Correcting decentralisation: reorganising to stop being a pure contractor (1987)

Between delegation and control, how to keep the strength

The heart of this sequence of decisions was that it went at the mechanism behind the company’s success, rather than applying first aid to a financial crisis. For a firm that had shed family ownership earlier than anyone, devolving authority to sites and subsidiaries was its own substitute for a centre of gravity — a way of drawing self-reliance out of its employees. But the same mechanism that had performed in the boom turned against Taisei in a low-growth, mature market as hoarded land, subsidiaries eating each other’s markets and slow decisions. When strength and weakness grow from one root, how far should management cut? Taisei’s answer was to add central control while keeping the decentralised base — an adjustment that deliberately did not swing the pendulum all the way back.

The slogan of breaking out of pure contracting was harder to realise than to draw on an organisation chart. The idea behind folding design into sales — creating orders rather than receiving them — was clear enough, but turning engineers who draw plans into people who go out and propose to clients takes daily training and a change of mind. That chairman Sako Hajime kept returning to the harm of vertical silos and the barrier between layers was a measure of the difficulty. Rather than chasing scale, in which mix of businesses should a mature market let Taisei use what it actually had — its non-family origins and its delegation? The question Taisei kept asking through the 1970s and 1980s would present itself again, in the same shape, at the bursting of the bubble and again after Lehman.