Intel Commits $50 Billion to Expand Chip Output

(p. B1) Less than six months into the job, Intel Corp. INTC -0.53% Chief Executive Officer Pat Gelsinger’s approach to reviving the chipmaker’s fortunes is emerging: move quickly and carry a big checkbook.

. . .

Mr. Gelsinger’s answer, effectively, has been an emphatic ”no.” He has committed Intel to not only make its own semiconductors but also become a so-called foundry, a maker of chips for others—underwritten with more than $50 billion in financial commitments, if Intel’s exploratory talks to acquire chip-making specialist GlobalFoundries come to fruition. The Wall Street Journal on Thursday reported Intel is considering an acquisition that would value GlobalFoundries at roughly $30 billion.

. . .

(p. B14) A GlobalFoundries takeover would come after Mr. Gelsinger, after little more than a month in the top job, committed Intel to making $20 billion in chip-plant investments in Arizona. Less than two months later, he added a $3.5 billion expansion plan in New Mexico. The Intel CEO has said more financial commitments are on the drawing board, both in the U.S. and overseas.

. . .

The global chip shortage has put semiconductor production in the spotlight like rarely before.

. . .

Intel is betting the chip boom is lasting. Mr. Gelsinger has said the market to make chips for others should become a $100 billion market by 2025.

For the full story, see:

Aaron Tilley. “Intel Bets Billions on Rising Chip Demand.” The Wall Street Journal (Saturday, July 17, 2021): B1 & B14.

(Note: ellipses added.)

(Note: the online version of the story has the date July 16, 2021, and has the title “Intel CEO’s Chip-Building Plan Has a $50 Billion-Plus Price Tag.”)

Water Cooler Encounters May Help More on Less-Developed Projects than Mature Projects

(p. 1) A key scientific breakthrough that would eventually help protect millions from Covid-19 began with a chance meeting at a photocopier — in 1997, between Professor Katalin Kariko and Dr. Drew Weissman, whose work laid the foundation for the Pfizer and Moderna vaccines.

It’s exactly the type of story that has executives itching to get people back to offices. Chance meetings like this are essential for innovation, the theory goes. “Remote work virtually eliminates spontaneous learning and creativity because you don’t run into people at the coffee machine,” Jamie Dimon, the chief executive of JPMorgan Chase, recently told shareholders.

Creativity is hard to quantify. But research, including studies of companies working remotely during the pandemic, supports Mr. Dimon’s argument only up to a point. The data shows that in-office work is helpful at one part of the creative process: forming initial relationships, particularly with people outside your normal sphere.

. . .

(p. 5) A new analysis of announcements by the 50 largest public video game companies, by Ben Waber and Zanele Munyikwa, found that companies that moved to remote work during the pandemic had more delays in new products than before the pandemic, while those that worked in person did not.

The researchers have a hypothesis about why. They also tracked billions of communications — email, chat and calendar data — among information employees at a dozen large global companies over recent years. They found that while working remotely, individual workers were more productive than before, and communicated more with people at different levels of the company and with close colleagues. But they communicated 21 percent less with their weak ties. Perhaps the video game developers lost the benefit of asking a co-worker from a different department to test a prototype, for example, or of running into someone from marketing and brainstorming ideas for selling a new game.

“I do think eventually technology will help here, but the stuff that’s widely available today just doesn’t do it,” said Mr. Waber, co-founder of Humanyze, a workplace analytics company started at M.I.T. Media Lab, where he got a Ph.D. “It probably would be fine if those initial water cooler conversations happened remotely. It’s just less likely they would.”

. . .

Another study, using location tracking technology to follow scientists and engineers at a global manufacturing firm, found that people who often walked by one another in the office, like on their way to the printer or the restroom, were significantly more likely to end up collaborating, especially at the beginning of projects.

“For most collaboration, takeoff is the most challenging bit, and that’s when we find co-location is most helpful,” said Felichism W. Kabo, a research scientist at the University of Michigan and the study’s author. “When people have a prior relationship, it’s much easier to sustain that virtually.”

. . .

For Professor Kariko, there was a long period when it seemed that her research on messenger RNA would never get funding. It was so different from that of her close colleagues, she has said, that it had little support. It took that encounter at the copy machine — meeting Dr. Weissman, who brought a different perspective and a desire to make a vaccine — to change that.

For the full commentary, see:

Claire Cain Miller. “Is the Water Cooler a Font of Inspiration?” The New York Times, SundayBusiness Section (Sunday, September 5, 2021): 1 & 5.

(Note: ellipses added.)

(Note: the online version of the commentary was updated Sept. 4, 2021, and has the title “When Chance Encounters at the Water Cooler Are Most Useful.”)

The article by Waber and Munyikwa mentioned above is:

Waber, Ben, and Zanele Munyikwa. “Did Wfh Hurt the Video Game Industry?” Harvard Business Review (2021).

The article by Kabo mentioned above is:

Kabo, Felichism W. “A Model of Potential Encounters in the Workplace: The Relationships of Homophily, Spatial Distance, Organizational Structure, and Perceived Networks.” Environment and Behavior 49, no. 6 (2017): 638–62.

Anderson Led NCR to Disrupt Its Own Cash Register Technology

I believe that Clayton Christensen (with Raynor) in The Innovator’s Solution, used the NCR transition from mechanical cash registers to electronic cash registers as an example of creative destruction that was NOT an example of his disruptive innovation. Alternatively, should this be considered a rare case where a firm succeeds in disrupting itself, especially rare because it was not implemented by the firm founders? (The usual case of rare self-disruption is HP disrupting its laser printer by developing the ink jet printer.)

(p. A9) The same self-belief that kept Mr. Anderson alive as a POW gave him confidence he could save NCR.

“The most important message I try to get across to our managers all over the world is that we are in trouble but we will overcome it,” he told Business Week, which reported that he had the “stance and mien of a middleweight boxer.”

Founded in 1884, NCR was comfortably entrenched as a dominant supplier of mechanical cash registers and machines used in accounting and banking. It underestimated the speed at which microelectronics and computers would wipe out its legacy product line. By the early 1970s, NCR was losing sales to more nimble rivals.

A factory complex covering 55 acres in Dayton made hundreds of exceedingly complicated machines rapidly becoming obsolete. Mr. Anderson found that NCR was using about 130,000 different parts, including more than 9,000 types and sizes of screws. For 1972, his first year as president, NCR took a $70 million charge, largely to write down the value of parts and inventory and replace outdated production equipment.

Mr. Anderson slashed the payroll and invested in new products, including automated teller machines and computers. Profitability recovered, and NCR reported record revenue of $4.07 billion for 1984, the year he retired as chairman.

For the full obituary, see:

James R. Hagerty. “Former POW Revived National Cash Register.” The Wall Street Journal (Saturday, July 10, 20211): A9.

(Note: the online version of the obituary has the date July 6, 2021, and has the title “Former Prisoner of War Saved NCR From Obsolescence.”)

The Christensen co-authored book mentioned above is:

Christensen, Clayton M., and Michael E. Raynor. The Innovator’s Solution: Creating and Sustaining Successful Growth. Boston, MA: Harvard Business School Press, 2003.

Musk Pushed Hard to Achieve Sustainable Scale at Tesla

(p. B1) This was Mr. Hunter’s big moment: His team had scheduled 1,700 people to pick up their Model 3s in the coming days—a record—and he was proud to announce the achievement. The compact Model 3 was Mr. Musk’s bet-the-company shot at transforming Tesla into a mainstream auto maker and ushering in a new era of electric vehicles—and at that moment, Tesla needed to move thousands of them to stay afloat.

Mr. Hunter had set a record, but Mr. Musk wasn’t happy. The Tesla chief executive ordered Mr. Hunter to more than double the number the next day or else he’d personally take over.

There was more. Mr. Musk said he’d heard that Mr. Hunter’s team had been relying on phone calls to schedule car pickups. That stopped now. Nobody likes talking on (p. B6) the phone, Mr. Musk said; it takes up too much time. Text customers instead. That would be faster. If he heard about any calls being made the next day, Mr. Hunter was fired.

Mr. Hunter’s wife and children had only recently joined him in Las Vegas; they had just finished unpacking their boxes. Now Mr. Musk was threatening to fire him if he didn’t do the impossible in 24 hours.

Tesla was 15 years old, and it was running out of time and money.

. . .

The sales organization didn’t have hundreds of company cellphones that Mr. Hunter’s sales team could use to send text messages, as Mr. Musk demanded, and they didn’t want their employees using their own personal phones.

Overnight, Mr. Hunter and other managers pieced together a solution, employing software that allowed his team to text from their computers. They stopped the practice of walking customers through the reams of sales paperwork that would eventually need to be completed and signed. If Mr. Musk’s goal was to have people in a queue to pick up their cars, then that’s what they would do. They’d just start assigning pickup times for customers: Can you come in at 4 p.m. on Friday to get your new Model 3?

Often, Mr. Hunter didn’t even wait for any response before putting a customer on the list for pickup. If the customer couldn’t make it, she might be told she would lose her spot in line for a car that quarter. Customers became more motivated to complete the tedious paperwork needed to complete a sale when there was a Model 3 dangled in front of them. Mr. Hunter’s team began telling customers to have it all completed 48 hours before delivery.

The team raced through their list of customers, assigning times at pickup centers around the U.S. By 6 p.m. the next day, they had reached 5,000 appointments. Mr. Hunter gathered the team to thank them for their work. He fought back tears. He hadn’t told them that his job was on the line; all they knew was that it was super-important to schedule a bunch of deliveries. That night on the call, Mr. Hunter reported the results to Mr. Musk.

“Wow,” Mr. Musk said.

. . .

As the clock ticked down to the end of September [2020] and Tesla’s outrageous sales goal seemed out of reach, Mr. Musk turned to Twitter to make an unusual request to his loyal customers: Help us deliver vehicles.

Longtime owners showed up at stores around the country. They focused on showing customers how to operate their new cars, and explained life with an electric vehicle, freeing up paid staff to handle the overflow of paperwork. Mr. Musk and his new girlfriend, pop musician Grimes, worked at the Fremont delivery center, joined by board member Antonio Gracias. Mr. Musk’s brother, Kimbal, also a member of the board, showed up at a store in Colorado. It was truly an all-hands-on-deck moment. Surrounded by friends and kin, Musk seemed at his happiest, one manager recalled: “It was like a big family event…. He likes that—he likes loyalty.”

The company was ready to tabulate the quarter’s final delivery results. It was close. Deliveries reached 83,500—a record that exceeded Wall Street’s expectations but that was more than 15% shy of the internal goal of 100,000. (It was also uncannily close to the estimate by the head of customer experience, who had seemingly been ousted for suggesting it.) Almost 12,000 vehicles were still en route to customers, missing the deadline for the third quarter.

For the full essay, see:

Tim Higgins. “The Race to Rescue Tesla.” The Wall Street Journal (Sat., July 31, 2021): B1 & B6.

(Note: ellipses, and bracketed year, added.)

(Note: the online version of the essay has the date July 30, 2021, and has the title “Elon Musk’s ‘Delivery Hell’.”)

The essay quoted above is based on Higgins’s book:

Higgins, Tim. Power Play: Tesla, Elon Musk, and the Bet of the Century. New York: Doubleday, 2021.

Elon Musk Says He Prefers Being an Engineer to Being Boss of Tesla

If Musk really prefers being an engineer, why doesn’t he resign as CEO and take a job as an engineer? Maybe like many entrepreneurs, he complains, but in his heart he prefers being an entrepreneur?

(p. B3) WILMINGTON, Del.—Elon Musk said Tesla bought SolarCity Corp. for one fundamental reason: to become more than a car company.

The Tesla Inc. chief executive made the argument as he wrapped up two days of sometimes feisty testimony in court, defending the roughly $2.1 billion tie-up completed in 2016 at a time both Tesla and SolarCity were financially struggling.

. . .

Though the grilling focused largely on what information Tesla shareholders were given about the financial condition of SolarCity, Mr. Musk at times veered farther afield in answering, particularly when it came to whether he exerted too much control over the purchase, a key question in the trial.

On Monday he said that he didn’t enjoy being the boss of Tesla. “I rather hate it, and I would much prefer to spend my time on design and engineering, which is what intrinsically I like doing,” he said.

When Mr. Baron on Tuesday asked Mr. Musk whether he had lied about when a core SolarCity product would be ready to sell in large volume, he responded, “I have a habit of being optimistic.” Mr. Baron fired back: “This is more than optimistic. This is just plain out false.”

For the full story, see:

Dave Michaels and Rebecca Elliott. “Musk Says Deal Helped Diversify.” The Wall Street Journal (Weds., July 14, 2021): B3.

(Note: ellipsis added.)

(Note: the online version of the story was updated July 13, 2021, and has the title “Elon Musk Defends SolarCity Deal: ‘The Goal Is Not to Be a Car Company’.”)

India’s Tata “Paid a Harsh Price” for Keeping Distance from Government

(p. A15) Mr. Raianu, a historian at the University of Maryland, is guilty of no hype when he titles his book “Tata: The Global Corporation That Built Indian Capitalism.”

. . .

No other company has dominated the history of its national commerce and industry quite as much as the house of Tata in India, where it is one of the few major businesses still regarded as unstained by overt corruption. Although family-run for most of its existence—the stubborn Indian norm for merchants—the Tata company was from an early date “unusual” among India’s corporate groups (Mr. Raianu says) in employing professional executives and “talented nonrelatives.” The company also “kept its distance from the state” in both colonial and postcolonial times. It gave only lukewarm support to the Indian National Congress, which meant that the Tatas had few political chips to cash when the Congress party came to govern a free India. It paid a harsh price for this aloofness when Air India—the Tatas’ thriving aviation arm—was nationalized by Prime Minister Nehru in 1953.

. . .

The Parsi character of the company has, in many ways, helped it to transcend the mud pit of Indian business. The Parsis are a minuscule community, numbering around 57,000 Indians today. Practitioners of Zoroastrianism, they fled to India in the eighth century when Persia came under the sway of Islam. They embraced Western ways more readily than other Indians and, as a result, thrived under the British. Parsis, writes Mr. Raianu, “typified the religious minority exempt from ritual restrictions of caste and guild systems, much like European Jews.” And so they were more ready to look outward—to foreign opportunities—than the hidebound Indian business castes.

For the full review, see:

Tunku Varadarajan. “BOOKSHELF; From Homestead to Hegemony.” The Wall Street Journal (Wednesday, July 14, 2021): A15.

(Note: ellipses added.)

(Note: the online version of the review has the date July 13, 2021, and has the title “BOOKSHELF; ‘Tata’ Review: From Homestead to Hegemony.”)

The book under review is:

Raianu, Mircea. Tata: The Global Corporation That Built Indian Capitalism. Cambridge, MA: Harvard University Press, 2021.

Supply Chain Fragility During Pandemic Undermines “Just-in-Time” Business Dogma

(p. A1) TOKYO— Toyota Motor Corp. is stockpiling up to four months of some parts. Volkswagen AG is building six factories so it can get its own batteries. And, in shades of Henry Ford, Tesla Inc. is trying to lock up access to raw materials.

The hyperefficient auto supply chain symbolized by the words “just in time” is undergoing its biggest transformation in more than half a century, accelerated by the troubles car makers have suffered during the pandemic. After sudden swings in demand, freak weather and a series of accidents, they are reassessing their basic assumption that they could always get the parts they needed when they needed them.

“The just-in-time model is designed for supply-chain efficiencies and economies of scale,” said Ashwani Gupta, Nissan Motor Co.’s chief operating officer. “The repercussions of an unprecedented crisis like Covid highlight the fragility of our supply-chain model.”

. . .

(p. A10) One day in 1950, Toyota executive Taiichi Ohno visited an American supermarket and marveled how the shelves were restocked as they were emptied, as Jeffrey Liker recounts in his book “The Toyota Way.” Shoppers were kept happy even though the supermarket had only small storerooms. It was the polar opposite of the car industry where warehouses were kept full of sheet metal and tires to ensure the assembly line never shut down.

Supermarkets had little choice, since they couldn’t stockpile bananas for months. Still, Mr. Ohno reasoned, their practices eliminated waste and cut costs. Toyota would only pay for what it needed to produce cars for a day. That meant they could make do with smaller factories and warehouses.

. . .

The tide began to turn with the global financial crisis. At least 50 auto suppliers went bankrupt, catching car makers by surprise. When suppliers like Visteon Corp. , a maker of air conditioners, radios and other components, declared bankruptcy, it led to fears that car factories relying on Visteon would also be unable to operate.

A different shock prompted a rethinking of just in time at the company where it started. The 2011 earthquake in northern Japan hit Toyota suppliers including chip maker Renesas Electronics Corp.

. . .

For certain components, Toyota asked its suppliers to stockpile parts, the antithesis of just in time. The on-hand inventory held by Toyota’s largest supplier, Denso Corp., rose to around 50 days’ worth of supply in the year ended March 2020, up from 38 days in 2011, according to its financial filings. Denso declined to comment on inventory figures but said it has started keeping emergency stores of parts, especially semiconductors.

Toyota’s efforts have helped it weather this year’s shortages of semiconductors better than many of its rivals, although it wasn’t perfect.

For the full story, see:

Sean McLain. “Auto Makers Hit Brakes On Just-in-Time Manufacturing.” The Wall Street Journal (Thursday, May 04, 2021): A1 & A10.

(Note: ellipses added.)

(Note: the online version of the story has the date May 3, 2021, and has the title “Auto Makers Retreat From 50 Years of ‘Just in Time’ Manufacturing.”)

The most recent edition of the classic book on Toyota’s success, mentioned above, is:

Liker, Jeffrey. The Toyota Way, 14 Management Principles from the World’s Greatest Manufacturer. 2nd ed. New York: McGraw-Hill Education, 2021.

Serendipitous Water Cooler Collaboration “Is More Fairy Tale Than Reality”

(p. B1) When Yahoo banned working from home in 2013, the reason was one often cited in corporate America: Being in the office is essential for spontaneous collaboration and innovation.

. . .

Yet people who study the issue say there is no evidence that working in person is essential for creativity and collaboration. It may even hurt innovation, they say, because the demand for doing office work at a prescribed time and place is a big reason the American workplace has been inhospitable for many people.

“That’s led to a lot of the outcomes we see in the modern office environment — long hours, burnout, the lack of representation — because that office culture is set up for the advantage of the few, not the many,” said Dan Spaulding, chief people officer at Zillow, the real estate market-(p. B7)place.

“The idea you can only be collaborative face-to-face is a bias,” he said. “And I’d ask, how much creativity and innovation have been driven out of the office because you weren’t in the insider group, you weren’t listened to, you didn’t go to the same places as the people in positions of power were gathering?”

“All of this suggests to me that the idea of random serendipity being productive is more fairy tale than reality,” he said.

. . .

“There’s credibility behind the argument that if you put people in spaces where they are likely to collide with one another, they are likely to have a conversation,” said Ethan S. Bernstein, who teaches at Harvard Business School and studies the topic. “But is that conversation likely to be helpful for innovation, creativity, useful at all for what an organization hopes people would talk about? There, there is almost no data whatsoever.”

“All of this suggests to me that the idea of random serendipity being productive is more fairy tale than reality,” he said.

. . .

. . . Professor Bernstein found that contemporary open offices led to 70 percent fewer face-to-face interactions. People didn’t find it helpful to have so many spontaneous conversations, so they wore headphones and avoided one another.

. . .

. . . some creative professionals, like architects and designers, have been surprised at how effective remote work has been during the pandemic, while scientists and academic researchers have long worked on projects with colleagues in other places.

Requiring people to be in the office can drive out innovation, some researchers and executives said, because for many people, in-person office jobs were never a great fit. They include many women, racial minorities and people with caregiving responsibilities or disabilities. Also, people who are shy; who need to live far from the office; who are productive at odd hours; or who were excluded from golf games or happy hours.

For the full commentary, see:

Claire Cain Miller. “THE UPSHOT;Returning to the Office? The Myth of Serendipity.” The New York Times, SundayBusiness Section (Sunday, July 2, 2021): B1 & B7.

(Note: the online version of the commentary was updated July 1, 2021, and has the title “THE UPSHOT; Do Chance Meetings at the Office Boost Innovation? There’s No Evidence of It.”)

The Bernstein research mentioned above is:

Bernstein, Ethan, and Ben Waber. “The Truth About Open Offices.” Harvard Business Review 97, no. 6 (Nov./Dec. 2019): 82-91.

To Extort U.S. Firms, Xi Passes Laws that Firms Cannot Obey

(p. B1) Doug Guthrie spent 1994 riding a single-speed bicycle between factories in Shanghai for a dissertation on Chinese industry. Within years, he was one of America’s leading experts on China’s turn toward capitalism and was helping companies venture East.

Two decades later, in 2014, Apple hired him to help navigate perhaps its most important market. By then, he was worried about China’s new direction.

China’s new leader, Xi Jinping, was leaning on Western companies to strengthen his grip on the country. Mr. Guthrie realized that few companies were bigger targets, or more vulnerable, than Apple. It assembled nearly every Apple device in China and had made the region its No. 2 sales market.

So Mr. Guthrie began touring the company with a slide show and lecture to ring the alarm. Apple, he said, had no Plan B.

“I was going around to business leaders, and I’m like: ‘Do you guys understand who Xi Jinping is? Are you listening to what’s going on here?’” Mr. Guthrie said in an interview. “That was my big calling card.”

His warnings were prescient. China has taken a nationalist, au-(p. B3)thoritarian turn under Mr. Xi, and American companies like Apple, Nike and the National Basketball Association are facing a dilemma. While doing business in China often remains lucrative, it also increasingly requires uncomfortable compromises.

That trend raises the question of whether, instead of empowering the Chinese people, American investment in the country has empowered the Chinese Communist Party.

. . .

Mr. Guthrie’s career arc and evolving view of China tell the story of Western industry’s complicated dance with the country over the past three decades. Mr. Guthrie and many executives, politicians and academics had bet that Western investment in China would lead the country to liberalize. It is now clear that they miscalculated.

“We were wrong,” said Mr. Guthrie, who left Apple in 2019. “The wild card was Xi Jinping.”

In recent years, China shut down Marriott’s website after it listed Tibet and Taiwan as separate countries in a customer survey. It suspended sign-ups to LinkedIn after the site failed to censor enough political content. And the Communist Party urged a boycott of Western apparel companies that criticized forced-labor practices in Xinjiang, a Chinese region where the government is repressing Uyghurs, the country’s Muslim ethnic minority.

. . .

In 2014, China’s so-called dispatch labor law went into effect, limiting the share of temporary workers in a company’s work force to 10 percent. From Day 1, Apple and its suppliers were in violation.

At a Foxconn plant in Zhengzhou, China, the world’s biggest iPhone factory, temporary workers made up as much as half of the work force, according to a report by China Labor Watch, an advocacy group. After the report, Apple confirmed that the factory broke the law.

Apple executives were concerned and confused, Mr. Guthrie said. They knew the company couldn’t comply because it needed the extra workers to meet periods of intense demand, such as the holidays.

. . .

“‘This is the point. You are supposed to be out of compliance,’” he said he had told them. “‘Not so they can shut you down, but so you’ll figure out what they want you to do and figure out how to do it.’”

Mr. Guthrie, who is often tucking his long, graying hair behind his ears, began giving his lecture on Apple’s risk in China around that time. Its extreme reliance on the country left it with little leverage to resist.

Apple continued to grapple with demands from the government.

. . .

To measure the success of their lobbying, Apple executives looked to the government’s annual corporate social responsibility scores, a proxy for the Communist Party’s view of a company.

. . .

Apple’s score steadily improved. From 2016 to 2020, its ranking among all companies in China rose from No. 141 to No. 30.

Apple didn’t always successfully resist the government’s demands. Over that period, Mr. Cook had agreed to store his Chinese customers’ private data — and the digital keys to unlock that data — on computer servers owned and run by the Chinese government.

For the full story, see:

Jack Nicas. “A Warning On China Is Prescient For Apple.” The New York Times (Friday, June 18, 2021): B1 & B3.

(Note: ellipses added.)

(Note: the online version of the story has the date June 17, 2021, and has the title “He Warned Apple About the Risks in China. Then They Became Reality.”)

Risk Averse Family Firms with Large Cash Reserves Can Last 1,000 Years

Is longevity for firms a noble goal? Or do humans usually flourish more in the churn of creative destruction?

(p. B1) KYOTO, Japan — Naomi Hasegawa’s family sells toasted mochi out of a small, cedar-timbered shop next to a rambling old shrine in Kyoto. The family started the business to provide refreshments to weary travelers coming from across Japan to pray for pandemic relief — in the year 1000.

Now, more than a millennium later, a new disease has devastated the economy in the ancient capital, as its once reliable stream of tourists has evaporated. But Ms. Hasegawa is not concerned about her enterprise’s finances.

Like many businesses in Japan, her family’s shop, Ichiwa, takes the long view — albeit longer than most. By putting tradition and stability over profit and growth, Ichiwa has weathered wars, plagues, natural disasters, and the rise and fall of empires. Through it all, its rice flour cakes have remained the same.

Such enterprises may be less dynamic than those in other countries. But their resilience offers lessons for businesses in places like the United States, where the coronavirus has forced tens of thousands into bankruptcy.

“If you look at the economics textbooks, enterprises are supposed to be maximizing profits, scaling up their size, market share and growth rate. But these companies’ operating principles are completely different,” said Kenji Matsuoka, a professor emeritus of business at Ryukoku University in Kyoto.

(p. B5) “Their No. 1 priority is carrying on,” he added. “Each generation is like a runner in a relay race. What’s important is passing the baton.”

Japan is an old-business superpower. The country is home to more than 33,000 with at least 100 years of history — over 40 percent of the world’s total, according to a study by the Tokyo-based Research Institute of Centennial Management. Over 3,100 have been running for at least two centuries. Around 140 have existed for more than 500 years. And at least 19 claim to have been continuously operating since the first millennium.

. . .

The businesses, known as “shinise,” are a source of both pride and fascination.

. . .

Most of these old businesses are, like Ichiwa, small, family-run enterprises that deal in traditional goods and services. But some are among Japan’s most famous companies, including Nintendo, which got its start making playing cards 131 years ago, and the soy sauce brand Kikkoman, which has been around since 1917.

. . .

The Japanese companies that have endured the longest have often been defined by an aversion to risk — shaped in part by past crises — and an accumulation of large cash reserves.

It is a common trait among Japanese enterprises and part of the reason that the country has so far avoided the high bankruptcy rates of the United States during the pandemic. Even when they “make some profits,” said Tomohiro Ota, an analyst at Goldman Sachs, “they do not increase their capital expenditure.”

Large enterprises in particular keep substantial reserves to ensure that they can continue issuing paychecks and meet their other financial obligations in the event of an economic downturn or a crisis. But even smaller businesses tend to have low debt levels and an average of one to two months of operating expenses on hand, Mr. Ota said.

For the full story, see:

Ben Dooley and Hisako Ueno. “A Family Business Got Its Start In a Pandemic (1,000 Years Ago).” The New York Times (Saturday, December 5, 2020): B1 & B5.

(Note: ellipses added.)

(Note: the online version of the story was updated Jan. 7, 2021, and has the title “This Japanese Shop Is 1,020 Years Old. It Knows a Bit About Surviving Crises.”)

Some Tech Startups, and Big Tech Firms, Want Workers Back in Office

(p. A1) For a tech guy, Mike de Vere, chief executive of fintech software startup Zest AI, has a contrarian return-to-work plan for his 100 employees: he wants them in the office full time.

Mr. de Vere said having employees together in the Burbank, Calif., headquarters improves communication, builds trust and allows for them to absorb knowledge from more experienced colleagues.

“We believe that we will be our best selves the more that we are together,” he said.

As more tech companies leverage the promise of flexible work arrangements as a competitive advantage, some are going the opposite route, betting that a strong office culture is what will help them recruit and retain the best talent.

Proponents of fully in-office work cite a range of benefits, from the collaboration that can result from happenstance interactions to easier communication. Plus, they add, plenty of people enjoy working in offices, especially after months spent, for some, in makeshift arrangements. Given the tech industry’s status as a bellwether for workplace trends, professionals in many industries are watching to see where it lands.

. . .

(p. A4) Dan Kaplan, a partner with organizational consulting firm KornFerry International, said the pandemic has permanently changed the equation for employees. The days of being in the office just to show your face are over: “People aren’t willing to do it anymore,” he said.

Though people early in their careers crave mentorship and the ability to build their social circles on the job, Mr. Kaplan said he’s started seeing flexibility as a point of negotiation between job seekers and employers. Candidates are trying to broker fewer days a week in the office and CEOs prefer more time in person, he said.

“There is going to be tension in the system,” he said. What tech companies do will have impacts across industries, he added.

. . .

An Amazon spokesman said the company plans to gradually return to an office-centric workweek because it “enables us to invent, collaborate, and learn together most effectively.”

For the full story, see:

Katherine Bindley. “Tech Startups Eye a World, Post-Covid, Back in the Office.” The Wall Street Journal (Monday, April 26, 2021): A1 & A4.

(Note: ellipses added.)

(Note: the online version of the story has the date April 25, 2021, and has the title “Five Days in the Office? For These Startups, the Future of Work Is Old School.” The online edition says that the title of the print edition was: “Tech Startups Eye a World, Post-Virus, Back in the Office Some Tech Firms View Office As Place to Lure, Hold Talent.” My copy of the print edition had the title in the citation above.)