Rumours started circulating last week that Jack Ma, Chairman of Alibaba Group, would step down. The official confirmation came this morning.
Jack Ma will pass over the Chairman post to Daniel Zhang, currently CEO of Alibaba in exactly one year’s time.
That would be the 20th anniversary of Alibaba as a company. Do note that today is Teacher’s Day in China.
Some of you asked us what would be Momentum Works’s thoughts on this. Here they are:
- Alibaba’s share price has been dropping because of the news, which shows how ignorant investors (and analysts) are about Alibaba’s internal structure and its resilience.
- Among the major internet (or any) companies in China, Alibaba is probably the best in managing succession.
- When companies grow to a certain size, they need professional managers to come in to take over departments and functions. In many companies, that creates conflict with founding team members.
- This situation, if not managed well, can choke the company’s growth – we see that a lot in Chinese companies, even with some of our consulting clients.
- Alibaba has managed it very well – co-founders still have their place while newcomers have their room to fully showcase their expertise.
- The Alibaba partnership, its unique practice of corporate governance, has been criticised profusely by media outlets. Though the scheme ensures that Alibaba, as an entity, remains sound and keeps rejuvenating itself.
- Unlike its main competitor JD.com, whose stock price plummeted lately because of the alleged sexual misconduct of its founder, Alibaba can live out Jack Ma. It is hard to imagine JD.com without Liu Qiangdong.
- Jack Ma will still be the permanent partner of Alibaba, and crucially ‘partnership continuity committee partner’ – which basically means partner for perpetuity if you choose to. This ensures that he continues to exercise influence over the Group, even though he might not remain Chairman. He has not been CEO for years for instance.
- One year transition time is good enough to get the organisation and external stakeholders prepared.
- Education is always dear to Jack Ma – he started off as an English teacher, and throughout his career at Alibaba he has made a lot of teaching sessions at different locations, and he became a figure that young people across the emerging markets admire.
- With a less business-focused profile and no more earthly burden fo running a business, he can actually exercise bigger influence over the wider society, from business elites to aspiring youth – partially through education.
- Surely Daniel Zhang will do a better job than Steve Ballmer?
Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected]