With Alibaba’s recent IPO, there’s been an uptick of interest in both the company and the current landscape of Chinese eCommerce. With the largest population in the world and a growing middle class, China is fast becoming the world’s most lucrative consumer market. Alibaba has become the poster boy for this incredible transition - and its success is generally presented as a byproduct of the Chinese market's growth as opposed to one that it achieved through their own innovative methods.
Nothing could be further from the truth.
Macro conditions allowed Alibaba to enjoy astronomical growth, but it was the ultimately the company's own processes that enabled its success.
Interestingly, many of the barriers that faced Jack Ma and Alibaba are likely to be similar to those facing SMEs and startups today. Despite the scale of Alibaba’s current operations, there are valuable lessons that startups can learn and apply to their own businesses.
Alibaba founder Jack Ma recently shared a story about how he invited 24 friends to his house to discuss the prospect of Alibaba as a business model. 23 out of the 24 people in the room told him to drop the idea.
The reasoning behind their apprehension ranged from Ma’s own lack of experience to serious doubts about eCommerce as a viable business. Nevertheless, Ma persisted. Like any disruptive business idea, there will always be an element of doubt in the viability of the proposed model.
Lesson #1: Make a decision and follow through
“No matter what one does, regardless of failure or success, the experience is a form of success in itself.” - Jack Ma
For Jack Ma, the risk paid off. The reality however, is that not every case of risk taking will have an Alibaba-scale reward. The decision is far from a formulaic one. Understand the market, have a game plan for the business you're hoping to build, and with a bit of luck, you might just be headed for a significant reward.
Establish values - and stick to them
“To make it easy to do business anywhere.” - Alibaba’s company mission
In a business environment dominated by rather conservative state-owned corporations, Alibaba is well known for their company culture. Rumour has it that Ma and his cohort still return to the original apartment where they first dreamed up the business whenever they feel that an innovative push is needed.
Alibaba has self declared that their corporate culture has been critical to the success of their company. Transparency is key. All employees are encouraged to voice their concerns on Aliway, the company’s internal communications platform. This gives the product development team access to a huge base of feedback, and all employees are encouraged to voice their concerns on the platform.
A flat hierarchy is also a part of the company’s philosophy. C-suite executives engage with staff often. Everyone chooses a nickname when they first enter the company to minimize the sense of structure or hierarchy.
Having a healthy, vocal, and active feedback system within the company is likely to have been an important reason behind the company’s success. Chinese corporate culture is notoriously hierarchical, making criticism of one’s superiors difficult. By not only encouraging, but mandating constant feedback, Alibaba goes against conventional structures and has achieved some pretty astounding results.
Lesson #2: Goals get you started, but processes determine success
Alignment within the company is key to success. Often times, the CEO will have a certain conception about the direction that the company is headed in and ideas about how to achieve that goal. It’s important that workflows and processes complement this vision.
There’s a tendency for people to understanding corporate culture as an abstract ideal, rather than concrete processes, structures and actions in a firm’s day-to-day dealings. Focus on actionable steps. It’ll get you much further in the long run.
Innovation as key to long term success
Stagnation is one of the most frightening directions for any successful business to move towards. It's happened to numerous successful companies. Understandably, it's difficult to replicate the model that was so successful on a much larger scale.
Lesson #3: Don't stagnate - there's always room for improvement
It’s easy to stagnate when approaching the pinnacle of what people see as ‘success’. After all, conventional wisdom dictates that ‘if it ain’t broke, don’t fix it’.
Now that we’re living in the digital age however, innovation occurs at a virtually unprecedented speed. Massive players, Myspace.com for instance, can disappear or become obsolete over the course of a few months. In order for businesses to survive, innovation and long-term investment is key.
Alibaba has beginnings in its B2B platform, but has constantly evolved and added to its portfolio. Today, it operates a number of enviably successful companies - including Taobao, China's largest C2C eCommerce platform; Tmall.com, the country's largest B2C platform; and Alipay, a third-party online payment platform.
All in all, Alibaba offers some valuable lessons for startups. It's clear that Jack Ma's success wasn't merely contingent on riding the right wave at the right time. Although timing is very important, getting the underlying processes right allows your business to capitalize on the opportunities when they do arise.