Great read, thanks for posing for some important questions. To your first question, let’s assume that isolationism continues to play out on the global stage. One potential option I thought of is for Toyota to local their final assembly plants in certain local markets (in order to obtain favorable free trade agreements), while sourcing their parts globally. One parallel to draw is the manufacturing process between Apple iPhones and Google Androids, where the former is manufactured end-to-end within Apple’s ecosystem of factories and suppliers and the latter typically takes on a more scattered, globalized sourcing and manufacturing model. However, given what we learned in TOM about the Toyota Production System, this may be infeasible given that Toyota requires extremely tight-knit partnerships with their suppliers. Frequently, this even means co-location between Toyota and its supplier(s).
On your second question, I wonder if Toyota could band together with other global automakers and form an industry alliance on such an issue. Given that global automakers are likely facing the same isolationist trends, and offer similar benefits to local markets such as corporate tax revenue and job creation, this might be a more effective route than Toyota’s individual efforts with the US government. At the end of the day, cars are a global product and thus, global consumers would lose if countries imposed huge tariffs on any car imports.
Super interesting essay! What an interesting application of blockchain technology. In addition to the risks you mention, I am concerned about two additional risks/downsides. First, given the large scale of elections, I wonder how feasible it is to use blockchain technology from a computational and cost standpoint. As we see with Bitcoin and cryptocurrencies, transactions are approved by “miners” (individuals/groups that provide the processing power to mine and record the transactions in the public ledger). As the number of users and transactions have increased over time, this has led to a significant slowdown in the system (e.g. taking days, instead of minutes, for a transaction to be recorded) as well as an increase in costs (both in terms of incentive fees paid to miners as well as computing costs). I wonder if these problems would also translate over to a voting application. Second, one of the things we can observe about the blockchain technology is that a “hard fork” can occur in the ledger. Essentially, a parallel blockchain can be established and operate independently of the original chain. Once this happens, you essentially have two different, independent views of the world. If this were to happen in a voting system, for example through a hack, that would be disastrous because we would essentially have two different election outcomes. However, Smartmatic and other leaders in this field could develop mitigating security features that could combat these concerns.
Great essay! I believe that WB should continue to invest in the traditional movie-going experiences. While I do believe that the world is increasingly moving towards digital, there is an experiential element to the movies that is irreplaceable. What WB should focus on is how to make the movie-going experience better and more enjoyable to the end consumer (not necessarily just about the movie content). For example, as Philip mentioned above, WB could experiment with new VR formats to attract customers. Additionally, WB could partner with national movie theater chains on how to improve the movie-going experience (not dissimilar to the IDEO movie theater case). Furthermore, although the US is ahead of the curve on digitizing entertainment, much of the rest of the world still values the movie theater experience and eagerly waits in anticipation for US movie releases. To give up its leadership in that space would be doing WB a huge disservice.
On your subscriber fatigue question, I do think that is a risk. Personally, I subscribe to Netflix as a loyal customer, then cherry-pick shows from all of the other streaming services (e.g. using my boyfriend’s HBO account, doing free trials on Hulu for a particular show) — it’s just too much to manage and pay for 3+ OTT services. As digital players and traditional studios move towards more original content creation, WB could have an advantage given its long-term industry expertise and access to talent.
Very interesting essay, great job! I had no idea that the apparel and textile industry contributed so much towards greenhouse emissions and water usage. To that end, I think your point about educating the end consumer is very important. Beyond educating me about Patagonia’s own supply chain sustainability initiatives, I believe that consumers would benefit from learning about the apparel industry’s environmental impact as a whole. I recommend that apparel brands/retailers collaborate together on an industry education initiative, with Patagonia at the forefront. Currently, sustainable products and business operations is a competitive point of differentiation for most companies; I would argue that for the collective good, we should expect it as table-stakes, rather than a differentiator. Consumers are growing increasingly conscientious about what they consume — oftentimes, the education piece is lacking.
The other parallel I would draw is with the food / agriculture industry, which is one of the biggest offenders in terms of GHGs and water usage. One initiative that food leaders, such as General Mills, have done is pledge a certain reduction in GHG and water reduction. To implement this, they have actually pledged to reduce their environmental footprint throughout the ENTIRE supply chain – beyond their own direct operations. The majority of GHG and water usage occurs upstream of the company’s own operations, in the operations of the suppliers and growers. I could see that applying to Patagonia and apparel brands as well (e.g. with cotton growers and fiber manufacturers).
Thank for writing about Nio – super fascinating company, and one that I had not heard of before (especially when competing against the likes of Tesla)! I have several thoughts to share on this topic. First, reflecting on our Chateau Margaux discussion today and the Chinese “luxury buyer”, I wonder how much of the push towards purchasing EV vehicle is around wanting to own the latest supercar as a status symbol vs. actually buying into the EV revolution for sustainability purposes? Perhaps the motivation doesn’t matter, as long as the outcome is positive. However, my fear is that the Chinese mainstream market will be slower to adopt EVs as a result – if the motivation proves to be around owning luxury supercars. One of the differences from the US EV market is that beyond Tesla, we also see many affordable EV options, such as the Prius and Volt. Second, I would be curious to learn what additional investments the Chinese government is making towards EVs, beyond monetary incentives/credits. I would imagine that there would also need to be some infrastructure changes and investments, beyond the individual consumer. Finally, there is a risk with the supply chain piece, as you alluded to in this essay. We have already seen this time and time again with Tesla. However, as more auto companies enter the EV space and move towards fully electrical offerings, I think it benefits the ecosystem as a whole as suppliers become more accustomed with providing parts for EVs.
Thanks for writing about an interesting and important topic, made more relevant over the past year given the current political climate in the US. First, I agree with previous comments that human capital is perhaps the most valuable asset for “asset-light” technology companies. Historically, the US has had an advantage when it comes to highly-educated labor resources due to its well-developed education system–particularly in higher education institutions (e.g. MIT). As immigration standards shift towards isolationism, we may not only see that highly educated foreign talent leave the country due to visa restrictions, but also that international students choose to pursue their education in countries other than the US (e.g. the UK) because their US job prospects become so limited. Thus, I see the threat to be even broader than the high technology industry. Second, I am hopeful that as the US technology industry becomes more and more powerful, they will have a greater lobbying voice on these immigration matters. It has been heartening to see so many admirable, well-known business figures from Silicon Valley speak out about this issue. Finally, I wonder how much of this shift towards isolationism is temporary and an outcome of the recent election cycle. While we have seen this shift globally over the past few years, I do think that election cycles tend to exhibit “pendulum swings” and in 4-8 years, we may see a regression back towards globalization. The question then becomes is that time horizon too long and therefore damaging for high-tech companies, like Facebook and Google, that must innovate quickly to survive?