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Roundtable 2011 Summary of the Speech by Jack Ma

Roundtable 2011 Information
 
Message from the Director
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Summary of the Keynote Talks
Summary of the Sessions
Summary of the Speech by Jack Ma
Key Takeaways
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Jack Ma is the lead Founder, Chairman and Chief Executive Officer of Alibaba Group. He is a board member of SOFTBANK CORP, Director of Huayi Brothers Media Corporation, and on the global board of directors of The Nature Conservancy. In 2009, he was recognized as one of the "TIME 100: The World’s Most Influential People" by TIME, one of "China’s Most Powerful People" by Business Week and one of the "Top 10 Most Respected Entrepreneurs in China" by Forbes Chinese edition. He also received the "2009 CCTV Economic Person of the Year: Business Leaders of the Decade Award". In 2010, Jack was named by Forbes Asia as one of "Asia’s Heroes of Philanthropy"

Summary of the Speech by Mr Jack Ma at Cocktail Reception

There is less difference between entrepreneurs from East and West than there is between effective entrepreneurs and professional managers, according to Mr Jack Ma. Western venture capitalists in China seem to understand the market quite well, but entrepreneurial leaders are far more dynamic than "frozen chicken" professionals. As the example of the Alibaba Group shows, entrepreneurial firms should be steeped in missions, visions, and values that cohere all employees. They should also place great importance on responsibility, the development of people, and avoiding the logic of rule-bound professionalism.

Initial Considerations

The crux of any entrepreneurial firm is its CEO, who should galvanize it to action and define what it is trying to achieve. Mr Ma expressed annoyance at professional CEOs who claim they have so well prepared for succession that they could leave today and their firms would continue to grow. "Anyone who thinks that should be fired," he said. CEOs have to make a major difference at every moment. They should push their firms ahead better than any alternative leaders and be keepers of the mission, vision and values that all employees adopt.

A firm's mission should not simply focus on success at a regional or international level. Rather, it should be targeted at redefining an important part of the firm's context. Alibaba’s mission is to make small- and medium-sized Chinese business successful, principally through the business-to-business facilitation of Alibaba.com. The accompanying vision was originally to make Alibaba one of the largest Internet firms in the world, but now it is "to make the Group last 102 years." Given that Alibaba.com was founded in 1999 this would mean a lifespan crossing three centuries. In any case, success cannot possibly be measured for at least another 90 years.

Defining and Defending Values

Only with the establishment and propagation of appropriate values would such a long-term view of success be possible in any firm. Those values should be widely held, capable of drawing employees together, and driven by the CEO rather than focused on him or her. From Mr Ma’s viewpoint the values most important for entrepreneurial leaders are optimism and trust. They should be optimistic themselves, seeking opportunities where others see difficulties. Conversely they should have the trust of their employees and know that those employees can be trusted to act ethically in their own capacities. Employees should never work for their CEO. Rather, they should work for the vision and mission that everyone in the firm agrees on together.

Even in the most value-driven firms this can be a difficult balancing act. During the financial crisis of 2008 Alibaba.com hired 5,000 fresh graduates who would otherwise have been without work. The rationale was that the firm had sufficient cash reserves and China would benefit from the effort. Without enough focus on making sure that the new employees agreed with the firm's values, some conspired with disreputable manufacturers to defraud customers. The firm has now frozen hiring and is devoting more time to developing and training all recently hired employees.

The Importance of Responsibility

Taking responsibility is a key aspect of the Alibaba culture and so is being responsible, which is not always the same. The generation of wealth above a certain level has definite social implications. When a person has some money or even a million dollars it is their money alone. They should be able to do whatever they want with it. However, when a person or a firm has 500 million dollars, it is society's money according to Mr Ma. Through purchasing goods or services society has helped to generate the money and should be paid back in some way. The firm should be asking "how can we help more people? How can we make a difference?"

From this perspective, no firm should need to create a corporate social responsibility program. It should already be attuned to what society needs and social responsibility should be embedded in its business model. For instance, 0.3% of Alibaba revenues are automatically given over to water protection in China.

Another way in which Alibaba take responsibility is through the priority it sets on people. Most firms claim that they serve their shareholders first but Alibaba prioritizes customers first, employees second, and shareholders third. If the Group serves its customers well they will pay it, and if it serves employees well they will be happy and increasingly creative. Both of these outcomes are more valuable for continued growth than the investments of shareholders. Nevertheless, being responsible means that it is crucial to be transparent with those shareholders.

Problems with Professionalization

The flip-side of this focus on people is knowing how not to treat them. Mr Ma was forceful in his conviction that professional management is very often an impediment to creating a people-centric firm. When professional managers arrive at a firm they tend to bring arbitrary policies with them, expecting to press a magical button and watch everything come out.

Even entrepreneurial firms like Alibaba are not immune to this problem. An Alibaba manager once refused to allow a pregnant employee to have a jacket that blocked radiation from her computer monitor. The woman was entitled to one but the manager insisted on the policy that she should have written proof of pregnancy from a doctor even though there was no reason for her to want one of the horrible, heavy jackets. Business should be all about viable human decisions and not rules. As Mr Ma put it, "when a firm has too many policies it has no culture."

A healthy skepticism of professionalization is vital for any firm that wants to continue improving, and that should extend to how MBA programs are preparing young entrepreneurs. Having managers with MBAs offers a certain amount of value for a firm, but it also tends to solidify mindsets. Returning from their studies these new professionals are analytical and can tell a firm why it is successful or not. Yet this simply confirms what most managers should already know. In contrast, entrepreneurial leaders have drive. Instead of seeing a clear logic in the way their firms operate, "they just go on reaching."

The Entrepreneurial Future

The entrepreneur's job is not to analyze but to make the dream happen. Entrepreneurial leaders should spend a vast majority of their time looking ahead, thinking about what is going to happen in five to ten years. That is certainly the case at Alibaba. If Chinese e-commerce is good in a decade’s time, then Alibaba will consider that it has done something worthwhile. If it is in decline, then the Group will have to take most of the blame.

Over the much longer term, Alibaba’s focus is on the young people who are driving its growth. Senior people can show the way forward from the heart, but younger people do so from the brain. Their ideas are paramount to Alibaba’s future success. From Mr. Ma's perspective, a firm made by young people born in the 1980s and 1990s has just the right ingredients to make a lasting difference.
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A detailed summary report of the roundtable can be downloaded here.
Mr Jack Ma
Mr Jack Ma
Mr Jack Ma receives award