poorly. As of November last year, Dongfeng Renault had sold a total of 151,000 vehicles, a 68.79% year-on-year decline.
02 Changing the coach is like changing the knife, or changing the soup without changing the medicine?
Generally speaking, there are three directions for corporate coaching: internal promotion of reliable employees, external professional managers with brilliant achievements, and re-employment of former CEOs.
In September 2019, Li Feng became the first Chinese CEO hired by Dongfeng Yueda Kia, a joint venture between Hyundai and Kia Motors. He has served as executive deputy general manager of Beijing Hyundai Motors for 5 years.In the same year, Faraday Future (FF) announced the appointment of former Byton chairman Bi Fukang as its global CEO, and founder Jia Yueting resigned from the position of former CEO.In July of the same year, Jingzhu, the founder of Haima Automobile, announced his return to ST Haima and re-appointed chairman of Haima Group, saying that he would lead Haima to start its fourth venture.
Former left CEO Jia Yueting, right FF current CEO Bi Fukang Source: LeTV
Although most people are pessimistic about FF and Hippocampus’ “replacement of coaches”, it still takes time to verify and verify the effect.A senior auto industry official told Future Auto Daily (ID: auto-time) that professional managers’ planning for enterprises is generally 2-3 years, and the short-term effect is not obvious.
And the CEO who is in dire jeopardy to turn the tide to save the company is not without precedent.
Former Nissan CEO Ghosn was the COO of Michelin South America. It took only two years for the company to turn a profit in the South American department. Five years later, Ghosn, 35, became the CEO of Michelin.In 1996, 41-year-old Ghosn became executive vice president of Renault, and after becoming CEO, it took Renault 3 years to make a huge profit.
In October 1999, Ghosn, who had just served as a Nissan COO, even issued a military order. If he cannot make a profit in 2000, it will exceed 4.5% profit margin at the end of 2002 and reduce the current debt by half. Ghosn promises to resign automatically.
Former Nissan CEO Carlos Ghosn Source: CNBC
Under his drastic reforms, Nissan lost $ 6.4 billion in 1999 and realized a profit of $ 2.7 billion in 2000.Nissan paid off its debt in 2002, and its profit margin in 2003 reached 11.1%, far exceeding expectations.Ghosn himself also became CEO of both Renault and Nissan.In 2016, the Renault-Nissan-Mitsubishi Alliance was established and Ghosn became the CEO of the alliance. During Ghosn’s control, the Renault-Nissan-Mitsubishi Alliance achieved the world’s number one sales in 2017.
Alan Mulally, a former executive at plane maker Boeing, also rescued Ford from fire and water.
In 2006, when the bankruptcy-prone Ford was scrambling, it became Boeing executive Mulally and became Ford’s CEO.Mulally boldly used the entire company as a mortgage to raise cash and rejected the government’s approach to providing cash assistance.Ford has survived the crash of American cars and reshaped its brand image, winning public praise.
Corporate reorganization and overall strategy formulation often have a “delay effect”.The various personnel changes of auto companies in 2019, whether it is changing the coach like changing the sword like a knife, or changing the soup without changing the medicine to maintain the status quo, still needs time to precipitate and witness.
03 Situation Creates Heroes
When the auto market is turbulent, personnel changes in car companies tend to become more frequent.
Since 2018, a wide range of personnel changes have been involved, accompanied by the first decline in sales in China’s auto market in 28 years.The last frequent personnel change occurred in 2011-2012, when the Chinese auto market slowed down, not only the domestic automobile independent car companies and joint venture brand talents flowed frequently, multinational car companies also frequently changed their coaches in China, in order to grasp the Chinese market.
However, most foreign researchers believe that the company’s performance is more determined by the economic trend of the entire industry, not by the CEO.Most of the environmental factors are beyond the control of the CEO alone, such as raw material prices, US dollar exchange rates, interest rates and inflation rates, and technological innovation trends.
If the CEO with the best historical performance takes over the worst performing company, what is the probability that these companies will increase their profitability?Antoinette Schoar, an economist at the MIT Sloan School of Management, studied hundreds of management change cases and found that the answer was about 60%.This figure shows that even the best CEO cannot guarantee the best results.
Daniel Kahneman, a psychologist at Princeton University and Nobel Laureate in Economics in 2002, believes that individual strength alone cannot turn things around: “We believe that what kind of personality a person has willWhat kind of result is produced. But we are wrong, because of the factors that determine success or failure, luck is much more than we often think. ”
For example, companies are always inclined to make personnel changes under the pressure of performance, and companies with gradual improvement in performance are seeking executives as CEOs.Kanaman believes that this will bring about an illusion, “The company changed the CEO and then the performance returned to normal, and you attribute this improvement to the newcomer.” But in fact, Kanaman believes that company performance tends to beFollowing the ups and downs of the megatrend, returning to normal is not directly related to the individual.
“In times of chaos”, when the industry is turbulent, it is often the time when individuals have the best chance to achieve themselves.But for companies, changing the CEO should think more clearly about the purpose and intent.Alibaba founder Ma Yun publicly stated last year that many Chinese companies have made some mistakes in the past few years, that is, the person who is a business thinks that he will also be a good investor. In fact, doing business and investing are two different things.”A lot of people who invest also think they can be entrepreneurs and change CEOs often. This is stupid. In fact, these are two different skills.”
Per-Ola Karlsson, Senior Strategy Partner, believes: “It may be the right move to quit the CEO, but the cost is very high.”From the data of 2012-2014, it can be seen that the median total shareholder return fell to -13% in the year in which the CEO was forced to replace, and returned to -0.6% in the year after the replacement.The planned replacement of the CEO reduced the company’s median shareholder return to -0.5% that year and -3.5% the following year.
In fact, replacing the CEO is only the beginning of corporate change. Frequent replacement of the CEO means that the company is swaying strategically. When the industry is going down, it will take a little more patience and persistence to reform.
(I am Cheng Xiaoyi, author of 36 氪 Future Automobile Daily, and I am concerned about industry trends such as travel black technology and autonomous driving. Please feel free to exchange and report. Please add WeChat tuanzi_C, please add your name, company, and position.)