Philippa Kaur

On April 1st, after nearly 14 years as boss of Toyota, Toyoda Akio handed the wheel to his successor. Sato Koji, formerly chief engineer of the Japanese carmaker’s premium brand, Lexus, has his work cut out. Toyota continues to produce more vehicles than any other firm. Its market value is almost three times as high as its closest rival in terms of output, Volkswagen. But it came late to battery-electric vehicles, having bet that hydrogen was the answer to zero-emission driving. Meanwhile firms like Tesla have thrived, ushering in more electric-vehicle startups. Other established carmakers, Volkswagen chief among them, have quickened the pace of electrification. All that has left Toyota in the dust. In 2022 its total battery-EV sales ranked 24th in the sector.■To stay on top of the biggest stories in business and technology, sign up to the Bottom Line, our weekly subscriber-only newsletter. More

EY just can’t get a break. The accounting-and-consulting giant is being sued for $2.7bn by the administrators of NMC, a London-listed hospital operator it had audited and which went into administration after understating debts by $4bn. EY is being investigated by the Financial Reporting Council (FRC), a British regulator; the firm denies the administrators’ claims of negligence. Its plan to unshackle an advisory business constrained by its inability to work with audit clients, codenamed “Project Everest”, is in doubt amid a rebellion by a group of American partners. And on March 31st its German arm received the harshest penalty ever meted out by APAS, Germany’s accounting watchdog, which includes a €500,000 ($548,000) fine and, worse, two-year ban on auditing new publicly listed clients in the country. This is a financial blow to the firm—and an even bigger reputational one.Listen to this story. Enjoy more audio and podcasts on More

Family business makes for compelling drama. Just ask anyone tuning in to the final season of “Succession”, which has recently begun airing on HBO. This Bartleby prefers “Buddenbrooks”, Thomas Mann’s chronicle of the decline and collapse of a German merchant family over the course of four generations. That novel, first published in 1901, drew heavily on the author’s personal experience. The dilemmas of working for an organisation which an immediate family member runs or in which they own the majority sound alarming enough in fiction, never mind real life. And nepotism can be plenty dramatic even without the plot twists. Listen to this story. Enjoy more audio and podcasts on More

The idea that wealthy dynasties can go to pot in the space of three generations pops up throughout history and around the world. John Dryden, an English poet who died in 1700, mused that “seldom three descents continue good.” In 19th-century America, successful families were said to go from “shirtsleeves to shirtsleeves” in that span of time. A Chinese proverb, fu bu guo san dai (wealth does not pass three generations) captures an identical sentiment.As a rising share of the world’s ultra-rich comes from emerging markets, the three-generation hypothesis is being tested once again—nowhere more so than in developing Asia. Asians are helping to swell the ranks of individuals with fortunes of more than $500m, which rose from 2,700 to nearly 7,100 globally between 2011 and 2021, according to Credit Suisse, a bank. The continent’s tycoons did more than their African or Latin American counterparts to push the developing world’s share of that total from 37% to 52% over the decade. The combined revenue of the continent’s family firms that rank within the world’s 500 biggest such concerns surpassed $1trn last year, according to researchers at the University of St Gallen in Switzerland (see chart 1).Overall, the results of the three-generation test so far look encouraging for Asia’s ageing patriarchs (most are men) as they seek a safe pair of hands to which to entrust their legacy. The grandchildren of the region’s founder tycoons may well be in shirtsleeves, but out of sartorial choice rather than necessity. They are worldlier than their elders, who built their fortunes on local businesses that thrive in periods of rapid economic development, such as construction or natural resources. They often blend the needs of the family business with personal preferences. At the same time, they are keenly aware of their responsibility to avoid the prodigal trap. As they take the reins of their business houses, it is up to them to show whether, in the words of one Asian heir, “you can institutionalise” and, like “a sort of Rothschild”, keep generating wealth over centuries. (Members of the Rothschild family are shareholders in The Economist’s parent company.)To understand what makes these Rothschild wannabes tick, start with education. Most have attended university abroad, particularly in America. Adrian Cheng, grandson of Cheng Yu-tung, a Hong Kong property tycoon, went to Harvard University. John Riady, the New York-born scion of an Indonesian business dynasty, attended Georgetown University, before earning an MBA at the Wharton School of the University of Pennsylvania and a law degree from Columbia University. Isha Ambani, daughter of Mukesh Ambani, graduated from Yale and then Stanford University’s Graduate School of Business in 2018. Foreign education distinguishes the new crop of tycoons from their grandparents, many of whom never completed university. What sets them apart from their parents is their career path into the family business. Like their fathers, Mr Cheng, Mr Riady and Ms Ambani all now work for these. Mr Cheng runs New World Development, the family’s property arm; Mr Riady is chief executive of Lippo Karawaci, the family empire’s property developer; Ms Ambani heads Reliance’s retail operation. But, like plenty of their peers, they took more or less circuitous routes to get there. For many, that means a stint in finance or professional services. Mr Cheng started his career in investment banking, including at UBS, a giant Swiss lender. Ms Ambani was a consultant at McKinsey. Mr Riady worked in private equity. For some others, the bridge is the world of venture capital and tech startups. Korawad Chearavanont, great-grandson of the founder of CP Group, Thailand’s largest private company, launched a tech startup that provides social-media features for apps. Kuok Meng Xiong, grandson of Robert Kuok, a commodity, property and logistics billionaire from Malaysia, runs K3 Ventures, a Singapore-based VC firm. Both in the case of foreign VC investments in Asia and of Asian investments in foreign VC firms, the heirs’ fluent English, foreign education and Western social circles makes them the ideal conduit. And these flows are growing: in the past two years VC investments in Asia averaged $150bn annually, more than half of America’s $280bn or so, and up from $11bn in 2012, when it was a quarter of America’s. The share of investments in VC deals in America coming from Asia has climbed, too, from less than 10% by value a decade ago to around a quarter in 2022, according to Dealroom, a data firm (see chart 2). Permitting the heirs to have a professional life outside the family is often about letting them spread their wings. “The first and second generation were quite traditional,” says Kevin Au, director of the Centre for Family Business at the Chinese University of Hong Kong. But, he adds, they were happy to send their children abroad, “where values are different and business is done differently”, perhaps understanding that not everyone wants to work with their parents. Impact investing and sustainability-related roles are popular among the millennial plutocrats. Rather than join Hyundai Group, Chung Kyungsun, grandson of its founder, Chung Ju-yung, has set up an impact-investment firm called Sylvan Group, which focuses on companies aligned with UN Sustainable Development Goals. The shift to more vocally progressive views in some areas, like inequality, may be driven by pragmatism too. “In societies where economic growth isn’t being shared they want to break you up, tax you, regulate you, they presume the worst,” says one business heir.Ensuring heirs’ experience beyond the family concern reflects a more open-minded parenting style. But it is also becoming a business priority for the older generation, especially as the family businesses diversify into new sectors and geographies. Reliance, which made its name in petrochemicals, is now India’s biggest telecoms firm and digital platform. Lippo has gained greater exposure to young technology firms in South-East Asia through Venturra Capital, its VC subsidiary. That young business scions have a wider circle of contacts than do their parents is useful for their families’ firms: rubbing shoulders with would-be startup founders, venture capitalists, consultants and bankers offers opportunity for early dibs on interesting investment opportunities. Last year Campden Wealth, a consultancy, surveyed 382 global family offices, the investment vehicles that manage dynastic wealth. It found that the majority would prefer the next generation of owners to gain external work experience before taking on the reins. More

Artists rarely create more than 5,000 works over a lifetime. Pablo Picasso, who died on April 8th 1973 at the age of 91, produced 25,000. Between 1950 and 2021 more than 1,500 notable Picassos were sold at auction in America and Britain, compared with 798 by the next-most-prolific artist, Andy Warhol, according to Sotheby’s Mei Moses, the art-data arm of the auction house. In its recent London sales, Sotheby’s offered a sculpture, an illustrated book, a cubist bronze cast, some gravure prints and several drawings and paintings, all by Picasso. Prices ranged from under £5,000 ($6,200) to more than £18m. Listen to this story. Enjoy more audio and podcasts on More

Rumours of an impending break-up of Alibaba have been swirling for a while. Chinese regulators had long been leery of its market power over the online economy, where its interests spanned e-commerce, digital payments, cloud-computing, entertainment and much else besides. The Communist authorities dislike the idea of anything, let alone a large private business, outshining the party. And the country’s leaders bristled at the high profile of Alibaba’s founder, Jack Ma, an icon of Chinese enterprise who every now and again dared question their decisions. Listen to this story. Enjoy more audio and podcasts on More

One personality type occupies more attention in the workplace than any other. The “talented jerk”, whose alter-egos include such lovable characters as the “toxic rock star” and the “destructive hero”, is a staple of management literature. These are the people who smash both targets and team cohesion, who get stuff done and get away with behaving badly as a result.So common and corrosive are these characters that plenty of companies spell out a zero-tolerance approach to them. “No jerks allowed,” says CARFAX, which provides data on vehicle histories. Netflix, a streaming giant, is similarly unequivocal: “On our dream team, there are no brilliant jerks.” The careers site of Baird, a financial-services firm, says that it operates a “no assholes” policy.It is totally reasonable for firms to want to signal an aversion to genuine jerks. It may not actually put people off (“No assholes? Well, I guess Baird isn’t the company for me.”). But it sends an explicit message to prospective and existing employees, and reflects a real danger to company cultures. Toxic behaviour is contagious: incivility and unpleasantness can quickly become norms if they pass unchecked. That is bad for retention and for reputation. It’s also just bad in itself. Moreover, the extreme version of the management dilemma posed by the talented jerk rarely exists in practice. The risk that you may be getting rid of the next Steve Jobs is infinitesimal. Just contemplate all the jerks you work with. If you really think they are going to revolutionise consumer technology, create the world’s most valuable company or have members of the public light candles for them when they die, you should probably just go ahead and make them the CEO. But the red-faced guy in sales who shouts at people when he loses an account is not that person. That said, the enthusiasm for banning jerks ought to make people a little uneasy, for at least three reasons. The first is that the no-jerk rule involves a lot of subjectivity. Some types of behaviour are obviously and immediately beyond the pale. But the boundaries between seeking high standards and being unreasonable, or between being candid and being crushing, are not always clear-cut. Zero tolerance is dangerous. You may mean to create a supportive culture but end up in a corporate Salem, without the bonnets but with the accusations of jerkcraft. The second is that jerks come in different flavours. Total jerks should just be got rid of. But they are rare, whereas bit-of-a-jerks are everywhere and can be redeemed. The oblivious jerk is one potentially fixable category. Some people do not realise they are upsetting others and may just need to be told as much. Other people are situational jerks: they behave badly in some circumstances and not in others. If those circumstances are very broad (whenever the person in question is awake, say), then that tells you the problem cannot be fixed. But if jerkiness occurs only at specific moments, like interacting with another jerk, then it may be that a solution exists. If the thing that a talented jerk does really well can be done in comparative isolation or without giving them power over other people, consider it. As the well-known philosophical teaser goes: if a jerk throws a tantrum in their home office and no one is around to see it, are they really a jerk? A third issue is one of consistency. This is not just about what happens when the person declaring war on jerks is also a jerk. It is also about the many other problem types who crowd the corridors of workplaces. Where are the policies that ban constructive wreckers, the people offering up so many ostensibly helpful criticisms that nothing ever actually gets done? Why not zap the brilliant fools who have blinding insights of absolutely no practical value? Above all, what about the pool of nice underperformers who putter along amiably and harmlessly, helping the culture much more than they do the bottom line? Talented jerks stand out, like shards of glass among bare feet: impossible to ignore, problems that have to be solved. Mediocrities are the bigger problem in many firms but are like carbon monoxide, silently poisoning an organisation. Right-minded purists will argue that anything less than zero tolerance towards talented jerks is just pandering to people who behave badly. But right-minded purists will have skated over paragraph three and are a scourge in their own right. Someone ought to write a management book about them.■Read more from Bartleby, our columnist on management and work:How to get flexible working right (Mar 23rd)From high-speed rail to the Olympics, why do big projects go wrong? (Mar 16th)The small consolations of office irritations (Mar 9th)Also: How the Bartleby column got its name More

To understand the shift in tone that has taken place in Silicon Valley in recent months, look no further than Mark Zuckerberg’s declaration in February that 2023 would be the “year of efficiency”. It is hardly the kind of language to set the pulse racing—unless you are an employee on the receiving end of it. On March 14th Meta, the tech giant Mr Zuckerberg runs, announced it would fire 10,000 staff—on top of the 11,000 it laid off last November. Meta is not alone. On March 20th Amazon, another tech behemoth, said it would cut a further 9,000 corporate employees, having already sacked 18,000 white-collar types. So far this year American tech firms have announced 118,000 sackings, according to Crunchbase, a data provider, adding to the 140,000 jobs cut last year. Investors have cheered tech’s new-found cost-consciousness. The technology-heavy NASDAQ index is up by 17% from its recent low point in late December. The companies are hearing the market’s message loud and clear. On March 24th the chief operating officer of Salesforce, a business-software firm, hinted that the company would soon add to the 8,000 lay-offs it announced in January. They have a way to go: firings since the start of 2022 represent only 6% of the American tech industry’s workforce. Because tech companies continued to hire throughout 2022, lay-offs have only just begun to reduce total industry employment (see chart 1). By comparison, between the peak of the dotcom boom at the start of the 2000s and its nadir at the end of 2003, America’s overall tech workforce declined by 23%, or 685,000 jobs.Still, the recent lay-offs have already been widespread and deep enough to warrant two questions. First, who is getting the chop? And second, where are the laid-off workers going? So far techies themselves have been mostly spared, observes Tim Herbert of the Computing Technology Industry Association, a trade body. Instead, the axe has fallen mainly on business functions such as sales and recruitment. These had grown steadily as a share of technology-industry employment in recent years, a telltale sign of bloat (see chart 2). Between the depths of the pandemic in the spring of 2020 and peak employment at the start of 2023, the tech sector added around 1m workers. Simply enlisting such numbers required hiring plenty of recruiters; as a headhunting rule of thumb, one recruiter can hire 25 new employees a year. Many of those same recruiters may now be surplus to requirements. But the specialists are not immune to the efficiency drive. As part of its lay-offs, Meta will restructure its tech functions in April. Releasing talented tech workers back into the wild could be a boon for other sectors wrestling with digital reinvention. For years unsexy industries like industrial goods have struggled to compete with the tech industry for talent. Now they are pouncing. John Deere, an American tractor-maker, has been snapping up fired tech workers to help it make smarter farm machinery. Last year the firm opened an office in Austin, a thriving tech hub in Texas. Carmakers, increasingly focused on software, are also hungry for technologists. So are banks, health insurers and retailers.Some of the laid-off techies are helping fuel a new generation of startups. Applications in January to Y Combinator, a startup school in Silicon Valley, were up five-fold on the previous year. Excitement is particularly strong in the buzzy field of ChatGPT-like “generative” artificial intelligence (AI), which uses complex algorithms and oodles of data to produce everything from essays to artworks—so much so that even big tech continues to hire enthusiastically in the area (see earlier article).Optimists hope that this technology will, like the smartphone before it, unlock a new wave of creative destruction, as AI entrepreneurs conjure up a variety of clever applications. The new AIs may in time mean even less need for, say, human marketers. But they could, like other breakthroughs before them, create entirely new job categories—not least in the technology industry itself. ■To stay on top of the biggest stories in business and technology, sign up to the Bottom Line, our weekly subscriber-only newsletter. More