After Ghosn, Renault should take the time to get it right

With Carlos Ghosn unlikely to be released from Japanese custody, where he has been held since Nov. 19, any time soon, Renault appears to be ready to follow Nissan's lead and remove him from his leadership posts at the automaker.

According to reports, Renault's board of directors has engaged two executive search firms to find permanent replacements for Ghosn, who holds the dual roles of CEO and chairman. That news follows an editorial on Monday in the influential newspaper Le Monde calling for a change at Renault.

"Renault must quickly restore order in its governance before it is too late to save an alliance that is weakening day by day," Le Monde wrote. "The first step must be to remove Mr. Ghosn from his position as CEO, which he can no longer objectively occupy."

Given that urgency, it would be tempting for Renault to move quickly, perhaps giving temporary co-CEO Thierry Bollore the job permanently and naming outgoing Michelin CEO Jean-Dominique Senard as chairman, a possibility that has been floated in the news media. Other prominent candidates include Didier Leroy, an executive vice president at Toyota, and Philippe Guillemot of Elior Group, a food-service conglomerate.

Yet that could be short-sighted, said Rich Kolpasky, a managing director at the search firm Stanton Chase, who specializes in the automotive and industrial sectors.

"This is one of the premier industrial roles in the world, not just in automotive. You have to get this right," Kolpasky said, "and going with the one or two people who are obvious fits without looking at it more broadly could be a mistake. It warrants investing the time."

Ghosn's successors would not only have to lead Renault Group, but also hold together the alliance with Nissan and Mitsubishi, even as internal and external investigations spread beyond Ghosn's alleged personal financial improprieties to business dealings in California and the Middle East. Nissan leadership has made it clear that the current balance of power in the alliance, in which Renault holds a controlling stake but is the smaller company, is not acceptable.

Under Ghosn, who held more than half a dozen CEO and chairman roles over nearly 20 years, the alliance has grown to 10 brands and sells more than 10 million vehicles annually in total in nearly 200 countries. It is both an industrial and financial partnership, with shared manufacturing, platforms and components, and teams of executives that oversee common functions such as purchasing and costly research into technologies such as autonomous vehicles and connectivity.

Renault and Nissan -- and the French government -- have reiterated their commitment to the alliance, which gives the automakers scale and geographic reach. But it may be much more fragile than Ghosn has let on.

Kolpasky described it as a "delicate balance," "It was achieved by Ghosn being involved in every facet of it in real time," he said. "Now that he's been removed, we're learning about the resentment that the Japanese side had, that they believed things were stacked in favor of Renault," he said. On the French side, both Renault and its largest shareholder, the French government, were blindsided by Ghosn's arrest.

Kolpasky said any executive search should consider outsiders with no ties to the companies or Ghosn, as well as executives already established in the alliance. "The obvious benefit of an insider is that this person would come up to speed more quickly," he said. “On the other hand, an outsider could be seen as more objective. Given what's happened, an outsider has to be considered."

"Renault and Nissan are going to be under an electron microscope," he added, "and things that maybe wouldn't have been scrutinized in the past are fair game now."

Under Ghosn, Nissan, Renault and the alliance released midterm plans in the autumn of 2017, so the strategic direction is somewhat set. But trust between the companies has certainly eroded, and rebuilding that will be the primary challenge for any new leadership, Kolpasky said.

"The first step is having clarity at the alliance level -- who will fill the void that is created by Ghosn’s absence?" he said. "Beyond that, it comes down to the basics: strong leadership and continuous communication, accountability, fostering an environment of trust, ethics and collaboration, and leading by example."