---
title: Don't run a startup-stage entity like head office
description: Mintzberg's configurations coordinate differently. HQ is a machine bureaucracy; a new entity is a simple structure. Impose one on the other and it suffocates.
image: https://nobusato.jp/hubfs/dont-run-a-startup-entity-like-head-office-en.png
---

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# Don't run a startup-stage entity like head office

[Nobu Sato](https://nobusato.jp/en/profile?hsLang=en)

![Don't run astartup-stage entitylike head office](https://nobusato.jp/hs-fs/hubfs/dont-run-a-startup-entity-like-head-office-en.png?width=1200&height=630&name=dont-run-a-startup-entity-like-head-office-en.png)

**Series「People Don't Follow the Org Chart」** · Part 6 of 13 · Part 2 · How structure shapes behavior  
Prologue：[The people who aren't on the org chart](https://nobusato.jp/en/blog/people-not-on-the-org-chart?hsLang=en)

The Japan entity has five people. HQ requires the same twelve monthly reports as a two-thousand-person company, three levels of approval for any spend over 20,000 yen, and HQ's eight-round interview process for every hire. The country manager spends half his time filling in forms. HQ calls it compliance. The entity calls it suffocation. Both are right, because they are managing two different kinds of organization.

## Five configurations, five coordinating mechanisms

In 1979 Henry Mintzberg proposed that organizational structure is not a continuous spectrum but a handful of relatively stable configurations, each coordinating work through one dominant mechanism. He listed five.

Simple structure: one person directly supervises everyone, almost no middle layer or rules, coordination by that person's judgment. Machine bureaucracy: coordination by standardized procedures and rules, typical of large manufacturers and mature corporate HQs. Professional bureaucracy: coordination by standardized skills, as in hospitals, law firms, universities. Divisionalized form: coordination by standardized outputs, with HQ setting targets for divisions and leaving the process alone. Adhocracy: coordination by mutual adjustment, as in project-based and R&D organizations.

The typology has been criticized as too neat; most real organizations are hybrids, and Mintzberg himself later added forms and changed names. I use it as a diagnostic table rather than a classification tool. Its value is in pointing out that each configuration has its own coordinating mechanism, and using the wrong one jams the organization.

Simple structureDirect supervision1Machine bureaucracyStandardized procedures2Professional bureaucracyStandardized skills3DivisionalizedStandardized outputs4AdhocracyMutual adjustment5Entity ← simple · HQ ← machine: mechanisms don't match

**Fig.1**Mintzberg's five configurations and their coordinating mechanisms. A startup-stage entity is the first; HQ is the second. The mismatch comes from imposing the second's mechanism on the first.

## HQ and the entity are different configurations

A multinational's HQ is almost always a machine bureaucracy or divisionalized form: thousands of people running on procedures, standards and reports, which is exactly why it doesn't descend into chaos at that size. A startup-stage Japan entity is a textbook simple structure: a few people, one head, all coordination happening through that person talking to everyone every day.

The machine bureaucracy's mechanism is standardized procedure. Impose it on a simple structure and this happens: process costs are fixed and don't shrink with size, so a five-person entity pays a two-thousand-person company's process cost, while the simple structure's own mechanism, the head's direct supervision, is crowded out by paperwork. The entity fails under both mechanisms at once.

The deeper problem is information. A machine bureaucracy sees itself through reports because it is too big to see people. In a simple structure the information is already in the head's head; a report translates it into a format HQ can read, and the translation generates no new information, only consumes time. The granularity gap between HQ and entity described in [the foreign-companies post](https://nobusato.jp/en/blog/what-foreign-companies-struggle-with-in-japan?hsLang=en) is this.

## The design decision: a different rulebook for two years

The recommendation is not that HQ give up control. It is to recognize that the entity is a different configuration for its first two years, give it a matching rulebook, and state when the switch happens.

Three rules. One: cut reports to three: cash, customers, people. Anything else HQ wants, it pulls from the system itself. Two: set approval thresholds by entity size, not HQ's absolute amounts. The head of a five-person entity should be able to approve several times what an equivalent HQ manager can, because he has more decisions, more varied and more urgent. Three: the entity sets its own hiring process; HQ sets only the floor of who must not be hired. How to make the first hires is in [the first-hire post](https://nobusato.jp/en/blog/first-hire-in-japan-should-not-be-sales?hsLang=en).

Write the switch point down: once the entity passes 50 people or gets a second layer of managers, it phases into HQ's procedures. That is the same timetable as [when to redraw the org chart](https://nobusato.jp/en/blog/dunbar-numbers-redraw-the-org-chart?hsLang=en).

## Back to the diagnosis

In the patterns layer of my organizational diagnosis, I first classify the configuration and then check whether the coordinating mechanism in use fits it. The most common mismatch is exactly this one: a simple structure run by machine-bureaucracy mechanisms. The symptoms are a head filling in forms, staff waiting for approvals, and work standing in a queue.

How many reports does your Japan entity submit each month, and how many of them does HQ actually read?

**In this series**  
Previous：[Conway's law: draw the team before the product](https://nobusato.jp/en/blog/conways-law-draw-the-team-first?hsLang=en)  
Next：[Your bilingual staff are not translators](https://nobusato.jp/en/blog/bilingual-staff-are-not-translators?hsLang=en)

---

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## More in this column

- ### [Fifty meters apart, conversations stop](https://nobusato.jp/en/blog/allen-curve-fifty-meters?hsLang=en)
  
  The Allen curve: contact falls steeply with distance; past 50 meters it equals another building. It still holds ...
- ### [The favor ledger is more honest than the org chart](https://nobusato.jp/en/blog/the-favor-ledger?hsLang=en)
  
  Mauss's The Gift: give, receive, repay. Japan's favor ledger is this mechanism, unwritten but tracked by all. Who owes ...
- ### [5, 15, 50, 150: when to redraw the org chart](https://nobusato.jp/en/blog/dunbar-numbers-redraw-the-org-chart?hsLang=en)
  
  Dunbar's number is a sequence: 5, 15, 50, 150. At each step, how relationships hold changes. A Japan entity growing to ...

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