Why Is Nissan Mimicking MySpace?

The Japanese carmaker is rolling out a social networking site, called N-Square, designed to bypass bureaucracy by boosting informal contacts

by Kenji Hall

Carlos Ghosn, president and chief executive officer of Nissan Motor Co., comments on a Navara truck on the production line during his visit to the Siam Nissan factory, some 20 kilometers east of Bangkok, Thailand, on Tuesday, June 26, 2007. BLOOMBERG NEWS

Some habits are hard to break. When Chief Executive Carlos Ghosn entered the picture eight years ago to rescue a near-bankrupt Nissan Motor (NSANY), the Brazilian-born Frenchman also set out to remake its corporate culture. He made English the official language at management meetings, introduced a performance-based grading system for employees, and added Western-style pay packages for top managers.

But he hasn't managed to change everything. One relic: consensus-building. Unless it's an order from the top brass, project teams can spend weeks in meetings about minor matters, a huge obstacle when quick decisions are needed. "We have so-called seminars to decide on the topics for a meeting," says Hikari Todoroki, an engineer at Nissan's research and development center in Oppama, west of Tokyo.

Now, executives think they know how to speed things up. In the coming months, the company will begin rolling out a social networking site, called N-Square, that will be open to tens of thousands of Japan-based office workers. Eventually, N-Square will connect up to 50,000 of the company's 180,000 employees worldwide, letting them create online profiles and blogs, form online communities and discussion groups, and swap data files.

A Way to Bypass Bureaucratic Channels

Since Ghosn took over, cost-cutting has been a top priority. The effort has contributed to improved earnings. In the latest quarter through September, Nissan's sales rose 11.7%, to $42.4 billion. While net income dropped 22.5% because of exceptional gains the year before, the all-important operating figure rose 5.3%, to $3.1 billion (BusinessWeek, 10/26/07).

But lowering costs is not just about trimming waste at factories. For Nissan, developing better, high-tech cars in less time and with fewer resources is just as vital—and harder to do. That requires employees to work with others who might not be sitting in the next cubicle. Engineers developing brakes for a small hatchback might want to consult more knowledgeable colleagues designing sports car brakes halfway round the planet.

A social networking site, says Simon Sproule, the Nissan executive in charge of N-Square, gives employees a way to circumvent the formal bureaucratic channels and create unexpected partnerships. You can't do that in an organization where everyone gets consulted on everything. "If you want to talk to your boss or your boss's boss or your boss's boss's boss, you set up meetings, you 'cc' everyone, you lay out an agenda, maybe even have a pre-meeting to discuss the topic," says Sproule. "There's an enormous amount of time spent just to get to talk to somebody."

Taking a Page from IBM's Playbook

Nissan's conversion to the power of social networking began in 2005. That's when Sproule visited IBM's (IBM) headquarters in Armonk, N.Y., and realized how behind the times Nissan was. He saw IBM's Web-based software that encouraged employees to share ideas. Execs also explained the IBM Jam, an annual online brainstorming involving all execs and employees. Back in Tokyo, he rang up General Electric (GE), Intel (INTC), 3M (MMM), and Procter & Gamble (PG) to ask how they encouraged collaboration. "For me, it was IBM that was the biggest inspiration," says Sproule, who is corporate vice-president. "That, and the 100 million people using MySpace."