What is the logic behind Alibaba's organizational adjustment?
Alibaba recently underwent a major organizational restructuring, which is being hailed as a textbook example of effective management. The “1+6+N” model implemented by the Alibaba partnership is a management strategy that has been used effectively across the organization.
This restructuring is just the latest in a series of exemplary management moves made by Alibaba’s executives. For example, when Dai Shan took over the management of Taobao and Tmall, she recognized that the company was falling behind in terms of customer experience. She identified that the definition of “experience” at Taobao was too narrow, and the company needed to focus more on the post-purchase experience, such as delivery. She adjusted the company’s values to prioritize customer experience and made cultural events that emphasized this new value.
Similarly, when Jiang Fan took over Alibaba’s international business, he spent months meeting with users and merchants to gather information on the business’s problems. He discovered that the company was not local enough, and he made localization the core of his strategy. He decentralized the decision-making process, and local staff was put in charge of each country.
Alibaba’s management moves are textbook examples of effective management, as they all involve three steps: diagnosing the problem, developing a strategy, and adjusting the organization to implement the strategy. These steps are essential in making any strategic move successful.
The current restructuring, led by CEO Zhang Yong, aims to address two major issues at Alibaba. Firstly, the company’s professional managers must compete with successful entrepreneurs. Professional managers may not have the same level of personal investment as entrepreneurs and may prioritize pleasing their superiors over long-term business success. Secondly, Alibaba does not have a universal organizational capability that can be applied across all of its businesses. This makes it challenging for managers to adapt to new systems and processes, and also limits Alibaba’s ability to incubate new businesses.
To solve these problems, Alibaba’s management team is seeking to transform its professional managers into entrepreneurs. They are doing this by implementing a new incentive program that will reward the leaders of individual business units with stock options. Additionally, Alibaba will focus on building a culture of entrepreneurship and providing autonomy to business leaders.
Overall, Alibaba’s restructuring is a textbook example of effective management. While there are potential issues, such as talent retention and reduced cooperation between business units, the company’s management team has taken the necessary steps to address these concerns and ensure continued success.
