The Essence of Management Judgment, as Revealed by the “Why Now?” Question
Rakuten Group has announced a reorganization of its financial businesses, integrating Rakuten Bank, Rakuten Card, and Rakuten Securities. What’s noteworthy is the background: the group announced a similar reorganization about two years ago, but subsequently “withdrew” it. Media reports highlight voices asking, “Why integrate now?”
Many managers tend to view withdrawing or postponing an announced policy as a “failure” or “weakness.” However, Rakuten’s case can be interpreted as an important practical example of “reversible management.” The key is not the “correctness” of the decision itself, but rather the design of timing and environment—”when and under what conditions” to execute the decision.
The “Announcement” and “Withdrawal” Two Years Ago Were Not a Failure
First, it’s premature to label the series of moves two years ago as a “failure.” At that time, Rakuten recognized the need for synergy and efficiency through the integration of its financial businesses. “Announcing” it was a decision in itself, signaling the direction internally and externally. However, it was later “withdrawn.” This very “withdrawal” is at the core of reversible management decisions.
In “reversible management,” decisions are treated not as “final decrees” but as “hypotheses” or “declarations of experimentation.” The announcement two years ago can be interpreted as “the first step to test the hypothesis of financial business integration.” Subsequently, based on certain conditions—for example, practical hurdles in integration preparation, changes in the market environment, a review of resource allocation within the group, or simply a judgment that “more observation is needed”—the next decision was made: “to postpone execution at this timing.”
This “deferral” or “execution postponement” does not lower the quality of the decision; it may have been the necessary time to increase the “maturity” of the decision. On the contrary, forcing through a large-scale organizational restructuring that is difficult to reverse, without the proper conditions in place, is a far riskier “irreversible decision.”
What Should Be Observed During the “Deferral Period”?
So, what did the management team observe during the two-year “deferral period,” and what conditions were they waiting to fall into place? While this is speculative, from the framework of “reversible management,” the following points can be considered.
1. Clarification of the “Practical Costs” of Integration: Details that were not visible at the announcement stage—such as the specific man-hours for system linkage, risks associated with customer data migration, and friction from integrating organizational cultures—likely became more concrete. Understanding likely deepened from synergy calculations on paper to a list of obstacles in the execution phase.
2. Changes in the External Environment: Financial regulations, competitor movements, and economic conditions are different from two years ago. In particular, changes in the business environment for Rakuten Mobile must have impacted resource allocation and priorities across the entire group. This period likely served as a time to closely monitor changes in the initial assumptions underlying the original hypothesis.
3. Provisional Placement and Testing of an “Integration Headquarters”: Large-scale reorganizations require a dedicated organization (PMO) to drive integration. Over these two years, they may have provisionally placed small-scale task forces or preparation teams to observe their functions and the necessary authority. This is a typical “reversible” organizational design process—testing roles without permanently assigning people.
Three Designs That Enable “Re-execution”
Executing a once-postponed decision again after two years. What enabled this “re-execution” was not mere “patience” or “passion,” but specific design considerations.
First, they did not leave behind the “corpse” of the decision. In many companies, when an announced plan fails, the personnel hired for it or the half-built organizations/systems remain as a “corpse,” hindering the next challenge. In Rakuten’s case, the announcement two years ago likely did not lead to large-scale upfront investment or fixed personnel, remaining in a provisional state. This made it possible to move again when the environment changed.
Second, they clearly maintained the “evaluation criteria” for the decision. While the broad direction of “financial business integration” remained unchanged, the specific metrics to measure its success or failure (e.g., cost reduction rate, improvement in customer lifetime value, cross-selling ratio of products) were likely refined over the two years and translated into realistic target values. Precisely because the decision’s purpose did not waver and the observable conditions were clear, they could gauge the timing of “now we can execute.”
Third, a culture that minimizes the psychological “cost of reversal.” Changing something once announced is a significant psychological burden for leaders. However, if a culture where “hypotheses are updated” and “decisions change when the environment changes” is ingrained in the organization, this burden is reduced. Whether the organization could digest the “withdrawal” two years ago as “learning” rather than “shame” holds the key to “re-execution.”
The Practice of “Deferral” That SMEs Should Learn
How can SMEs with limited resources apply this case to their management? Even without large-scale M&A or organizational restructuring, applicable principles exist.
For example, consider entering a new business. Many managers struggle with the binary choice of “do it or don’t.” However, “reversible management” takes a third option: “start small and observe.” Specifically:
- Form a “provisional team” using part of existing members’ time, without hiring dedicated personnel.
- Avoid full-scale capital investment; create a minimal prototype using existing materials or rentals.
- Before starting, decide on evaluation criteria and exit conditions, such as “If sales do not reach $X after 6 months, we will withdraw or change the method.”
Designed this way, a decision to “fully commit” two years later becomes possible, just like Rakuten. The important thing is for the entire organization to recognize that “stopping” is not a “failure,” but one “outcome of a decision.”
Summary: Setting an “Expiration Date” and a “Right to Retry” for Decisions
Rakuten’s two-year-delayed financial business reorganization is an excellent example showing that management decisions are not linear “decide → execute.” Rather, it is a cyclical and reversible process: “hypothesis declaration → observation and condition preparation → execution or modification or deferral → re-evaluation → re-execution.”
What managers should learn is to incorporate in advance, for all important decisions, an “evaluation period (expiration date)” and a “design for retrying.” For instance: “We will evaluate this new business in one year,” or “We will conduct an interim review of this organizational reform in six months. If the effects are not evident by then, we will retain the option to revert to the original structure.”
The question “Why now?” arises from the premise that a decision is a one-time event. However, from the perspective of “reversible management,” it can be seen as the result of precise synchronization between the environment and the decision: “A timing that was once inappropriate has now become appropriate.” In your company, is that decision you postponed truly a “closed” matter? Is the “observation” and “design” for re-executing it still ongoing?
It’s okay to withdraw a decision. It’s okay to change its timing. What’s important is not turning that process into an “irreversible commitment.” Rakuten’s two years may have been a valuable “waiting time” for precisely that purpose.
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