Philippa Kaur

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“America is the piggy-bank of the pharma world,” gripes David Mitchell of Patients for Affordable Drugs, a consumer lobbying group. There is some truth to this. America is the world’s largest pharmaceutical market, with $630bn in sales in 2022, or 42% of the worldwide total. Its contribution to profits—65% of the global haul—is greater still. American patients have long borne the burden of these juicy returns. Prescription medicines in America cost two to three times more on average than in other wealthy countries (see chart). Patients’ out-of-pocket expenses, the slice of drug costs not covered by insurance, are also among the highest in the world.One reason for high prices is that, unlike other countries, America has not regulated drug prices. Until recently it was illegal for Medicare, the government-funded health insurance for over-65s, to haggle with drug companies. That is set to change. The Inflation Reduction Act (IRA), passed last August, gives Medicare the power to negotiate directly with pharmaceutical firms. It also forces companies to pay a rebate to Medicare if their drug prices rise faster than inflation. The Congressional Budget Office, a federal agency, estimates that price-capping measures will lop $96bn from the federal deficit by 2031.On August 29th the government named the first ten drugs chosen for price negotiation, which will take effect in 2026. Pharma firms have little choice but to agree to the price set by officials. Any that walk away will have to choose between paying stringent fines, or withdrawing all of their drugs from the Medicare programme. The backlash from the pharma industry has been fierce. “This is not ‘negotiation.’ It is tantamount to extortion,” protested Merck, an American drugmaker, in a lawsuit against the government. A slew of pharma giants—Astellas, Boehringer Ingelheim, Bristol Myers Squibb and Johnson & Johnson—have joined the legal bandwagon, challenging price-setting provisions in the IRA. Pharma bosses are bracing for price cuts of between 25% and 95% in drugs chosen for price negotiation. Since the law’s passage over 50 companies have blamed the IRA in earnings calls for clouding their prospects. It is already having some unwanted side-effects. One issue is a provision in the law that could change the types of drugs that these companies develop. Most medicines are either small-molecule drugs or large-molecule drugs. The former are chemical-based pills of the kind that line medicine cabinets. Large-molecule drugs, also called biologics, are more complex and must be injected into the bloodstream. The ira grants biologics 13 years of pricing freedom after a drug is approved, whereas small-molecule drugs get only nine years post-approval before they face Medicare’s bean counters. Jonathan Kfoury of LEK, a consultancy, estimates that small-molecule brands could lose between 25% and 40% in overall revenue due to early price caps. Executives fret that the new rules will dissuade innovation in small-molecule pills. Last November Eli Lilly, a big American drugmaker, binned a small-molecule cancer drug from its pipeline, blaming the ira for making the investment unviable. In the same month Alkermes, an Irish biotech firm, announced plans to spin off its biologics-focused oncology business into an independent company. Richard Pops, the company’s chief executive, explained that the IRA had “made biologic medicines more valuable”.Another contentious provision in the law starts the pricing clock at a drug’s launch. Pharma firms usually introduce a new drug to small patient populations, like those with rare conditions or late-stage diseases, who have few alternatives, before widening availability to others. With only nine years in which to maximise returns, companies will try to “delay the clock” by launching their drug for the largest disease areas, believes David Fredrickson, who leads the oncology division of AstraZeneca, an Anglo-Swedish pharma giant. Genentech, an American biotech firm owned by Roche, a Swiss drugmaker, is considering postponing the launch of its upcoming small-molecule drug for ovarian cancer. Instead, the company may wait a few years until the drug has been cleared for use in the much larger prostate cancer market. The impact of the IRA may be muted, at least until the end of this decade: JPMorgan Chase, a bank, suggests that the new law’s price cuts will be only a “modest drag” on big pharma’s growth in its first few years. But as more medicines are added, drugmakers will feel more pain. And if the new rules dissuade pharma firms from developing small-molecule drugs, they could prove counterproductive, by raising prices in the long term. Unlike biologics, which are harder to copy, small-molecule pills are flooded with cheaper knockoffs once their patent expires.Alexis Borisy, a biotech investor, notes that uncertainty around the returns for small-molecule medicines is already influencing funding decisions. That is a problem. Big pharma relies on smaller, more agile biotech firms for ideas. Between 2015 and 2021, 65% of the 138 new drugs launched by big pharma originated in external partnerships, mostly with smaller firms. Given America’s disproportionate role in the discovery of new therapies, disruptions to the innovation pipeline could have far-reaching consequences.■ More

As bullets fly around a high-speed train carrying a former Miss World and a gang of spies through the Italian Alps, shopping is surely the last thing on viewers’ minds. Yet should they press pause, they will see an option to buy items from the show: the heroine’s gold necklace, her red dress, or the teetering stilettos in which she is improbably running rings around the villains. Only her exploding perfume is not yet for sale.“Citadel”, a thriller on Amazon Prime Video, shows what happens when the world’s biggest online retailer becomes one of its biggest entertainment producers. As well as buying merchandise from the show on Amazon’s e-commerce site, audiences can listen to its soundtrack on Amazon Music, or read about its production on Amazon’s sister site, imdb.com. Its multinational cast and plot, and planned spin-offs in different languages, are chosen to appeal to shoppers around the world.Hollywood old hands are snooty about Amazon’s video efforts, and understandably so. Despite a reported budget of $300m, making it the second-priciest tv series in history (after “The Rings of Power”, another Amazon project), “Citadel” received lukewarm reviews and failed to crack the top ten most-streamed shows in America (Amazon says it has done better internationally). Critics see it as emblematic of the company’s high-spending, low-impact record in video. This year Amazon will blow $12bn on streaming content, second only to Netflix (see chart). It has had some hits, including “Reacher” and “The Boys”. But its 45 streaming nominations at the upcoming Emmy awards—a record for Amazon—is less than half as many as Netflix or Warner-Discovery’s service, Max. “Amazon’s hit rate is not good, nor consistent with its spend,” admits one former executive.Yet despite its creative misfires, Amazon is quietly assembling something that has eluded most of its rivals: a model for how to make streaming pay. Its shows may underwhelm, but it is preparing to pair them with its formidable advertising machine, and is turning its streaming app into a high-margin marketplace for third-party sales, along the lines of its all-conquering e-commerce site. Hollywood might snigger at Amazon’s output. But the Seattle firm may yet have the last laugh.Amazon has been in the video business since 2006, when it launched Unbox, an iTunes-like downloading platform. Since then the company has deployed its tech-sized chequebook to become one of the biggest forces in Tinseltown. Its main streaming service, Prime Video ($8.99 a month, or free as part of Amazon’s broader Prime membership), attracts some 156m monthly viewers—about as many as Disney+ and second only to Netflix. Freevee, its free streaming service with ads, has another 40m or so. Fire tv, Amazon’s range of internet-connected tv sets and streaming sticks, outsells every brand bar Samsung, with nearly 100m devices in use worldwide, according to TechInsights, a data firm.The most obvious motive for Amazon’s video experiments is to increase the value of the Prime bundle, which keeps members shopping on the e-commerce site. But video has the potential to become a moneyspinner in its own right, in two ways.First, advertising. In little more than a decade Amazon has created a digital-ads business that has disrupted the duopoly of Google and Meta. Its ad revenue this year will be around $45bn, making up about 7.5% of worldwide digital advertising, estimates Insider Intelligence, a research company. It is already more than a third the size of Meta’s ad business. But whereas Google and Meta both have healthy video-ad operations (through YouTube and Reels, respectively), Amazon’s inventory is mainly sponsored search results on its e-commerce site.That seems to be changing. Amazon has kept Prime Video largely ad-free to preserve a “premium” feel, says one senior executive. But the introduction of commercials last year by Netflix and Disney+ has given a green light to others to do the same. Amazon has been experimenting with running ads alongside sports shows on Prime, and has shifted more of its back-catalogue to Freevee, its ad-supported streamer. Analysts expect to see more commercial breaks on Prime soon.Among streamers, Amazon is uniquely well placed in the advertising game. Whereas Netflix acknowledges that it is mainly limited to generic “brand” advertising, Amazon has enough information on its customers, through its e-commerce site and its Fresh grocery stores, to serve highly personalised ads. What’s more, it can measure the effectiveness of those ads, by observing viewers’ subsequent behaviour in its shops. It has yet to exploit this ability fully, but viewers will get a taste of it in September when Amazon plans to run targeted, measured ads alongside its “Thursday Night Football“ programme. In November it will show a blizzard of ads when it airs the first American football game to coincide with Black Friday, an annual holiday to honour the shopping gods.It makes this a “foundational year” for Amazon’s video-ad business, says Andrew Lipsman of Insider Intelligence. “The future of their advertising strategy on video is going to really take hold.” Morgan Stanley, a bank, forecasts that within two years Amazon’s nascent video-ad business will be worth more than $5bn a year in America alone, and that in the long run its superior intel on its viewers could allow it to charge higher rates for its ads than any other video platform.That ability will become more valuable as viewing shifts to streaming. Ads on internet-connected television make up about a third of tv ad spending in America. As that share rises, a “pot of gold” awaits sellers of digital advertising, says a former Amazon executive. What’s more, points out Mr Lipsman, “When you introduce data, it transforms markets.” tv ads are reckoned to be among the most effective, but their impact is hard to measure. As advertisers gain the ability to see how customers respond to their commercials, the tv advertising market, currently worth about $90bn a year in America, stands to grow, with the lion’s share going to the companies that offer the best measurement.Streaming’s new landlordAmazon’s second approach to making video pay is to sell viewers not just its own output but other companies’ content, too. Whereas viewers opening Netflix or Disney+ see only shows on those platforms, those opening Prime Video are offered content from a range of other streamers. If a customer subscribes to another service via Prime, or buys or rents a show, Amazon takes a cut, reckoned to be between 20% and 50%. When a viewer watches a free channel via Prime, Amazon takes a slice of the ad revenue or sells its own ads in some of the channel’s slots.Tom Harrington of Enders Analysis, a research firm, likens the approach to Amazon’s strategy in retail. The company began by selling its own products, before opening its marketplace to other traders. These days two-thirds of sales on Amazon.com are made by third parties, with Amazon taking a commission—a much higher-margin business than selling its own wares. Its aim is to be the same kind of “landlord” in video, believes Mr Harrington.This analysis sheds light on the purpose of big-budget shows like “Citadel”. Amazon continues to stock its e-commerce site with first-party products, to maintain price competition and ensure that the marketplace has a broad enough offering to keep customers returning. Prime Video content plays a similar role: high-profile shows and live sports—something not available from most other streamers—get people to open the app, while guaranteeing them a wide range of content to choose from. “The real question isn’t how many people watched ‘Rings of Power’,” says Mr Harrington. “It’s how many people went into Prime because of ‘Rings of Power’…and then [spent] more on other content.”Amazon seems to be succeeding in getting people to spend time on its platform. Although few of its shows break into the top ten individually, Nielsen’s figures show that Prime Video’s share of streaming in America—about 8.9% of hours watched in July—is about 70% greater than that of Disney+, and more than twice that of Max.Becoming a content landlord is not easy. Amazon’s bargaining power over suppliers is weaker in video, where there are a few big studios with their own direct-to-consumer offerings, than in e-commerce, where millions of tiny sellers use its marketplace. Amazon’s hold over consumers is weaker, too: whereas the company accounts for nearly 40% of e-commerce sales in America, its Fire tv platform handles only about 15% of streaming traffic there.Still, the company is carving out ways of making money in an industry drowning in losses. Amazon may not dominate the Emmys, or Nielsen’s top ten. But, says a former executive, its chief aims in video are for people to watch tv through its hardware, to buy content through its store, and to watch commercials served by Amazon advertising. Even if “Citadel” remains a critical flop, it may have done its job.■ More

“Arrived in Bologna, Italy, today, now it’s off to Tuscany. The heatwave is spectacular here. If things continue like this, these holiday destinations will have no future in the long term. Climate change is destroying southern Europe. An era comes to an end.” This tweet in early July by Karl Lauterbach, Germany’s health minister, went down badly in Italy. The country’s minister for tourism, Daniela Santanchè, sourly retorted that she thanked Mr Lauterbach for picking Italy for his holiday, but the Italian government was well aware of climate change and that sustainability was one of the central elements of its strategy for managing tourism.The industry is not just an important contributor to Italy’s economy. Europe is the planet’s most visited region, welcoming 585m of the world’s 900m international travellers in 2022. On top of this, domestic holiday-makers outstripped foreigners in terms of nights spent in tourist accommodation in the eu. Little wonder then that the sector directly generates 5% of the eu’s GDP and by some estimates indirectly accounts for more than 10%. Some countries rely heavily on travellers’ contributions both direct and indirect, including Croatia (26% of GDP), Greece (18.5%), Spain (13.6%) and Italy (10%).Changes to the climate that lead to ever-wilder weather could deliver a nasty blow to the tourist industry. This year southern Europe has endured an abnormally turbulent summer. Extreme hot weather in Italy in July contributed to wildfires that ravaged Sicily as the temperature at one time climbed to 47°C in Palermo, the island’s capital. Farther north, hailstorms in Lombardy claimed several lives. Also in July Greek authorities had to evacuate tens of thousands of tourists from Rhodes and Corfu after wildfires engulfed those islands. After heatwaves scorched Spain over the summer, Tenerife battled fires that last week forced thousands to flee their homes. Heavy floods have deluged southern Austria, Croatia and Slovenia.Despite the devastation, Italy’s tourism industry—and that of Europe as a whole—is set for a record summer this year as holidaymakers return in force after the travel restrictions of the pandemic. Few have cancelled trips despite the dangers that may await them. According to Demoskopika, a market researcher, 68m people will have taken a holiday in Italy this summer, with around half arriving from abroad. Tourist numbers this year may even surpass the record set in 2019, when 743m visitors arrived in European destinations from other countries. According to Germany’s tuI, the world’s largest travel group, in spite of higher prices summer bookings were around 6% higher than a year ago.Can the rebound last if tourists are fearful of the effects of climate change in years to come? Harald Zeiss, an expert in sustainable tourism at Harz University of Applied Sciences in Wernigerode, speaks for many climate watchers when he says that Europe’s weather will become hotter and drier, and that extreme weather events will become even more likely in the future. Aside from the awful consequences for populations caught up in floods or fires, this also threatens the livelihoods of those who rely on income and employment from tourism in affected areas.The classic “all-inclusive” package holiday on the beaches of the Med will have a rough ride, predicts Mr Zeiss. He reckons that the prospects of oppressive heat will deter the elderly and those with children in particular. Torsten Kirstges, another tourism expert at Jade University of Applied Sciences in Wilhelmshaven, thinks that while wildfires remain sporadic travellers will continue to flock south, even in the hot summer months, at least for the next five years. Youngsters in particular still want to roast in the sun, says Mr Kirstges.The lure of the Mediterranean will probably endure as long as the alternatives do not look as enticing. Northern destinations, in particular the Baltic Sea, Germany, eastern Europe and Scandinavia, may see an increase in demand during the peak summer period. But these destinations cannot replace southern resorts because they are not equipped for mass tourism (which many don’t want anyway). For potential visitors the weather is too unpredictable in the summer. But travel trends do change, if slowly. In the 1950s the favourite holiday destination for Germans was a trip across the border to Austria. It was not before the mid-1980s that Spain took over. And experts agree that tourism in Europe in 30 years’ time will be different from what it is today.The industry has joined in with wider promises by businesses to hit the targets of the Paris climate agreement by becoming net-zero emitters of carbon dioxide by 2050. TUI, for instance, wants to be climate-neutral across its operations and supply chain by 2050. Yet such efforts by firms to mitigate the effects of global warming will have little overall impact. More importantly, tourism will need to adapt to climate change.In the short term, this will be a question of measures such as strict management of water resources where these are becoming increasingly scarce, early-warning systems for extreme weather events and an extension of the holiday seasons, says Thomas Ellerbeck, chief sustainability officer at tui. His company is, for instance, extending the booking season for Greece until November. Mr Kirstges thinks many more hotels in the Med will install air conditioning (fuelled by solar power), water coolers and the like. Tourists may adapt by going out in the mornings and evenings to avoid the midday furnace.Longer term, some switching from the golden sands of the Med to the beaches of the Baltic is inevitable. But there is a silver lining for the holidaymakers who will either discover the unexpected beauty of Baltic beaches or may go south at different times of the year. A shift by some tourists to the spring or autumn will help with the overcrowding which has become a such a nuisance for residents and those visitors eager to imbibe the culture of Dubrovnik, Venice, Barcelona or other marvels of southern Europe in relative peace. ■To stay on top of the biggest stories in business and technology, sign up to the Bottom Line, our weekly subscriber-only newsletter. More

America’s steelmakers were the big-tech firms of their day, at the corporate forefront in the 19th century as industrialisation led to rocketing demand. In 1901 ten industrial firms were combined to create us Steel, one of the world’s first billion-dollar corporations, and for the next 70 years business boomed for steelmakers boosted by rearmament in two world wars. Those heady days are long gone. Many firms such as us Steel, which smelt steel in blast furnaces from iron ore using coking coal, have either been bought or gone bust. Indeed, on August 13th Cleveland-Cliffs, an America competitor, said it had offered $7.3bn for us Steel, half in cash and half using its own shares. Shortly afterwards ArcelorMittal, the world’s second-largest steelmaker, was said to be mulling a bid.us Steel, once a juggernaut of the American stockmarket, now languishes in the s&p 400, a mid-cap index, as does Cleveland-Cliffs. Meanwhile, companies using electric-arc furnaces (eafs), which process scrap metal using electricity in mini-mills, now account for 75% of American production compared with 10% in 1960. Mini-mills are greener and cheaper to build and run, so generally remain profitable even during downturns. That translates into nifty margins. Mini-mill operators such as Nucor and Steel Dynamics posted operating margins of around 22% in the latest quarter, compared with 12.5% for us Steel and 8% for Cleveland-Cliffs.The legacy steelmakers could fall even further behind. eafs have the flexibility to make the flat-rolled steel used by railways and carmakers as well as long-steel products mainly used in construction. Blast furnaces are limited to just the former. That leaves the incumbents with few options. One is to embrace the new. In 2021 us Steel purchased Big River Steel, a mini-mill, for around $1.5bn and is building another, taking its steel capacity from eafs to around 6.6m tonnes in 2024, 28% of its total. A more audacious move would be to buy another big steelmaker to consolidate blast furnaces further. The industry has already heavily consolidated; 14 steelmakers made up around 80% of the market in 2000 compared with just four today.Cleveland-Cliffs, the only confirmed bidder for us Steel so far, has been particularly active: in 2020 the firm snapped up ak Steel and ArcelorMittal’s blast furnaces when it left America. Merging with us Steel is a bigger gamble. It would create a steelmaking juggernaut, giving it half of flat-rolled steel, 60% of the car market and total control over electrical steel. Antitrust authorities may deem it a consolidation too far. Politicians may be more amenable, especially as an election approaches.United Steelworkers, the union that represents us Steel’s employees, is batting for Cleveland-Cliffs. The union wants to keep blast furnaces, as they are heavily unionised, and claims to have veto power over prospective bidders. us Steel’s boss, David Burritt, disputes this and has so far turned down his rival’s offer, calling it unreasonable. He may soon have no choice but to accept if he wants to restore us Steel to anything its like former glory.■To stay on top of the biggest stories in business and technology, sign up to the Bottom Line, our weekly subscriber-only newsletter. More

If America inc were ever to raise a glass to the Supreme Court, the ideal time to have done so was in June, when the nine justices ruled unanimously in favour of Jack Daniel’s in a jolly judgment that included discussion of parody, bad puns and, of all things, dog poo. The trademark-infringement case centred on a canine toy shaped like a bottle of Jack Daniel’s called “Bad Spaniels”. Beneath, in the whiskey maker’s black-and-white filigree, the words “Old No. 7 Brand Tennessee Sour Mash Whiskey” were replaced by “The Old No. 2 on your Tennessee Carpet”. Jack Daniel’s was not amused, nor was the US Chamber of Commerce, an influential lobby group that called the case “no laughing matter”. Elena Kagan, a liberal justice who wrote the opinion, could barely contain her mirth, remarking that the case was about “dog toys and whiskey, two items seldom appearing in the same sentence”. Her conclusion, though, was dead serious and pro-big business: parody is not a blanket excuse for trademark violation.To some, the decision fitted a pattern. Last year Lee Epstein of the University of Southern California and Mitu Gulati of the University of Virginia School of Law used data on wins and losses by corporations in 1920-2020 to describe the Supreme Court led for 17 years by Chief Justice John Roberts as possibly “the most pro-business court in a century”. This was not only because of the Republican majority, they argued. Those appointed by Democrats voted remarkably often in favour of business, too, as they did in the Jack Daniel’s ruling.This business-friendly characterisation may be an oversimplification. As the academics admit, there are more nuanced ways of evaluating America’s highest court, such as looking at the legal doctrines the cases set out. Since former President Donald Trump stuffed the court with ultraconservatives, its 6-3 rightward swerve may even have weakened its support for business. In fact, the court’s most recent decisions, some swayed by originalist readings of a constitution blind to the way business would operate 235 years later, have confounded corporate America, ruling against its interests on issues ranging from interstate commerce to affirmative action. As it has become less pragmatic, the court has become less predictable. And business recoils at uncertainty.History shows how the court’s ideological texture has influenced American commerce. For most of the 20th century, data from Ms Epstein and Mr Gulati show that the most business-friendly court was under William Howard Taft in 1921-30, a laissez-faire age when cases against unions predominated. The nadir of corporate success was during the 1950s and 1960s. After that, with the re-emergence of free-market thinking, the corporate win rate improved. Emblematic of the pro-business environment that defined the Roberts court in its early years was Citizens United v fec, a decision finding that corporations have a constitutional right to spend what they like on political campaigns.Recent rulings have darkened the mood, though. Two that directly went against the interests of corporations have big potential spillover effects. In upholding a California law that bans the sale of pork from overly confined pigs, the court in May rejected an attempt by out-of-state farmers (who produce almost all of the nation’s pork) to claim the law, called Proposition 12, violated the constitution by harming interstate commerce. In support of the farmers, the Chamber of Commerce unsuccessfully sought to show that the California precedent could allow other powerful states to impose regulations on businesses beyond their borders, thereby Balkanising state-by-state trade.Another case, Mallory v Norfolk Southern Railway Company, dealt with the question of where companies may be sued. It has long been settled that companies can face legal challenges where an injury occurred or where they are based. But the court’s ruling in June upheld a unique Pennsylvania law enabling prosecution of companies in its courts even if injuries occurred elsewhere. That raises the possibility of “forum shopping” if other states pass similar laws.Equally worrying from a corporate point of view are the repercussions from seismic judgments that are not related to business. Companies are bracing for the fallout from a decision in June to end race-based affirmative action in higher education. Before the judgment, more than 80 firms, from Apple to Uber, joined in filing a friend-of-the-court brief expressing the workplace benefits of promoting diversity at universities. Since the ruling, some fear that a similar challenge to Title VII of the Civil Rights Act, which prevents discrimination in the workplace, could jeopardise their diversity efforts.The court may yet mollify parts of the business community. Free-market diehards have applauded its efforts to push back against President Joe Biden’s regulatory onslaught. Two forthcoming cases will explore the contours of the administrative state. One concerns the future of the Consumer Financial Protection Bureau, a watchdog. The other will examine a nearly 40-year-old precedent known as Chevron that instructs judges to defer to government-agency interpretations of ambiguous laws as long as their readings are reasonable.Don’t get court out Yet there is an uneasy tension. While parts of the private sector welcome curbs on administrative power, last year’s landmark West Virginia v Environmental Protection Agency curbed the EPA’s ability to regulate greenhouse-gas emissions from coal-burning power plants, setting back the move to cleaner forms of fuel that many firms support. Critics saw it as the conservative supermajority making policy from the bench. Just as corporate America rues the loss of common sense in parts of the Republican Party, so it may come to lament a more interventionist Supreme Court. Time for a Jack Daniel’s stiffener, surely.■Read more from Schumpeter, our columnist on global business:The battle between American workers and technology heats up (Aug 15th)How green is your electric vehicle, really? (Aug 10th)Meet America’s most profitable law firm (Aug 2nd)Also: If you want to write directly to Schumpeter, email him at [email protected]. And here is an explanation of how the Schumpeter column got its name. More

Gandalf from “The Lord of the Rings”, Yoda in “Star Wars” or M in Ian Fleming’s early James Bond novels all act as mentors, providing sage advice and guidance to the less worldly-wise. In real life, as in fiction, the value of imparting wisdom gained through experience and age (Yoda is 900 years old, Gandalf is in his 1,000s) is becoming ever more important. It is in a company’s interest to keep its employees happy and loyal even if the jobs-market upheavals of the pandemic-induced “great resignation” are fizzling out. A good mentoring scheme can serve this purpose. Listen to this story. Enjoy more audio and podcasts on More

Gandalf from “The Lord of the Rings”, Yoda in “Star Wars” or M in Ian Fleming’s early James Bond novels all act as mentors, providing sage advice and guidance to the less worldly-wise. In real life, as in fiction, the value of imparting wisdom gained through experience and age (Yoda is 900 years old, Gandalf is in his 1,000s) is becoming ever more important. It is in a company’s interest to keep its employees happy and loyal even if the jobs-market upheavals of the pandemic-induced “great resignation” are fizzling out. A good mentoring scheme can serve this purpose.Workplace mentoring has long been an informal affair, disguised as a chat by the coffee machine or a trip to a bar with a longer-serving and more senior colleague. Even the most successful find having a receptive ear a useful addition to the corporate armoury. For over 30 years Bill Gates has turned to another billionaire, Warren Buffett, for advice. Peter Thiel, another tech baron, credits René Girard, a French polymath and part-time philosopher, as one of his greatest inspirations.In recent years businesses have sought to formalise an arrangement with the obvious rewards of nurturing a sense of connection and loyalty, and helping the transfer and development of skills. The aim is to support staff and boost their confidence by sharing knowledge and experience. At their best, when there is genuine rapport between mentor and mentored, such arrangements can help the latter to come up with new ideas and help them cope with problems.So how do firms build the best mentoring schemes? For them to work, some degree of chemistry is essential, as is a high regard for the person whose advice is being sought, irrespective of age gaps and backgrounds. Maurizio Orlacchio, a former manager for Four Seasons, a hotels chain, credited his career to his relationship with his mentor, an older executive who taught him how to motivate his employees—and himself.Schemes should be self-managed with the junior party taking the lead in arranging discussions which are always confidential. It is best to let employees choose the person with whom they would most like to discuss their career trajectory, no matter their position on the corporate ladder. Requested mentors can be flattered but still decline.If you want to become a valued mentor, do not start by offering unsolicited advice. If you’re being mentored, do not look for solutions to personal problems (failing romantic relationships, dandruff) or ask for bail money. But anything else work-related should be open for discussion. “I’m feeling wobbly, this is all too much to take in” is as legitimate as chatting about your long-term career prospects.Firms are increasingly recognising the importance of face time with helpful colleagues. Nicholas Bloom at Stanford University, using data from hundreds of organisations since the onset of the pandemic, found that the mentoring of recent hires was a key reason to bring employees into the workplace two or three days a week. David Solomon, ceo of Goldman Sachs, has echoed this in his push for a full return to the office.Despite Goldman’s efforts, working from home has become a post-pandemic fixture. So virtual mentoring also still has a role. As with any online relationship, trust and rapport take longer to build. No matter how clearly boundaries are set, there are inevitable glimpses of personal spaces when sessions take place on Zoom with cameras on. Bartleby recommends looking reasonably smart and refraining from getting a beer from the fridge. What seems natural when meeting face-to-face does not always translate well online.Reverse mentoring is also in fashion. Matching a junior employee with an executive whose understanding of diversity and other generational divides may need a refresher course could have benefits. There is room to debate how much a seasoned chief financial officer will learn from a millennial but the best mentoring relationships are always a two-way street.Whether it is lunch, drinks or a chat in the car park, mentoring’s benefits are undeniable if it fosters a friendlier culture, staff retention and development of talented employees. Think of Yoda’s serene demeanour and galactic wisdom rather than his enigmatic speech patterns. The idea is to find, if not a Jedi master, then at least someone to talk to whenever you feel stuck in your job. Sometimes sharing a coffee can be just as powerful as wielding a lightsabre.■Read more from Bartleby, our columnist on management and work:A retiring consultant’s advice on consultants (Jul 17th)A refresher on business air-travel etiquette (Aug 4th)The dark and bright sides of power (Jul 27th)Also: How the Bartleby column got its name More