Restructuring corporate design in periodsof dynamic change
Naoto Iwasaki
Gerry Gannon

Ⅰ．Introduction
In November 2020, the Nikkei 225 Index achieved its highest stock price in 29
years after bubble economy burst, despite Japan being during the Covid19
Pandemic. This was the Nikkei’s highest level since the bursting of the bubble
economy in 1992. The reason behind the high stock was because of easing over theuncertainty of the USA presidential election and investment markets around theworld became optimist and bullish about future opportunities. Certainly, theNikkei 225 Index had been bouncing back and forth between the 20,000 and 24,000 yen for quite some time. In early December 2020, it reached 27,000 yen andshortly thereafter exceeded 28,000 yen on 21st January 2021. Although there is aslight sense of incongruity of stock prices rising at the time of such a major natural
disaster as the Corona virus, the stock price rise, which many regard as a “leading
indicator of the economy” hints at economic expectations post virus.
For many people in Japan, the events of the pre and post bubble economy have
faded from view. The change in the business environment from boom to bust overthe following 30 years was intense, and apart from the period of the World War 2
was marked by the most significant stagnation Japan has experienced in recent
memory. During this time many enterprises experienced both Bull and Bear waves
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of prosperity and decline, with many enterprises being born and many others
disappearing.
One top investment trust company has suggested that this is a cycle that theJapanese economy will go through every 30 years1). It may be true that such acyclical movement is accurate, but above all, it is the transformational effort ofenterprises that has been the driving force of today’s stock price revival. The
evolution of the enterprise is not the environmental deterministic evolution of
Darwinian evolution2) or Lamarck-style evolution3) advocates. Rather, it is anevolution in which the will and consciousness of the subject were mingled, which
Koop4) and Dr. Kinji Imanishi5) advocated. The result of the significant effort inachieving these transformations for many enterprises is now bearing fruit.
In this paper, we will consider the basic concept of corporate transformation
within the conceptual framework of rethinking “Corporate-design” 6), while
overviewing the industrial society primarily in Japan over the past 40 years.

Ⅱ．Basic concepts of Corporate-design
The first thing that a company which is trying to change its model and markets
must do is to understand the nature of the existing market and how it is changing
and importantly why it is changing. It is vital for the organization to study what
influence it has over its ability to adjust and change, for in understanding thechange that an enterprise wants to achieve, without the ability to achieve this
1)
2)
3)
4)
5)
6)

See Nikkei Shinbun, 25th December 2020, p.20 (in Japanese)
It is a natural selection theory, and the theory that evolution occurs by mutation.
It is a theory that it is a unnecessary theory, and it is a theory that it mutates in theliving thing by the need for the organ.
See Bergson, “Creative Evolution”.
See “What is evolution?” by Kinji Imanishi, Kodansha Academic Library, 1976 (inJapanese)
See “Redesign of Corporate Design” by Naoto Iwasaki. (in Japanese)─ 108 ─Restructuring corporate design in periods of dynamic changechange, is of little or no value. Then the issue of timing arises, can the enterprisematch the required timing? The resources to achieve effective change, even in alarge organization are scare and even then, there is a limit as to the amount ofchange that can be realistically achieved and that is why timing is so important.
And, for the business to operate and indeed strengthen itself whilst it is going
through the process of change, the nature and caliber of the management system isvery relevant. Additionally, the entity would be wise to manage (as far as possible)
the relationships between stakeholders, which sometimes fall into conflicting
contradictions. Managers must think about how to manage, procure, and prioritiese
appropriate resources, how to communicate with partners and customers, and to
how to restructure the business structure and the basic processing it needs, so thatis it must be cognizant of the “overall structure of the enterprise” and its
environment.
In this paper, the redesign of the overall structure of the enterprise in relation
with the business environment is referred to as restructuring corporate design.
“Corporate design” is composed of “business design”, “management design” and“governance design”. The “business design” has the function, mechanism or
system of creating sales and value added to a business. “management design” isthe mechanism that enables an organization to function effectively and efficiently,
and finally “governance design” is the mechanism of corporate governance thatcoordinates the relationship between the various stakeholders of an enterprise.
Thus, even if a business design is suitable for the changing environment theenterprise finds itself in, the enterprise’s performance cannot operate to its
intended level, unless the management design, which enables the enterprises
operations, can be similarly enhanced, and improved. e.g., If you upgrade theengine of a car for higher performance without upgrading the tyres, likely the car
will perform worse (spinning tyres with no grip) or worse crash!

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For any enterprise to operate at its potential, at its optimal performance, which
is an appropriate combination between environmental change, business design,
management design, and governance design, all three “business design”,“management design” and “governance design” must all be working together
effectively.
1．Changing external environment
In this section we will consider the changes in the “market environment”,“technicalenvironment”,“competitiveenvironment”,

and“institutional

environment”, which are the main elements of the external environment
surrounding the enterprise and examine their impact on enterprise performance.
(1) Changes in the market environment
The most familiar aspect of the external environment is the market
environment.
In the case of Japan (population 125 million), about 300 trillion yen of the
Figure-1

Concept of Corporate Design%JCPIQH/CTMGVGovernance Design

Management Design%JCPIGQH%QORGVKVKQPBusiness Design%JCPIGQH6GEJPQNQIKGU%JCPIGQH+PUVKVWVKQP─ 110 ─Restructuring corporate design in periods of dynamic change

economy is private or consumer consumption, whilst in China, a country withmore than 1.3 billion people the consumer economy is about 650 trillion yen, morethan twice that of Japan. In both countries the power of the consumer to affect theeconomy should not therefore be underestimated as they are indeed powerfuldrivers of their respective economies. And, as the GDP per capita in China grows,
so consumers will have more power over the economy in the future.
In understanding the impact of the bursting of the bubble economy in Japan, it
becomes clear that the economic environment has had a great impact on consumer
behaviour. The influencing factors which affect the purchasing decisions ofconsumers at the height of the bubble economy, which commenced with the swift
appreciation of the yen in 1987, were quite different from those of the post bubble
bursting economy. In the bubble economy, high-priced goods had high utility forpeople, and there was widespread consumer demand for high end luxury goods.
This then extended to the service sector of the consumer economy as well,consumers tending to purchase goods and services that were of higher
specifications and utility than previously was the case. At that time, it wascommon practice for consumers to purchase products above what they required, by
way of example, “there were many buttons and switches that we did not know how
to use in home appliances”. Excessive and overly ornate packaging, was one
example of the excessive waste of the time and this trend still lingers today incertain sectors of the economy.
However, consumer sentiment changed significantly when the bubble
economy collapsed, and the purchasing behavior of the consumer changed
markedly. Subsequent to the bursting of the bubble economy, consumers refused
to pay the retail price and instead consumers selected discount-stores, 1dollar
shoppers and category killers to buy everything. Under such situation, retailers
could not achieve such high prices and so the prices of many goods and services

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had to be discounted and reduced, resulting in the so called “collapse of the pricing
system.”. However, the “collapse of the pricing system” did not last long. After the
bursting of the bubble economy, the market became more and more uncertain withaffluent people and those on a budget both skewing the consumer markets andconfusing retailers, thus resulting in extreme market polarization.
In spite of the fact that at that time everybody in Japan considered Japan to be
in a deep recession, there were still many affluent consumers shopping at luxury
brand shops which were spreading in the Ginza area. Some consumers wereseeking cheap daily necessities including food for even one yen, whilst for others,
expensive brand shopping and expensive meals in high class hotels and restaurants
was the norm. Previously the behaviours of these rich vs poor were understood, thepattern of the rich and poor, but the “market polarization” pattern which appearedin the new millennium era was not so simple. It was not unusual to see a wealthy
full-time housewife wear real fur in her Mercedes on a daily basis, and for a young
woman to wear a Louis Vuitton luxury bag who was in fact a low-income, nonregular employee who was forced to be frugal every day. It was completely
different from a simple type of “a bipolar society”. The complexities anduncertainties illustrated by these examples became more and more common.
Moreover, the desires of the more affluent in Japanese society resulted in achange in the more affluent end of society and more and more up market storesflocked to Japan, fueled by high disposable income and the ever-increasing
demand for more upmarket goods and services. Since 2007, large-scale apparelstores of SPA business type7) have begun to line the center of the Ginza district.
Starting with the opening of H&M store as Japan’s first store, followed by
UNIQLO, the largest SPA company in Japan, ZARA and GAP, to name but a few.
7)

It is an initial of specialty (S), store retailer of private (P), label, apparel (A). In the
1980s, GAP used it to describe its business type.

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In addition to high-end apparel, such as haute couture and ready-to-wear, theseareas became a magnet for “high end” retailers and “more affluent” customers,
with high end coffee shops, up market restaurants and other complementary
services to cater to the desires (both men and women) of those with a higher
disposable income in Japanese society. Thus, old Ginza has changed, and its
character changed more and more as time went by. In addition to the affluent
Japanese customers, a boom in more affluent Chinese and other Asian tourists
soon followed. Today it is now a common sight to see long lines of tourist coacheswith affluent Asian consumers in the Ginza area. It will be interesting to see how
Ginza is able to adapt in a post Covid world? All markets are greatly influenced by
the economic situation and Ginza is no exception.
Another consumer economic area of activity worthy of note is that ofsupermarkets, whose sales have been sluggish in recent years as the consolidationand decline of department stores progressed in the Heisei depression. This wascontributed to by the addition of significant number of convenience stores, which
expanded extremely swiftly, both in terms of numbers and the services they
provided. Indeed, looking across the whole retail and consumer spectrum, the only
area which has increased is the mail-to-mail sales market.
One area of dramatic growth is that of the e-commerce (EC) market which isalso undergoing rapid change and expansion. Whilst this was growing rapidly prepandemic, the effect of the pandemic, with the fear consumers had of face-to-facecontact, this has further accelerated the adoption of online shopping andmarketing. This has even had a major effect in the distribution structure of theretail sector, in transforming the buying behavior of consumers. According to U.S.
marketer Roland Hall, store-selling distribution in general, pre pandemic worked
as follows: Attention → Interest → Demand → Memory → Action, i. e.,“AIDMA.” 8) However, now consumers collect their information from the Internet,

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consumers collect the information from a wide range of sources including searchengines, and through SNS such as Facebook, Twitter, and Instagram moreover,there is now the new phenomena of consumers connecting directly with otherconsumers as it is so easy for them to exchange information with other consumers,
even if they were unknown to each other prior to this “first contact”. Thus,
consumers’ buying behavior has changed and is now characterized by “Attention→ Interest → Search → Action → Share (information sharing)”.; a change from“AIDMA” to “AIS.”As a result of the internet age, great changes have taken place in customers
product knowledge and understanding of the wider market. Indeed, on occasion
the consumer can have more knowledge that that of a product salesperson, which
was never the case prior to the emergence of such a vast array of product andservices data available to all consumers online at the touch of a button. Moreover,in addition to friends and acquaintances, the consumer now has direct access toconsumer reports, “influencers” opinions and a multitude of claimed experts (someexpert, some not) through their internet portal at home. In fact, the change in powerfrom the retailer to that of the consumer is quite daunting for some enterprises.
There are even dedicated websites e. g., unhaggle. com in the USA which isdedicated to making car sales direct with the consumer, bypassing the retailer tothe extent that the retailer does not have any contact with the consumer untildelivery of the vehicle, the 3rd part expert (unhaggle.com) conducting all
negotiations.
The spread of the Internet has also enabled some distribution channels whichwere not viable previously. Under the traditional distribution system, which isgoverned by Pareto’s law, 20% of good customers provides 80% of an entity’s
8)‘AISAS’ is a concept clarified in 2004 based on the analysis by Dentsu Co., Ltd., thelargest PR company in Japan.

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sales, a huge potential market called “Long Tail9)” had become apparent. In thelong tail market, goods that had been treated only as “dying goods” until can now
be as revenue source10), which is the manifestation of an 80% potential market thathas been neglected under an ecosystem with limitless marginal costs close to zero.
The “fanboy” market is no longer just for only geeks.
In addition, the “inner globalization” of Japan has given rise to a new market.
Many developing countries in Asia have achieved rapid economic growth. For
Japan, which has a declining population due to the declining birthrate and aging
population, the increase in tourists visiting Japan is a welcome boost to theeconomy. Fortunately, Japan is a very attractive destination, particularly fortourists from Asian countries, and the number of tourists has been steadily on theincrease with successive waves of inbound tourists in the last few years11). In
addition, the full-scale operation of LCC (Low-Cost Carrier) airlines in pursuit of“low cost and value” in the Asian market also played a significant role inglobalization and tourism travel in developing countries. By way of example, Ryan
Air, the European based LCC has a larger market capitalisation than British
Airways (by a factor of over 3). “Inner globalization” by tourists visiting Japan isbeneficial not only from an economic benefits perspective, but also in enhancing
the flexibility of rigid local markets by promoting diversity and flexibility of themarket as overseas consumers usually have slightly different aspirations to thosefrom the domestic market. Static rigid markets have a higher probability of being
destroyed when faced with major change. It is also important to strengthen
flexibility and elasticity to withstand major changes. “Inner globalization” is also
important in the sense of adding to the flexibility and diversity of the Japanese
9)
10)
11)

See “Long Tail” by Chris Anderson.
See “The Rise of the Internet of Things and the Shared Economy” by Jeremy Rifkin.
The number of foreign tourists visiting Japan in 2019 was the highest ever, but since
the pandemic in 2020, this boom has subsided at once.

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market. Thus, the changing market environment is a big factor in promoting the
restructuring and revitalising individual enterprises offerings to consumers, both
domestic and foreign.
(2) Changes in the competitive environment
The second change which promotes the rethinking of corporate design ischanges in the competitive environment itself. One of the significant influencing
factors here is the shortening of the product life cycle, the rise and inevitable fall ofcompetitive enterprises. In recent years, the speed of the one-time winners fallingfrom grace and becoming losers in specific industries and business arenas has beenshortened remarkably. Even enterprises that once held the top position in specificindustries, regardless of their prestige when they were at the top, are now unlikely
to remain as the No. 1 enterprise for long. In recent years, the length of time anenterprise spends as an industry “No. 1” has shortened dramatically.
The reign of the “Big Three” American companies of Ford, GM and Chrysler,that once dominated the automobile industry in the 20th century world is over.
Ford Motor Co., which pioneered the production line process for cars globally is
no longer going to manufacture cars anymore in North America from 2022 (having
switched 100% to trucks and SUVs) whilst Toyota, Nissan and Subaru are

manufacturing cars in the North American market. In this section we will consider
the changes in the “market environment”, “technical environment”, “competitiveenvironment”, and “institutional environment”, which are the main elements of theexternal environment surrounding the enterprise and examine their impact onenterprise performance.
Another good example of this phenomena is Kodak Co. founded in the USA on
the 23rd of May 1892, which for decades reigned as the No. 1 globally in thephotograph film market for many decades, which but filed for bankruptcy in 2012.

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In the early 1980s, when PCs had just appeared on the market, many
manufacturers looked up to the “Big Blue” (IBM). Around 1990, the PC market in
Japan was completely dominated to by NEC whose business domain was “C&C
(Computer & Communication). Similarly Daiei in Japan was a supermarket chain that

reigned in the top place in the GMS industry in Japan, and Sharp sought newtechnology to enable it to differentiate itself from its competitors, Sharp was at thattime was No. 1 globally in the liquid crystal business. Sony is yet another example,
Sony was the No. 1 advanced TV manufacturer, that title now rests firmly in
Samsung’s hands, the once, world famous Sony Trinitron, is no more.
Many of the corporate heroes of the 20th century were forced from the top of
the table, some even disappearing from the market altogether, or changing theirappearances dramatically. Their time at the top not lasting very long, O’Reilly C.
A. and Tashman M.L., who authored “Lead and Disrupt”, said, “Five years ago, oreven twenty, managers had the luxury of time. If they were slow to react to change,
they would recover, this is no longer the case.”
In the internet era, the time to get to the No. 1 position in any sector can be very
rapid, correspondingly the period that any enterprise stays at the top is also
shortened and its decline can be very rapid. In this turbulent age entities must
continually innovate both to attain and retain the No. 1 position. Since thechallengers continually aspires to dethrone the champion, thus the battle to stay at
the No. 1 slot is continual and relentless, and the time between each series
challenge is being shortened as well. Yahoo! Japan, which had a major share ofinternet service in Japan and expanded the market as one of the leading figures in
the Japanese market, but when Amazon and Rakuten Co. appeared, it lost its
massive market share and fell to “also ran” status very swiftly. Mixi a major SNS
company in Japan, gathered up to 10 million members in Japan also lost its sharesoon after Facebook appeared. Perhaps the best example in recent memory is that─ 117 ─

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of the mobile phone sector where Nokia, the Scandinavian giant, and the CanadianCompany Blackberry Co. which both held the No. 1 spots for handheld devices forseveral years have now almost completely disappeared.
Another factor that is prompting the change in the competitive environment is
the acceleration towards the borderless economy and globalization of corporate
activities. In recent years, the globalization and “inner globalization” of thedomestic market has progressed very rapidly in Japan, and competition withforeign entrant companies has intensified in the Japanese market. Previously thiscompetition was limited to western global enterprises, but now in addition to thesewestern brands, there is a wide range of Asian entrants, particularly from China
and Korea. Although with the bursting of the bubble economy, Japanese people are
not as comparatively affluent as they once were, there are still more than 120
million wealthy consumers in Japan. More than that, since the newcomer’sbusiness culture, rules and competitive behavior is very different to the apparent
more “gentlemanly polite” behavior of Japanese companies, where honor is very
important to each other, these new entrants can be quite cut-throat, have no qualms
about breaching local business norms and local companies consequently can be
attacked quite viciously. For example, the Chinese company Heir Co., whichbecame the world’s largest home appliance manufacturer, was a state-owned
manufacturer of small refrigerator production, but when it partnered with Sanyo
Electric Co., it used Sanyo to transform itself into a full line manufacturer of home
appliances to the extent where it now dwarfs its competitor. Hyundai cars from
Korea is similarly a good example, Hyundai bought the rights to the “old”
Mitsubishi Pajero whilst Mitsubishi Motors went on to build a new model. At thattime Mitsubishi Motors cars would never consider Hyundai as an equal or apotential future competitor on the same footing, now however, Hyundai cars
produces far more cars globally than Mitsubishi Motors, which has been pushed─ 118 ─Restructuring corporate design in periods of dynamic change

down the league table of global car producers quite rapidly. In this case, thestudent exceeded the expectations of the master in the relationship, and quite
rapidly changed positions, one suspects with hindsight Mitsubishi Motors would
not have partnered with Hyundai if they knew how much Mitsubishi Motors wascontributing to Hyundai’s rise and Mitsubishi Motors’s own comparative fall.
In addition, there are many newcomers who had broken into new markets fromcompletely different business fields. And the competitors break in the businessfield with the weapon and they fight with different strategies. For example, who
would have considered that Toyota would compete with Google? Who would haveimagined that Amazon would provide a network system to governments as a giant
platform enterprise? Who 10 years ago would have imagined that NTT, as thedescendants of the governmental corporation12), which monopolized the telegraphand telephone business in Japan, would compete directly with Amazon?13)
Industries and businesses which were not related to each other and were notcompetitors previously are able to reach across into other markets and mountcompetitive attacks. This certainly marks a major change in enterprises behavior.
Moreover, it is not uncommon for “yesterday’s allies to become today’s
enemies.” And vice vera (witness BMW’s and Toyota’s co-operation on the
Toyota Supra and BMW Z4, where they share the same engine or Nissan (Rogue inNorth America) and Mitsubishi (Outlander in North America) where they use the sameengine and drivetrain (bought in by Mitsubishi from Nissan). As the innovation of
information technology and the globalization of corporate activities progress
rapidly, a struggle develops in the border regions where the boundary between
12)
13)

Nippon Telegraph and Telephone Public Corporation (Denden Public Corporation)
was a special corporation privatized in 1985 and monopolized the telegraph andtelephone business of Nippon Telegraph and Telephone.
As a result of this, NTT will take NTT Docomo as a wholly owned subsidiary by theend of 2021 and strengthen its competitiveness.

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industries is no longer clear. By way of example, who would have thought that
British supermarkets would compete directly with British Banks, even though the
British economy is one of the most over banked in the world? Yet this entry for thesupermarkets makes perfect sense, Marks and Spencer’s entering the foreignexchange business, having foreign exchange kiosks in every store is a logicalextension of their business. In so doing they enter a new business domain, now
with Marks and Spencer’s branded credit cards, loans etc. Another example is
Hon-Hai Co., a Taiwanese EMS company that is a producer of iPhones and iPads,
it is also ready to change from a manufacturing subcontractor to a specialized
manufacturer by acquiring Sharp the liquid crystal manufacturer. It is possible that
Hong-Hai may become one of Apple’s greatest competitors, such is the borderlessbusiness environment in which enterprises now operate.
Askul whose parent company Plus Co. was a stationery manufacturer andwhich has now transitioned to be a mail order stationary supplier is one such
example14). At the time when Askul entered the stationery mail order market,
people in the parent company considered that the business decision showed a “lackof common sense” because of selling products of other stationary manufactures
would clearly cannibalize sales. Some insiders considered it to be a betrayal of
their customers, the stationery stores, to whom customers were very loyal.
However, Askul’s business model was elaborate, and it solved both problems. The“agent system”, which was initially necessary to satisfy both parties, had alreadybecome necessary. Now, Askul is currently changing its strategy, because it is now
under Z Holding Co. which is one of the biggest net sales groups in Japan.
In this way, fundamental changes in the competitive environment are driving achange in corporate design. In that sense, many successful Japanese companies

14)

Asukl in Japanese means “everything will be delivered on a next day”.

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will possibly will be easy prey for new comers, because many Japanese companies
which have been in the top positions for many years may become complacent intheir success and fail to innovate and stay ahead of their challengers.
(3) Changes in the technological environment
The third factor is technological environment.
Digital technology, which has evolved exponentially since the mid-1980s, has
rapidly developed by greatly improving the integration and processing speed ofsemiconductors, which are its core building blocks. As a direct result of the priceofelectronicequipment

decreasing

substantially

and

the

subsequent

commoditization of PCs and the spread of the Internet, a full-fledged “net society”
has now arrived. The range of B2B trading has expanded significantly, and inparallel with this, productivity has also greatly improved.
In B2C trading, the consumer market has been transformed by enterprises
embracing one-to-one marketing and the dramatic expansion of the e-commercemarket. Not only has C2C trading also increased, but additionally, SNS changed
the means, methods and contents of human-to-human interactions and has
transformed consumers from receivers of information to active users and in somecases, even transforming them into service providers. The daily life of consumers
has clearly changed rapidly in the latter half of the 20th century, facilitated by thechange of technology from analog to digital technology. It is not only
technological innovations in the field that are transforming social structure andindustrial structure. For example, innovations in the biotechnology field, areraising potentially dramatic changes in the agriculture industry, the advent ofgenetically engineered food such as beef becoming a reality. Branded beef,branded pork, and even branded fish are becoming very popular. In addition, many
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medical field and many lives are saved. From an environmental perspective, thesustainability of the earth is now of grave concern and many of theseenvironmental challenges can be solved, but doing so without dramaticallyaffecting the economies of the world can only be effected if there is a complete
revolution in energy production. Not only this, but innovations in science andtechnology are going to be key to us maintaining our comfortable affluent lives
into the future.
However, no matter how good a scientist is, they cannot know the complete
spectrum of developments across the whole of technology. Thus, a company
whose technological advantage is based on technology from 2010 will have tounderstand the industries “technology trajectory” in terms of understanding what
direction the technology in the field is going and what “breakthroughs” are likely
and possible. For it is not possible for an enterprise to respond effectively tochange without understanding the trajectory of the main technology the enterpriseuses, where is it now, where is it going and where is it going to be in 5, 10 and 20
years’ time?
It is important, not only for the technology trajectory, but also for the businessto understand how fast this technological change is spreading in the marketplace.
For as Jack Welch opined “If the rate of change on the outside, exceeds the rate ofchange on the inside, the end is near.15)” It took about 80 years for automobiles tospread to about 50% of global consumers. The automobile industry which
established the mass production system in the United States spread in the U.S.
market and established the industry, and then spread into the European market16).
Subsequently, Japanese manufacturers introduced the lean production system
15)
16)

Straight from the Gut, by Jack Welch and John A. Byrne (2001). New York: WarnerBusiness Books.
See Raymond Vernon, “Storm over the Multiples the reality issues”, Harvard
University Press, 1977

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which enables the high-mix low-volume production. Over time, as the market ofdeveloping countries in Asia developed, Japanese companies collectively supplied
more than half of the world’s automobile market in the 1980s. Thus, automobiles
became popular in the world market, but until 1980s automobile penetration rate
was only around 50% in the world.
This speed of adoption of new technologies is clearly increasing, e.g., it took
20 years from when mobile phones first appeared in the general market before it
spread to about 80% of the world market17), and it took 20 years for the uptake of
the Internet to raise to 90% in Japan. The smartphone released in the USA in 2007
has become a global phenomenon in 5 years. This might partially be because theprice of these products and services is somewhat cheaper than that of automobiles.
However, this is also a testament to the transformation of the world from a“gradual advance society” to a society which has an increasing fast adoption life
cycle for new technology and products. For example, the mobile phone
manufacturer Nokia Co. of Norway which at one time was the world’s No. 1, lostits lead very swiftly as other global competitors such as Apple and Samsung
entered the marketplace. Nagaoka Co. of Japan, which was the world’s largest
record stylus manufacturer in the latter half of the 1980s, also lost its lead by rapid
expansion and adoption of new technology beyond its expectations, the CD
market18).
In addition to the changing speed of technological trajectory, it is important toconsider the detailed adoption pattern of the of the new technology in themarketplace. In this way, changes in the technological environment are driving
17) See 2019 release of the International Telecommunication Union (ITU).
18) Yamagata Nagaoka took over part of the company’s business after dissolution. In
1999, the company name was changed to Nagaoka Co., Ltd. By the way, thepopularity of analog records has been recovering since around 2010, and the
production of record needles is increasing.

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changes corporate design and adoption of new technologies.
(4) Changes in the institutional environment
The fourth factor is the change of the institutional environment.
Enterprises in Japan operate in an environment governed by law, regulations,specific business customs and practices, within a Japanese organisational andsocietal culture etc., which are major enablers and at the same time, constraints inbehavior. While enterprises cannot ignore laws and regulations, deregulation often
increases business opportunities19). Looking back at deregulation over the past 50
years, many of these deregulation drives have succeeded in their goal of
deregulating and opening a particular sector of an economy.
For example, in the mid-1990s, Japan’s financial markets were forced to open
due to pressure by foreign banks and foreign governments. The Japanese
government was unable to avoid a Japanese “big bang” in the financial markets,
thus the financial sector was opened to foreign financial institutions that previously
had not been allowed to trade in Japan. As a result, many new globally competitivebanks entered the Japanese financial sector. Japanese financial institutions, which
had had large amounts of nonperforming loans since the bursting of the bubble,
were a good target for Kurofune20). As a result, Japanese financial institutions
were forced to choose a combination of equity measures, regardless of their sizeand comparative financial strength. Previously banks had been related directly totheir own Zaibatsu trading group, post Japanese big bang, three Japanese
megabanks have emerged which do business on a nationwide scale, being
19)
20)

According to estimates by the Cabinet Office, the economic effect of regulatory
reform since the 1990s in fiscal 2005 was about 18,345.2 billion yen.
“Kurofunne“ in Japanese means foreign invaders. “Kuro” means black and “Fune”
means ship. Color of American steamships which came to Yokohama Japan at first
were black.

─ 124 ─Restructuring corporate design in periods of dynamic change

Mitsubishi UFJ Bank, Sumitomo Mitsui Banking Corporation, and Mizuho Bank.
Regardless as to whether it was good or bad, the unraveling of the traditional
Japanese financial system has had an impact on the whole Japanese economy. The
old industrial structure before the bursting of the bubble economy, which had been
formed with Zaibatsu banks at the top, was forced to restructure by reforming andintegrating financial institutions. In the Zaibatsu system, Zaibatsu group entities
had multiple cross shareholdings and thus this strengthened the ties between theenterprises, thereby increasing profit opportunities. Post big bang, these Ziabatsu
structures were dissolved. This had the impact of significantly changing theposition of shareholders in the reformed enterprises. Previously silent andpowerless, shareholders began to exert power as true owners of the company. This
has raised the standard of corporate governance and caused the revision of theCompanies Act in Japan.
The introduction of international financial reporting standards (IFRS) has also
had a significant impact on corporate activities21). Japan was forced to adopt IFRS,
if it had not done so, international financing opportunities regarding access to theinternational capital markets would not be open to Japanese corporations.
On the other hand, deregulation which required a complete change in systems
which had powered economic society of postwar Japan has been embraced by theprivate sector under the banner of revitalizing the private sector across the wholeof Japan. Since the Meiji Restoration, postal services had been monopolized by theJapanese government, these were privatized in 2005, thus postal services which
had previously been developed uniformly nationwide, now opened to privatecompanies. It was a big business opportunity for couriers who had already built an
21)

At present, the accounting standards required in Japan are the Japanese version ofJapanese Accounting Standards, U. S. Accounting Standards, and International
Accounting Standards.

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成城・経済研究第 235 号（2022 年 2 月）

effective logistics network throughout the country. As a result, Yamato transport
which was exposed to price competition and was forced to withdraw from thepostal business early on. However, the success of Yamato’s courier service
business until then was the result of many changes in the deregulation oftransportation, because prior to this the regulation of the transportation business inJapan had been very strict. To expand its courier service business to the whole ofJapan, the company had to fight the regulators to remove many levels of
restrictions.
However, it is also true that deregulation was not the only event bringing
change. Environmental regulations and the Protection of Personal Information Act
also brought significant change. And, with these changes, the opening of different
sectors of the economy and significant changes in other areas of the economy,these winds of change brought challenges and opportunities.
In addition, as industry and legal regulations changed, so did the corporate
culture in Japan, particularly regarding the environment and what was considered“ethical behavior”, bringing new standards and norms of behaviour. Now, interestin corporate social responsibility (CSR) has increased significantly, and companies
that do not address these important societal changes and trends are unlikely to
thrive and prosper. In addition to considering global norms, heightened
consideration needs to be given to all stakeholders than was previously thepractice. Similarly, as regulations and corporate governance has improved, so theintroduction of the Whistleblower Protection Act was seen as strengthening
regulations related to corporate governance, ethics and integrity.
As business entities venture overseas and operate in different regions so theymust adapt to the legal systems, business customers and norms there. In somecases, these required changes can lead to fundamental changes in corporate design.

─ 126 ─Restructuring corporate design in periods of dynamic change

2．Corporate internal systems
As we have indicated, the external environment that enterprises operate in isundergoing constant change, and the changing ebbs and tides of the environment
in which an entity operates cannot be ignored. The entity must stay abreast of thesechanges and understand how they will affect the entity both directly and indirectly.
We will now examine the three elements that make up the internal systems of
the enterprise that enable it to adapt to its changing environment, business design,
management design, and governance design.
(1) Business design
Business design is the first element of corporate design, and it is the operating
mechanism for generating profits. Business design is the mechanism by which
companies generate profits and refers to the basic direction that the business isfollowing and the market that it is operating in to realize its potential and thrive.
Thus, business design is the entities’ internal structure and methodology thatcreates, generates, and sustains profit.
Therefore, it becomes a critical element of business design to build acompetitive advantage by strengthening the existing business by for example
launching a new business, or expanding overseas even when the main market waspreviously the local market. In order to achieve this, a key question then becomes,
what kind of decision-making mechanisms will the entity employ? What kind oftechnologies and resources should it use to build business and profit centers, whatkind of value chain will it use to transform and realize its goals? What kind ofresources and staff does it need to acquire to strengthen its goal and build its
competitive advantage? These are all key to the purpose of the business in
examining its structure and design.
Since the mechanism for generating profit depends on the external─ 127 ─

成城・経済研究第 235 号（2022 年 2 月）

environment of the enterprise, it is vital that the entity understands and monitors
any changes in this key area. The entity needs to understand changes in thebusiness environment from a variety of perspectives, such as what the economic
data suggests the consumer and market trends are, how changes in technology areaffecting the market and consumers, what is the speed of the market in terms ofadoption, customers upgrading etc.
(2) Management design
The second element of corporate design is “management design”. It is relatedwith how to construct the organization and how to operate its management
systems.
The ultimate goal of an enterprise is long-term survival, because the enterpriseis “going concern”. For enterprises to achieve their ultimate goals, they need toutilize the management resources effectively and they have efficiently to create
value. Therefore, a key point of management design is to establish how the entities
members operate and build corporate policies and culture such as corporate
philosophy, vision, and strategy, what organizational structure is used to place andutilize people, and how to manage the members who make up the organization,
increase motivation, and strengthen their abilities? Maintaining conformity
between the management design and the business design that enables thegeneration of the entity’s profits, are vital for its survival and longevity.
It is not difficult to understand that any mismatch between business design andmanagement design can have a major impact on the performance of any enterprise.
In the 1980s, when Japanese products were sweeping the world market with highquality and low-priced products, Japanese management with lifetime employment
and seniority at the core supported a business design which enabled economic
growth led by exports. Japanese management was the optimal management design

─ 128 ─Restructuring corporate design in periods of dynamic change

for Japanese companies at that time. After the bursting of the bubble economy,
many of the declining Japanese companies tried to restructure their businessdesigns. However, as the management situation changed dramatically, therelationship between business design and management design, which had beenchanging sharply, became even more disconnected. The changing businessenvironment meant Japanese entities no longer had the funds needed to fulfil
lifetime employment obligations. At that time, many enterprises challenged theredesign of the business. However, except for a few, most entities were unable tosucceed in this transformation. The difficulty of such a transformation should not
be underestimated, Nissan had to go to a foreign national (Carlos Ghosn) to effect its
own transformation, with mixed success.
After any period of dramatic change, the relationship between the new
business design and the management design needs to be re-evaluated. This wastrue after the bursting of the bubble economy and it is true now, with our “newnormal” pandemic environment. The one thing we can say with certainty is that itis going to become an extremely important and difficult choice for the Japanese
economy and Japanese companies in the future.
(3) Governance design
The third element of corporate design is “governance design” related tocorporate governance. Until now, many Japanese companies have been paying
attention to only a few of their stakeholders on a regular basis. Banks that werecreditors were considered more important than shareholders, whilst otherstakeholders like employees, managers and company owners were often given alower priority. Whilst the company concentrated on providing products andservices, it was common practice to deal with other stakeholder issues after they
surfaced, rather than being pro-active. Thus, for example, not paying great interest

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成城・経済研究第 235 号（2022 年 2 月）

to the environmental impact caused by the company’s products and services andacts contrary to “good corporate ethics”. As interest in corporate governanceincreased, the relationship with various stakeholders has become more of apriority. Whether or not it has an impact on customer satisfaction (CS),management now needs to conduct itself to enhance total corporate value, productdesign and production activities. Considering the impact on environment andrecycling, employee satisfaction (ES) and thus the relationship with all
stakeholders must be increasingly considered. This point was discussed in theprevious section, so we will only briefly touch on this point here.
Either way, in a changing business environment, business, management, andgovernance are required to be fully integrated so they interact seamlessly andsynergistically.

Ⅲ．What is the restructuring corporate design?
One lever of change, is to make the whole structure fit without contradiction
between the external environment in which the internal system of the enterpriseinteracts and the internal system of the enterprise, which is composed of businessstructure, organizational management system, organizational climate and culture,corporate governance structure, etc. Then the decision can be made as to whether
changes can be made to the external environment, to change the internal system, or
to change both. However, in order to change the structure of the external
environment itself, in effect to change the corporate design, it is possible to spend ahuge amount of time and energy22). In other words, the choice of the enterprise22)

In business administration, “creation of the market” is often said, but the number ofcompanies succeeding in it does not exist by any means. And it is pointed out that the
profit obtained from the innovation is not large, and the concept of the re-invention israised. Just as Schumpeter, who raised the concept of innovation, points out
innovation as a “new combination”, the possibility of industry without it is small.

─ 130 ─Restructuring corporate design in periods of dynamic change

structure is inevitably impacted by the nature and speed of the transformation of
the internal system.
1．Shifting strategic thinking and management logic
In order to transform corporate design and realize corporate evolution, it isnecessary to challenge the existing strategic thinking and adapt to changes in theexternal environment and transform management’s decision making to enable
them to thrive in the new business environment.
(1) Changing strategic thinking“Changing strategic thinking” is to transform an entities overall modus
operandi, which is the basis of corporate strategy, in-order to respond to thechanged circumstances, be they market or technological in nature. In the industrial
society of Japan in the 20th century, an “industrialized society”, “economies ofscale” based on mass production and mass sales, “economies of scope” focusing
on utilization of unused resources and by-products produced by developing
multiple businesses, and “side-by-side competition” and “homogeneouscompetition” competing for a share in the same market as other competitor
companies was the basis of the strategic approach of enterprises. In other words, it
was considered that the primary method to succeed over your competitor was in
the pursuit of “economies of scale” or “economies of scope”. However, as themarket environment, competitive environment, technological environment, andsystem, etc. change, it has become difficult to continuously develop businesses aspreviously in the pursuit of scale and scope. Consequently, some entities havecome to reject conventional models and consider the business from a completely
different perspective36), which very much represents a “Paradigm shift” inbusiness.

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成城・経済研究第 235 号（2022 年 2 月）

However, even if a high priority is placed on corporate innovation, it is notpossible to remodel all existing management resources or processes or possible tointerrupt serving consumers whilst the business is in operation.
What can an executive of a business in a competitive environment do when
faced with a fundamental paradigm shift in a marketplace? How can they view thebusiness from a different perspective, changing fundamentally the way they thinkand operate? The more successful an entity is, the more reluctant it will be tointerfere with the formula that has led to its success. And the bigger the success ofan entity, the stronger the tendency to be risk averse and embrace the status quo.
Consider for example the Swiss watch industry vs Seiko’s dramatic rise because of
Seiko embracing liquid crystal display technology or the traditional car
manufacturers using primarily the ICE (Internal Combustion Engine) to power theirvehicles v Tesla. However, wise entities continually transform and seek to create
an “economy of speed” which is affected by continually anticipating and staying
ahead of the market. This is created by being prepared to move away fromprevious models of business and embracing new paradigms.
To appreciate the nature of creating new economic value, we need to consider
issues such as the “sharing economy23)” or “free economy24)”, in which value iscreatedbyprovidingserviceswithout

necessarily

receivingmonetary

consideration from the person receiving the service. Changing the nature of the
traditional consumer supplier relationship allows the rebuilding and restructuring
to a completely different relationship with the customer. This can lead to acomplete change in the nature and a superior competitive advantage, compared tocompetitors, one which they will not be able to replicate easily, particularly inenvironments which are changing rapidly. If an entity can do this and pivot and23)
24)

See “Free” by Chris Anderson.
See “Share” by Chris Anderson.

─ 132 ─Restructuring corporate design in periods of dynamic changechange, the question arises as to whether it can do so without fundamentallychanging the business itself or replacing all management resources? If it is agile
and open to change, it may be be able to do this effectively, whereas a morecompetitive bureaucratic based competitor, may not. Such a paradigm shift will
enable a business to evolve in a new direction by developing a new way to build
long lasting relationships with customers.
(2) Transforming management logic
To effect such a transformation in a business to literally achieve a “change instrategic thinking”, the organizational management system that supports andmaintains them must also be transformed.
It is about the transformation of the internal system of the enterprise. In orderto achieve this, it is necessary to change the logic of management of the internal
system, which has been supported by all in the entity previously and it must be
remembered that is the reason for the entities success achieved thus far. So, tochange it fundamentally, requires significant effort. To make such a change
effectively, the entity must review and understand its core competencies and its
business domain extremely well. If it does so well, it is possible to reinvent thecustomer value proposition and the customer value chain of the entity’s main
business. It needs to be done carefully and thoughtfully, but if done well, it candramatically improve the entities performance and improve the motivation ofmembers by transforming the underlying culture and climate of the entity.
The division of labour has long been considered one of the cornerstones of a
successful business entity. As effective as the division of labour is, many consider
the opportunities by embracing ICT successfully exceed the benefits of ICT. The
pyramidal bureaucracy structure which has been the fundamental organizational
structure for decades is also questioned by ICT. In losing the chains of the division─ 133 ─

成城・経済研究第 235 号（2022 年 2 月）

of labour dictum, a whole range of possibilities becomes possible.
In addition, “Wa25)”, which has long been considered as a source of strength
for Japanese businesses, can also act at a barrier to creativity under certain
conditions. If an executive has been bound by Wa all his/her business life, it is very
difficult to break out of this way of thinking and re-invent an alternative creative
process. The development of alternative markets that prioritize different choices,even contradictory to Wa, such as in the individual’s choice vs that of thecollective opinion’s choice would allow the introduction of a completely different
customer value chain. Entities operating under such a model would clearly have a
different relationship with the consumer and be in a position to offer completely
different goods and services to those operating under the Wa philosophy. A widely
attributed quote to Einstein comes to mind, “Insanity is to do the same thing andexpect a different result” and highlights that a new type of thinking is required inorder to develop a different business paradigm, and this can be difficult for those
executives who have spent their careers in one particular of paradigm. To
challenge a business logic which you as an executive have grown up with andindeed, have relied on this business logic as the reason for your success, that is avery difficult personal transformation for any executive to perform. In a market
which prioritizes the selection of the best executive for the job, and the success ofthe executive being due to his or her ability to use the current paradigm effectively,
it is unlikely to be the executive skilled in the current paradigm that will develop
the next revolution or paradigm. Although one must consider that knowing one
paradigm well, and therefore knowing it’s weaknesses, can allow an executive toconsider alternative way of doing things. This thus illustrates the challenge withWa, for to invent the new philosophy that follows Wa, one must criticise it, which

25)“Wa” in Japanese means team play and collaboration.

─ 134 ─Restructuring corporate design in periods of dynamic change

is against the principles of Wa, thus illustrating the dilemma in thinking required todevelop new paradigms.
2． Explore inconsistencies and dissolve them with Aufheben thinking
Based on our discussions thus far, what is required is for a business entity
which can achieve an evolution of its corporate design, to figure how to integrate
the existing corporate design with that proposed. In other words, will it be able torealize and attain the new vision of the organsation whilst transitioning from its
existing state, without disadvantaging or even breaking the existing business?
Thus, it is easier for Amazon to operate in the online environment than Walmart,as Walmart has to cannibalize its existing business and needs a completely
different way of thinking from its executives when considering “bricks andmortar” stores v on-line retail.
To summarize, to maintain an existing business successfully, whilsttransitioning in a completely new business domain and doing so whilst ensuring
the continued success of both entities in each domain is extremely difficult. To
maintain growth and profitability in the old domain, whilst the entity in the new
business domain is beyond most of today’s executive’s ability. And even if theysucceed once, can they do so again and again as the pace of change accelerates andthe need for more and more paradigm shifts becomes apparent. One solution to thischallenge may well be that in reexamining corporate design, a corporation should
be remodeling itself in such a way as to permit and facilitate multiple strategic
directions.
As illustrated in Figure-2, business design under paradigms such as“economies of scale”, “economies of scope”, “homogeneous competition”, and“supply side” is an old corporate paradigm that matches the management design
stipulated in “division of labor”, “the hierarchical organization”, “emphasis on

─ 135 ─

成城・経済研究第 235 号（2022 年 2 月）

similarity”, and “scale and profit”. On the other hand, new business designs which
operate under the paradigms of “economics of speed”, “economy of connection”,“economy of sharing, free economy”, “competition under different rules”, and“demand side” can be seen as a completely different type of corporate design thatmatches the management structures defined in “fusion”, “elastic and multi-level
organization”, “acceptance of heterogeneity” and “fun and creativity”.
An enterprise that initiates change, might choose to adapt to the environmentby breaking away from the previous strategic direction and changing its
management logic as much as possible. In other words, to balance the objects at
the poles such as “type A” and “type B” shown in Figure-2, the easiest solution is
to find the “point of equilibrium”. However, this may not solve anything, andindeed, it may compound the problem, as the entity is neither operating under a
new paradigm or the old. So, both old customers and potential new customers may
not be served well. Whilst in politics choosing the “point of equilibrium” mightlead to success, this may not be the case when considering an entities strategic
Figure-2

Single pole consideration

Traditional type of

New type ofBusiness DesignᲥManagement Design

Business DesignᲥManagement Design

Point of equilibrium─ 136 ─Restructuring corporate design in periods of dynamic change

purpose. For management to try and navigate two different directions with thesame staff and resources might not be a recipe for success. It is possible to get from
Tokyo to Osaka by many routes, but it is not possible to travel two alternate routes
simultaneously without addressing the issue of additional resources ortechnologies.
Because the business environment is constantly changing, even if we canovercome the challenges of effecting temporary change, we will face anotherchallenge shortly thereafter as continuous change is now the norm and indeed it isaccelerating. Simply comprising the concepts at the edges will not solve theproblem. This is because if change is required, then satisficing rather thanundergoing fundamental change to address the issue, will not address the “rootcause” of why change is needed in the first place and is therefore unlikely to
succeed and deliver the desired change results.
When examining the relationship between new business creation andmanagement, Christensen C. points out in the “The Dilemma of Innovation”, that,“It is good if it is an extension of existing technology, but in the case of destructive
technology, it is rather fatal to let the main business absorb it”. What we caninterpret from this is that sustainable innovation is progressive, and its relativetechnological trajectory and market penetration can be predicted however, suchtypes of corporate design are unable to respond to disruptive innovations. In otherwords, it is difficult to integrate “type A” and “type B” into a single-axis
framework, you can have analogue technology or digital technology, but
combining both in one seamless system to gain synergy is almost impossible. By
way of example, many influential car magazines and websites (autoblog.com, Car
and driver magazine, Autocar magazine) whilst extolling the virtues of the large central

display to control multiple functions on the vehicle as pioneered by Tesla, wrote at
length demanding that vehicles re introduce certain analogue controls, e.g. Honda

─ 137 ─

成城・経済研究第 235 号（2022 年 2 月）

timberline in the USA, where the call to have an old fashioned analogue volume
control for the radio reached such a crescendo, that Honda had to relent andintroduce this from the 2021 model year, having previously deleted it.
The main theme of this paper, when considering corporate design, is not thateither type A or type B should be selected. An important point in thetransformation of corporate design is not to contradict the corporate design of type
A or the corporate design of type B, but to find and remove the contradictions thatexist between them, that is, to look at the unstoppable elimination ofcontradictions. For example, in search of economies of scale and scope, corporate
actions to gain maximum benefit from them are considered as being “highly
industrialized”. It is assumed that corporate behavior adapts to the individual needsof the market and increases added value, and the type of corporate behavior which
realizes it is “highly informationized”. It is not difficult to try to restructure thecorporation by fulfilling only the conditions of the former and only the latter
Figure-3

Essence of restructuring corporate design

Extent of Industrialization

AufhebenTraditional type ofCorporate Design

mass customize

mass production
centralized andhierarchical texture

self organization
zero marginal cost

old type of economy

New type ofCorporate Design
custom production

flexible organization
new type of economy([WHQWRI1HWZRUN6RFLHW\
─ 138 ─Restructuring corporate design in periods of dynamic change

conditions. In this phase, “degree of industrialization” and “degree of
informationization” are positioned at either ends of one axis. However, it is notpossible for a company to choose an activity that ignores the conditions that makeup industrialization. The realization of economies of scale and scope are therefore
indispensable for any enterprise.
Then, what the enterprise needs to do is not to position “degree ofindustrialization” and “degree of informationization” at opposite ends, but toconsider each as a different axis. By doing so, “customization” will be replacedwith “mass customization”, and self-organization that changes according to thesituation will be achieved. Of course, it is not easy to identify real world examplesof this. But this does lead us to understand that what we should do is identify theroot cause of the largest underlying problems that the enterprise has and seek abusiness strategy which effectively addresses it.

Ⅳ．Finding and solving the contradictions“Lead and Disrupt” by Professor O’Reilly of Stanford University andProfessor Tashman of Harvard Business School published in 2016 attracted greatinterest, and that research was spreading in various ways. The Japanese version
was translated and published in 2019, and when reading “Lead and Disrupt” theproverb suggesting that a strategy of “chasing two rabbits opens up the future” wasespecially attractive26).
Most academic scholars believe that “Business administration is extremelyinterdisciplinary”. However, business administration is more mistery than “ology”.
There are countless variables related to management and, given such a wideranging dynamic range of variables (some interdependent, some not) predicting the26)“Lead and Disrupt”, Charles A. O’Reilly & Michael L. Tashman,─ 139 ─

成城・経済研究第 235 号（2022 年 2 月）

outcome is difficult, if not impossible. Thus, it leads us to question whether
management “science” is able to help clarify and predict success in corporate
management or perhaps it is the “art of management” or a combination of the two.
However, if we were able to solve contradictions that the enterprises face, thiswould be a major achievement.
We have acknowledged that many Japanese companies have experienced
hardships during the long approximately 30 year economic downturn of the Heisei
era. However, by contrast some Japanese companies were in fact able to achieve
growth during that era. In Japan, there are many entrepreneurs and companies thathave realized growth despite strong headwinds and were able to thrive andprosper. In this paper, we have discussed the reasons for the difference in corporate
performance by associating it with the concept of “corporate design”. This paper
considers the changes that have been ongoing in society and business entities
during these periods of change.
One of the conclusions as a result of this analysis is that traditional corporate
design and corporate design, which has been redesigned throughout the Heisei era,
should not be positioned as one axis or the other, but should be viewed as dualistic,each of which exists on an alternative axis.
For example, in 1960-1990, late in the Showa era, Japanese management
carried the Japanese economy to the top of the world, and people at that timeenjoyed the riches of those days. The Showa era after the war was anunprecedented period of success for Japanese companies. The corporate design ofthe period matched the business environment well. However, as soon as the Heisei
era arrived, a long-term recession hit Japanese companies. And under the variouspressure of the huge environmental change, such as “it is a global business”, “it isa global standard”, “it is an IT revolution and ICT”, “it was informatization”, “it isgender” and “it is the new normal”, Japanese companies have been forced to─ 140 ─Restructuring corporate design in periods of dynamic change

rethink their corporate design.
Fortunately, or unfortunately, the corporate structure redesigned today has no
small remnants from the Showa era. For example, even in recent years, seniority
factors still remain in the performance-based wage system of Japanese companies,
and there are also remains of a number of particularly obsolete Japanese style HR
management characteristics in organizational management systems and corporate
culture throughout Japan, e.g., “Wa”. That’s not to say it is a problem, nor is it anegative translation of the results it produces.
Organizational inertia can exist in either situation. However, it can be said that
there was a problem only in the context of continuing the process of attempting the
integration of the polar adjustment aiming at the “point of equilibrium” of one
axis, that is, the process of searching for the goal of the redesign of the corporate
design. The process of redesign stopped trying to balance the two ideas placed on
the other end of one axis.
For example, globalization has been recognized as a market reality since theend of the 1980s, Goshar G. and Bartlett C. proposed a new concept, the“transnational enterprise”. The characteristics of the transnational enterprise, also
referred to as the “glocal-company model”, is that it is derived from twocontradictory concepts of efficiency and adaptability and realizes them bothconcurrently. That is, in order to eliminate the contradiction and not to position on
the one side or the other, but to solve the problem by positioning each one of thesefactors on a different axis. In short, the problem is solved by simultaneously
realizing “high efficiency and high adaptability” by thinking as “efficiency =globalization, adaptability = localization” (see Figure-5)27).
From a similar perspective, “Lead and Disrupt” raises the issue of solving
27)

See “Manufacturing a cross borders” by Bartlett Christopher A. & Ghoshal
Sumantra,: The transnational solution.”, President Fingers of Harvard College, 1989

─ 141 ─

成城・経済研究
Figure 5

第 235 号（2022 年 2 月）

Concept of Transnational Enterprisesʶ
EffectivenessGlobalEnterpriseTransnational
EnterpriseInternational
EnterpriseMultinational
Enterpriseʷʷ

Adaptability

Chart-5

ʶ

Lead and Disrupt

High

Strategic Importance
Low

Low

Independent
Bisiness Unit

Ambidextrous
Organization

Quadrant 3

Quadrant 4

Spinout

Exiting
Business Unit
Or outsource

Quadrant 1

Quadrant 2

Leverage Core
Business Assets

High

Source Created from “Lead and Disrupt” p. 286

─ 142 ─Restructuring corporate design in periods of dynamic change

problems based on two axes of “deepening and exploration” as an element toachieving corporate evolution in disruptive innovations that have the power tocreate exponential change.
One of the most important challenges in the modern era will be to restructure
corporate design to establish the root causes of problems faced by enterprises andrapidly transform. Once the root cause is established, the main opposing factors
which are opposite sides on one axis must be examined for, as we showed in thissection, it is a contradiction in the problem of corporate design. Then we must
work to resolve the contradictions. In other words, the essence of restructuring thecorporate design is to dissolve due to aufheben (sublating) thinking. This is a criticalmeasure to restructure corporate design.

The main reference(1)(2)

Anderson Chris, “Long Tail”, Hyperion Books, 2006
Bartlett Christopher A. & Ghoshal Sumantra, “MANUFACTURING A CROSSBORDERS”, President Fingers of Harvard College, 1989,

(3)
(4)

Bergson Henri-Louis, “L’Evolution Creatrixe”, 1907
Botsman, R., Rogers, R, “What’s Mine Is Yours: How Collaborative Consumption
is Changing the Way We Live”, 2010

(5)

Christensen Clayton M., “Disruptive Technologies Changing the Waves”, Harvard
Business Review, 2011

(6)Friedman Thomas L., “The World Is Flat: A Brief History of the Twenty-first
Century Further Updated and Expanded Edition”, International Creative
Management, 2005,(7)

Hamel Gary & Prahalad C. K., “MEETING FOR THE FUTURE”, Harvard
Business School Press, 1994(8)

Hammer Michael & Champy James, “REEN GINEERING THE CORPORATION
A Manifesto for Business Revolution”, Linda Michaels Retailary Agency, 1993

(9)

Harari Y. N., “SAPIENCE: A Brief History of Humankind”, Kinneret, ZmoraBitan, Dvir, 2011(10)

Imanishi Kinji, “What Is Evolution”, Kodansha Academic Library, 1976 (in─ 143 ─

成城・経済研究第 235 号（2022 年 2 月）Japanese)(11)

Iwasaki Naoto, “Restructuring Corporate Design”, Hakutoshobo, 2012 (inJapanese)(12)

Iwasaki Naoto & Kanda Makoto, “Understanding Management”, JMAM, 2005 (inJapanese)

(13)
(14)

Kirkpatrick David, “The Facebook Effect”, Teri Tobias Agency, 2010
Thomas S. Kuhn, “THE STRUCURE OF SCIENTIFIC REVOLUTIONS”, The
University of Chicago Press, 1962

(15)

Kurzweil Ray, “THE SINGULARITY IS NEAR: When Humans Transcend
Ology”, Loretta Barrett Books, 2005

(16)

Moore Geoffrey A., “LIVING ON THE FAULT LINE”, James Levine
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(17)

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This article is the second of four articles by Dr Gannon and Professor Iwasaki and builds
on the original ideas by Professor Iwasaki in “Essence of redesigning corporate design”, inSeijo Economics No. 232, March, 2021.

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