17 ms·

Why Japanese companies do so many different things

910 points by d0ks 5mo ago

claw-el 5mo ago
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.
- BJones12 5mo ago
  I, from a country with few conglomerates, found the Commoncog explanation for why they exist to be interesting https://commoncog.com/how-to-become-an-asian-tycoon/ https://commoncog.com/how-to-become-an-asian-tycoon/ https://commoncog.com/the-asian-conglomerate-series/ https://commoncog.com/the-asian-conglomerate-series/
  - steve-atx-7600 5mo ago
    Thanks - very well written articles
BJones12 5mo ago
The core of the article is buried 60% down: > 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
- reedf1 5mo ago
  The writing is a joy and the context is useful. Hardly buried.
  - programjames 5mo ago
    I clicked on the article to learn, "why Japanese companies do so many different things," and then got hit with pages of low-bitrate context, such that my eyes started glazing over and it was difficult to find the answer to the question. So I appreciate their compression, or at least pointing to where the answer is found.
    - thrawa8387336 5mo ago
      Yeah not everyone is a reader these days
      - programjames 5mo ago
        Not only is that implication rude, it's just not true. I am at least in the 95th percentile of amount of reading. I just think the article is poorly written. Not everyone is a good writer these days (or any days).
        i_am_a_peasant 5mo ago
        the article is pure garbage. most articles are. i love reading but your average article writer is just not a good writer. it’s 90% fluff
    - SubiculumCode 5mo ago
      The answer is much more deep than those bullet points provide. Hard disagree.
    - jimbokun 5mo ago
      TikTok attention span at work.
jdw64 5mo ago
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.
- wileydragonfly 5mo ago
  “Weeabo crap” was also my take on the article.
- showerst 5mo ago
  I didn't feel like this article necessarily idolized it; the author seemed pretty even-handed about strengths and weaknesses. The interesting question in all of these kinds of things is "are there ideas we can take to gain the strengths of other systems or patch the weaknesses in ours?". Looking at Japan specifically, I think I speak for most westerners in saying that if we could get a little more stability and less financial-quarter-driven behavior without taking the whole kit of lifetime employment and zombie companies, that would be a good thing. The author points out just how bundled that is, so it's a tough nut to crack. One model that does give us that is the 'Untouchable visionary CEO' of Jobs and Musk, but I think the popularity of that approach is also limited, partially because of all the not so visionary CEOs trying to be Jobs, and partially because working for those guys is terrible. They inevitably seem to become tyrants. Most Americans I know are familiar with the unending work culture of Japanese white collar workers (if only a parody version of it), and want no part of it.
MetaWhirledPeas 5mo ago
> 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.
- cm2012 5mo ago
  I do also think there's a charm to this model but there's a real cost also with Japan's economy stagnating compared to the United States in the last 30 years.
  - monkaiju 5mo ago
    Perhaps, but in terms of the average Japanese persons day to day experience it doesn't seem so bad. They outrank us in almost all QoL measures
    - ahartmetz 5mo ago
      They work crazy long hours (the last of which every day don't do much at all for productivity), which is really bad for QoL. Though I hear that the situation is improving.
    - sashank_1509 5mo ago
      Frankly I think any QoL measure between a western and a Japanese life are meaningless. If you’ve ever worked for a Japanese corp under a Japanese boss, you would basically experience that your life is hell. As a westerner we are even subjected to far lesser rules and customs than a Japanese, and yet to me it still felt far more stifling and unbearable than any western company I worked for. Western companies have different failure modes, but intense unspoken micromanagement and stupid expectations was never one of them. And I was a supposed “subject matter expert”, to be treated better than rank and file. That said, this clearly works for Japanese people, many of them are happy, I think they would be miserable under a western firms “do whatever the f you want as long as you get results” culture. To each their own. Japan in some sense is stagnating if you compare it to a GOAT like US, but Japan of 1910s was also probably stagnating compared to US, in its own terms Japan is doing fine and their political situation is much more civil. So GG to them
hennell 5mo ago
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.
- toast0 5mo ago
  > Now the paper company got into the hotel business seems a far better example. No idea how that happens. That's easy. They have corporate visitors to their corporate offices and the available hotels are insufficient. They decide to just make their own hotel. There are many corporate campuses with an embedded hotel. Some run by the corporation itself, some with significant management contracting with the corporation, and some independently managed. Large corporation has a small travel business is very common.
  - sevenseacat 5mo ago
    And don't the Japanese railways make all their money from the real estate around their lines, or some such?
- dv_dt 5mo ago
  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.
toast0 5mo ago
> 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.
- murillians 5mo ago
  A great example is the bowling lane people AMF, who have over the years made things like pinsetters, jet-skis, motorcycles, scuba gear, shovels, and nuclear reactors. All spun in and out of the company over its life
- PaulHoule 5mo ago
  There have been conglomerate fads from time to time in American business. Interestingly ITT https://en.wikipedia.org/wiki/ITT_Inc https://en.wikipedia.org/wiki/ITT_Inc. used to have a big position in hotels and just about everything else and it trained quality movement advocate Phil Crosby https://en.wikipedia.org/wiki/Philip_B._Crosby https://en.wikipedia.org/wiki/Philip_B._Crosby
- xp84 5mo ago
  Yeah, we actually had our own era of “conglomerates” - they were very big from the 1960s through 1980s. Companies like ITT, Cendant, Gulf+Western, GE — formed from tons of acquisitions, sprawling across completely unrelated industries. At one point in the 1990s, you could buy a toaster from the same company that makes airplane engines, MRI machines, and produces “Saturday Night Live.” And you may have financed that toaster through their financial arm (GE Capital). Eventually the many lines of business were spun off from companies like this. What came next was a very different type of consolidation - companies like Comcast, Chevron, and the current “AT&T” who went from being regional players to buying as many other companies just like themselves in order to maximize economies of scale - they’re huge but really just do one or two very closely-related things.
MagicMoonlight 5mo ago
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.
ktallett 5mo ago
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.
etempleton 5mo ago
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.
- joe_mamba 5mo ago
  > 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. Is your experience in the same America where Meta is losing another 4-6 billion $ this year in AR/VR business unit, after losing 19 billion $ last year. Similar with Google's and Apple's AR/VR unit which also consume a lot of money in R&D(funding a lot of high paying jobs) and not make any money, yet. So sure, there's no risk appetite for things that make little money, except for all the evidence proving the contrary.
  - etempleton 5mo ago
    There is zero appetite for things that make a little bit of money, but in big tech there is limitless appetite for things that lose money but might make a lot of money one day. If it ends up AI only makes a little profit annually in the longer term the whole thing collapses on itself.
    - joe_mamba 5mo ago
      >There is zero appetite for things that make a little bit of money Because "making little money" is a commodity business activity, overrun with competition from Europe and Asia. So why would you ever want to compete in the race to the bottom of "little money" when you have the highest labor cost in the world? It makes no business sense. You go into "all or nothing" moonshots because Europe and Asia can't compete there. Especially when you have the world reserve currency as the infinite money glitch cheat code (while it lasts).
whall6 5mo ago
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.
- fer 5mo ago
  Right, the survival bit made me remember this: https://en.wikipedia.org/wiki/Ichimonjiya_Wasuke https://en.wikipedia.org/wiki/Ichimonjiya_Wasuke
- tolciho 5mo ago
  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?
NordSteve 5mo ago
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. See for example https://aakashgupta.medium.com/microsofts-ceo-just-became-a-product-manager-that-s-a-80-billion-failure-signal-f21ce2369841 https://aakashgupta.medium.com/microsofts-ceo-just-became-a-... or https://www.bloomberg.com/news/newsletters/2025-06-12/zuckerberg-snaps-back-into-founder-mode-on-ai-for-better-or-worse https://www.bloomberg.com/news/newsletters/2025-06-12/zucker...
dmurray 5mo ago
> 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.
toephu2 5mo ago
> 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.
- ExoticPearTree 5mo ago
  > Japan takes Western concepts, and applies an obsessive cultural devotion to mastery (Shokunin). Thank you for explaining this. I was alawys amazed how the japanese would take the cuisine from other countries and make it better in all aspects than the country that originated it.
  - xandrius 5mo ago
    Why are people saying that the Japanese counterpart of other cuisines are better? Have you guys eaten the originals? OP mentions curry, bread, pizza, etc. Those are things most gaijins complain about when in Japan! Can't find a proper piece of bread that isn't sweetened, or you find a French chain doing something almost similar but still not on par with breads found in France. I helped at a pizza shop near Fuji city and while it was not bad, they weren't quite there yet. I can say that some foods are not bad but saying that they do things inherently better? C'mon now. Still haven't found a decent thai or indian restaurant in Japan, and probably never will, given the general aversion for strong spices.
    - kingkongjaffa 5mo ago
      > general aversion for strong spices You can get very hot spicy katsu curry in most Japanese cities.
sashank_1509 5mo ago
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.
- MrBuddyCasino 5mo ago
  And even US and UK are very questionable by now. The last time they had something resembling capitalism was sometime before Roosevelts New Deal.
  - sashank_1509 5mo ago
    Why’d you say that? IBM, GE, Ford have all been disrupted
    - kingkongjaffa 5mo ago
      Business can get too big to fail and instead of being allowed to fail get bailouts from the government, thus are not truly capitalism.
busterarm 5mo ago
You can pry my Mitsubishi pencil sharpener from my cold dead hands.
aemoven 5mo ago
I like watching Paolo fromTOKYO
- cm2012 5mo ago
  He is part of a great new generation of entertainers. Youtube is great to see how the rest of the world lives.
clearstack 5mo ago
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unsignedint 5mo ago
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.
czhu12 5mo ago
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
enaaem 5mo ago
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.
LoganDark 5mo ago
> Hitachi makes nuclear reactors, power grids, railway systems, elevators, semiconductor manufacturing equipment, medical imaging devices, data storage, IT consulting, and industrial machinery. What, no mention of their personal massagers?
LZ_Khan 5mo ago
If a corporation does not have an incentive to make money, it will not align its priorities correctly. For every neatly diversified company you have 10 zombie companies with workers floundering around like ants without a queen.
- floatrock 5mo ago
  If a corporation has an incentive to make money, it will align its priorities towards making money. Question is: are "making money" and "correct priorities" synonymous? You use "zombie companies" as a universal pejorative and suggest we should all be instead worshiping at the alter of economic efficiency, JIT-delivery, and maximizing shareholder value without really considering the critiques there. Yes, the "zombie company" strawman is paying people to move dirt from one hole to the other and back again which is dumb, but the "efficient company" has its own strawman, one drowning in manufactured debt, peeing in pee bottles in-between amazon warehouse isles, and unable to manufacture its own medical equipment when a black-swan pandemic event hits. Which one is "better" largely depends on if you value societal stability or shareholder profits. Or, in the framing of the article (which is summarizing Aoki, Milgrom, and Roberts), J-style companies exceed in periods of moderate volatility where 1) things don't change so much that you need the money-above-all-else incentive that favors strong hierarchical Jobs-like leadership that finds the visionary new solution, but 2) they change enough that the money-above-all-else incentive that favors value-engineering enshittification loses out to competition. The "societal stability" is just a part of the incentive bundle that forces the adaptation called the J-style approach.
  - LZ_Khan 5mo ago
    a poor population will eventually become an unstable one. In Japan's case, quite literally -- as their population distribution looks like its about to topple over.
paulsutter 5mo ago
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")
dv_dt 5mo ago
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.
- greatgib 5mo ago
  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.
  - dv_dt 5mo ago
    That's a good question, but to me it is not not odd at all to see continuity of growth in that all hugely profitable lines start smaller and grow. The proposition of the VC startup industry is the same at the core of it. Do many small things that can become big, only this is a more organic expertise driven decision basis for building the expertise instead of hype cycles and FOMO Look at it this way, you need to maintain the expertise anyway, originally for the Toilets, but you only need that expertise sometimes, and to be experts worth anything at all, they need to do things outside of what the company is already doing to deepen and maintain that expertise. If you have a set of highly technical experts operating like mini startups - is it a surprise that one might become a unicorn in the balance sheets from time to time?
RemingtonDavies 5mo ago
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.
- skyblock500 5mo ago
  The 40,000$ of a bespoke coffee table comes from the uniqueness of the manufacturing process. No piece of wood is the same, and the way it is prepared from start to finish differs based on numerous factors. The price of a computer chip has been lowered so significantly because of the standard process that is used across millions of chips with materials that are 99.999999999% pure.
dadoum 5mo ago
I want to highlight that maybe today, big conglomerates are rare, but this is also because during the late-20th century, the trend was to break up conglomerates to increase competitiveness and improve financial performance of companies by focusing on the best businesses. If you look at the situation before that moment, Japan's situation would still be on the extreme side when compared to the other developed nations at the time, but not as unique I think. In retrospect, I tend to think that this take was naive. It probably increased financial performance but it discouraged taking risks, and pushed the multidisciplinary skills out of companies in a way that is hard to reverse, inducing knowhow loss and probably slowed down innovation. But this is only my personal analysis and I am no economist.
maxglute 5mo ago
Isn't this functionally GE, Bell Labs etc before MBAs.
- fyrn_ 5mo ago
  Also due to tax structures changing in ways the discouraged long term r&d for existing companies. Largely replaced with a university driven model today, or hyped based fake it till you make it startup investment
momolii 5mo ago
[flagged]
stymaar 5mo ago
> This is very different from how most wealthy countries operate. American firms, for example, tend to prioritize focus above all else It hasn't always been like that. Western companies, including US companies, used to have lots of diversification as well (maybe not as much as the Japanese, but much more than today's companies still: not that long ago a company like IBM used to make mouses and keyboards, in addition to their photocopier, mainframe, software, and personal computer business. They even made a hydrogen peroxide analyzer in 1982![1]). They did so because it makes the company more resilient, and because in that time their shareholders wanted the companies they invested in to be resilient, to have a reasonable yield/risk profile. Things changed in the 80s, when deregulation generate a boom in financial products. Then, individual company resilience was seen as obsolete, you'd cover your risk through portfolio diversification and all you'd want from a company was the pure yield, and companies were streamlined to make as much profit as possible, everything reducing the ratio being sold or terminated. Fast forward 40 years, people believe it has always been like that and it must be so kind of deep cultural difference between Asia and the West. [1]: https://web.archive.org/web/20050119055353/http://www-03.ibm.com/ibm/history/exhibits/specialprod2/specialprod2_4.html https://web.archive.org/web/20050119055353/http://www-03.ibm...
- Cthulhu_ 5mo ago
  Funny you mention IBM given that it still has its fingers in many porridges (to butcher an expression), maybe not computer peripherals but it's still a very broad company.
  - stymaar 5mo ago
    I mentioned IBM because my in-laws used to work there, and they both ended up out of the company because of two waves of "let's focus on our core business" restructuring.
- danmaz74 5mo ago
  Correct, and specifically, it was the total focus on "shareholder value" which caused this, as most often splitting the company and selling its parts brought more immediate value to shareholders. If that also brings more long-term value could be more difficult to assess.
PunchyHamster 5mo ago
Weird thinking that not spinning out every single thing into separate company/selling it out just to make the investor sheet look nice is considered "strange" Vertical integration is almost looked like a mistake in the western investor driven companies; and inventions are to be bought, not actually made, why risk research money into anything not deemed "core business" by the market ?
MeherunJessi 5mo ago
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EdwardDiego 5mo ago
Yamaha also runs a global music school franchise (and I love that the logo on their motorcycles is three tuning forks)
- ultrahax 5mo ago
  Yamaha also made top-end archery gear for quite a while. Infamous for metric threads when nearly everything else used imperial.
  - EdwardDiego 5mo ago
    Oh yes, I remember seeing their logo on a friend's bow!
Exoristos 5mo ago
Japanese conglomerates are relics of a handful of British businessmen's attempting to exploit and dominate Japan during the late colonial period. They did this outside the normal channels of conquest or statecraft, due to Japan's unique relationship to the world at the time.
codazoda 5mo ago
Here’s a weird aside… I like to create little business try’s. Most of them are wildly unsuccessful. I tried to get a bit of business liability insurance, including E&O for this. Why? Because I do too many things. I design and sell 3D printed plastic parts, write books, publish a blog, and publish software. I’ve tried this like three times (it’s time consuming). Last time I decided to stick with just digital assets and I put “software development” but listed my blog and books, figuring most software companies run forums, publish guides, and blog. They declined because they don’t cover “publishers”. I guess you need to buy insurance for each division or something. I’d just like some general business liability and E&O while I figure out what works.
codazoda 5mo ago
Here’s a weird aside… I like to create little businesses. Most of them are unsuccessful. I tried to get a bit of business liability insurance, including E&O for this, but it’s proven to be somewhat difficult: I do too many things. I design and sell 3D printed plastic parts, write books, publish a blog, and publish software. I’ve tried this like three times (it’s time consuming). Last time I decided to stick with just digital assets and I put “software development” but listed my blog and books, figuring most software companies run forums, publish guides, and blog. They declined because they don’t cover “publishers”. I guess you need to buy insurance for each division or something. I was just looking for some general business liability and E&O while I figure out what works. I wrote How to Lose Money with 25-Years of Failed Businesses about some of my tries over the years. https://joeldare.com/how-to-lose-money-with-25-years-of-failed-businesses https://joeldare.com/how-to-lose-money-with-25-years-of-fail...
- greazy 5mo ago
  As someone who dreams up many types of businesses (yet rarely go through with any), thanks got sharing your blog. Reading it now, great read!
deleted 5mo ago
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Ngraph 5mo ago
[flagged]
warumdarum 5mo ago
Basically having 2-3 guys with expertise working on a niche product preserves capability and you have a little turtleegg that can hatch into a product over time.
try-working 5mo ago
Like with China, people try to explain Japan with "culture", which always results in a circular argument: China/Japan is this way, because that's what China/Japan is like. An example would be "super apps". If you google this term you will see countless results that say "Chinese users prefer one app that does everything; they are also better at handling information density." The argument becomes: Super apps exist because Chinese users like Super apps. This is wrong. If you ever talk to a single Chinese user you will learn that none of them like these types of apps. Read the comments here as an example: https://x.com/felixleezd/status/2039008846514119046 https://x.com/felixleezd/status/2039008846514119046 > "No it doesnt. As a Chinese, these apps are shitty to use and I struggle with finding what I need most of the time." > 'Lol no. > Its just bloat without careful thoughts. > "We have this new product, pls add it to the main screen, pls send a notification to all our users to try it out, pls my promotion depend on it" > You can get away with this for decades if the main moat is strong enough.' > "I hate them, full of shitty ads and ads and ads. Basically, every app wants to lend you money, which is a total disaster." There's not a single user that likes "super apps." Then why do they exist? Because of the business environment. In the 2010s, post-iPhone and when smartphones became everyman's personal computing device, VC investment into China skyrocketed, culminating in 2015. Alibaba alone launched something like 50 new services during this decade. A few giant companies remained while the other startup tech companies failed; they divided the market among themselves, and in order to increase LTV per user they started bootstrapping their new services by putting links into them inside their existing platforms. Taobao adding links to Alipay and so on. So "super apps" exist in China because of the business environment. The apps are literally designed by KPIs: get more users to click on this button and open this other service. It has so far been impossible for any startup to disrupt the BAT giants, so they can keep adding more and more services to the same apps and as a result they get more cluttered. The reason I'm making the analogy about China is that the same is certainly true for Japan. It is a steady-state, non-dynamic market where companies that were created decades ago remain and can expand horizontally. It has nothing to do with Japanese culture.
sonnyproto 5mo ago
It's true that many Japanese companies are not as mainstream as US and Chinese saas companies. They tend to have more interests in niche market haha.
winterbourne 5mo ago
The article doesn't address branding very much, but one of the theories for why laser-focused American brands (like Starbucks, KFC, or McDonald's) do so well in Japan is that Japanese mega-companies are too brand-diluted to compete with them.
makeitdouble 5mo ago
> The first thing we should note is that Japanese companies do a lot of things differently from Western companies. > The most important of these, by far, is lifetime employment That ship has sailed. The most favorable accounts[0] put it around 30~40% of the workforce at most, other accounts pronounce it dead. There can be pockets of exceptions, but the bigger companies still afloat aren't shielded from that reality. [0] https://eprints.whiterose.ac.uk/id/eprint/43581/1/matanlematsuiepjhrm2011_deposit.pdf https://eprints.whiterose.ac.uk/id/eprint/43581/1/matanlemat...
GeorgeWoff25 5mo ago
but their work culture always horrifies me
xzp12138 5mo ago
[flagged]
znpy 5mo ago
btw we have an american company that's doing a lot of different things: Amazon. dumb example: it does computer chips (graviton cpus), it does backpacks and stationary (stuff under the "amazon basics" brand), it does editorial work (amazon self-publishing), it does satellite communications. oh and cloud computing and more and more stuff.
thelastgallon 5mo ago
Others big coops (that I know of!): Amul is controlled by 3.6 million milk producers: https://en.wikipedia.org/wiki/Amul https://en.wikipedia.org/wiki/Amul U.S. energy-producing cooperatives are consumer-owned, not-for-profit utilities providing power to over 42 million Americans across 56% of the nation's landmass. These entities consist of local distribution systems, generation and transmission (G&T) cooperatives, and agriculture-focused energy co-op. The nation’s 900 electric cooperatives (co-ops) power the homes of more than 42 million Americans across 47 states: https://www.energy.gov/cmei/success-stories/articles/eere-success-story-electric-cooperatives-channel-solar-resources https://www.energy.gov/cmei/success-stories/articles/eere-su... I wonder what it unique about electricity that this model is widely adopted in a predominantly anti-worker country in the world. Is it because farmers are the biggest votebank? And mostly rich, powerful, have all the political connections?
- thelastgallon 5mo ago
  I almost forgot to mention Mumbai Dabbawala Association delivering food with clockwork precision since 1890, long before any of these web[1.0,2.0,3.0] 'tech' existed. Mumbai Dabbawala Association is a 125-year-old, cooperative-style logistics system that delivers approximately 200,000 home-cooked meals daily to office workers across the city.
barrkel 5mo ago
It's because Japanese society frowns on entrepreneurism, which means innovation needs to be attached to an existing company.
ducksauceanyway 5mo ago
i agree with you
mschuster91 5mo ago
> Even a country like Germany, which matches Japan in its depth of high-precision firms, has nothing like Japan’s corporate diversification. Only a few large conglomerates, like Siemens, have anything approaching the lateral breadth of the Japanese firm. Oh we had that level of conglomerates. Deutsche Bank and Allianz as capital providers, Siemens, AEG, Thyssen, Krupp, Mannesmann and a bunch of others formed the so-called "Deutschland AG" [1] - a web of interconnected very large companies, that also had very good ties to politics. It was a better time. [1] https://de.wikipedia.org/wiki/Deutschland_AG https://de.wikipedia.org/wiki/Deutschland_AG
drayfield 5mo ago
Reminds me of an old favourite from The Onion: https://theonion.com/yamaha-ceo-pleased-with-current-production-of-jet-skis-1819570984/ https://theonion.com/yamaha-ceo-pleased-with-current-product...
cvoss 5mo ago
Article argues that we don't see J-model software companies (or at least they aren't very good) because there's something inherent about software that demands innovation, green field work, blue sky ideas, etc., and that those things only happen (well) in an H-model company. I disagree. So much of software is long lived or should be. We desperately need incremental refinement of already solid products and instead we have decay and rot because H-modelers make bad calls. (E.g. OSes.) My team develops a product that is 15+ years old. As I read how J-models work, I kept thinking, "Yeah, we need that. That would help a lot. I'd love to work for decades on this product if we could do it thay way." Our product is mature and always in demand. But it always needs maintenance and it frequently needs significant improvement to keep pace with the changing environment around it. Bad H-model judgments have sent it in the wrong direction sometimes based on directives from on high, when, actually, the team itself holds so much knowledge and expertise that we can often self-organize in ways that maintain, refine, and improve this 15 year old system. We could benefit so much from a move toward proper J-model thinking.
Zigurd 5mo ago
Some of the examples given in the article make more business sense than others. For example, mass manufacturers of ceramic home articles probably have science and technology expertise that cuts across product categories and markets. Sometimes the logic of focus hasn't focused enough on the expertise it takes to sustain, for example, both toilets and semiconductor manufacturing tooling. The spreadsheet might say you are unlocking shareholder value by spinning off one or the other business, but when it comes time to make the next generation products, it would be to your advantage to have knowledge of both products in house.
makerdiety 5mo ago
I only care about the cyberpunk stuff that's happening right now.
lowellniles 5mo ago
When I graduated with an AI-related degree in the mid-90's, the only jobs in that field I could find were in Japan. I worked for a company that primarily produced chemicals and plastics, but got into semiconductors and also... beer? LOL you can probably guess which company.
donkeylazy456 5mo ago
It is always fun to watch people debating about CJK. It would never end until the world ends. It gets more fun because now `westerners` joined the debate.
zrn900 5mo ago
This is surprising to the modern mainstream tech because doing 'one single thing good' and identifying the company with it has become a phenomenon in the West. 'Who are we and what we do' questions get asked - as if companies and everyone in them were teenagers in search of their identities. In a way that is the case - the majority of startups having been staffed by very young people in the mid 2000s made early startups like teenagers themselves. Otherwise big, large companies have been diversified in the West at that time too. Ironically things are going back to that - now every big tech company that once defined itself with 'one single thing', is trying to do everything to shore up profits...

910 points by d0ks 5mo ago

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.

BJones12 5mo ago
I, from a country with few conglomerates, found the Commoncog explanation for why they exist to be interesting https://commoncog.com/how-to-become-an-asian-tycoon/ https://commoncog.com/how-to-become-an-asian-tycoon/ https://commoncog.com/the-asian-conglomerate-series/ https://commoncog.com/the-asian-conglomerate-series/
- steve-atx-7600 5mo ago
  Thanks - very well written articles

BJones12 5mo ago

The core of the article is buried 60% down: > 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

reedf1 5mo ago
The writing is a joy and the context is useful. Hardly buried.
- programjames 5mo ago
  I clicked on the article to learn, "why Japanese companies do so many different things," and then got hit with pages of low-bitrate context, such that my eyes started glazing over and it was difficult to find the answer to the question. So I appreciate their compression, or at least pointing to where the answer is found.
  - thrawa8387336 5mo ago
    Yeah not everyone is a reader these days
    - programjames 5mo ago
      Not only is that implication rude, it's just not true. I am at least in the 95th percentile of amount of reading. I just think the article is poorly written. Not everyone is a good writer these days (or any days).
      - i_am_a_peasant 5mo ago
        the article is pure garbage. most articles are. i love reading but your average article writer is just not a good writer. it’s 90% fluff
  - SubiculumCode 5mo ago
    The answer is much more deep than those bullet points provide. Hard disagree.
  - jimbokun 5mo ago
    TikTok attention span at work.

jdw64 5mo ago

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.

wileydragonfly 5mo ago
“Weeabo crap” was also my take on the article.
showerst 5mo ago
I didn't feel like this article necessarily idolized it; the author seemed pretty even-handed about strengths and weaknesses. The interesting question in all of these kinds of things is "are there ideas we can take to gain the strengths of other systems or patch the weaknesses in ours?". Looking at Japan specifically, I think I speak for most westerners in saying that if we could get a little more stability and less financial-quarter-driven behavior without taking the whole kit of lifetime employment and zombie companies, that would be a good thing. The author points out just how bundled that is, so it's a tough nut to crack. One model that does give us that is the 'Untouchable visionary CEO' of Jobs and Musk, but I think the popularity of that approach is also limited, partially because of all the not so visionary CEOs trying to be Jobs, and partially because working for those guys is terrible. They inevitably seem to become tyrants. Most Americans I know are familiar with the unending work culture of Japanese white collar workers (if only a parody version of it), and want no part of it.

MetaWhirledPeas 5mo ago

> 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.

cm2012 5mo ago
I do also think there's a charm to this model but there's a real cost also with Japan's economy stagnating compared to the United States in the last 30 years.
- monkaiju 5mo ago
  Perhaps, but in terms of the average Japanese persons day to day experience it doesn't seem so bad. They outrank us in almost all QoL measures
  - ahartmetz 5mo ago
    They work crazy long hours (the last of which every day don't do much at all for productivity), which is really bad for QoL. Though I hear that the situation is improving.
  - sashank_1509 5mo ago
    Frankly I think any QoL measure between a western and a Japanese life are meaningless. If you’ve ever worked for a Japanese corp under a Japanese boss, you would basically experience that your life is hell. As a westerner we are even subjected to far lesser rules and customs than a Japanese, and yet to me it still felt far more stifling and unbearable than any western company I worked for. Western companies have different failure modes, but intense unspoken micromanagement and stupid expectations was never one of them. And I was a supposed “subject matter expert”, to be treated better than rank and file. That said, this clearly works for Japanese people, many of them are happy, I think they would be miserable under a western firms “do whatever the f you want as long as you get results” culture. To each their own. Japan in some sense is stagnating if you compare it to a GOAT like US, but Japan of 1910s was also probably stagnating compared to US, in its own terms Japan is doing fine and their political situation is much more civil. So GG to them

hennell 5mo ago

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.

toast0 5mo ago
> Now the paper company got into the hotel business seems a far better example. No idea how that happens. That's easy. They have corporate visitors to their corporate offices and the available hotels are insufficient. They decide to just make their own hotel. There are many corporate campuses with an embedded hotel. Some run by the corporation itself, some with significant management contracting with the corporation, and some independently managed. Large corporation has a small travel business is very common.
- sevenseacat 5mo ago
  And don't the Japanese railways make all their money from the real estate around their lines, or some such?
dv_dt 5mo ago
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.

toast0 5mo ago

> 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.

murillians 5mo ago
A great example is the bowling lane people AMF, who have over the years made things like pinsetters, jet-skis, motorcycles, scuba gear, shovels, and nuclear reactors. All spun in and out of the company over its life
PaulHoule 5mo ago
There have been conglomerate fads from time to time in American business. Interestingly ITT https://en.wikipedia.org/wiki/ITT_Inc https://en.wikipedia.org/wiki/ITT_Inc. used to have a big position in hotels and just about everything else and it trained quality movement advocate Phil Crosby https://en.wikipedia.org/wiki/Philip_B._Crosby https://en.wikipedia.org/wiki/Philip_B._Crosby
xp84 5mo ago
Yeah, we actually had our own era of “conglomerates” - they were very big from the 1960s through 1980s. Companies like ITT, Cendant, Gulf+Western, GE — formed from tons of acquisitions, sprawling across completely unrelated industries. At one point in the 1990s, you could buy a toaster from the same company that makes airplane engines, MRI machines, and produces “Saturday Night Live.” And you may have financed that toaster through their financial arm (GE Capital). Eventually the many lines of business were spun off from companies like this. What came next was a very different type of consolidation - companies like Comcast, Chevron, and the current “AT&T” who went from being regional players to buying as many other companies just like themselves in order to maximize economies of scale - they’re huge but really just do one or two very closely-related things.

MagicMoonlight 5mo ago

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.

ktallett 5mo ago

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.

etempleton 5mo ago

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.

joe_mamba 5mo ago
> 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. Is your experience in the same America where Meta is losing another 4-6 billion $ this year in AR/VR business unit, after losing 19 billion $ last year. Similar with Google's and Apple's AR/VR unit which also consume a lot of money in R&D(funding a lot of high paying jobs) and not make any money, yet. So sure, there's no risk appetite for things that make little money, except for all the evidence proving the contrary.
- etempleton 5mo ago
  There is zero appetite for things that make a little bit of money, but in big tech there is limitless appetite for things that lose money but might make a lot of money one day. If it ends up AI only makes a little profit annually in the longer term the whole thing collapses on itself.
  - joe_mamba 5mo ago
    >There is zero appetite for things that make a little bit of money Because "making little money" is a commodity business activity, overrun with competition from Europe and Asia. So why would you ever want to compete in the race to the bottom of "little money" when you have the highest labor cost in the world? It makes no business sense. You go into "all or nothing" moonshots because Europe and Asia can't compete there. Especially when you have the world reserve currency as the infinite money glitch cheat code (while it lasts).

whall6 5mo ago

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.

fer 5mo ago
Right, the survival bit made me remember this: https://en.wikipedia.org/wiki/Ichimonjiya_Wasuke https://en.wikipedia.org/wiki/Ichimonjiya_Wasuke
tolciho 5mo ago
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?

NordSteve 5mo ago

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. See for example https://aakashgupta.medium.com/microsofts-ceo-just-became-a-product-manager-that-s-a-80-billion-failure-signal-f21ce2369841 https://aakashgupta.medium.com/microsofts-ceo-just-became-a-... or https://www.bloomberg.com/news/newsletters/2025-06-12/zuckerberg-snaps-back-into-founder-mode-on-ai-for-better-or-worse https://www.bloomberg.com/news/newsletters/2025-06-12/zucker...

dmurray 5mo ago

> 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.

toephu2 5mo ago

> 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.

ExoticPearTree 5mo ago
> Japan takes Western concepts, and applies an obsessive cultural devotion to mastery (Shokunin). Thank you for explaining this. I was alawys amazed how the japanese would take the cuisine from other countries and make it better in all aspects than the country that originated it.
- xandrius 5mo ago
  Why are people saying that the Japanese counterpart of other cuisines are better? Have you guys eaten the originals? OP mentions curry, bread, pizza, etc. Those are things most gaijins complain about when in Japan! Can't find a proper piece of bread that isn't sweetened, or you find a French chain doing something almost similar but still not on par with breads found in France. I helped at a pizza shop near Fuji city and while it was not bad, they weren't quite there yet. I can say that some foods are not bad but saying that they do things inherently better? C'mon now. Still haven't found a decent thai or indian restaurant in Japan, and probably never will, given the general aversion for strong spices.
  - kingkongjaffa 5mo ago
    > general aversion for strong spices You can get very hot spicy katsu curry in most Japanese cities.

sashank_1509 5mo ago

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.

MrBuddyCasino 5mo ago
And even US and UK are very questionable by now. The last time they had something resembling capitalism was sometime before Roosevelts New Deal.
- sashank_1509 5mo ago
  Why’d you say that? IBM, GE, Ford have all been disrupted
  - kingkongjaffa 5mo ago
    Business can get too big to fail and instead of being allowed to fail get bailouts from the government, thus are not truly capitalism.

busterarm 5mo ago

You can pry my Mitsubishi pencil sharpener from my cold dead hands.

aemoven 5mo ago

I like watching Paolo fromTOKYO

cm2012 5mo ago
He is part of a great new generation of entertainers. Youtube is great to see how the rest of the world lives.

clearstack 5mo ago

[dead]

unsignedint 5mo ago

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.

czhu12 5mo ago

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

enaaem 5mo ago

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.

LoganDark 5mo ago

> Hitachi makes nuclear reactors, power grids, railway systems, elevators, semiconductor manufacturing equipment, medical imaging devices, data storage, IT consulting, and industrial machinery. What, no mention of their personal massagers?

LZ_Khan 5mo ago

If a corporation does not have an incentive to make money, it will not align its priorities correctly. For every neatly diversified company you have 10 zombie companies with workers floundering around like ants without a queen.

floatrock 5mo ago
If a corporation has an incentive to make money, it will align its priorities towards making money. Question is: are "making money" and "correct priorities" synonymous? You use "zombie companies" as a universal pejorative and suggest we should all be instead worshiping at the alter of economic efficiency, JIT-delivery, and maximizing shareholder value without really considering the critiques there. Yes, the "zombie company" strawman is paying people to move dirt from one hole to the other and back again which is dumb, but the "efficient company" has its own strawman, one drowning in manufactured debt, peeing in pee bottles in-between amazon warehouse isles, and unable to manufacture its own medical equipment when a black-swan pandemic event hits. Which one is "better" largely depends on if you value societal stability or shareholder profits. Or, in the framing of the article (which is summarizing Aoki, Milgrom, and Roberts), J-style companies exceed in periods of moderate volatility where 1) things don't change so much that you need the money-above-all-else incentive that favors strong hierarchical Jobs-like leadership that finds the visionary new solution, but 2) they change enough that the money-above-all-else incentive that favors value-engineering enshittification loses out to competition. The "societal stability" is just a part of the incentive bundle that forces the adaptation called the J-style approach.
- LZ_Khan 5mo ago
  a poor population will eventually become an unstable one. In Japan's case, quite literally -- as their population distribution looks like its about to topple over.

paulsutter 5mo ago

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")

dv_dt 5mo ago

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.

greatgib 5mo ago
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.
- dv_dt 5mo ago
  That's a good question, but to me it is not not odd at all to see continuity of growth in that all hugely profitable lines start smaller and grow. The proposition of the VC startup industry is the same at the core of it. Do many small things that can become big, only this is a more organic expertise driven decision basis for building the expertise instead of hype cycles and FOMO Look at it this way, you need to maintain the expertise anyway, originally for the Toilets, but you only need that expertise sometimes, and to be experts worth anything at all, they need to do things outside of what the company is already doing to deepen and maintain that expertise. If you have a set of highly technical experts operating like mini startups - is it a surprise that one might become a unicorn in the balance sheets from time to time?

RemingtonDavies 5mo ago

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.

skyblock500 5mo ago
The 40,000$ of a bespoke coffee table comes from the uniqueness of the manufacturing process. No piece of wood is the same, and the way it is prepared from start to finish differs based on numerous factors. The price of a computer chip has been lowered so significantly because of the standard process that is used across millions of chips with materials that are 99.999999999% pure.

dadoum 5mo ago

I want to highlight that maybe today, big conglomerates are rare, but this is also because during the late-20th century, the trend was to break up conglomerates to increase competitiveness and improve financial performance of companies by focusing on the best businesses. If you look at the situation before that moment, Japan's situation would still be on the extreme side when compared to the other developed nations at the time, but not as unique I think. In retrospect, I tend to think that this take was naive. It probably increased financial performance but it discouraged taking risks, and pushed the multidisciplinary skills out of companies in a way that is hard to reverse, inducing knowhow loss and probably slowed down innovation. But this is only my personal analysis and I am no economist.

maxglute 5mo ago

Isn't this functionally GE, Bell Labs etc before MBAs.

fyrn_ 5mo ago
Also due to tax structures changing in ways the discouraged long term r&d for existing companies. Largely replaced with a university driven model today, or hyped based fake it till you make it startup investment

momolii 5mo ago

[flagged]

stymaar 5mo ago

> This is very different from how most wealthy countries operate. American firms, for example, tend to prioritize focus above all else It hasn't always been like that. Western companies, including US companies, used to have lots of diversification as well (maybe not as much as the Japanese, but much more than today's companies still: not that long ago a company like IBM used to make mouses and keyboards, in addition to their photocopier, mainframe, software, and personal computer business. They even made a hydrogen peroxide analyzer in 1982![1]). They did so because it makes the company more resilient, and because in that time their shareholders wanted the companies they invested in to be resilient, to have a reasonable yield/risk profile. Things changed in the 80s, when deregulation generate a boom in financial products. Then, individual company resilience was seen as obsolete, you'd cover your risk through portfolio diversification and all you'd want from a company was the pure yield, and companies were streamlined to make as much profit as possible, everything reducing the ratio being sold or terminated. Fast forward 40 years, people believe it has always been like that and it must be so kind of deep cultural difference between Asia and the West. [1]: https://web.archive.org/web/20050119055353/http://www-03.ibm.com/ibm/history/exhibits/specialprod2/specialprod2_4.html https://web.archive.org/web/20050119055353/http://www-03.ibm...

Cthulhu_ 5mo ago
Funny you mention IBM given that it still has its fingers in many porridges (to butcher an expression), maybe not computer peripherals but it's still a very broad company.
- stymaar 5mo ago
  I mentioned IBM because my in-laws used to work there, and they both ended up out of the company because of two waves of "let's focus on our core business" restructuring.
danmaz74 5mo ago
Correct, and specifically, it was the total focus on "shareholder value" which caused this, as most often splitting the company and selling its parts brought more immediate value to shareholders. If that also brings more long-term value could be more difficult to assess.

PunchyHamster 5mo ago

Weird thinking that not spinning out every single thing into separate company/selling it out just to make the investor sheet look nice is considered "strange" Vertical integration is almost looked like a mistake in the western investor driven companies; and inventions are to be bought, not actually made, why risk research money into anything not deemed "core business" by the market ?

MeherunJessi 5mo ago

[dead]

EdwardDiego 5mo ago

Yamaha also runs a global music school franchise (and I love that the logo on their motorcycles is three tuning forks)

ultrahax 5mo ago
Yamaha also made top-end archery gear for quite a while. Infamous for metric threads when nearly everything else used imperial.
- EdwardDiego 5mo ago
  Oh yes, I remember seeing their logo on a friend's bow!

Exoristos 5mo ago

Japanese conglomerates are relics of a handful of British businessmen's attempting to exploit and dominate Japan during the late colonial period. They did this outside the normal channels of conquest or statecraft, due to Japan's unique relationship to the world at the time.

codazoda 5mo ago

Here’s a weird aside… I like to create little business try’s. Most of them are wildly unsuccessful. I tried to get a bit of business liability insurance, including E&O for this. Why? Because I do too many things. I design and sell 3D printed plastic parts, write books, publish a blog, and publish software. I’ve tried this like three times (it’s time consuming). Last time I decided to stick with just digital assets and I put “software development” but listed my blog and books, figuring most software companies run forums, publish guides, and blog. They declined because they don’t cover “publishers”. I guess you need to buy insurance for each division or something. I’d just like some general business liability and E&O while I figure out what works.

codazoda 5mo ago

Here’s a weird aside… I like to create little businesses. Most of them are unsuccessful. I tried to get a bit of business liability insurance, including E&O for this, but it’s proven to be somewhat difficult: I do too many things. I design and sell 3D printed plastic parts, write books, publish a blog, and publish software. I’ve tried this like three times (it’s time consuming). Last time I decided to stick with just digital assets and I put “software development” but listed my blog and books, figuring most software companies run forums, publish guides, and blog. They declined because they don’t cover “publishers”. I guess you need to buy insurance for each division or something. I was just looking for some general business liability and E&O while I figure out what works. I wrote How to Lose Money with 25-Years of Failed Businesses about some of my tries over the years. https://joeldare.com/how-to-lose-money-with-25-years-of-failed-businesses https://joeldare.com/how-to-lose-money-with-25-years-of-fail...

greazy 5mo ago
As someone who dreams up many types of businesses (yet rarely go through with any), thanks got sharing your blog. Reading it now, great read!

deleted 5mo ago

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Ngraph 5mo ago

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warumdarum 5mo ago

Basically having 2-3 guys with expertise working on a niche product preserves capability and you have a little turtleegg that can hatch into a product over time.

try-working 5mo ago

Like with China, people try to explain Japan with "culture", which always results in a circular argument: China/Japan is this way, because that's what China/Japan is like. An example would be "super apps". If you google this term you will see countless results that say "Chinese users prefer one app that does everything; they are also better at handling information density." The argument becomes: Super apps exist because Chinese users like Super apps. This is wrong. If you ever talk to a single Chinese user you will learn that none of them like these types of apps. Read the comments here as an example: https://x.com/felixleezd/status/2039008846514119046 https://x.com/felixleezd/status/2039008846514119046 > "No it doesnt. As a Chinese, these apps are shitty to use and I struggle with finding what I need most of the time." > 'Lol no. > Its just bloat without careful thoughts. > "We have this new product, pls add it to the main screen, pls send a notification to all our users to try it out, pls my promotion depend on it" > You can get away with this for decades if the main moat is strong enough.' > "I hate them, full of shitty ads and ads and ads. Basically, every app wants to lend you money, which is a total disaster." There's not a single user that likes "super apps." Then why do they exist? Because of the business environment. In the 2010s, post-iPhone and when smartphones became everyman's personal computing device, VC investment into China skyrocketed, culminating in 2015. Alibaba alone launched something like 50 new services during this decade. A few giant companies remained while the other startup tech companies failed; they divided the market among themselves, and in order to increase LTV per user they started bootstrapping their new services by putting links into them inside their existing platforms. Taobao adding links to Alipay and so on. So "super apps" exist in China because of the business environment. The apps are literally designed by KPIs: get more users to click on this button and open this other service. It has so far been impossible for any startup to disrupt the BAT giants, so they can keep adding more and more services to the same apps and as a result they get more cluttered. The reason I'm making the analogy about China is that the same is certainly true for Japan. It is a steady-state, non-dynamic market where companies that were created decades ago remain and can expand horizontally. It has nothing to do with Japanese culture.

sonnyproto 5mo ago

It's true that many Japanese companies are not as mainstream as US and Chinese saas companies. They tend to have more interests in niche market haha.

winterbourne 5mo ago

The article doesn't address branding very much, but one of the theories for why laser-focused American brands (like Starbucks, KFC, or McDonald's) do so well in Japan is that Japanese mega-companies are too brand-diluted to compete with them.

makeitdouble 5mo ago

> The first thing we should note is that Japanese companies do a lot of things differently from Western companies. > The most important of these, by far, is lifetime employment That ship has sailed. The most favorable accounts[0] put it around 30~40% of the workforce at most, other accounts pronounce it dead. There can be pockets of exceptions, but the bigger companies still afloat aren't shielded from that reality. [0] https://eprints.whiterose.ac.uk/id/eprint/43581/1/matanlematsuiepjhrm2011_deposit.pdf https://eprints.whiterose.ac.uk/id/eprint/43581/1/matanlemat...

GeorgeWoff25 5mo ago

but their work culture always horrifies me

xzp12138 5mo ago

[flagged]

znpy 5mo ago

btw we have an american company that's doing a lot of different things: Amazon. dumb example: it does computer chips (graviton cpus), it does backpacks and stationary (stuff under the "amazon basics" brand), it does editorial work (amazon self-publishing), it does satellite communications. oh and cloud computing and more and more stuff.

thelastgallon 5mo ago

Others big coops (that I know of!): Amul is controlled by 3.6 million milk producers: https://en.wikipedia.org/wiki/Amul https://en.wikipedia.org/wiki/Amul U.S. energy-producing cooperatives are consumer-owned, not-for-profit utilities providing power to over 42 million Americans across 56% of the nation's landmass. These entities consist of local distribution systems, generation and transmission (G&T) cooperatives, and agriculture-focused energy co-op. The nation’s 900 electric cooperatives (co-ops) power the homes of more than 42 million Americans across 47 states: https://www.energy.gov/cmei/success-stories/articles/eere-success-story-electric-cooperatives-channel-solar-resources https://www.energy.gov/cmei/success-stories/articles/eere-su... I wonder what it unique about electricity that this model is widely adopted in a predominantly anti-worker country in the world. Is it because farmers are the biggest votebank? And mostly rich, powerful, have all the political connections?

thelastgallon 5mo ago
I almost forgot to mention Mumbai Dabbawala Association delivering food with clockwork precision since 1890, long before any of these web[1.0,2.0,3.0] 'tech' existed. Mumbai Dabbawala Association is a 125-year-old, cooperative-style logistics system that delivers approximately 200,000 home-cooked meals daily to office workers across the city.

barrkel 5mo ago

It's because Japanese society frowns on entrepreneurism, which means innovation needs to be attached to an existing company.

ducksauceanyway 5mo ago

i agree with you

mschuster91 5mo ago

> Even a country like Germany, which matches Japan in its depth of high-precision firms, has nothing like Japan’s corporate diversification. Only a few large conglomerates, like Siemens, have anything approaching the lateral breadth of the Japanese firm. Oh we had that level of conglomerates. Deutsche Bank and Allianz as capital providers, Siemens, AEG, Thyssen, Krupp, Mannesmann and a bunch of others formed the so-called "Deutschland AG" [1] - a web of interconnected very large companies, that also had very good ties to politics. It was a better time. [1] https://de.wikipedia.org/wiki/Deutschland_AG https://de.wikipedia.org/wiki/Deutschland_AG

drayfield 5mo ago

Reminds me of an old favourite from The Onion: https://theonion.com/yamaha-ceo-pleased-with-current-production-of-jet-skis-1819570984/ https://theonion.com/yamaha-ceo-pleased-with-current-product...

cvoss 5mo ago

Article argues that we don't see J-model software companies (or at least they aren't very good) because there's something inherent about software that demands innovation, green field work, blue sky ideas, etc., and that those things only happen (well) in an H-model company. I disagree. So much of software is long lived or should be. We desperately need incremental refinement of already solid products and instead we have decay and rot because H-modelers make bad calls. (E.g. OSes.) My team develops a product that is 15+ years old. As I read how J-models work, I kept thinking, "Yeah, we need that. That would help a lot. I'd love to work for decades on this product if we could do it thay way." Our product is mature and always in demand. But it always needs maintenance and it frequently needs significant improvement to keep pace with the changing environment around it. Bad H-model judgments have sent it in the wrong direction sometimes based on directives from on high, when, actually, the team itself holds so much knowledge and expertise that we can often self-organize in ways that maintain, refine, and improve this 15 year old system. We could benefit so much from a move toward proper J-model thinking.

Zigurd 5mo ago

Some of the examples given in the article make more business sense than others. For example, mass manufacturers of ceramic home articles probably have science and technology expertise that cuts across product categories and markets. Sometimes the logic of focus hasn't focused enough on the expertise it takes to sustain, for example, both toilets and semiconductor manufacturing tooling. The spreadsheet might say you are unlocking shareholder value by spinning off one or the other business, but when it comes time to make the next generation products, it would be to your advantage to have knowledge of both products in house.

makerdiety 5mo ago

I only care about the cyberpunk stuff that's happening right now.

lowellniles 5mo ago

When I graduated with an AI-related degree in the mid-90's, the only jobs in that field I could find were in Japan. I worked for a company that primarily produced chemicals and plastics, but got into semiconductors and also... beer? LOL you can probably guess which company.

donkeylazy456 5mo ago

It is always fun to watch people debating about CJK. It would never end until the world ends. It gets more fun because now `westerners` joined the debate.

zrn900 5mo ago

This is surprising to the modern mainstream tech because doing 'one single thing good' and identifying the company with it has become a phenomenon in the West. 'Who are we and what we do' questions get asked - as if companies and everyone in them were teenagers in search of their identities. In a way that is the case - the majority of startups having been staffed by very young people in the mid 2000s made early startups like teenagers themselves. Otherwise big, large companies have been diversified in the West at that time too. Ironically things are going back to that - now every big tech company that once defined itself with 'one single thing', is trying to do everything to shore up profits...