What the Stalled Restructuring Reveals
A recent report in a Korean economic daily caught my attention: the restructuring of a petrochemical business has stalled due to the unexpected geopolitical risk of the Middle East conflict. With corporate opinions failing to converge, soaring raw material costs are now squeezing performance.
At first glance, this might be dismissed as “external changes derailing the plan.” But from the perspective of reversibility in management decisions, a deeper lesson lies hidden. The question is: wasn’t the restructuring plan itself structured to be irreversible?
Meanwhile, a report on the organizational restructuring of the Vietnam Fatherland Front Central Committee, published around the same time, appears to be the polar opposite. Despite being a large-scale reorganization, its process seems to incorporate elements of “reversibility.”
In this article, I’d like to explore the design of “reversible restructuring” in management decisions, using these two news stories as case studies.
Why Restructuring Runs Aground
The petrochemical restructuring stalled not just because of the external factor of the Middle East conflict. More fundamentally, the plan itself was likely designed on the premise of “completion.”
Three Characteristics of Irreversible Plans
From my experience observing many business restructurings, I can say that “irreversible restructuring plans” share three common characteristics.
First, only the synergy effects of integration are emphasized, while the costs of separation are downplayed. Second, consensus-building among stakeholders ends with a “decision,” failing to anticipate conflicts of opinion during the execution phase. Third, while claiming to “account for” changes in the external environment, only a specific scenario is actually considered.
In the case of this petrochemical restructuring, reports of corporate opinions failing to narrow down clearly illustrate the second characteristic. While the broad framework of the restructuring was agreed upon, specific conditions and schedules could not be reconciled, leading to a deadlock.
If this deadlock drags on, the third risk—soaring raw material costs—will materialize, worsening the situation further. It’s a classic case of “unable to go back, yet unable to move forward.”
Learning “Reversible Organizational Reform” from the Vietnam Fatherland Front
So, how can we design “reversible restructuring”? Here, the organizational restructuring of the Vietnam Fatherland Front Central Committee offers valuable insights.
Phased Transition and Setting Evaluation Periods
According to reports, this reform is “significant.” But what matters is the approach. Rather than fixing the organizational structure all at once, the process appears to incorporate a phased transition.
Specifically, it involves operating under the new organizational structure for a set period, evaluating the results, and then making adjustments as needed. This is a practical application of the fundamentals of “reversible management”: “setting evaluation periods” and “clarifying observation points.”
When managers undertake organizational reform, they often rush to “transition to the new system quickly” and try to make drastic changes all at once. However, I’ve seen many cases where this leads to confusion on the ground, fails to deliver expected results, and leaves the organization unable to return to its original state.
The Vietnam Fatherland Front case shows that even large-scale reforms can minimize risk by incorporating reversibility into the process.
Three Design Points for Ensuring Reversibility
Here, I’ll summarize three points for designing “reversible restructuring,” derived from the petrochemical and Vietnam Fatherland Front cases.
Set Exit Conditions First
Before starting a restructuring, clearly define the conditions under which the plan will be abandoned. This is one of the most fundamental principles of “reversible management.”
In the petrochemical case, conditions like “if corporate opinions do not converge within X months, the plan will be returned to a blank slate” should have been agreed upon in advance. Setting exit conditions can prevent the risk of prolonged deadlock.
Set Evaluation Periods
After transitioning to a new organizational or business structure, establish an evaluation period to verify its effectiveness. During this period, it’s crucial to maintain procedures for returning to the original state.
In the Vietnam Fatherland Front case, this evaluation period seems to be implicitly set. I recommend that managers also treat the first three to six months after introducing a new organization as a “trial operation period” and hold regular effectiveness reviews.
Design the “How to Return” in Advance
This point is often the most neglected. If the restructuring doesn’t go well, you need to have a plan for how to return to the original state, designed in advance.
Specifically, document the legal and financial procedures for re-separating integrated departments, data migration plans for reversing system integrations, and HR rules for reverting personnel assignments. This allows you to act without hesitation when needed.
“Being Reversible” Is Not a Weakness
Some managers view “setting exit conditions first” or “designing how to return” as a pessimistic stance that assumes plan failure. But this is a major misunderstanding.
On the contrary, incorporating “reversibility” into the design is what enables bold restructuring. By anticipating the worst-case scenario and preparing countermeasures, you create psychological peace of mind and accelerate decision-making.
The business transformation I experienced during the COVID-19 pandemic was based precisely on this thinking. When starting a new business, I simultaneously defined “conditions for withdrawal” and “procedures for returning to the original business,” which enabled rapid decision-making.
The stalled petrochemical restructuring reminds us anew of the dangers of “irreversible plans.” And the Vietnam Fatherland Front reform offers hints for designing “reversible organizations.”
In management decisions, the most important thing is not the correctness of the decision itself, but how quickly and at what low cost you can return to the original state if the decision turns out to be wrong. I encourage you to incorporate the design of “reversible restructuring” into your own organizations.
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