A company that hasn't conducted a single market research in 137 years, doesn't set five-year plans, and never lays off employees no matter how poor its performance is.

In today's business world, any of these three points could be debated for an entire year in an MBA classroom.

But its Switch has sold 155 million units, making it the best-selling console in history; its overseas trademark for the world's most profitable IP, Pokémon, is exclusively held by it; last year, the Switch 2 was released, with 17.37 million units shipped in 7 months. It is Nintendo.

In early July, Huazhi International took its trainees to Japan for study and investigation. (When others increased prices, it didn't; when others closed stores, it expanded. This trip to Japan left me stunned.) The person who "undermine" it was a fellow insider who had worked there for 14 years - Mr. Xiumu, the former head of Nintendo's legal department. When he joined Nintendo in 2004, it was the year when this century-old company was being trampled by Sony. Since then, he has personally experienced the turnaround in the era of Satoru Iwata and handled countless copyright lawsuits.

During the half-day sharing session, Mr. Xiumu did not talk about success, but instead revealed all of Nintendo's "dark history" and "counter-intuitive" practices.

After listening, our biggest feeling is that this trip was worth it. Chinese bosses are experiencing anxiety over peak growth, confusion about transformation, and IP building, but this 137-year-old company has already gone through all of these.

01. From Hanafuda to Game Empire, I have paid the most expensive tuition

Many people don't know that Nintendo started its business by selling playing cards.

In 1889, Kyoto craftsman Yamauchi Fumijiro opened a playing card workshop to produce the Japanese national card game "Hanafuda". That year, Emperor Guangxu assumed personal rule, and it was still more than a decade before the first automobile appeared on the streets of Beijing.

Relying on the unyielding commitment to "only the highest quality", Flower Cards spread into tobacco shops on every street corner across the country - this distribution network became Nintendo's financial safety cushion for nearly a century thereafter.

In 1949, at the age of 22, Hiroshi Yamauchi was called back by his family to take over the business. His first action was to replace the traditional handmade paste method used by housewives with mechanized production, which directly increased efficiency tenfold. In 1959, he obtained the license from Disney to print Mickey Mouse on playing cards, and conveniently took the company public.

With capital in hand, Yamauchi Hiroshi judged that the business of playing cards had reached its peak and must be transformed. And then? Nintendo has begun to cross borders wildly: it has opened a taxi company, sold instant rice, manufactured baby carriages, and made photocopiers. There are even urban legends circulating about it opening a love hotel.

The result was a complete failure, with heavy debts and almost ruining themselves. This "black history" led to Nintendo's most important self-recognition: its core competitiveness lies not in heavy asset operations, but in pure entertainment creation.

Over the next sixty years, it never strayed from the word "entertainment". The turning point came from a maintenance worker named Junpei Yokoi. In 1966, when Hiroshi Yamauchi toured the factory, he discovered Yokoi's homemade spring-loaded toy, which he had been playing with. He immediately decided to commercialize it - the "Super Gripper" sold over a million units in one Christmas season, marking Nintendo's official entry into the toy industry.

Later on, Game & Watch, Famicom, and Game Boy successively became legendary: the Famicom rescued the American market from ruins after the "Atari crash"; the Game Boy, with its "backward" non-backlit grayscale screen, left all its color screen competitors in the dust.

Of course, I didn't pay less tuition.

In 1995, the Virtual Boy sold only 770,000 units worldwide, marking the most disastrous hardware failure. The N64's insistence on cartridges angered Square and Enix, who collectively defected to Sony with their games such as "Final Fantasy" and "Dragon Quest". This was the first time Nintendo lost its dominant position. The Wii U's disastrous failure in 2012 pushed the company to a desperate gamble - which led to the later Switch.

Hiroshi Yamauchi has a famous saying: "In the world of entertainment, it's either heaven or hell. There's no market for second place." Others may view this as motivational advice, but Nintendo views it as a cautionary tale.

02.

Three "counter-intuitions" that strike at the heart of Chinese enterprises' anxieties

If we only look at the results, Nintendo looks like a player with good luck. But what Mr. Xiumu uncovered on the spot were its three business logics that are almost "against human nature".

The first counter-intuitive principle: never conduct market research.

The reason is heart-wrenching: research can only reveal ideas that the public already knows, and it cannot produce anything surprising. Mr. Xiumu drew an analogy on the spot, saying that it's like a royal chef cooking for Empress Dowager Cixi. Instead of asking "What would you like to eat?", the chef has to serve something that makes her exclaim "delicious".

Nintendo's alternative approach is "self-challenge": first ensuring that the creators themselves find it interesting, and turning uncertainty into relative certainty.

The second counter-intuitive principle: focus on "outdated" technologies.

Internally, it's called "level thinking of withering technology", which is another new concept. It involves using mature, cheap, and fully verified "outdated" technologies to find brand-new scenarios and gameplay combinations.

The Game & Watch utilized black-and-white LCD screens that were left over from the calculator price war; the Game Boy's much-ridiculed grayscale screen traded off for low price, long battery life, and durability, and its sales crushed all color screen competitors; the Wii avoided the high-definition arms race and created a family-friendly blue ocean with its mature motion sensor; the Switch, utilizing the Tegra X1 chip in the later stages of its lifecycle, still managed to sell 155 million units.

Others focus on parameters, while it focuses on gameplay. The key to innovation lies not in "What" (technology), but in "How" (gameplay).

The third counterintuitive principle: we will never lay off employees.

"If we lay off employees for the sake of short-term financial performance, morale will suffer a devastating blow. Amidst the panic of fearing unemployment at any moment, I don't believe creators can develop works that move the world." - Satoru Iwata's response when pressed on layoffs at the 2013 shareholders' meeting

Even during the years when the Wii U flopped, Nintendo didn't resort to punitive layoffs. Instead, in 2023, it gave a 10% raise to all employees, and in April 2026, another salary adjustment was made. As a result, many core producers have been with the company for over 35 years.

Not conducting research, not buying second-hand goods, and not laying off employees—each of these violates common management principles. However, when combined, they precisely constitute Nintendo's confidence in taking its time to refine and perfect its products.

03.

IP is nurtured, not planned

During this visit, the question that Chinese entrepreneurs asked most frequently was about IP. After all, who doesn't want their own Mario and Pokémon?

But Mr. Xiumu's answer may disappoint many people: Nintendo did not have an IP strategy in its early years.

Mario was originally just a placeholder character designed to fit arcade hardware, and was called Jumpman at the time; neither Donkey Kong nor Luigi were "planned" protagonists. Characters are "nurtured" over time through each installment of the series - first there are products that make people laugh, and then there's the IP; expecting to create the IP first and then add products reverses the order.

The true awakening came from the pressure of copyright disputes. It was not until 2015 that Nintendo first launched an IP strategy covering all characters - note that the initial starting point was "protecting its own IP from infringement", rather than monetization. Nowadays, this strategy has been upgraded to "expanding the population exposed to Nintendo IP": with game consoles as the core, radiating comprehensively to mobile games, film and television, theme parks, and peripherals.

How to manage specifically? There are three ways.

Managing characters like a talent agency. The Mario characters are virtual artists who "never disappoint", and their misuse is strictly controlled. They prefer to grant fewer licenses rather than overexert their image.

Use old characters to introduce new ones. Bring new IPs onto the stage of "Nintendo Star Wars" and share the stage with old characters, quickly gaining recognition and legitimacy.

Legal defense should precede business operations. Copyrights are automatically generated, patents are applied for once they are completed, and trademarks can be laid out in advance - Nintendo's intellectual property team will register product names on a large scale. The ownership design of Pokémon is even more textbook: Nintendo, Game Freak, and Creatures jointly established Pokémon Company, with overseas trademarks exclusively held by Nintendo, which amounts to holding the veto power for global distribution. The "Pokémon Trading Card Game" launched in 2024 downloaded over 10 million times in two days and generated over $900 million in sales within half a year - the flexibility of ownership design directly translates into the efficiency of IP monetization.

Of course, the "strongest legal department" is not called in vain. In 2024, we launched a precise attack on the Yuzu emulator, and within a week, the other party surrendered: paying $2.4 million in compensation, destroying all codes, and permanently halting updates. The patent war with "Petmon Paru" even resulted in an impairment loss of 6.4 billion yen in fiscal year 2026 - to build barriers, regardless of sunk costs.

Interestingly, in 2026, when the entire industry was "All in AI", Nintendo made it clear at the shareholders' meeting that it would not use generative AI for content creation. The reason given was very characteristic of Nintendo - "Our products are more interesting than AI". The judgment of what is interesting must remain in the hands of the creators.

Of course, after listening to the "Nintendo Way" for quite a while, Mr. Xiumu's final summary was quite restrained: "IP cannot be imitated or copied. The core lies in having a core spirit and a story foundation that can be continuously extended. There is no need to imitate the development path of Japanese IP. Instead, we can learn from its spirit and rely on local advantages to innovate independently. (Rough translation from Japanese to Chinese)"

Do you feel that this sentence is more important than all the previous valuable content.

Today's Chinese consumer brands are too prone to falling into two extremes: either they blindly believe in quick success through traffic, creating an internet celebrity IP in three months and making it outdated in nine months; or they blindly follow textbooks, copying the practices of Disney and Sanrio, only to end up with superficial results.

The truly noteworthy lesson Nintendo has learned over its 137 years is actually summed up in one sentence: Return to the genuine emotional needs of users, make one thing extremely interesting, and then be patient.

Flower cards can sell for a hundred years, and so can game consoles. Technology can be overturned overnight, and trends can change every three years, but the act of "making everyone smile" never goes out of style.

After all, the world of entertainment is either heaven or hell - whoever can make users laugh from the bottom of their hearts will be the one who laughs last.