Hacker News

> 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.

Quite the opposite - for me, anyway.

FWIW, as a Westerner, I find the Mondragon Corporation to be fascinating and something I've read a lot about because there's no way we've figured out the ideal sort of setup for a business (or government, or any sort of human organization, given appropriate context) in the year 2026.

We have a lot to learn, and while "different" doesn't always mean "better," I strongly believe being exposed to "different" is necessary for us to devise novel approaches to human organization.

What article were you reading? This article isn't idealizing Japanese companies, and specifically discusses the drawbacks of the Japanese approach, including zombie companies.

The article's thesis statement isn't "the Japanese approach is better," but that business practices like these bundle together, that they're very difficult to change, and that each bundle has different advantages and disadvantages.

Ironically, you've proved a deeper point about how amusing HN is: we all tend to project our fantasies onto the articles we're discussing, even if we didn't fully read or understand the article.

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.

> how would a Westerner react if they saw me romanticizing the Mondragon cooperatives in Spain?

HN has had posts romanticizing them, maybe check those

https://news.ycombinator.com/item?id=32622140

https://news.ycombinator.com/item?id=41438060

> it created a massive 'zombie company' problem—a heavily discussed issue in Korea and Japan that the West seems largely blind to

Zombie companies in the west are mentioned as a low/ZIRP phenomena. But the west shouldn't have as big an issue with those because companies, when less diversified, get killed off more often by interest rate hikes.

Japanese and American companies have different purposes.

In Japan the corporation primarily provides stable income and employment for society, and secondarily returns on capital invested. In America, corporations primarily provide returns on capital invested and secondarily provide stable income and employment.

This shows up in the data too. Japanese corporations are less likely to go out of business but provide worse investment returns. American corporations provide better investment returns, but the citizens have to deal with layoffs.

Most citizens would prefer stability to growth, but I think the tradeoff has a lot of downstream consequences.

> It makes me wonder(i'm korean): how would a Westerner react if they saw me romanticizing the Mondragon cooperatives in Spain?

I'd be pleasantly surprised, very impressed and it would make me reach out to have an offline chat. Not exaggerating.

> if they saw me romanticizing the Mondragon cooperatives in Spain?

Speaking for myself, I'd find that very interesting! I just stumbled over an article about it a few days ago, and don't think it's weird that different parts of the world would be interested in a regional business phenomenon.

I think you need to step back and look at why those people write such things.

There are people who romanticize Japan/Asia because they never were there and it is not attainable for them.

There are people who romanticize Japan/Asia because they have direct business interests to do so like selling dreams to the first group.

Mondragon gets glazed on HN frequently. Just search and you’ll find many examples.

> romanticizing the Mondragon

Are they successful?

Japanese culture reflects certain western attitudes which make it stand out.

Do I detect resentment?

Agree with the meta point. I worked in Korea and Japan and loved the culture but when I moved to the west I was surprised to see how people over here fantasize about their (imo inefficient) corporate cultures.

This particular article was decently nuanced though.

Yes, objectively these characteristics of Japanese corporations seem like inefficiencies in the "free market".

Lack of mobility across companies (no price discovery on wages), lack of specialization (no focus), age based hierarchy (anti-meritocratic). None of these sound good for a well-tuned system.

I suspect much of Japan's stagnation is due to this system.

> how Westerners idealize Japan

Westerners are taught by the media and education to idealize Japan and hate China almost everywhere. They present cherry-picked aspects of both countries that make China look bad and Japan look good. In reality every country has its good and bad aspects.

This is just part of the propaganda machine and what politicians want you to believe, in an effort to align their populations to be supportive of their foreign policy and military motives. That ultimately trickles down to things like this. When people come to HN, or any place, with rose-colored glasses of Japan, they will seek confirmations of that rose color everywhere.

In my opinion, this comes from the 70s and 80s where there was very real concern that Japan was going to surpass the US economically. Many companies in the US attempted to adopt Japanese methods in manufacturing and other areas, media then inherited further Japanisms. There is also an historic backdrop of westerners viewing Japan as a mysterious civilization on the far side of the globe dating back to the 1500s.

As someone who finds Japanese corporate culture interesting or even desirable in some ways, it definitely doesn't seem like the most efficient way to run a company. And I'm sure there are plenty of cultural aspects that would not be my cup of tea.

I pretty much agree. While any semblance of a "horizontal" dynamic in Japanese software development was perhaps realized in embedded systems around 40 years ago (e.g., rice cookers with fuzzy logic, or, in a different sense of _lateral_, Gunpei Yokoi’s famous philosophy of "Lateral Thinking with Withered Technology"), software has traditionally been undervalued in Japan. This historical neglect has ultimately contributed to the decline of our consumer electronics industry. (Though personally, I still don’t see why a toaster or a fridge needs to be connected to the internet.)

IMO, the tight-knit division of labor between Toyota and its subcontractors is a slightly different story from the broad diversification within a single corporation. While the latter was historically bolstered by strong industry-academia ties (often driven by university cliques), we rarely see this kind of broad diversification happening in recent years. That said, Japan's traditional "membership-based" employment system, combined with a cultural reluctance to shut down unprofitable business units, is likely what has allowed this diversification to persist for so long.

In any case, Japanese companies are currently struggling with the friction between their traditional corporate culture and the superficial adoption of Western concepts like DX, Agile, meritocracy, job-based employment, and a startup-centric mindset. I suspect Korea might be facing similar structural clashes, though perhaps you are adapting at a much faster pace.

The author discusses the zombie problem. I don't think the author is romanticizing this system. Instead, he is explaining why this system exists (as a result of WW2-era industrial reforms that were kept in place instead of discarded), and why that system naturally leads to a certain set of outcomes. West Germany also had to rapidly catch up after WW2 to suit America's Cold War purposes, and there are some similarities to J-firm structure there, but I'd be interested to hear the author's take on why it ended up somewhere else.

I'll preface this by saying there are lots of other factors at play, but here's an interesting one I can speak to personally:

Car culture. We're a very car-centric society, and the Japanese auto makers have been a part everyday life to 3 full generations of Americans now. Even most Baby Boomers are too young to remember a world without Honda or Toyota. Across all age groups, a lot more Americans grew up with a fondness for their family's Toyota than their family's Hyundai.

I grew up in middle America. Both my grandfathers were "GM Men" if you will. Partly by vocation, partly by culture. On both sides of my family, every car was either a Chevy or a Buick. When my folks bought a Honda in 2007, it was treated like a scandal. But yknow what? Now one of my cousins has a Hyundai, and nobody batted an eye. Things are changing, even for the "raise hell praise Dale" crowd.

Japan's car makers, and their other industrials have a 40-year head start on embedding themselves in the American zeitgeist. Sony, Panasonic, Canon, Yamaha, they've all been here a really long time. They're loved because they're familiar. That's a bias, and I think that bias colors the way we talk about east Asian businesses more broadly.

I think I've seen the odd HN post about Mondragon that does portray it positively. Though I'm not sure I've seen one in at least several years.

Did you read the entire article? There is a whole section on where western model excels. The article is not about romanticizing Japanese culture, but to tell a story about how and why Japanese and American firms tend to differ. I am sure that it paints in overly broad strokes at times, but I really did not get the impression of idolization, idealism, or even oriental mysticism.

In Japan, your corporate affiliation often dictates your social standing.

This is absolutely true in the US as well, by the way. People will treat you differently if you work for a FAANG company. People take a lot of pride in telling others they work for one. And we even have a word for someone who used to work for Google, for instance.

This is the first I've heard of the Mondragon cooperatives, and I quick peak makes me want to learn more about them -- I'm enamored with the idea for coops.

Did you read it? I can see how you can come to this conclusion devoid of context. This is actually a topical article - mainly because it is a surprise to many that a toilet company could be one of the biggest winners in the AI pick-and-shovel trade. These names have just recently been hoisted into the spotlight. It's not really a romanization but an explanation of why.

>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.

Related: In most of the world, carmakers separate out a luxury brand from their other products: Honda with Acura, Toyota with Lexus, etc. In Japan, they don't. The explanation I usually get is that the culture primarily associates luxury with "being attached to the big-name corporation". So you don't really improve on that by introducing another smaller brand, even one you build up as luxury.

See also the patio11 comment:

>>My salary was $30k, but there is some tangible value in having a pocket full of business cards which practically read "Attention, person who has just been handed this card: give the bearer whatever he wants. We're good for it. If you don't, we will remember." That status is very much not the same as the one you get if you combine two part-time jobs into the same level of income.

https://news.ycombinator.com/item?id=8576008

> It’s always fascinating to see how Westerners idealize Japan on platforms like HN

Most HNers tend to be in their mid-30s to 50s so a lot of Japan-philia does appear to stem from an older mental image from the 1990s to 2010s.

> 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 Japanese Keiretsu and later Trust Bank model is the norm in South Korea, Taiwan, China, and other Asian countries as well due to a mix of colonial, financial, and policymaking ties.

Nothing of this is particular to Japan, it's only the way it manifests in Japan that is adapted to its rich culture. Zombie corporations, corporations with ties to the government, family owned companies, monopolies, cronyism, all of this has been a staple of Western capitalism for centuries.

I've thought a lot about (and I don't mean this in a derogatory way) the weebu phenomenon. I remember encountering it first in college when I met people who were in an anime club. It wasn't for me but my philosophy generally is "let people enjoy things".

I've wondered how much of this stems from being disaffected by the modern (particularly Western) world. I worked with an ethnically Chinese guy who was a massive weebu and that always struck me as odd given the Japan-China history.

Japan has always rubbed me the wrong way: misogyny, racism and denial about Japanese war crimes in WW2 mostly. Also the salaryman work culture. I see videos from Japanese workers and life honestly looks miserable. It's also a country that is dying. The samurais, ninjas, Ronin, shoguns, etc are cool though. Japanese history is fascinating.

My hot take here is that China is actually what people idealize Japan to be. China has the most competent government in the world and it's not even close. It's not problem-free. Nowhere is. But the transformation in the lives of ordinary Chinese people over the last few decades is unbelievable. China pulled ~800 million people out of extreme poverty.

It could be worse than Japan too. I think South Korea is that. As a non-Korean from the outside looking in, South Korea looks like a dystopian run by aristocratic (chaebol) families where the birth rate is the lowest in the world and it's in fact so low that if nothing changes, South Korea simply won't exist in 3 generations.

One other interesting fact about Japanese companies is that their CEOs get paid far far less than Western companies.

Checkout this article that talks about it: https://www.theatlantic.com/business/2010/07/5-lessons-of-ja...

edit: added article.

The writing is a joy and the context is useful. Hardly buried.

Yes, thank you for compressing it. They start their answer with:

> Here is the answer I want to suggest: Japanese companies excel in lots of very different domains because it’s inherent in how they’re structured.

Which is then backed by some economists saying something similar (generally), but all of which completely ignores Japan’s specific history.

As a better example Of examining Japan, here’s a look at Japan’s monopolies, how they were broken up, and partly how that effected the future of their industry:

https://m.youtube.com/watch?v=5_-Ac68FKG4

"Look at all the foreign-things Japan is now famous for: Japanese Whiskey, Denim, bread making, Japanese curry, etc."

I think all your examples are terrible (bread) or overpriced (Japanese Whiskey). There are also a lot of places that are pretty crap in Japan like restaurants where they clearly don't really care.

Compare to Italy that wherever you go everything seems really high quality. I was in a gas station in the middle of nowhere and I had a really great cappuccino for example.

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.

That's a bold claim. While I'm sure the average quality in Japan is significantly better than ours, I would put the best pizza places in Jersey, NYC, and CT up against anywhere in the world.

I’ve always had the flip position of this. It’s that the ultra smart Japanese guy doesn’t have that much economic mobility. So he practises excellence in his field. Patio11 pointed out The Sort on his Twitter feed and after that I’ve been convinced of this.

> 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.

> There is zero appetite for things that make a little bit of money relative to the cash cows of the company.

The other side of this is only new baby firms invest in that thing that makes a little bit of money. But given enough refinement, that thing starts making more and more money as it gets better and better. And soon, that new baby firm outshines the incumbent. The incumbent's wasn't incentivized to invest in the thing that started off worse but eventually became the new model. Think Kodak with film-vs-digital cameras.

This was the thesis of 1997's The Innovator's Dilemma, written by the guy who coined "Disruptive Technology".

> zero appetite for things that make a little bit of money

For obvious reasons, the expected rate of return needs to clear the hurdle of the risk-free interest rate. This puts a pretty high floor on activity that is "worth doing". This is a mechanism by which the phenomenon of ZIRP diversifies economic activity.

On the flip side if a small part of the company is suddenly making a ton of money, urge investors will demand it be spun off into a separate corporation to “realize its value.”

> 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.

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.

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

There have been conglomerate fads from time to time in American business. Interestingly ITT

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

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.

Apple is basically this already.

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/the-asian-conglomerate-series/

> 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.

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.

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.

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

Right, the survival bit made me remember this: https://en.wikipedia.org/wiki/Ichimonjiya_Wasuke

And even US and UK are very questionable by now. The last time they had something resembling capitalism was sometime before Roosevelts New Deal.

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