An analytical approach to automaker's potential

Nissan's Palmer pursues the right formula

An analytical approach to automaker's potential

Andy Palmer: “The mathematics of physics must apply. ... But you've got to believe in the math.”
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YOKOHAMA, Japan -- Andy Palmer strikes a professorial pose in the corner of his 21st floor executive suite atop Nissan Motor Corp.'s glass-walled world headquarters here. Red marker in hand, he vigorously scribbles graphs and formulas on a whiteboard.

"I'll try to explain it to you in regular English. But we're talking about mathematics," he chirps. He then launches into a discourse about the r-squared correlation between a vehicle's transaction price, a brand's market share and the overall opinion of the brand.

The upshot: Higher brand opinion translates into higher prices and better share.

To Palmer, a British high school dropout who was anointed Nissan's global No. 3 executive on Nov. 1, it's an immutable mathematical truth: Brand matters. Therefore, his plan to remake the carmaker's middling image will rely heavily on massaging fickle public opinion.

Palmer, 50, is a mechanical engineer who cut his teeth building clutch boxes. But he's also a modern-day Whiz Kid, a Ph.D. cut from the same analysis-soaked cloth as the Robert McNamara data gurus who pioneered modern business principles at Ford Motor Co. in the 1950s.

For any challenge, there's a mathematical solution. Palmer's obsession is instilling that discipline on a carmaker whose strengths have been partly clouded by mixed and sometimes conflicting messages.

"My hypothesis is we live in a physical world. The mathematics of physics must apply," he says. "If you can put clarity around your brand and what it stands for, then eventually overall opinion will go up, which, if you follow the mathematics, means, automatically, your market share and transaction price will go up. But you've got to believe in the math."

Punk rock, product planning


Palmer's rise to the uppermost ranks of Nissan has been exponential.

He joined Nissan in 1991 at its European technical center in Cranfield, England. A decade ago he shifted to Japan.

Today the motorcycle aficionado and punk-rock devotee travels the world as a sort of shadow CEO to Carlos Ghosn, the charismatic head of Nissan and its French alliance partner, Renault. Of Nissan's nine executive vice presidents, Palmer has arguably the biggest portfolio and wields the widest influence. He signs off on all things related to product planning, marketing, sales, zero-emission vehicles and the Infiniti luxury brand.

Palmer, who spends 21/2 weeks outside Japan every month, picked up the global sales role Nov. 1, when Ghosn appointed him chief planning officer as part of a management shuffle meant to speed the company's growth.

The promotion made Palmer the de facto third in command behind Ghosn and Hiroto Saikawa, a Nissan lifer who oversees Asia, r&d, purchasing and manufacturing.

But after Ghosn there is no more publicly recognized figure at Nissan than Palmer.

If there is a major Nissan product push, Palmer is the man. From the launch of the Leaf electric vehicle to the rollout of Nissan's NV200 New York taxi, from the reinventing of Infiniti to Nissan's upcoming development of self-driving automobiles -- he's there.

"I'm the face of the car," Palmer says.

Andy Palmer
Age: 50
Nationality: English
Title: Chief planning officer
Responsibilities: Global corporate planning, product planning, sales, marketing, communications, Infiniti business, zero-emission vehicles
Education: Ph.D. in engineering management from Cranfield University, United Kingdom
Family: Married, 4 children
Early career: Chief engineer, manual transmissions, at Rover Group, 1986-91
Joined Nissan: 1991 at Nissan Technical Center Europe
Appointed executive vice president: 2011
Interests: Motorcycling, punk rock, miniature model making
First car: Used, white, first-generation Volkswagen Polo
Favorite car: 1966 Nissan Skyline
In his garage: Black Nissan Leaf, White Infiniti FX
Favorite vacation spots: Machu Picchu, Cape Town, Rome
Pet peeve: “Lack of clarity drives me crazy.”
Motto: Never give up
Quote: “I'm an engineer who has, during my career, worked on every single part of a motorcar. I know motorcars inside out. That's my passion.”

"If you can put clarity around your brand and what it stands for, then eventually overall opinion will go up, which, if you follow the mathematics, means, automatically, your market share and transaction price will go up. But you've got to believe in the math." - Andy Palmer

Fiery quotes


With his penchant for English spread-collared dress shirts and pink neckties, Palmer shares Ghosn's urbane dapper aura. But while his boss is machine gun-like in his public mannerisms, Palmer's persona is more circumspect and deliberate -- usually.

His vigorous defense of the brand has, at times, become awkward headline fodder.

Last fall, Palmer dissed the Toyota 86 sporty coupe, sold as the Scion FR-S in the United States, as a "midlife crisis" car to Motor Trend. And he famously was quoted with a one-word response to EV critics who say the cars are as bad for the environment as gasoline vehicles: "Bullshit."

He keeps a framed copy of that particular Sydney Morning Herald clip on his office wall.

Despite such outpourings or maybe because of them, Palmer has morphed from gearhead to global marketing guru. In October, Forbes magazine named him the world's third-most-influential chief marketing officer, behind counterparts at Apple and Samsung.

"He is very focused, and people trust what he's saying," says Larry Levy, CEO of Appinions, the marketing consulting firm that carried out the survey for Forbes. "He really does understand what's going to move the needle in terms of thought-provoking content."

Levy praised Palmer for adopting a data-driven marketing approach.

"He's confident enough to try using big data," Levy says. "It's a very rifle-shot approach to what used to be a shotgun approach. He wants to move away from spray and pray."

Part of Palmer's overhaul was a global makeover of Nissan advertising.

The imagery and message have been unified and simplified in all markets. He also consolidated worldwide brand management under one unit called Nissan United that is handled by ad agency Omnicom of New York. The old approach made him cringe.

"Those adverts in the U.S. are normally somebody singing and dancing in front of a dealership and inviting you down to the dealer for the deal at Bob's this weekend," Palmer says. "We mandated that the final screen -- 'Nissan, Innovation that Excites' -- you always finish with that. The car should be the star. We made some basic rules."

Case in point: the evocative black, red and white Nissan Juke ad that juxtaposes the compact crossover with a Star Wars storm trooper helmet. Palmer points to a poster of that ad hanging on his wall and reads aloud the catchphrase. "'Innovation that Excites' is the tag line that's used everywhere in the world," he says. "It's consistent 100 percent."

Press: Praise for Palmer

Better branding


Palmer also inserted marketers into new product development from Day One.

Before, marketers would take their first crack at a product six months before start of sales. Now, Palmer says, "they are closely associated with the product four years out.

"When you come down to the last six months, which is booking your advertising space, fundamentally, your advertising position is well understood and simplified."

Thanks to such efforts, Nissan has climbed steadily in brand-perception rankings.

In 2010 it wasn't even on the radar of Interbrand's annual survey of the world's 100 most valuable brands. In 2011 it cracked the list at No. 90, and by last year it had risen to No. 65.

The survey measures brands based on financial performance, advertising exposure, consistency, customer understanding, clarity and relevance.

Palmer says he seeks marketing guidance from, among others, academics at the London Business School and Jim Press. The former Toyota Motor Corp. board member and Chrysler Group president has been a Nissan adviser since 2010.

Press calls Palmer a jack-of-all-trades who can be hands-on in all areas of the business. "There aren't many people with that ability," Press says. "He oversees a very complicated and complex portfolio. He's a terrific example of a global automotive executive."

Nissan's problem, Press says, is that marketing hasn't caught up with product.

That is partly because Nissan was on the brink of bankruptcy when Renault stepped in to rescue the company in 1999. Ghosn channeled Nissan's then-paltry cash flow into basics such as product development and manufacturing, not marketing.

"He inherited a company that was pretty well hollowed out," Press says. "They never really focused on brand development. That's what they are doing now."

Ghosn has made improving brand value a key pillar of his Power 88 business plan, which ends March 31, 2017. Nissan has invested billions of dollars in EVs and wants to take leadership in autonomous driving. But the message isn't sinking in, Ghosn says.

"That is the job of Andy," he says. "We discovered that even though we were developing a lot of products, a lot of technologies, in a certain way it was not communicated very well.

"The marketing side is a little weak. It is his responsibility to make it an asset for Nissan."

Palmer has another tough task: reaching the 8 percent global market share goal targeted by Power 88. In June 2011, the combined share of Nissan and Infiniti was about 5.5 percent. It had climbed to only 5.9 percent by last September, Nissan says.

Again, Palmer's sales road map brings him back to the data.

"We've got to get our incentive spends under control," Palmer says. "You should be able to use mathematics to model more or less where they should be. My hypothesis is that sales is a process, and therefore a process can be monitored like a production line, and within a statistical error, you can anticipate what's going to happen."

He suggests that just as global marketing methods were tightened and standardized, global sales methods will be, too. Some may even include new rules for dealerships.

Refining the dealer experience is especially important, he says, because customers spend more time researching online and less time visiting showrooms.

"From the moment somebody walks through the door, there is a process that can be applied and there is training that can be applied," Palmer says. "The way in which you welcome somebody can, in some way, be mandated."

"I didn't get my Ph.D. until I was nearly 40 years old. Pragmatism and academia go hand in hand." - Andy Palmer

Room to rise?


Palmer is adept at multitasking.

At 16, he left high school, where he was an accomplished fencer and badminton player, to pursue his love of gears and gadgets as an apprentice assembling clutches at Automotive Products, a now-defunct British parts maker.

His next stop was designing transmissions at Rover Group, where he worked on the Mini and the Rover 100, 200 and 400. All the while, he completed parallel master's and doctoral degrees in engineering and management, while holding down his day job.

"I didn't go through the classical engineering training," Palmer says. "I didn't get my Ph.D. until I was nearly 40 years old. Pragmatism and academia go hand in hand."

Could Palmer's relatively young age and rapid rise put him in line as the next CEO?

Executives who once were considered top contenders, such as Carlos Tavares and Patrick Pelata, have left the company. Yet Ghosn publicly says he prefers a Japanese national to succeed him.

Much will depend on how Palmer performs in boosting Nissan's image and sales.

Palmer says November's management shuffle, which dissolved the COO position and created five direct reports to Ghosn, shows there are plenty of choices.

"I think the bench of management is much stronger now," Palmer says. But when a visitor notes that he has never stopped climbing the ladder in his meteoric rise, he replies, "At some point, there's no room on the ladder." c

You can reach Hans Greimel at hgreimel@crain.com. -- Follow Hans on Twitter

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