Becoming a holding company — and spinning out the watch business (2001)

Building a structure, and finding someone to hold it together

The core of this decision lies in carving the businesses accumulated through diversification into independent companies, each bearing its own profit and loss and its own manager, and placing a supervising layer above them. The boldness of handing even the founding watch business to a subsidiary can be read as the end point of a restructuring that sought to make responsibility unambiguous in the middle of a crisis — a choice that acknowledged, in organisational form, the end of the era in which the company earned as a single manufacturer. But building a structure and deciding who holds that structure together are not necessarily the same problem.

Indeed, the pattern of a founding family leading reorganisation across generations became part of the background to the later governance turmoil. As an institution, the holding company clarified which business earned under whose responsibility; what it could not settle by organisational design alone was who would sit at the supervising centre and how the interests of the group as a whole would be adjudicated. How the Seiko of later years would make use of the independent-accounting mechanism that spinning out and the holding structure had prepared, in matters of governance, was the question the 2001 reorganisation left behind.