Publications
Partners
The company was not only the largest US-listed initial public offering, but Alibaba also claimed the world’s biggest in 2014. And now recently turned entrepreneur Tanye ver Loren van Themaat says South African businesses can learn a lot from the ecommerce giant. Below she outlines five key success factors which should be taken into account. – Stuart Lowman
By Tanye ver Loren van Themaat*
I recently read Alibaba’s World by Porter Erisman about how Alibaba, the world’s largest e-commerce company, grew from a small Chinese start-up to have the largest IPO in history ($25bn – which valued the company at $168bn).
I identified five success factors from Alibaba’s fascinating life, which can be applied to South African business. Most of the factors deal with keeping the local flavour, but ensuring that good fundamentals are incorporated.
Want to know how Alibaba became the world’s largest e-commerce company?
They thought Chinese, just like we need to think South African.
The success factors are:
1. On the same page
When Savio Kwan joined Alibaba as their new COO in 2001, he spent a lengthy three months with top management on a process of discovering, developing and defining Alibaba’s mission, vision and values. Employees were frustrated, as Alibaba had been discussing dreams for a long time which didn’t have any concrete results.
When the great unveiling finally arrived, Savio amazed the company by stating that from then on 50% of the performance evaluation will be based on an employee’s performance and 50% on how well the staff adhered to Alibaba’s core values.
These values were used for hiring, firing, evaluating and promoting Alibaba staff. This was a whole new way of thinking in the Chinese culture where in the past KPIs (key Performance Indicators) where always measured on performance only.
Alibaba’s mission:
"To make doing business easier.
Alibaba’s vision:
To be a partner to all business people.
Alibaba’s nine values:
Passion, innovation, teach and learn, openness, simplicity, teamwork, focus, quality, customer first"
Alibaba founder Jack Ma
Other concepts the COO brought into Alibaba:
• Two tracks for advancement. A management track and a specialist track, because not every skilled specialist makes a good manager.
• Training track. New employees would be trained in their specific skill, and the core of the training was Alibaba’s vision, mission and values.
Lesson: A company must figure out what they stand for first, before they can develop strategies, systems, processes and models. These things take time, and we South Africans aren’t known for our patience.
I often get the feeling that South Africans think that working on organisational culture and vision is a waste and some even call it fluffy. So it’s interesting that this was so integral to Alibaba’s success. They understood that culture and strategy go together.
2. Processes and Systems
As Alibaba grew, turmoil ensued. The company became too big to be system-less. They were like a mast-less boat that was slowly leaking. Jack Ma, Alibaba’s CEO and one of its founders, was a visionary, aspiring leader. He had very little management experience and Alibaba almost went bankrupt a few times in its early years, as the company was unstructured and disorganised.
Savio Kwan brought vast experience to the company. He previously spent 25 years in management, of which 15 were in General Electric, quite a structured organisation. He brought his experience of formal management, systems and processes, and scale to Alibaba, making difficult changes and bringing much needed structure.
Read also: Alibaba wants world domination – ex-Goldman partner to drive globalisation
Lesson: Although passion, drive and vision is critical, it’s not enough on its own to make a company successful. Structure and processes are important because they:
• Allow businesses to be more efficient
• Assist companies with delivering consistent good quality
• Help new employees become productive faster
South Africans are problem solvers and follow the ‘boer maak n plan’ principle, fixing, killing fires and winging the business as it grows. This often just delays systematising the company.
At some point, as a company grows, a systematic approach to building the business must be implemented. It’s important to realise that experience can add significant value, as long as it doesn’t stifle the culture and core of the company.
3. South Africans understand the South African market best
Chinese consumers like fancy websites with emoji’s and lots of expression, something Western consumers find tacky. Western consumers like clean, minimalistic web pages like Google. This was one of the biggest mistakes that Alibaba’s competitor eBay made in China, they standardised their website and removed the Chinese flavour. The market flocked to eBay’s competitor Taoboa (part of Alibaba), a great win for Alibaba.
Alibaba kept their website easy to use, because a large part of the Chinese market used the internet for the first time. They didn’t give in to the temptation and pressure to make an impressive, complicated website.
Read also: The Gospel according to Alibaba’s Ma: Love Amazon as Thyself
Lesson: South African companies tend to try and copy and paste successful business models. What is considered trendy, appropriate, fashionable in international markets isn’t necessarily what South Africans really want. We live in a very diverse country. Careless business model and product reproduction can alienate a large portion of the South African market.
We need to take a step back and resist the easy path of blindly replicating business models and rather spend time understanding customers and creating suitable, excellent products and services for South Africa. Companies must keep an open mind and not stifle the ‘local’ with traditional best practices. After all, Local is Lekker.
4. Your people
In the early days, Alibaba fell into the MBA trap. It had assembled a great team of Ivy League, impressive-on-paper managers from large international companies. They never took the time to immerse themselves in the Chinese culture.
These managers gave the CEO, Jack Ma, ignorant advice, applying their big-company inclinations to this Chinese start-up. Rifts were created between the Chinese and the international managers, a clear cultural clash. Savio had to make some crucial staff cuts, getting rid of most of the international managers.
At the same time, Savio reduced working hours for the remaining staff. This seemed counter intuitive – reduce staff, reduce hours, and complete the same workload.
He created these sustainable working hours to ensure that people don’t burn out, and also get to spend more time with their families. Jack Ma talked about Alibaba lasting a 100 years, and Savio understood that the employees wouldn’t last at the current pace.
Read also: Alibaba: World’s best kept investment secret?
Lesson: Looking after your people and creating a good work environment is part of building a sustainable company. If people don’t like working in your company, are burnt out or disrespected, they will jump ship when a new opportunity arises.
5. Service Excellence
Alibaba puts customers first, employees second and investors third.
Often pressure from investors will force companies to focus on short-term gain. Jack Ma believed that building great products and services are more important than giving in to pressure. He believed that if customers and employees are happy, investors will eventually be rewarded. He often kicked back against investor pressure that could negatively affect the customer experience.
Lesson: South Africa still has a long way to go to reach true service excellence. We are used to average service, so when we receive great service we are pleasantly surprised. South Africans love to tell the good story.
So allow your customers to spread your story. This is easier said than done and most people don’t know where to begin. The first step is to define the desired customer experience, and make sure your employees understand why this is important. Great customer experience should start at the top and permeate to the frontline.
Read also: Jack Ma: 10 quick facts on how he got super-rich (plus video)
Conclusion: What I like most about Alibaba is that they dance to their own rhythm. Alibaba has had many windfalls, but they got the right people in at the right time who could drive the company to greatness and they didn’t let anyone who disregarded the Chinese culture get in their way.
South Africa has 11 official languages and many more cultures. These cultures are different on many levels, and even similar cultures differ in urban and rural areas. Finding a voice that includes all our cultures and achieves a high level of acceptance is the real challenge.
Similarly, doing business can be complex, and the only way to capture a large customer base is to offer fantastic service, and make the customer the inkosi (morena, koning).
• Tanye has an Industrial Engineering Masters from Stellenbosch on Business Model Innovation and Growth. She founded Thundamental to re-ignite businesses that are stuck.
Thundamental focuses on creating, delivering and capturing more value to revitalise your business by innovating its business model. Tanye strives for efficiency and excellence, as it allows more time for what is important, may that be family, building a business or going for a cycle.
* For more in-depth business news, visit biznews.com or simply sign up for the daily newsletter.
