Becoming a holding company and splitting into six operating firms (2005)

On handing out authority

The clean-up of the negative legacy was largely complete by 2004, so the move to a holding company was not its aftermath. What it rested on was a number: through the restructuring that began in 2001, the consolidated subsidiaries reached roughly twice the margin of the parent. It was a design for governance — dissolving the fifty-year centralism of the Fukuoka head office and redistributing authority. The company took the order of testing the hypothesis against subsidiary results first, and only then extending it to the parent.

Yet the authority it handed out began to be gathered back in within three years. The split, taken to 22 companies by October 2006, was heading by 2008 toward consolidation into four regional companies, and that November an operations control division was placed inside the holding company itself. The NEXT 50 plan ended with ordinary profit of ¥1.19 billion against a ¥9 billion target. The hypothesis that delegating authority raises efficiency and margins appears to have held for independent subsidiaries, but not to have worked the same way once the parent itself was carved up.