When things were bleak at Nintendo in 2013, finally, its extraordinary president, Satoru Iwata, told shareholders exactly why two straight years of operating losses was no reason to dump anyone.
“I sincerely doubt that employees who are afraid of being fired will be able to develop software titles that can impress people around the world,” he said, rejecting the moral pressure from investors to reduce headcount and endanger the brilliance of game franchises such as Mario and Zelda for short-term financial results.
A decade later, the Japanese company remains defined by the clash: the top-down rejection, the instinct of the primacy of full-bore shareholders versus the usually imported faith that is the only guarantee of progress and the only way to secure the future of the elderly. , society is shrinking.
Iwata, somewhat unexpectedly, is now being quoted on social media from beyond the grave – his statement about how to run a happy software ship in rough seas has been repeated by crying and recently unemployed from Silicon Valley. But is he right?
For those who see such extermination as necessary, the large-scale layoffs at Google, Microsoft, Amazon, Salesforce and other tech sectors should, in principle, serve as a masterclass for the likes of Japan in the ways of “real” shareholder capitalism. company evolution. However, even in the US, it has become a question of how shareholder-focused savagery is beneficial.
In theory, this could be a golden opportunity for prime minister Fumio Kishida to be tougher and more global on the “new capitalism” narrative – the formidable economic howitzer he introduced in 2021, but so far has failed to do so. the flag that says “bang!”
There is a possibility that a well-formulated blueprint for a “new capitalism” could be Japan’s gift to the world when the old capitalism seems very thirsty. It might, with some serious thought, have provided a framework to reduce major shareholder pressures in favor of the more multi-stakeholder capitalism that Japan is more comfortable with.
Japanese companies, despite pressure from more vocal investors to share the money, have generally stuck to the line that employees should carry the same weight as shareholders among the CEO’s priorities. Many of them are self-righteous ossified management, but many are genuine.
Kishida has made substantial speeches on the new capitalism – one last year in London and one last week at the opening of parliament. He has also created a steering committee of external experts on how to shape policies around the simultaneous ideals of greater wealth equality, stronger national economic security and the promotion of innovation. Concrete steps, and even a precise definition of “new capitalism”, remain elusive, and those on the committee say privately that their approach is too broad.
Two reasons that can prevent the big party for the new capitalism, or even as proof of Iwata-ism. The first is that Kishida seems to have realized that the better the idea, the more vaguely defined it is. They are not, say people close to them, especially doctrinaire, and do not yet understand exactly where the problem is the fault of capitalism, and there is only a group of management of self-preservation, inefficiency and inheriting risk. To define the new capitalism strictly, he will carry out major reforms, he did not, 15 months of work, seems very enthusiastic.
Another reason is that there is a growing — very quiet — recognition among many Japanese CEOs that the kind of mass layoffs that are plaguing the U.S. tech sector, while ugly and sad in and of themselves, indicate something to be desired about U.S. job liquidity. the market where the former Google and the former Microsoft have now been removed. They will get more jobs, and different sectors will benefit from the cross-pollination of talent.
Larger, listed Japanese companies, at the expense of corporate innovation and other problems, have never encouraged such liquidity: now many want to have it. In order to produce a new capitalism with the promise of greater vitality, Kishida had to, unfortunately, recognize the need to curtail one of the worse and more unstable features of the old capitalism.
The big problem with Iwata-ism, is that – as the man said – his claim relies on “sincere doubt” rather than the empirical tests that the US has been doing for years.
leo.lewis@ft.com