CEO Blog #04 “Vertically or horizontally divided, everything is about balance”

CEO Blog #04 “Vertically Or Horizontally Divided, Everything Is About Balance”

Recently, we announced a change in the company structure to all members of HACARUS.

The change is to switch the internal structure of the organization from a job classification-based (horizontally divided) to a business unit-based (vertically divided).

There is a known pain when a startup is growing.
It is called,

“Brick walls of 30, 50, and 100 employees.”

I will leave the explanation of each wall because you can find it easily elsewhere.
HACARUS is now trying to overcome the 50-employees wall.
(If you include the part-timers and interns, the number become closer to 100. Hence, the wall we need to overcome might be one step further…)

Why is a startup of this size trying to introduce a business unit-based structure?

When you hear a business unit-based structure, you may think it is a system that is usually introduced by large companies.
The first thing that comes to my mind when I hear it is also rather negative words like “big company disease” or  “sectionalism.”

Behind this decision-making are circumstances specific to HACARUS and closely related to the impact of the Coronaviruses


First, the circumstances specific to HACARUS.

HACARUS has adopted a strategy of having multiple business areas with completely different time frames, budget sizes, and regulations, such as manufacturing, healthcare, and infrastructure.

We used to divide our organization into units such as data science, apps, edge, sales, and management, and assigned the necessary resources for each business area on a case-by-case basis.
The advantages of this approach are flexibility and speed.

When a project in one business area is completed, another project can be started in another business area, allowing for flexibility in resource allocation between different business areas.
From a member’s point of view, being involved in a variety of projects broadens one’s perspective and increases one’s chances of gaining new knowledge.

On the other hand.

The fact that resources are not fixed to a certain business area makes it difficult to develop a deep understanding of each business area and its future direction.
In a startup that handles only a single business area, this issue often does not become apparent. This is an issue that cannot be avoided once the company decides to handle multiple business areas.


Next is the impact of Coronaviruses.

Companies have incorporated remote work for some time now.
At HACARUS, we quickly introduced a hybrid work system that combines working from home and coming to the office, and we continue to do so today.

The advantages of hybrid work have been mentioned in many places, so I won’t go into them here.
The biggest disadvantage is communication, of course.

When using tools such as Slack and Zoom, communication tends to be focused on members within the same job category, and it is difficult to see what members in other job categories are doing.

A “business” is a cooperative effort by members of multiple job categories, and a “company” is the aggregate of multiple businesses.

If it is difficult to see what the members of other job categories are doing, it is consequently difficult to see where the business itself is heading.
If it is difficult to see where each business is headed, it is also difficult to see where the company as a whole is headed.

The issue of remote work making it difficult to perceive the larger group, such as a business or a company, is something that CEOs of all companies must face.


By anchoring members to a certain business, communication across different job categories within that business will be active at least.

The question is how to ensure communication between different businesses. The answer seems to be simply a matter of taking over the job-based communication methods practiced under the old system, specifically the various meetings and task forces, to the new system.

It is easy to turn this into a zero-sum issue of whether to be vertically or horizontally divided, but I think it is all about balance in the end.

As a startup CEO, I am gaining some valuable experience in a sense of overcoming the brick walls of 30, 50, and 100 employees in a remote work situation caused by the Coronaviruses and in an uncertain world situation. I feel grateful for this learning opportunity.

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