Renault “Spy” Case Reveals Severe Culture Failure

Seemingly out of the blue, Renault, the French car maker, fires three senior managers for alleged industrial espionage, accusing them of selling secrets about the company's electrical vehicle program. The story hit like a bomb.

In a television interview, asked if he had concrete evidence, CEO Carlos Ghosn said certainties (“certitudes”) lay behind the action. Some weeks later, he was back on the same news channel, TF1, apologizing to the three executives and their families.

Instead, a senior member of the company’s internal security organization, who had driven the investigations, was arrested.

In March, the New York Times, quoted the Paris prosecutor Jean-Claude Marin saying the investigation had shifted toward “a possible swindle” inside Renault’s internal intelligence service, which acts as an internal policing and security service.

How on earth could this happen? Asked repeatedly by Julia Hood to comment on this case – being on the same continent and able to digest French news sources, I guess I qualify as an expert – I have dug into it.

Without wanting to get into more detail than the good NYT overview, let me just say this – the more I’ve learn the less I understand.
Questions pile up. Firstly, how can a well-run corporation, headed by one of the truly global managers of our age, get into this mess?

Secondly, how have they organized their internal audit and intelligence gathering to let dubious data drive such drastic action? Acting on “certainties” rather than evidence?

Thirdly, how low must trust among the leadership be, and how bad cross-company communication, for this sort of mess to evolve and run its course before someone says: “Just a moment. Let’s look at what we really know”?

At the core, I believe this is a case of severe culture failure.

Disentangling what lies behind that breakdown, in my view, is now the No 1 mission of the PR folk in Renault, together with Ghosn and his executive team. The CEO and a few others have foregone their bonuses to atone for their actions. And the three publicly disgraced executives have been reinstated and compensated.

You could only speculate about what led to the sort of isolation from the company reality that the top team must suffer from to make a decision to fire three senior executives based on internal intelligence “certainties”. Addressing that is a culture challenge all by itself.

And what about the 120,000 employees – how will they feel knowing that apparently paranoid internal investigators could have turned on them, too, without being held in check?

Renault is a great company, and its alliance with Nissan, where Ghosn is also the CEO, is truly path- breaking in its industry.

But I can’t help but wonder what must have happened in the last five or 10 years of expansion that allowed this breakdown in internal communications, this total collapse of trust.
How can their corporate culture have failed so thoroughly?

What is company culture? It is based on behavior, and behavior is an expression of values. Values have to be internalized, and personal, and behaviors must be based on agreed norms. To complete the circle, norms are, at their best, codified values. Something broke badly.

But there is always a way to address such breakdowns. All it takes is leadership, and a shared acknowledgement that values are like diamonds, formed either over time or under pressure. It seems to me that there’s enough pressure now to lay bare and reaffirm Renault’s values.

Let’s hope Renault takes the opportunity to reexamine its norms, behaviors and values so that the company can address what must be one of the most severe culture crises in a modern, global corporation. If it does, it can emerge strengthened from this crisis.

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Bjorn Edlund
Retd EVP Communications, Royal Dutch Shell plc
Principal, Edlund Consulting Ltd.