Internet Business Thinking

Chapter 39 Business Crisis in the Internet Era: What They Do at Critical Moments (2)
The 25 business divisions make Alibaba's structure extremely flat, and the flat organizational structure allows power to be collected, requirements to be raised, and responsibilities to be delegated.Once there are disagreements on strategic development within the company, the direct consequence is that grassroots leaders do not act, and even intensify factional struggles within the company.Among the newly split businesses, some may quickly become a giant like Taobao, and some may not be able to do so.As a result, it will inevitably lead to a reshuffle of resource flow and popular support.What Ma Yun said about "giving more opportunities for young Ali leaders to innovate and develop" is quite intriguing.

Ma Yun's personnel adjustment logic
Before the split, the giant ship of Alibaba was like a hierarchical bureaucracy.In the entire Alibaba Group, members are divided into M-level, P-level and S-level according to a rigorous level. M-level and P-level belong to the management level, and sales and customer personnel belong to the C-level.Jack Ma is the only M10, the highest level in the company. M9 is vacant, and other executives are all below M8. P represents the personal job level, which is divided into 14 levels.With the adjustment of the group organization and the increase of levels, this hierarchical management system has gradually become a bureaucratic system. Employees at the lower level are squeezed and exploited by the upper level, and employees at the same level are intriguing and deceiving each other.Factional struggles, power struggles and bragging rights abound.Some executives have served in a certain position for many years, and it is inevitable that they will "pull the hills" and become kings, forming a small personal circle.In order to maintain the motivation and vitality of Alibaba to continue to move forward, Ma Yun hopes to break through these barriers through reforms, so that the whole group can be unified into the overall pattern of a game of chess.

Ma Yun does not play cards according to the rules.The purpose of his employment is that he will never be bound by "people", will not become rigid because of "people", and will not let "people" lag behind the strategy.People who know Ma Yun can comment on Ma Yun's employment strategy in five words: "Enough ruthless, enough decisive."

Job rotation is an effective way to attract talents, put an end to corruption, and prevent cliques from forming and breeding factions.Enterprises such as IBM, Motorola, Huawei, and Lenovo also implement job rotation systems within the company, but the scope and intensity of Alibaba Group’s job rotation is rare among domestic technology companies, especially the job rotation caused by department splits.

In February 2011, Jack Ma "killed Wei Zhe with tears" and eliminated hundreds of employees who violated the rules, which triggered a cadre rotation. In March 2, Yan Limin, the general manager of Juhuasuan, was dismissed due to management loopholes. At the same time, a group of illegal "junior girls" were eliminated. This corruption behavior seriously affected the image of Ma Yun and Alibaba, prompting Ma Yun to become a cadre Rotation drama. The rotation of cadres in March 2012 involved 3 middle and senior executives, but none of them resigned, but were transferred to different subsidiaries.

In January 2013, Ma Yun carried out another big action of departmental splitting. One of the purposes was to suppress the internal friction caused by the internal struggle of the system, prevent middle and high-level cadres from clumping together, and form their own small teams and teams, thereby strengthening " centralized control.According to Ma Yun's principle, once a department becomes big, it will be split up, and a small one is beautiful, and a small boat can turn around.

In addition to preventing factions, cadre rotation is also conducive to the rational allocation of resources. At the same time, it is also conducive to mobilizing the potential of cadres, cultivating various abilities, and improving adaptability and innovation ability.Lu Zhaoxi and Peng Lei are veteran employees with the most rotations.

Sometimes rotations are done to bring in talent. At the end of 2007, Taobao CEO Sun Tongyu, group COO Li Qi, and CTO Wu Jiong resigned on the grounds of "learning". In 2009, Eighteen Arhats re-competed for employment, and the purpose was also to introduce new people and replenish fresh blood for the company.

Problems that may be faced under the new structure
At the beginning of Alibaba’s establishment, Guan Mingsheng from General Electric Company of the United States created a unique corporate culture from several aspects such as “goals, missions, and values” and incorporated it into the employee assessment system to help Jack Ma overcome the lack of funds in the early days of his business. difficult predicament.

Alibaba's "Six Meridians Excalibur" has the effect of "sealing the throat with one sword". Employees who disagree will be resolutely eliminated, even if they have great performance.In order to avoid the dilution and alienation of the corporate culture caused by the expansion of the enterprise, Jack Ma has carried out "rectification campaigns" many times, and at the same time formulated the "recuperation" policy, emphasizing not to overemphasize performance.Nevertheless, with the increase of "airborne troops" and younger management personnel, under the pressure of performance, Alibaba's values ​​are still being challenged.The most prominent example is the "fraudgate" incident that occurred in 2011.

With Ma Yun's splitting of the organizational structure this time and the splitting after it becomes bigger in the future, more and more outstanding employees will take up management positions.The age requirements for managers are post-70s and post-80s, with the intention of maintaining the momentum and vitality of the company.

And when more and more post-70s and post-80s take up management positions, and even post-90s gradually become the backbone of corporate management, under the pressure of performance, will incidents like "fraud door" repeat?Especially when Guan Mingsheng, who formulated the value system, has left.

Of course, there is a set of "cultures" running through Alibaba's value system: Alibaba's "smiling face" culture, Taobao's "upside down" culture, Alipay's "handprint" culture, and Yahoo China's "barefoot" culture.These cultures help to strengthen employees' sense of belonging and responsibility.However, now that the word "Taobao" has disappeared, B2B and Alipay have been split, China Yahoo Mail has disappeared, and the portal has "closed", can these cultures still be implemented in the new organizational system? (Section III) How does Jack Ma control Alibaba?

Although Ma Yun’s personal share in Alibaba’s overall shares is not high, he has the voting representation rights of all insiders, and this entrepreneurial team has become the de facto internal controller of the company, which has enlarged Ma Yun’s personal 7.4% stock authority to 51% %above.Ma Yun adopted four methods of balance, avatar, star, and dynamic to control Alibaba.

Alibaba has gone through 14 years of development, but as a minority shareholder, Jack Ma, chairman of the board of directors of Alibaba Group, still firmly controls this huge business empire.What unique methods did Jack Ma adopt in the transfer of equity?To sum it up, Ma Yun's equity control technique adopts various techniques such as balance technique, avatar technique, star technique, and dynamic technique.

Balancing technique: Alibaba's dual-market entrepreneurship

Some start-ups and entrepreneurs use the capital market as a cash machine, and use PE/VC as fools who do not understand the company and the market.The Alibaba Group's entrepreneurship is a dual-market operation for the industry market and the capital market.Ma Yun has become a "seesaw" person, one end is the commodity market, the other end is the capital market, and the fulcrum is control.

First of all, start a business in the e-commerce market. In the past 14 years, Alibaba Group has grown from a small company to an ecological social enterprise with a market value of about 700 billion US dollars, and the growth rate is amazing.Through a series of events such as Cainiao.com and Alinet Bank, Alibaba Group has made the development momentum of Alibaba's ecological business more and more fierce.

Second, start a business in the equity capital market.Alibaba’s dazzling equity financing has attracted huge amounts of capital in a relatively small proportion, maintaining capital options with its unique business advantages, and continuously injecting funds into commodity market operations to accelerate business growth. Alibaba Group’s 14-year financing situation, 2002 ~2003, 2005~2006, 2009~2010, and 2011~2013 are the key years for Alibaba's promotion, and they are also the main nodes for company financing and equity changes.

In fact, it is very difficult to realize the interaction between the capital market and the e-commerce market, but Jack Ma has done it: almost every step that Alibaba has crossed is achieved by financing.Ma Yun not only built an e-commerce platform for merchants, but also created an e-commerce investment platform for shareholders—just like an investment company.

In fact, it is even more difficult to balance the fulcrum (control) of the capital market and the e-commerce market, but Ma Yun still did it.The key reason is that Ma Yun has a good grasp of the timing of Alibaba Group's business leap and the share of financing.For example, Taobao.com was established in 2003, mainly because of eBay’s fierce invasion and the sudden attack of SARS, which changed people’s shopping habits. The combination of these two important factors formed an excellent time for Taobao’s business development.Ma Yun seized this opportunity.In the second year of its establishment, Taobao introduced the third round of financing in a timely manner, and controlled the equity share of the second largest shareholder at about 20%, which could not pose a threat to its own control rights at all, which reflected Ma Yun's profound balance ability.

Split technique: Alibaba's shareholding structure

Alibaba Group's equity has been fluctuating, but these are numerical changes rather than structural changes.Alibaba Group’s shareholding structure includes three types: the industrial capital represented by Yahoo enables it to have Internet genes and gain sufficient appeal in the Internet industry; the professional investment capital represented by Softbank enables it to avoid management interference, and the entrepreneurial team has sufficient flexibility; Jack Ma and his management team are human capital, which enables them to have sufficient enthusiasm and internal control.

Corporate control right is a combination of owner's share right, internal and external information right, shareholder's communication right and contractual arrangement.Alibaba's shareholding structure, shareholder identity, information symmetry between internal controllers and owners, etc., make Ma Yunji "representative of internal controllers, internal spokesperson of the two major investment institutions, coordinator of the three types of shareholders, and four major shareholders." The four identities of the authorized person of rights and interests are integrated into one body, and there is no conflict of roles.

First of all, he is a representative of an entrepreneurial team.Ma Yun has a relative advantage in the entrepreneurial team. He built the team with one hand, and at the same time relied on the first-mover advantage and charisma of its founder. The entrepreneurial team has become the de facto internal controller of the company, amplifying Jack Ma's personal authority from 7.4% to more than 51%.

Secondly, he is the internal spokesperson of the two major investment institutions.Due to its extensive investment, Softbank has majority shares in more than 300 major IT companies around the world. Although it has the professional influence of professional investment, it does not have the energy to take care of Alibaba. It urgently needs to find a spokesperson for Alibaba; Capital is also unable to exert the influence of industry rules, and it is even more necessary to find a spokesperson in Alibaba.Therefore, both professional capital and industrial capital have become de facto financial investors, and it is difficult for professional investors and industrial investors to compete for control.

Again, he is the coordinator of the three types of shareholders.As an industrial investor, eBay wants to invest in the acquisition of Alibaba's shares, and professional investor Sun Zhengyi is also very excited about the price offered by eBay.At this critical moment, Alibaba Group signed a strategic partnership with Yahoo, another industrial investor. Yahoo acquired 40% of the shares of Alibaba Group, and all investors except Softbank withdrew.

Finally, he is the grantor of four classes of shareholder interests.Shareholders have ownership, disposal rights, distribution rights, and control rights.While Softbank, Yahoo and the entrepreneurial team have de facto ownership, they have "authorized" all four powers of asset disposal, profit distribution, and decision-making control to Jack Ma.

Star Art: Alibaba’s Highest Discourse Power
Faced with the huge cash flow generated by the successful operation of the company's business, as well as the value-added and expansion generated by the successful operation of capital, most people will fight for the right to dividends and disposal rights, but Jack Ma has chosen the right to speak.Especially according to the agreement signed when Yahoo invested in Alibaba Group in 2005: five years later, that is, in 5, changes in the structure of the board of directors and voting rights will make Jack Ma and his team lose control, but in the end Yahoo chose not to exercise this agreement. rights, did not actually assign a board member, and still maintained the original 2010:2 four-member board structure.The main reason is that they are afraid that internal discoordination will affect the value of Alibaba Group, which shows Ma Yun's influence on Alibaba Group from the side.

The trust inside and outside the enterprise determines the efficiency of the enterprise, and it is also the foundation of the enterprise system, which is what people often say "who speaks well".This is not determined by statutory authority such as shareholding ratio. It is "determined by the will of all stakeholders." Ma Yun's shareholding control is due to his successful creation of "heart tricks."

First of all, Ma Yun continued to increase his negotiating power for "trust" and constructed a rule star.

Masayoshi Son of Softbank invested in Alibaba Group. To a certain extent, he was worried about control.At that time, Ma Yun did not raise Sun Zhengyi's concerns to the negotiation and construction of scientific rules, because at that time, Ma Yun did not have the capital for negotiation, only enthusiasm, persistence, teamwork and B2B wisdom.

Sun Zhengyi originally planned to invest 3000 million US dollars, accounting for 30% of the shares of Alibaba Group.But Ma Yun only let him invest 2000 million US dollars, so Ma Yun and his team have more benefits.It coincided with the global Internet bubble, and the scenery here in China was unique. In this way, Jack Ma began to have the capital to negotiate.

Ma Yun is well versed in the way of capital power. When his negotiating power is not particularly strong, he must adopt "uncivilized means" to achieve the goal of "civilization". Inspired by justice, Masayoshi Sun suggested to Ma Yun: "C2003C platforms are completely similar to B2B." At that time, eBay was trying its best to develop this field in China.The successful creation of Taobao gave Jack Ma the power to communicate and negotiate with the capital.

In the end, during the equity change process of Yahoo’s investment in Alibaba in 2005, Jack Ma reached control through an agreement in a regular manner:

One is the separation of stock rights and voting rights.Yahoo holds a 40% stake in Alibaba, but only has 35% of the voting rights, and the remaining part of the voting rights belongs to Jack Ma's team. This clause is valid until October 2010.

Second, the number of seats on the board of directors is tilted.Among the four seats on Alibaba's board of directors, Jack Ma's team has two, Yahoo, the major shareholder, has only one seat, and SoftBank has only one seat. By October 2010, Yahoo has the right to have the same number of board seats as Jack Ma's team.

The third is that before October 2010, under any circumstances, the board of directors shall not remove Jack Ma from the position of CEO of Alibaba.

Secondly, Jack Ma continued to increase his leadership with "rule of man" and organized corporate stars.

In corporate governance, the shareholding ratio of external institutional investors exceeds 60%, which is not stable for founder-type companies.Baidu Robin Li has a saying that is most appropriate: "Don't easily hand over the initiative to investors. In the process of starting a business, no one will be willing to do good."

During Alibaba’s start-up stage, it was difficult to have a clear plan for the use of large sums of financing. Coupled with its aggressive market expansion and the establishment of multiple overseas offices, it had to rely on personal capabilities instead of system capabilities to protect the interests of shareholders.As an emerging Internet company with a large number of self-employed individuals and a lack of clear division of labor, it is necessary to balance the influence of individuals, small groups, and external investors who do not participate in the company's specific business on the company's business.Only people with strong leadership can make everyone agree with the business, philosophy, and culture and form a synergistic effect.

In October 2010, Yahoo added additional board members, which verified the value of corporate leadership.Ma Yun once said: "Even if (Yahoo) sends ten directors in, isn't it still doing the right thing? If you don't send directors in, I will listen to whether you make sense. If there is no reason, 10 directors are useless. use."

In the end, Ma Yun continued to increase capitalization with "personal" and constructed a social star.

The company is owned by the owner, and only when the manager of the company has the ability to integrate social resources can he develop jointly with the major shareholders.Ma Yun created his personal brand as the capital of Alibaba and became the representative of responsibility and power for upstream and downstream customers.Therefore, the operation of the Jack Ma brand is very successful, and even the reputation of the Jack Ma brand was once higher than that of Alibaba.If the shareholders let Ma Yun get out of class, Ma Yun will take away most of the high-quality customers in an instant.

Why did Ma Yun create the entrepreneurial hero brand?This is another kind of influence of Ma Yun, which is the cohesion of PE/VC and the ability to create performance.If Ma Yun dismisses get out of class or shareholders withdraw their capital, with Ma Yun's brand in the private equity field, huge financing can be completed in an instant.Of course, the customers that Alibaba serves are also entrepreneurs, and the brand image created by Jack Ma can also generate affinity for customers.

Ma Yun is the totem and spiritual mentor of Alibaba. No one can replace his position in Alibaba. His control over the enterprise does not even need to be supported by equity. Perhaps this is the reason why Alibaba has never been swayed by capital. one.As Wang Ran, CEO of Yikai Capital, said: "Alibaba has too deep a brand of Jack Ma. Now, Jack Ma's control over the company is more based on a humanistic thing and the influence of a spiritual leader. In the future, It may make Ma Yun less colorful. Alibaba’s culture will continue to evolve. For Ma Yun, legend is more important than control.”

Dynamic technique: the regularity of Alibaba’s growth

(End of this chapter)