Integrating the two-headed giant after the Yawata–Fuji merger (1970)

Scale does not become one body by itself

The heart of this problem was how to reconcile the world-leading scale the merger produced with the internal friction that same scale created. The cultures of the two predecessors were called water and oil, and communication silted up as meetings grew larger. That Nippon Steel’s leadership avoided a hurried reorganization and gave priority to reconciliation by consensus — on the view that a genuine new agreement could only be built by passing through the friction — can be read as a decision to absorb the pain of integration slowly, over time. Immediately after its founding, the company was itself the proof that expanding scale does not automatically deliver an integrated organization.

This struggle gradually disappeared from view in the growth that followed. The rationalization gains appeared, and a structure capable of holding the world’s top position in crude steel for many years took shape. But the friction and the communication problems that come with sheer size are things that management-by-scale meets again and again. Half a century after that reunion of two firms separated for a quarter of a century, Nippon Steel went on to the largest cross-border acquisition in its history. How to bind together organizations with different cultures — the question posed in the first months of 1970 — returns in a new form every time the company reaches for scale.