The Irreversible Organizational Ossification Called “Restructuring”
J:COM is embarking on a large-scale organizational restructuring, merging nine group companies. Tokushima Prefecture is establishing a new “Policy Division” to promote tourism. Both are so-called forward-looking organizational changes aimed at “strengthening the structure” or “improving efficiency.”
However, what is the biggest hidden risk for executives and managers? It is “the inability to revert an organization once it’s created.” The moment roles are fixed, personnel appointments are made, and budgets are allocated, that organizational structure begins to rigidify as the “correct answer.” Even if it was a mistaken judgment, the psychological and political costs become enormous, making correction extremely difficult.
From the perspective of “reversible management,” organizational restructuring is one of the decisions most prone to losing reversibility. Using recent news as a case study, this article presents a concrete blueprint for testing a “provisional integration” before “fixing” the organization.
The Unobservable Risk Hidden in J:COM’s 9-Company Merger
Let’s examine the J:COM case in detail. According to reports, it will merge nine group companies in April, integrating regional business companies that were previously separate. The purpose is presumed to be speeding up decision-making and concentrating management resources.
What is often overlooked here is the “observability of pre-integration differences.” The current state of nine separate companies can be seen, in a sense, as “nine experimental fields” running in parallel. Subtle differences in customer service, sales methods, and cost structures likely exist in each region. There is a risk that this “on-the-ground knowledge” will be lost in the process of converging into a single manual or rule through integration.
To judge whether integration is the “correct answer,” data is needed to compare the pre-integration state with the post-integration state. However, once a full integration is complete, the “pre-integration state” used for comparison disappears. This is a classic example of an “irreversible decision.”
Three Design Points for “Provisional Integration”
So, how can one proceed with a “reversible provisional integration” instead of heading straight for a complete and irreversible merger? There are three design points.
First, set a clear “evaluation period.” “First, we will establish an integration headquarters to control functions comprehensively for one year, while maintaining each company’s legal status and financial statements. After one year, we will evaluate KPIs to decide on a full merger, maintaining the status quo, or another form.” Such a declaration guarantees the reversibility of the decision.
Second, measure and record the “baseline” before integration. Measure and record indicators you want to change through integration—such as decision-making speed, customer satisfaction, employee engagement, and cost efficiency—immediately before integration. Without this, judgments about post-integration success or failure will fall into emotional arguments.
Third, identify and continuously observe the “value that might be lost” due to integration. For example, is “local community focus” or “field mobility” being lost? Decide in advance who is responsible for observing this and how often.
The Trap of Role Fixation Seen in Tokushima Prefecture’s New “Policy Division”
Another interesting case is the organizational restructuring in Tokushima Prefecture. It has been reported that a “Policy Division” will be newly established to strengthen the structure for promoting tourism. The objective is clear: to create an organization with responsibility and authority for the cross-cutting issue of tourism.
The pitfall here is the ossifying power inherent in the unit “division” itself. In administrative organizations, when a “division” is established, a budget is allocated, personnel are assigned, and annual business plans are formulated. This means drawing an implicit boundary within the organization: “Tourism promotion is this division’s job.” Other departments may withdraw from tourism-related work, potentially leading to “siloization,” where the overall creativity and sense of ownership within the organization actually decrease.
One principle of “reversible management” is to “prioritize observation over fixation.” If so, instead of immediately establishing a permanent “division,” why not launch it as a time-limited task force, such as a “Tourism Promotion Project Office”? Members could hold concurrent positions from various departments, and budgets could be allocated on a project basis. This makes it easier to disband or reorganize if it doesn’t function well or even fosters siloization.
The “Provisional Establishment” Technique Applicable to Municipalities and SMEs
This concept of “provisional establishment” is particularly powerful for SMEs with limited resources. Examples include launching a new business division or creating a bridging role between sales and development.
Before creating a full-fledged new department or position, there is room to experiment with the following “provisional forms”:
- Concurrent Team: Form a team with members who dedicate part of their time to the new function while maintaining their primary duties. Call the person in charge a “Project Leader,” not a “Department Head.”
- Time-Limited Budget: Allocate funds as quarterly project budgets instead of annual budgets.
- Define Outcomes First: Clearly define and agree upon the specific outcomes this team must achieve within six months (e.g., complete interviews with X new potential clients, create a prototype) before the team is formed.
This allows verification of whether the function is necessary through actual results and activities. If it doesn’t work well, “withdrawal” is complete simply by returning members to their original departments and stopping the budget. Human and psychological costs are minimized.
The Intersection of “Strategic Retreat” Advocated by BCG and Reversibility Design
The third piece of news, an essay by the Japan CEO of BCG on “How to Strategically Wind Down a Business,” aligns with our philosophy in its positive view of “retreat” itself. He emphasizes the importance of viewing retreat not as “liquidating past failures” but as “reallocating resources for the future.”
Applying this thinking to the context of “organizational restructuring” reveals an important principle: “Creating a new organization is a ‘strategic retreat’ from the old organization.”
Establishing a new Tourism Policy Division means a “retreat” from the tourism-related work previously handled separately by various departments. J:COM’s integration of nine companies into one is a “retreat” from nine independent management structures. If so, it is necessary to rigorously verify whether this “retreat” truly represents the optimal reallocation of resources for the future.
Verification requires a mechanism to maintain and evaluate the pre-retreat state (As-Is) and the new organizational state (To-Be) in a comparable manner. Full mergers or permanent new establishments strip away this “comparability” from the start. The “provisional integration” and “provisional establishment” we advocate are techniques that intentionally create this period for comparison and evaluation, thereby increasing the reversibility of the retreat decision itself.
Practical Framework: The “Reversibility Checklist” for Organizational Change
Finally, here is a checklist to confirm whether a contemplated organizational restructuring decision is “reversible” when considering it within your own company.
- Is the evaluation period clear? Is it documented: “We will trial this for X months first. We will decide on continuation at [Month, Year]”?
- Has the baseline been measured? Have you measured and recorded baseline performance metrics (speed, quality, cost, employee sentiment, etc.) before the change?
- Are withdrawal conditions agreed upon? Have you decided on specific indicators and thresholds for what situation would lead to judging “this change has failed” and reverting (or changing to another form)?
- Who is the observation lead? Have you designated a responsible person (other than the change promoter) to observe and evaluate the post-change state from a neutral position?
- Are signals of fixation minimized? Can you start in a more flexible form instead of immediately eliminating legal entities, granting formal titles, or allocating permanent budgets?
Organizations should follow strategy, but if the organization itself becomes rigid, it can become a shackle for new strategic shifts. Treat major organizational changes not as a “decision” but as an “experiment.” The first step for that is to start in a “provisional” form with a set evaluation period.
Whenever you see news of organizational restructuring touting efficiency or strengthening, ask yourself from a managerial perspective: Is it designed to be “reversible,” or is it a one-time, irreversible gamble?
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