Yesterday I read an article that’s been going viral around the world, and which tackles the seemingly pointless topic of “Why Japanese companies do so many different things.”
Example:
TOTO is a Japanese toilet manufacturer that’s been gaining ground in the US.
But besides excellent toilets, TOTO also makes excellent bathroom tiles, faucets, modular kitchens, photocatalytic coatings for buildings, and assistive equipment for the elderly.
And now, thanks to the growth of AI and the resulting demand for memory chips, TOTO has a booming new business making something called an e-chuck, which is a component of the semiconductor supply industry.
There are dozens of examples like this among Japanese companies.
Kyocera makes kitchen knives, LCD systems, and joint replacements.
Yamaha builds motorcycles, guitars, and industrial robots.
Nintendo started out as a handmade playing card company, tried to enter the taxi service and instant rice markets, and eventually settled on making Mario and Zelda.
A bunch of Japanese companies do a bunch of stuff, often entirely unrelated, at a very high and very profitable level.
How? Why?
I won’t attempt to summarize the viral article here. It’s over 5k words long, and it is itself based on summarizing a number of much longer econ research papers. Here’s just one relevant insight for you and me today:
American and Japanese companies are built up of fundamentally distinct “bundles of practices.” Among economists, these distinct bundles have gotten the names H-firm (typical American biz) vs J-firm (typical Japanese biz).
Elements of the H-firm you’re probably familiar with. Things like employee specialization, promotions and salaries based on performance, frequent workspace switching, openness to external capital.
Elements of the J-firm are much more foreign if you’re not from Japan. They include such practices as lifetime employment (even in times of economic crisis), hostility to outside capital, general employee knowledge rather than specialization, promotion and salary based on seniority rather than performance.
There’s one more distinction that’s relevant for us:
The H-firm is geared towards profitability and returns to investors.
The J-firm, on the other hand, is aiming simply at its own survival, even though it can be wildly profitable as it looks to survive.
It’s an interesting topic, and the viral article is worth looking up and reading.
But it’s not just idle curiosity why I’m sharing this with you. This whole distinction between J-firms and H-firms sounded familiar and personally relevant to me. I figured the J-firm is much more like my email-newsletter-based biz, which you might call the B-firm (for Bejako-style business).
The B-firm is also a bundle of practices, such as:
1. Selling yourself, your own personal attitudes and interests, rather than promising to solve a customer problem first and foremost
2. Regular and frequent communication
3. High prices
4. High trust
5. Customers who stick around and continue to buy for years, and often buy many different things, often entirely unrelated
Ultimately, the B-firm is also about long-term survival rather than short-term profitability, though the B-firm has been very profitable to me over the long term.
I’m telling you this in case you have an idea of what a “business” looks like.
Some of the most fundamental ideas we have about “business” are actually only assumptions, or rather, bundles of practices that make sense in a given context, like Silicon Valley or Wall Street.
Other forms of business exist, as part of other bundles, and can be very successful, and maybe much more palatable to you personally.
A final insight from that viral article:
In Japan, there was a trigger that caused the emergence of the J-firm bundle of practices. That trigger was the decision by the Japanese government, during the 1930s and 40s, to instruct firms to prioritize employees over shareholder profits, as part of the Japanese drive to build up military capacity.
Similarly, if you want to have a B-firm like mine, there’s a trigger that will in time pull in other practices, like high prices and customers who continue to buy year after year. That trigger is starting to communicate regularly and frequently with your audience, such as by sending daily emails.
You don’t need my help to start a daily email habit. But if over time you’ve decided that you want my help in starting your own daily email habit, here’s where to go: