Wolt has decided to exit the Japanese market. Meanwhile, the Rakuten Group is advancing a restructuring of its financial businesses, and in South Korea, the integration of HD Hyundai and Lotte Chemical has been approved. At first glance, exit and growth/restructuring appear to be opposite management decisions.
However, from the perspective of “reversible management,” these are decisions based on the same principle. It is the stance of not permanently fixing a decision once made. An exit is not a failure but a “decision to retreat” that reallocates resources to a more suitable place. Restructuring is also an “act of retreating” that does not cling to past structures but updates oneself in line with environmental changes.
The pressure many SME leaders feel is that “once a decision is made, you must see it through to the end.” However, the market, competitors, and technology continue to change from the moment you make your decision. There is no guarantee that the initial decision is absolutely correct. What’s important is to treat decisions as “experiments” rather than “final decrees,” and to leave room to turn back if necessary.
The Value of “The Courage to Retreat” Seen in Wolt’s Exit from Japan
The food delivery market is characterized by fierce competition. The decision to enter was likely based on expectations of market growth. However, there are realities that only become visible by actually competing in the market: customer acquisition costs, securing delivery personnel, differentiation from existing players…
What’s noteworthy about Wolt’s decision is that it chose the “exit” option early and clearly. This can be seen as a decision that escaped the “curse of sunk costs”. The emotional attachment of “we’ve invested this much, so we must…” renders many management decisions irreversible. Wolt honestly evaluated the results of its “experiment” in the Japanese market and chose the path of “retreating” and reallocating resources to other, more profitable markets or businesses.
This is not a defeat but optimization of management resources. There is no need to be ashamed of an exit. On the contrary, the integrity to face reality and focus resources on the next move is essential for sustainable management.
The “Structural Variability” Demonstrated by Rakuten and HD Hyundai’s Restructuring
The restructuring of Rakuten Group’s financial businesses and the “Daesan Project” integration of HD Hyundai and Lotte Chemical embody “reversible management” from another angle. These show a posture of not clinging to business structures or organizational forms built in the past.
Rakuten is reviewing its group structure of integrated operations for banking, securities, and card businesses and considering a restructuring to facilitate fundraising through its banking subsidiary. This is a move to update the structure itself, acknowledging that the previous judgment of “synergy through group integration” is no longer optimal due to changes in the regulatory environment and market conditions.
Similarly, the integration of HD Hyundai and Lotte Chemical is a “structural change” to respond to major environmental shifts in the petrochemical industry (decarbonization, supply chain reorganization). The framework of independent companies, once established, can also cease to be the optimal solution when the environment changes. A bold integration means once “retreating” from the existing framework and starting anew in a completely different form.
Think of your company’s organizational chart and business scope not as “absolute” but as the “provisional form” most suitable for the current environment. This is the core mindset shift of “reversible management.”
Three Principles for Designing Decisions as “Experiments”
So, how can you incorporate “room to retreat” into your own management decisions? Here are three principles applicable not only to major decisions like exits or large-scale restructuring but also to daily hiring, new business launches, and tool implementation.
Principle 1: Always Decide the “Evaluation Period” and “Exit Conditions” First
When starting a new business, hiring a new person, or introducing an expensive tool. “Let’s just try it” makes it impossible to retreat if it fails. Before making a decision, always clarify the following two points.
- Evaluation Period: Specific timing to review the decision, e.g., “interim evaluation after 3 months,” “decision on continuation after 1 year.”
- Exit Conditions (Kill Switch): Objective, measurable termination criteria, e.g., “if sales fall below XX yen per month,” “if customer unit price drops below YY yen,” “if member turnover rate exceeds ZZ%.”
Simply documenting and sharing these two points with stakeholders transforms the decision from a “permanent commitment” to a “time-limited experiment.” Wolt’s exit was likely possible because there was a defined period of experimentation in the Japanese market and evaluation criteria within the company.
Principle 2: Do Not “Fix” People or Systems
The biggest reason decisions become irreversible is immediately “fixing” people or systems.
Before immediately hiring a full-time employee for a key position, deconstruct the work itself and try “temporarily placing” it with external resources or short-term contracts. Before rolling out a new managerial system company-wide all at once, run it as a “pilot” in one department.
Fixation blurs accountability and causes you to lose sight of the actual work content or purpose that should be changed, due to thinking “this person is in this position” or “this system exists.” Rakuten’s restructuring is precisely an attempt to review the previously “fixed” success model of “group integration.”
Principle 3: Continuously Observe “Reality” with “Numbers”
What supports “reversible management” is not emotion or speculation but grasping reality based on objective numbers. The previously mentioned theme of “protecting the leader’s future with numbers” connects here.
After making a decision, regularly monitor the set evaluation metrics. The key here is not to blame “someone” for bad numbers. Numbers are signals that tell you “whether the initial decision or structure fits the current environment”. While it’s not clear exactly how Wolt evaluated the numbers for the Japanese market, it undoubtedly decided to exit based on objective indicators.
Creating a dashboard and developing a habit of checking only the core KPIs (Key Performance Indicators) daily or weekly enhances decision reversibility.
“Exit” and “Restructuring” are Proof of Management Health
In the world, expansion and growth are often praised, while exit and downsizing tend to be viewed negatively. However, organizations that can flexibly change their own form in response to environmental changes are the ones that survive long-term.
An exit is the act of cleanly terminating a failed experiment and recovering precious management resources (funds, talent, time, attention). The recovered resources can be invested in the next, more promising experiment.
Restructuring is “surgery” on oneself to regain competitiveness in a changed environment, without clinging to past success models. Both are proactive choices not to cling to the status quo.
I ask you, as an SME leader. Does your company still have room for “reversible” decisions?
- Are you pouring resources into an unprofitable business out of inertia?
- Is the organizational structure built on past success now a hindrance in the current market?
- When making a new challenge, do you clearly decide on an evaluation period and exit conditions?
The First Step in “Reversible Management” You Can Start Today
You don’t need to suddenly think about grand business restructuring or exit. Start with the next small decision.
“How and when will we evaluate whether this decision is working?”
Ask yourself this question before every decision: placing an order with a new supplier, mid-career hiring, changing internal rules. This alone transforms the decision from a “sacred decree” to a “verifiable hypothesis.”
Wolt, Rakuten, and HD Hyundai are merely practicing this “verifiable hypothesis” as management decisions on a large scale. There is nothing they can do that you cannot.
Management is not about continuously providing correct answers, but about continuously renewing oneself within a changing environment. That renewal sometimes requires a decision to “retreat.” Exit and restructuring are not signs of a leader’s “defeat” but of their “wisdom” and “courage.”
Comments