Howard Yu/Channel NewsAsia
“A big tree attracts the wind,” my friend at the Alibaba Innovation Centre said, reminding me of a Chinese proverb and prompting a speculation of Jack Ma’s retirement. He elaborated:
“Big personas are all either killed or arrested or jailed.”
He was referring to Wang Jian, co-chairman and co-founder of HNA Group, who died in a fall in France in early July this year. He was referring to Anbang Insurance founder, Wu Xiaohui, who was sentenced to 18 years in prison last May for “abuse of power.”
He was also referring to Liu Qiangdong, the chief executive of JD.com, who was arrested in the US on suspicion of rape this September.
In a country where a corruption probe can result in the suicide of a top general, the relinquishing of the chairmanship at Alibaba by Jack Ma, now China’s richest man, in order to return to his true vocation of “teaching and education” at once seems pragmatic and inspiring.
Once a cash-strapped English teacher, Ma amassed an extraordinary US$46 billion or so in wealth by building China’s biggest e-commerce operator, which owns Taobao, TMall, and Alibaba.com; AliPay, which has become synonymous with mobile payment; and AntFinancial, a US$150 billion finance subsidiary that, alone, is worth more than Goldman Sachs.
Ma presided over Alibaba as it set the record for the biggest IPO (initial public offering) in history when it was listed at the New York Stock Exchange in 2014. The company went on to became Asia’s first company to exceed the US$400 billion valuation mark.
It’s hard not to compare Ma to Amazon’s Jeff Bezos, America’s richest man. But while Amazon’s iconic founder is likely to continue driving it in the foreseeable future, a professional management team will need to bring Alibaba to maturity.Many have said that incoming chief executive Daniel Zhang would have “a big shoe to fill”, and “a hard act to follow”. Critics sneered at Zhang’s low profile, his lacklustre charisma, resembling “more Clark Kent than Superman”. No one except Zhang himself sees the man to be a “free and unfettered spirit,” a phrase Zhang picked for his own nickname at Alibaba. But what if this mild-mannered organisation man is exactly what Alibaba most needs now?
ALIBABA IS ‘GROWING UP’?
In 1972, Larry E Greiner, a business school professor from the University of Southern California, observed how organisations went through crises as they grew.
In what is now a Harvard Business Review classic, Greiner drew upon insights from clinical psychologists and laid out a series of developmental phases that companies had to go through as they came of age. It was written after two decades of post-war ascendancy.
Corporate America had extended its footprint globally. Ford, General Electric, Procter & Gamble, and countless other corporations were present across the Atlantic and the Pacific. But they were in crisis.
As impressive as their geographic span was, these companies’ top management couldn’t effectively coordinate unified or cohesive strategies. Local chiefs ran their individual businesses as fiefdoms. Few resources were shared. Market synergy was all but nonexistent, and headquarters failed to marshal significant effort against new competitors that primarily came from Japan.
It was a time of reckoning for CEOs. Economists recognised the inevitable decline of America’s competitiveness.
During the heady years of mergers and acquisitions, companies have to apply “a decentralised organisational structure”. For the quick capturing of local opportunities, responsibilities have to be pushed downward, allowing factory and sales managers to react swiftly to local market conditions. This process of delegation elicited heightened motivation among the rank-and-file at a time when simply chasing after customers and sales orders relentlessly equated success.
Greiner saw that the delegation phase had outlived its usefulness. Companies were falling into crisis because central coordination was required to mount any meaningful counterattack against competition.
But substantial product development or global marketing was expensive, so moonshot projects had to be initiated from the very top. Hence, a new organisational structure gained extreme popularity: It was the matrix.
For seasoned executives whose schedules are characterised by endless meetings, matrix organisations require no introduction. The matrix is a company structure in which reporting relationships are set as a grid rather than a traditional hierarchy.
Managers have dual reporting lines. A marketing manager for laundry detergent reports to the head of the country where she operates. But she also reports to the head of detergent, who sits in another city and keeps a watchful eye on the global positioning of the overall category.
Suddenly, with two bosses in mind, trade-offs are no longer singularly dimensioned. Rather, to recycle the ultimate cliche, managers had to “think globally, act locally.”
Alas, no structure can last forever. As we enter the Internet age, digital disruptors are besieging many bellwethers. These are the Silicon Valley paragons who came with little administrative heritage. Driven by a very simple structure, emboldened by entrepreneurial founders, and supported by a core group of loyal employees who haven’t minded working excruciatingly long hours, these digital upstarts embody millennials’ hyper-adaptation to the rapidly changing world.
In the process, they displace as many old incumbents.
They all realise the importance of infusing Silicon Valley’s agility into their traditional commercial discipline. It’s Greiner’s final stage of growth: The transition from coordination to real collaboration.
But learning applies to everyone. It’s just that Alibaba is coming from the other end. Alibaba is gigantic. In terms of maturity, it still runs like a garage upstart. This paradox is not entirely new.