A hypothesis I had on why some countries have more conglomerates than US is that access to capital and funds are much harder in those countries in comparison to US. When access to capital is comparatively more limited, more innovations falls to the party that has comparatively easier access to capital (conglomerates) and therefore reinforcing their position as conglomerate.
> you have a firm that has lots of lifetime employees who can’t be fired, and whose skills are tailored to what your firm needs rather than to a particular occupational category transferable to any employer
> the system only makes sense if the company is also insulated from outside pressure
> the J-firm [Japan-style company], run by its employees and largely indifferent to the interests of shareholders, exists simply to continue existing
> And that basic impulse toward survival is why Japanese companies are so insistent on diversification. If you’ve made a commitment to keep people employed for life, then you need to create jobs for them if their current jobs stop making sense
> If you’re not very worried about profitability, and have lots of well-trained generalist employees, then it makes perfect sense to reinvest your company’s earnings by expanding into new industries
It’s always fascinating to see how Westerners idealize Japan on platforms like HN. It makes me wonder(i'm korean): how would a Westerner react if they saw me romanticizing the Mondragon cooperatives in Spain? They’d probably find it strange and out of touch with reality.
This essay on Japan's corporate diversification and physical tacit knowledge is an interesting read. However, as an East Asian, my assessment is that this system is heavily driven by Japan's unique, subtle classism. It's a highly collectivist society with strict age-based milestones and immense pressure to secure traditional employment. In Japan, your corporate affiliation often dictates your social standing.
The author paints the lack of shareholder pressure as the secret behind their successful diversification. While true for a few, the flip side is that it created a massive 'zombie company' problem—a heavily discussed issue in Korea and Japan that the West seems largely blind to.
Also, the idea of a 'horizontal culture' in Japan is a myth, especially in software. Even a glance at the Japanese web(5ch, onJ etc...) reveals a deeply entrenched vertical hierarchy. In my experience working with Japanese developers, their reliance on the legacy Waterfall model and an exhausting chain of approvals and reporting was far from horizontal. (Though I admit my sample size is small, it heavily contradicts the Western narrative).
I agree that this rigid system fosters the tacit knowledge needed for hardware and materials. Still, it proves that we all tend to project our fantasies onto cultures we don't fully understand. The divergence in perspectives on HN never fails to amuse me.
> It makes me wonder(i'm korean): how would a Westerner react if they saw me romanticizing the Mondragon cooperatives in Spain? They’d probably find it strange and out of touch with reality.
In his science fiction novels, Kim Stanley Robinson frequently incorporates the Mondragon economic model to explore post-capitalist, worker-owned, and cooperative societies. I'd say KSR is a decently well-known S/F writer, so at least some westerners (and I'd assume many in this site) have already some idea of it. But I'd say it's true that it's easy to romanticize these kinds of singular situations and brush over the problems they might have.
I'm a german software developer working for a japanese corporation in a german subsidiary. I agree with pretty much everything in your post. Especially the exhausting chain of approvals and also the unwillingness to make quick/tough decisions feels like walking through molasses at times.
However, there is also an upside to this. I can actually confirm that they take quality control very serious, probably due to the losing face cultural thing if the product fails the customer and therefore rarely do quick last minute changes or crunch, because it degrades quality.
>While true for a few, the flip side is that it created a massive 'zombie company' problem—a heavily discussed issue in Korea and Japan that the West seems largely blind to.
Oh, we're getting there. It's just a bit fringe right now, but Meta's $90 billion loss on VR and *gestures at various aspects of the Gamestop situation" and a few other incidents have people asking questions that are uncomfortable for the passive investmend fund crowd. Forget zombie companies; by many measures, America has a zombie economy.
It’s Stockholm syndrome. Japan really spanked the highly established U.S. auto and electronics industries in the 70s, and many people now look to kaizen, Kanban, etc as serious cope.
I think one thing that's happening is that they're good at things we're frustratingly bad at, and bad at things we don't even realize we're good at, so they get used as an example an awful lot.
As a westerner (UK) I massively idealise Mondragon and wouldn't find it weird if anyone else did. Cooperatives are fascinating and the question of workplace democracy needs more consideration.
> It’s always fascinating to see how Westerners idealize Japan on platforms like HN
I think HN'er are smart enough to not idealize everything about Japan.
For example you can be in awe about how clean and safe the country is and how precisely on time all subways train are without idealizing toilet that stream water up your arse.
> It’s always fascinating to see how Westerners idealize Japan
Replace 'Westerners' with Americans and you are spot on.
I have never met any European that glorifies any part of Japan (I'd see Asia as a whole), most of them will tell you how the tall buildings make them feel little and how the society is beyond oppressive.
Whatever meritocracy exists in capitalism is ironed out by those rigid hierarchies.
I am not sure what is appealing about Japan, Korea or any of these parts of the world, to me they are full of plastic, sugar and late stage capitalism that makes the Americans look as socialists.
I do strongly suspect that a certain type of male likes these places for reasons I cannot even hold in my mind for more than a few seconds.
for what it's worth, back when i was in b-schoo, the predominant theory for the existence of large, diversified Asian conglomerates (Japanese keiretsu is a prime example, but it's not unique to Japan. Similar entities exist in S.Korea and Thailand, among other places) is the friction of starting and doing businesses in these countries. Startups there have such a hard time getting funded and landing clients, that the financing aspect alone give the conglomerates enough of an advantage to edge out startups, despite the inefficiencies typical of large organizations (and in this the Japanese corporate giants are no better than IBM or GE).
this theory is typically mentioned when introducing the Theory of the Firm, i.e. why do companies exist at all? why not everyone just freelances, and when you need a marketing/finance/legal/coding person, you just contract one on the free market? the idea is that there are always frictions when doing business with someone new (is this person good? trust worthy? how do i find out?), and how much friction there is determines how big the firm will grow (to incorporate functions in-house, or expand to other industries).
in a perfect frictionless economy, it could indeed be true that business transactions all happen at the smallest unit, i.e. the individual. at the other extreme, there would just be one firm that coordinates all economic activities. all real world economies sit some where in between.
Not about the article but I have the exact opposite impression of HN treatment of Japan. It's largely expats complaining about living in Japan or Westerners comparing Japanese values to their own and always concluding the former is inferior, not just different. It feels like a modern form of imperialism to me. I'm surprised you get a positive impression (yes this particular article is an exception though).
Almost nothing in this aritcle matches the reality of my experience in Japan. Horizontal culture? In in my experience. Everything you do requires approval in triplicate. Do the wrong thing at a company and you'll get screamed at by the person who feels their job is under threat from you trying to step out of your precribed role. There's absolutely no such thing as "generalist employees" at any Japanese company I know of. I have no idea where the author got this idea.
Thank you for this post. I am a "Westener" who lived in Japan for 6 years. Boy, was that eye-opening in terms of "the map and the territory". Basically nothing is what it seems to be - and unfortunately the positive things mostly turn out to be nationalism-motivated make-believe, wishful thinking, or only made possible by extremely lax attitudes to amassing public debt (any country could make the trains run on time if they were ready sell their future for it).
Western Japanophiles, especially from the US, and even if they speak the language and have lived there, are mostly ignorant and their idea of Japan is a full phantasy.
I think it's the density of Californians, and that Japanese culture, food, second language etc. is popular there probably not least due to their relative proximity.
If HN was Brit-dominated, while less romanticised perhaps we probably would seem oddly fascinated with say France, to our minority members elsewhere.
It's not at all like in the article, it's not horizontal, and very much hierchcal and rigid.
And it can be seen in japanese software, it looks like it was designed from request sheet without actually understanding why. It's often nonsensical and extremely convoluted.
Most of the good japanese software is actually developed in the west by subcontractors.
For example Sony games
I have noticed that when Japanese megacorps get brought up on the internet, people will admire how cool it is for a company to make so many things. But when a Korean megacorp who makes the same variety of stuffs get brought up, it's all about how evil and oppressive the late stage capitalism chaebols are. There is definitely a double standard when it comes to Japan.
The fact that Samsung is kind of famous for just entering new industries left and right, and continuing to produce mediocre products while gaining enough experience to become industry leaders comes to mind. I feel like the blog post could apply to many countries
> the J-firm, run by its employees and largely indifferent to the interests of shareholders, exists simply to continue existing
I don't know if all companies should be run like Japanese companies, but there's something very heartwarming about this. Some companies exist for the purpose of employment, and that's okay. In fact it's admirable and makes me want to cheer.
I'm not sure I'd say a company that makes ceramic toilets also making a tool for memory chips... which is also ceramic is really 'different things'. They're clearly a ceramic company. Different tolerances, but similar expertise.
Now the paper company got into the hotel business seems a far better example. No idea how that happens.
I'd bet the leaders of the Japanese ceramic company have some deep ties and focus on ceramics, while the leaders of the US paper company have deep ties and focus on the financial industry.
> American firms, for example, tend to prioritize focus above all else: it would be bizarre for an American paper mill to also operate a concert hall and an airport catering business
I don't think Kimberly-Clark ever opetated a concert hall, but they did run an airline (Midwest Express) and K-C Aviation was an airplane servicing firm.
It's not that American companies don't operate in diverse businesses. Maybe they're less likely to, but it happens when the need arises... if there's no reasonable supplier for an important input, then you start one, or you ask an existing supplier if they can start a new line of business that's somewhat related.
The headline example is that Toto, known as a maker of ceramic toliets, is making a lot of money making specialty ceramics used in semiconductor manufacturing. Which yeah, ceramic manufacturer makes ceramics.
The US business market does like to spin-off divisions when they are successful and can be independent.
They’re an absolute disaster but I do love that the companies are actually investing in expanding into new things. Shareholders don’t want that, they want cold hard cash. Hence all the buybacks and PE firms destroying companies.
The one key thing that is completely incorrect is there is no horizontal hierarchy. Everyone has a boss, a boss that you must not suggest is wrong. I'm very fond of visiting Japan but having worked there, found it impossibly challenging to get anything done.
When things work well it is great and the focused culture produces some great things, but when it fails it leads to catastrophe as no one is able to voice early in the process. Issues are only discovered once they are serious.
My experience in American organizations is that products and services need to not just make money, but make a lot of money. There is zero appetite for things that make a little bit of money relative to the cash cows of the company. You could say this is in part focus, but it is also based on internal accounting. Small product lines are saddled with total company overhead costs even if they do not apply to said product or service. Not good or bad, but it can lead to strange situations where you have a successful product that everyone complains doesn’t make any money.
> There is zero appetite for things that make a little bit of money relative to the cash cows of the company.
The other side of this is only new baby firms invest in that thing that makes a little bit of money. But given enough refinement, that thing starts making more and more money as it gets better and better. And soon, that new baby firm outshines the incumbent. The incumbent's wasn't incentivized to invest in the thing that started off worse but eventually became the new model. Think Kodak with film-vs-digital cameras.
This was the thesis of 1997's The Innovator's Dilemma, written by the guy who coined "Disruptive Technology".
I almost feel like this topic deserves a further deep dive. This seems like a more profound difference of cultures: Japan, where failure is stigmatized and less of an option, optimizes for survival, and the United States, where failure is common, optimizes for growth(? wealth? fame?).
The pattern might also hold at a broader level. The United States is a relatively young nation that has seen plenty of internal strife (plenty of civil wars including The Civil War) whereas Japan has existed in some form for 2,600 years.
Probably too deep to consider, but the thought hit me that trees and plants (like these J-firms) grow multiple branches as quickly as they can because they are optimizing for survival.
There has been some internal stife in Japan, such as the Taira and Minamoto clans having a bit of a falling out, or that time when the Tokugawa somehow ended up on top, or tussles over the Meiji restoration. And also the "opening up undeveloped land" thing that was maybe not so benficial to the Ainu, and others.
How are you defining civil wars such that America has had "plenty" of them? Could you list a few?
This paragraph on organizational model is super relevant to understanding how tech companies are responding to LLMs today.
> Aoki’s key insight was that the J-mode had a comparative advantage in environments of moderate volatility: situations where conditions changed frequently enough that rigid central plans would be outdated before they were executed, but not so radically that only top-down strategic intervention could cope. In an environment of stable, predictable demand, the H-firm did fine; in an environment of extreme disruption, where the whole product line had to be rethought, centralized authority was indispensable, and the H-firm also did fine. But in between—where the challenge was to make constant small adjustments in a changing but recognizable paradigm—the J-firm excelled.
> In 2007, workers at a Toyota plant in Kentucky pulled the andon cord 2,000 times per week; workers at a Ford plant in Michigan pulled it just twice a week. You can’t get all the benefits of a single practice without installing the complete bundle.
This example seems to contradict the author's main point.
The Toyota factory in Kentucky got some of the benefits of the Japanese approach without importing every practice. They might have had a more Japanese organisation than Ford, but surely they didn't replace American practices in matters outside their control. They still had to deal with American approaches to labour practices, banking, local government, etc., all of which are called out in the article as necessary for the J-mode to flourish.
> So why are Japanese companies like this? Why do they do so many different things? And how do they manage to do so all those different things so well?
Author says: Japanese companies excel in lots of very different domains because it’s inherent in how they’re structured.
My response: No mention of culture? Sure maybe it is because of how they are structured somewhat, but it's also because of their culture. Japanese are masters of their craft. Look at the best pizza place in the world, the best burger maker in the world.. they are not in Italy or America, but in Tokyo.
Japanese take pride in their work and master their craft. A small pizza-shop owner in Tokyo doesn't make great pizza because of how it was structured. It's cultural. Japan takes Western concepts, and applies an obsessive cultural devotion to mastery (Shokunin).
Look at all the foreign-things Japan is now famous for:
Japanese Whiskey, Denim, bread making, Japanese curry, etc.
I might be gatekeeping, but I consider a mark of actual healthy capitalism, to be creative destruction, the biggest companies of 1 generation are destroyed by the next generation and the churn keeps going on. Nothing ever lasts except the system.
By this criteria, in the entire world, only US and UK seem to do capitalism properly. Whether the current age of tech companies survive till 2050s is to be seen, (we are already seeing signs of OpenAI, Anthropic joining them but it is to be said if the existing monopolies of say Microsoft will be disrupted).
In other countries, big companies have been the same for hundreds of years, from Japan to Germany to Korea to India. This is no longer capitalism as much as it is some soft form of Feudalism, where the same set of families hold power for generations at a time till some major fortune swings occur.
While things like the expectation of lifetime employment (or at least very long tenure) may sound appealing, it also creates a job market with very low fluidity. In practice, if you miss that narrow “fresh out of school” hiring window, you can end up facing pretty unfavorable prospects later on.
People can still get hired mid-career, of course, but many companies traditionally hire based more on long-term potential than immediately usable skills, since they expect to train employees heavily through OJT. That also means the number of openings for experienced hires can be relatively limited. And because of the seniority-based structure, even experienced workers may end up starting near the bottom anyway.
There was an entire generation of people who missed that initial hiring window because of economic downturns and hiring freezes, and many of them still struggle to land stable permanent positions even today.
Things are gradually changing, but many structural assumptions are still there. For example, parts of the legal and employment system are historically built around the assumption of lifetime employment, which also makes it difficult for companies to dismiss permanent employees once they are hired.
The Japanese economy is also famous for a macro economic stagnation for almost 40 years, a mild deflationary spiral, and companies hoarding cash on balance sheets rather than return it or invest it.
There are definitely world class companies in Japan, but also broad systemic problems with incentives
Asian countries seem to have a different approach to diversification. In the East it is the companies that diversify while in the West it is the shareholders that diversify. So Bill Gates will not tell Microsoft to start farming, but he probably does have farms in his portfolio.
> Hitachi makes nuclear reactors, power grids, railway systems, elevators, semiconductor manufacturing equipment, medical imaging devices, data storage, IT consulting, and industrial machinery.
Very well done. I lived in Japan for years, love Japan deeply, and this essay rang true in many ways.
Two thoughts:
- Japanese management style and processes are probably fruitful ground for understanding how teams of agents should work. H-firms require inspirational leadership, and agents don't need that.
- There is an interesting opportunity to turn Japanese process knowledge into a trainable environment, which of course should be done in such a way to benefit Japan and the Japanese people ("The type of deep process knowledge that has accreted within companies like Kyocera and Toto is almost impossible to replicate")
It's really odd to me that having an advanced ceramics division at Toto is considered such and odd diversified activity, and on top of that making money from the expertise of that division. Deep knowledge of ceramics would seem to me, to be a fundamental advantage if your main line of business is making ceramic toilets.
Companies like this with deep interlocking expertise used to be common in the US too when the US actually made things. GE was a conglomerate of "diversified" expertise - at least until a grandfather of financialization laid the seed to take apart the company.
AT&T and Xerox used to maintain all sorts of deep expertise in all sorts of science and technical activities - though maybe it could be noted that they were famously bad at spinning out other diversified product lines. But the expertise was a need in their core activities. Maybe the most interesting thing about Japanese businesses is that they have shown how to successfully start and maintain diversified product lines.
The main reason we are surprised by these "diversified" products, I suspect is that the typical American (and HN reader), is just not very familiar with the wide range of expertise needed to actually run manufacturing businesses.
What is odd is that a very small side business somehow unrelated to the main activity that is manufacturing toilets, suddenly become the activity providing the main income of the company.
Concepts like this make me think about precision in products. When you spend 40,000$ on a computer chip you get a commodity piece of nm-scale precision. When you spend 40,000$ on a pink ivory coffee table you get a pile of wood with a maximum precision of 0.1-1mm. I'm just wondering what it would be like if atom-level precision was the main focus of every single premium product.
88 comments
[ 2.0 ms ] story [ 90.1 ms ] thread> you have a firm that has lots of lifetime employees who can’t be fired, and whose skills are tailored to what your firm needs rather than to a particular occupational category transferable to any employer
> the system only makes sense if the company is also insulated from outside pressure
> the J-firm [Japan-style company], run by its employees and largely indifferent to the interests of shareholders, exists simply to continue existing
> And that basic impulse toward survival is why Japanese companies are so insistent on diversification. If you’ve made a commitment to keep people employed for life, then you need to create jobs for them if their current jobs stop making sense
> If you’re not very worried about profitability, and have lots of well-trained generalist employees, then it makes perfect sense to reinvest your company’s earnings by expanding into new industries
This essay on Japan's corporate diversification and physical tacit knowledge is an interesting read. However, as an East Asian, my assessment is that this system is heavily driven by Japan's unique, subtle classism. It's a highly collectivist society with strict age-based milestones and immense pressure to secure traditional employment. In Japan, your corporate affiliation often dictates your social standing.
The author paints the lack of shareholder pressure as the secret behind their successful diversification. While true for a few, the flip side is that it created a massive 'zombie company' problem—a heavily discussed issue in Korea and Japan that the West seems largely blind to.
Also, the idea of a 'horizontal culture' in Japan is a myth, especially in software. Even a glance at the Japanese web(5ch, onJ etc...) reveals a deeply entrenched vertical hierarchy. In my experience working with Japanese developers, their reliance on the legacy Waterfall model and an exhausting chain of approvals and reporting was far from horizontal. (Though I admit my sample size is small, it heavily contradicts the Western narrative).
I agree that this rigid system fosters the tacit knowledge needed for hardware and materials. Still, it proves that we all tend to project our fantasies onto cultures we don't fully understand. The divergence in perspectives on HN never fails to amuse me.
In his science fiction novels, Kim Stanley Robinson frequently incorporates the Mondragon economic model to explore post-capitalist, worker-owned, and cooperative societies. I'd say KSR is a decently well-known S/F writer, so at least some westerners (and I'd assume many in this site) have already some idea of it. But I'd say it's true that it's easy to romanticize these kinds of singular situations and brush over the problems they might have.
Have never heard about it until now, but just looking through it, sounds great!
Oh, we're getting there. It's just a bit fringe right now, but Meta's $90 billion loss on VR and *gestures at various aspects of the Gamestop situation" and a few other incidents have people asking questions that are uncomfortable for the passive investmend fund crowd. Forget zombie companies; by many measures, America has a zombie economy.
I think HN'er are smart enough to not idealize everything about Japan.
For example you can be in awe about how clean and safe the country is and how precisely on time all subways train are without idealizing toilet that stream water up your arse.
Replace 'Westerners' with Americans and you are spot on.
I have never met any European that glorifies any part of Japan (I'd see Asia as a whole), most of them will tell you how the tall buildings make them feel little and how the society is beyond oppressive.
Whatever meritocracy exists in capitalism is ironed out by those rigid hierarchies.
I am not sure what is appealing about Japan, Korea or any of these parts of the world, to me they are full of plastic, sugar and late stage capitalism that makes the Americans look as socialists.
I do strongly suspect that a certain type of male likes these places for reasons I cannot even hold in my mind for more than a few seconds.
this theory is typically mentioned when introducing the Theory of the Firm, i.e. why do companies exist at all? why not everyone just freelances, and when you need a marketing/finance/legal/coding person, you just contract one on the free market? the idea is that there are always frictions when doing business with someone new (is this person good? trust worthy? how do i find out?), and how much friction there is determines how big the firm will grow (to incorporate functions in-house, or expand to other industries).
in a perfect frictionless economy, it could indeed be true that business transactions all happen at the smallest unit, i.e. the individual. at the other extreme, there would just be one firm that coordinates all economic activities. all real world economies sit some where in between.
Western Japanophiles, especially from the US, and even if they speak the language and have lived there, are mostly ignorant and their idea of Japan is a full phantasy.
If HN was Brit-dominated, while less romanticised perhaps we probably would seem oddly fascinated with say France, to our minority members elsewhere.
https://news.ycombinator.com/item?id=41438060
Where does it not? As in which countries are not like this?
It's not at all like in the article, it's not horizontal, and very much hierchcal and rigid.
And it can be seen in japanese software, it looks like it was designed from request sheet without actually understanding why. It's often nonsensical and extremely convoluted.
Most of the good japanese software is actually developed in the west by subcontractors. For example Sony games
I’ve been promoting it and its organizational structure for a decade on this website and I’m one of the oldest members on HN
Huh? I thought Agile was dead (it is) and we were going back to waterfall in the West already...
I don't know if all companies should be run like Japanese companies, but there's something very heartwarming about this. Some companies exist for the purpose of employment, and that's okay. In fact it's admirable and makes me want to cheer.
Now the paper company got into the hotel business seems a far better example. No idea how that happens.
I don't think Kimberly-Clark ever opetated a concert hall, but they did run an airline (Midwest Express) and K-C Aviation was an airplane servicing firm.
It's not that American companies don't operate in diverse businesses. Maybe they're less likely to, but it happens when the need arises... if there's no reasonable supplier for an important input, then you start one, or you ask an existing supplier if they can start a new line of business that's somewhat related.
The headline example is that Toto, known as a maker of ceramic toliets, is making a lot of money making specialty ceramics used in semiconductor manufacturing. Which yeah, ceramic manufacturer makes ceramics.
The US business market does like to spin-off divisions when they are successful and can be independent.
The other side of this is only new baby firms invest in that thing that makes a little bit of money. But given enough refinement, that thing starts making more and more money as it gets better and better. And soon, that new baby firm outshines the incumbent. The incumbent's wasn't incentivized to invest in the thing that started off worse but eventually became the new model. Think Kodak with film-vs-digital cameras.
This was the thesis of 1997's The Innovator's Dilemma, written by the guy who coined "Disruptive Technology".
The pattern might also hold at a broader level. The United States is a relatively young nation that has seen plenty of internal strife (plenty of civil wars including The Civil War) whereas Japan has existed in some form for 2,600 years.
Probably too deep to consider, but the thought hit me that trees and plants (like these J-firms) grow multiple branches as quickly as they can because they are optimizing for survival.
How are you defining civil wars such that America has had "plenty" of them? Could you list a few?
> Aoki’s key insight was that the J-mode had a comparative advantage in environments of moderate volatility: situations where conditions changed frequently enough that rigid central plans would be outdated before they were executed, but not so radically that only top-down strategic intervention could cope. In an environment of stable, predictable demand, the H-firm did fine; in an environment of extreme disruption, where the whole product line had to be rethought, centralized authority was indispensable, and the H-firm also did fine. But in between—where the challenge was to make constant small adjustments in a changing but recognizable paradigm—the J-firm excelled.
See for example https://aakashgupta.medium.com/microsofts-ceo-just-became-a-... or https://www.bloomberg.com/news/newsletters/2025-06-12/zucker...
This example seems to contradict the author's main point.
The Toyota factory in Kentucky got some of the benefits of the Japanese approach without importing every practice. They might have had a more Japanese organisation than Ford, but surely they didn't replace American practices in matters outside their control. They still had to deal with American approaches to labour practices, banking, local government, etc., all of which are called out in the article as necessary for the J-mode to flourish.
Author says: Japanese companies excel in lots of very different domains because it’s inherent in how they’re structured.
My response: No mention of culture? Sure maybe it is because of how they are structured somewhat, but it's also because of their culture. Japanese are masters of their craft. Look at the best pizza place in the world, the best burger maker in the world.. they are not in Italy or America, but in Tokyo.
Japanese take pride in their work and master their craft. A small pizza-shop owner in Tokyo doesn't make great pizza because of how it was structured. It's cultural. Japan takes Western concepts, and applies an obsessive cultural devotion to mastery (Shokunin).
Look at all the foreign-things Japan is now famous for: Japanese Whiskey, Denim, bread making, Japanese curry, etc.
By this criteria, in the entire world, only US and UK seem to do capitalism properly. Whether the current age of tech companies survive till 2050s is to be seen, (we are already seeing signs of OpenAI, Anthropic joining them but it is to be said if the existing monopolies of say Microsoft will be disrupted).
In other countries, big companies have been the same for hundreds of years, from Japan to Germany to Korea to India. This is no longer capitalism as much as it is some soft form of Feudalism, where the same set of families hold power for generations at a time till some major fortune swings occur.
People can still get hired mid-career, of course, but many companies traditionally hire based more on long-term potential than immediately usable skills, since they expect to train employees heavily through OJT. That also means the number of openings for experienced hires can be relatively limited. And because of the seniority-based structure, even experienced workers may end up starting near the bottom anyway.
There was an entire generation of people who missed that initial hiring window because of economic downturns and hiring freezes, and many of them still struggle to land stable permanent positions even today.
Things are gradually changing, but many structural assumptions are still there. For example, parts of the legal and employment system are historically built around the assumption of lifetime employment, which also makes it difficult for companies to dismiss permanent employees once they are hired.
There are definitely world class companies in Japan, but also broad systemic problems with incentives
What, no mention of their personal massagers?
For every neatly diversified company you have 10 zombie companies with workers floundering around like ants without a queen.
Two thoughts:
- Japanese management style and processes are probably fruitful ground for understanding how teams of agents should work. H-firms require inspirational leadership, and agents don't need that.
- There is an interesting opportunity to turn Japanese process knowledge into a trainable environment, which of course should be done in such a way to benefit Japan and the Japanese people ("The type of deep process knowledge that has accreted within companies like Kyocera and Toto is almost impossible to replicate")
Companies like this with deep interlocking expertise used to be common in the US too when the US actually made things. GE was a conglomerate of "diversified" expertise - at least until a grandfather of financialization laid the seed to take apart the company.
AT&T and Xerox used to maintain all sorts of deep expertise in all sorts of science and technical activities - though maybe it could be noted that they were famously bad at spinning out other diversified product lines. But the expertise was a need in their core activities. Maybe the most interesting thing about Japanese businesses is that they have shown how to successfully start and maintain diversified product lines.
The main reason we are surprised by these "diversified" products, I suspect is that the typical American (and HN reader), is just not very familiar with the wide range of expertise needed to actually run manufacturing businesses.