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Executive Perspectives 企业家视野专栏 August 2013 www.IACMR.org Company Culture and Values Are the Lifelines of

Executive Perspectives

企业家视野专栏

August 2013 www.IACMR.org

Company Culture and Values Are the Lifelines of Alibaba

— An interview with Jack Ma, Founder and Executive Chairman of Alibaba Group

Xiao-Ping Chen, University of Washington

About Alibaba Group

Alibaba Group was founded in 1999 by 18 people led by Jack Ma, a former English teacher from Hangzhou, China who has aspired to help make the Internet accessible, trustworthy and beneficial for everyone. Since its inception, it has developed leading businesses in consumer e-commerce, online payment, business-to-business marketplaces and cloud computing, reaching Internet users in more than 240 countries and regions. Alibaba Group consists of 25 business units and is focused on fostering the development of an open, collaborative and prosperous e-commerce ecosystem. The privately held Alibaba Group, including its affiliated entities, employs some 24,000 people around the world and has more than 70 offices in Greater China, India, the United Kingdom and the United States. Alibaba has established a strong company culture based on a shared mission, vision and value system as the cornerstone of the company and its subsidiaries. They respect the spirit of entrepreneurship, innovation, and focus on meeting the needs of their customers.

About Jack Ma

Executive Chairman, Alibaba Group Jack Ma is the lead founder of Alibaba Group. After the company’s debut in 1999, he served as Group chairman and chief executive officer for more than a decade, with responsibility for overall strategy and focus. On May 10, 2013, he stepped down as chief executive officer but remains executive chairman and continues to shape the Group's business strategy and management development. Jack Ma and Alibaba Group uphold a mission “To Make it Easy to do Business Anywhere” and are committed to helping small and medium-sized businesses to develop and grow, as well as provide consumers with an enjoyable and convenient online shopping experience. “Live seriously and work happily” is the philosophy that Jack Ma and his team live by. Jack Ma is the Executive Chairman of Alibaba Group and also serves as chair of The Nature Conservancy’s (TNC) China board of directors, and is a member of TNC’s global board of directors. Jack Ma holds a bachelor's degree in English from Hangzhou Teacher's Institute and like every graduate, believes his alma mater is the best school in the world.

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Executive Perspectives 企业家视野专栏 August 2013 www.IACMR.org © International Association for Chinese

Executive Perspectives

企业家视野专栏

August 2013 www.IACMR.org

企业家视野专栏 August 2013 www.IACMR.org © International Association for Chinese Management Research

© International Association for Chinese Management Research

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Executive Perspectives 企业家视野专栏 In February 2013, Yabuli was still covered with white snow, quiet and

Executive Perspectives

企业家视野专栏

In February 2013, Yabuli was still covered with white snow, quiet and beautiful. In the 13th Annual Conference of the China Entrepreneurs Forum, however, heated discussions were going on about China’s future economy and reform. During the conference break, along with Professor Zhang Weiying, I interviewed Jack Ma, CEO of Alibaba Group.

Q Xiao-Ping Chen: Hi, Jack, it has been a long time

since I last saw you at the Academy of Management meeting in Hawaii. I’m so glad to meet you here in Yabuli. First, would you please describe your management style, philosophy, and perspective? What experience in your life profoundly influenced your leadership style and philosophy? It’s a broad topic, and we welcome your boundless answers.

Jack Ma: Personally, I feel that multiple management perspectives have emerged in China over the past 30 years, but that there have been no significant breakthroughs. In my view, nations and corporations develop in a similar manner. For example, the U.S. political system and management system are based on similar Christian beliefs. If you closely observe American companies’ operational systems, you will find interesting similarities with people’s religious beliefs there. Likewise, Japan’s micro-management practices reflect their cultural roots. In China however, because of the rapid economic growth in the past 30 years, and the lack of religious beliefs in this country, our management follows a less consistent pattern. We must take scraps from here and there, and nothing is our own. Cultural beliefs form the root of culture, which serves as the philosophy of management. I have been thinking about this question in the past few years. If Alibaba desires sustainable development, we must have a management philosophy. But if we don’t have a powerful and persistent corporate culture as the root, we cannot create the philosophy and thinking. You

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learn from America; you learn from Japan. But you learn only their operations, not their minds. So what is an enterprise’s mind? You may find me a little eccentric when talking about Taoism, Buddhism, and Confucianism, and mixing them. Indeed, I observe them all and harvest meaning from China’s ancient culture, especially from the Tai Chi philosophy.

Q Xiao-Ping Chen: Would you expand more

about the particular Tai Chi doctrines that you feel

especially meaningful?

Jack Ma: In fact, Tai Chi’s view on accommodation and transformation, yin and yang, ebb and flow, all thread through our company’s management philosophy. A dialectic view on accommodation and transformation includes closely related concepts. The same goes with education and nurturing. Education is the school’s responsibility and nurturing is the family’s job. We call it transformation by nurturing. And that’s what we really want. I have thought about it for the last four years, and gradually formed my own perspectives about our values and value system, the concept of belief and reverence. Belief is to be grateful for today and yesterday. Reverence is awe and respect regarding tomorrow and the unknown. Weaving belief and reverence into our culture would form the core values for the basic design of all management systems.

“To see people surpass me” is my biggest wish

Jack Ma: I feel that my thoughts about management have something to do with my teaching experiences. I was not the best teacher, but I certainly was a good teacher. I knew I couldn’t be the best in China, so I decided to step into the business world. I applied the same rules I followed as a teacher in running a business. That is, teachers

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Executive Perspectives 企业家视野专栏 always wish their students to surpass them. That is the fundamental

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always wish their students to surpass them. That is the fundamental difference between me and other entrepreneurs. Most business people, especially those professional managers, fear anyone overstepping them. I’m the opposite. When I find talented workers, I want to train them to replace me as soon as possible. That’s the characteristic of a teacher. Teachers always want the best for their students. If the student becomes a professor, or a mayor, or a big boss, teachers are as proud as if the achievement were their own. No teachers want their students to fail. So I never steal the spotlight from newly hired young people. If someone warns me about an employee who is trying to overstep me, I reply that I’m a teacher and that’s the way it should be. Another special experience is the way I studied English. I began studying English when I was very young, not just the language but more about the culture. I started chatting with foreigners around West Lake when I was 13, taking them sightseeing while practicing my oral English.

Q Xiao-Ping Chen: You were so brave! I was in

Hangzhou at that time, but never had the guts to talk

with a foreigner in English!

Jack Ma: I hung outside Shangri-La Hotel for nine years, getting up at 5 am daily and walking to the Shangri-La. During those nine years, I hardly skipped a single day! In talking with foreigners, I realized what they told me was quite different from what I had learned in school or heard from my parents. I started to think twice before believing whatever others told me. That experience made me more open-minded and better at understanding Western concepts. I disapprove of Chinese people who say that Westerners are no good in everything they do. How about ourselves? What about our own strengths and weaknesses? Through endless thinking, I have groomed, little by little, my own management philosophy in the company, based on

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Tai Chi, Taoism, and Buddhism. I never talked about this directly, but they are the source and nutrition of our management philosophy. In addition, my experience in education makes me interested in hiring, training, nurturing, and motivating talents. That’s the fun of my job. I worked as a class teacher before, and my job was about three things: recruiting good students; “fixing” them if they were not good enough, or letting them go. My English learning experience helped me to understand Western people’s system, ways, methods and techniques. I think they are quite good at methodology, and I embrace their managerial theory and principles. But it’s hard for us to adopt all of their ways because our and their cultural foundations are quite different. Therefore I use Chinese culture as a base and adopt Western principles. I let young people, employees and ground-level managers decide how to run the company rather than doing that myself. The traditional Chinese boss likes to control the company’s operations, but that would make your staff rely on you and never learn how to handle things in their own way. What a real leader should do, instead, is to give your team overall guidance and principles and be the source of your company’s culture. It’s just impossible for me to construct the culture myself.

The leader carries responsibility for the future

Jack Ma: As a teacher, I know how to use available resources. When I stroll in the rich Chinese cultural heritage, I feel that Confucianism, Buddhism, and Taoism are still powerful today. In Taoism, the best leadership is not leading at all. What is leadership anyway? I think it requires sacrificing today for the future; the person who can sacrifice today to win tomorrow is a real leader.

Q Xiao-Ping Chen: Your point of view is

interesting. Why would you think this way?

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Executive Perspectives 企业家视野专栏 Jack Ma: You can tell that I do not like professional managers;

Executive Perspectives

企业家视野专栏

Jack Ma: You can tell that I do not like professional managers; they tend to focus only on short-term results. I explained that to every professional manager in Alibaba the first day they came to work. They understand my view and many of them now identify with me. I also worked hard to transform professional managers, but later I found that the more successful they were, the harder it was to persuade them to change. What is a good leader? A good leader must be equipped with the excellent attributes of a professional manager. At the same time, the leader must be reliable, able to bear responsibilities not only for today but for tomorrow and the future. Frankly, professional managers and politicians are similar to me. They make easy promises but they can’t solve tomorrow’s problems. We habitually think about how to solve yesterday’s problems, but it is more important to consider what we must do today to solve tomorrow’s problems. The Taoist perspective calls for walking your path naturally by following your understanding of the future rather than focusing only on past and present problems. That’s why I used to say that I don’t listen to economists. I may have expressed myself in an extreme or simple way in order to catch the attention of those who have not thought about it and inspire them to do so. I remember right before the financial crisis, I met with a number of entrepreneurs. They were all listening to economists' predictions about the future economy and the government’s next actions. I said: “Ducks know first when the river gets warm in spring. You guys are entrepreneurs, fighting on the frontiers of the economy. If you don’t know when the water gets hot, what has gone wrong in your production chain, or with your customers, what is the point of sitting here listening to economists’ forecasts?” Economic research covers only models and problems from the past. Second, economists draw their conclusions from a tremendous amount of data, but in China, many statistics are not completely accurate. How can you

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possibly use them to make good judgments? What should the government do? In my view, it should not directly control economic policy, but decide on ways that help shape the economy and solutions to problems. For instance, instead of directly interfering with the economy today, government should devise policies that provide a solution when problems occur tomorrow. Likewise, companies must prepare for the future. Speaking in the Taoist language, you must have a principle to guide you and go step by step. I think Alibaba is in its current position because we understand and follow our moral obligation.

A culture of gratefulness, sharing and openness: live seriously and work happily

Q Xiao-Ping Chen: What exactly is the moral

obligation you follow?

Jack Ma: I often feel that people like me are not supposed to be successful,

Q Xiao-Ping Chen: Why?

Jack Ma: Because we lack the necessary elements for success in a normal sense. We have no resources and no rich daddy or uncle. I used to tell my colleagues that we were like a lucky person who catches a gold bar falling from the sky. We had two choices, to try our luck and look for another gold bar or to hide it. The first choice isn’t reliable because it’s like standing by a stump waiting for another hare to crash into the trunk and kill itself. The second choice is insecure because someone might steal the gold. Instead, it’s better to share it with others, show your gratitude for what you have, and everyone will be happy. The core of Taoism is letting things take their own course; the core of Buddhism is emptiness, the same inheritance as Taoism. What does it mean to let things take their own course? It means to stride ahead even if we know the result, for the process is

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Executive Perspectives 企业家视野专栏 what we really appreciate. After all, everybody is going to die, and

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企业家视野专栏

what we really appreciate. After all, everybody is going to die, and our final home is the cemetery. If you can see that as your destination through life, you will not fuss over trivialities. Confucianism is the Chinese way of management: let the king be a king,

the minister a minister, the father a father and the son

a son; while Western Christianity has developed into

a more open system up to the present. We adopted what they have in common and implemented it in our management model: gratefulness, sharing, and openness. I gave a speech at Harvard in 2002. After my talk, a CEO from a foreign company said that

I was a mad man. He said he had been in China

for many years, and didn’t believe that my way of managing a company would work. I invited him to

visit Alibaba. After a three-day stay, he said “Now

I understand. Here you have 100 mad men just like

you.” I agreed. People in a madhouse never admit they are crazy. They believe the outsiders are. That’s why people here in Alibaba are united. Someone

said it’s impossible to be unable to find 1000 people who think as he does among 1.3 billion people; if he did, he would train them to be us. And that’s why we have so many similarly crazy people. Alibaba’s culture was developed not through my own efforts, but through collective hard work. Our culture is the result of cherishing the same ideals, following the same path, and unifying the same type of people. If you want to copy us, you have to first copy our culture, confirm your cultural foundation, and hire people who share your ideas. Many companies nowadays want to compete with Alibaba, and I say, “Hey, brother, you don’t know what you are talking about.” I have spent 10 years to shape this company’s development. These are the people we recruited, and this is our way of training them. This whole e-commerce business model is only one form of our efforts, and there is no way you can compete with us.

Q Xiao-Ping Chen: I went to your company for a

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meeting two years ago and found that many meeting rooms are named after Jin Yong’s martial arts novels. Why?

Jack Ma: Jin Yong’s martial arts novels are the most down-to-earth way of explaining Confucianism, Buddhism, and Taoism. They cherish brotherhood, morality, courage, emotion, and conscience. I have said in the company numerous times that it is only a matter of time for Alibaba to become the most profitable company in China; what I’m worried most is that Alibaba becomes merely a money-making business without any human touch. I want our company to be like a person, with feelings, consciousness, and a code of conduct. Alibaba is a service company, not a high-tech one. The higher the technology, the further a company will move away from consumers. I cherish loyalty and brotherhood. Jin Yong’s novels reflect the philosophy of Taoism, Buddhism, and Confucianism, and yet young people and our clients comprehend the stories. When we talk about the Bright Summit and Xiaoyao Tower (“Xiaoyao” means “wander about at leisure”), people understand and it makes them happy. One principle I advocate in the company that is inspired by Taoism, Buddhism and Confucianism is “live seriously and work happily.”

Q Xiao-Ping Chen: People often say “work

seriously and live happily”. Why did you reverse it?

Jack Ma: Because if you don’t live seriously, life won't be serious with you. If you are unhappy at work, you cannot be innovative. Likewise, being serious at work doesn’t guarantee that you will be creative. Isn’t it better for one to have fun at work and feel free to come and go anytime as long as they finish their work? If you are unhappy with your job, please go, it’s not your mistake. “Working seriously and living happily” is just nonsense. Others talk about balancing work and life. That’s also impossible! About four years ago,

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Executive Perspectives 企业家视野专栏 someone suggested that I give a lecture to teach our staff how

Executive Perspectives

企业家视野专栏

someone suggested that I give a lecture to teach our staff how to separate life from work because they found it too difficult to do so. I talked for about 30 minutes and by the end of the speech, I realized that I was talking nonsense, meaningless words, for I never separated my life from my work.

Q Xiao-Ping Chen: That’s my basic view too. Life

and work are not against each other but they are

inseparable.

Jack Ma: I now want to explain why I’m going to step down as CEO on May 10.

Q Xiao-Ping Chen: Is that because you want to be

Chairman only?

Jack Ma: In China, stepping down as CEO simply means you are giving up control of the company. In an Internet company, stepping down as CEO is a difficult challenge. People may think that the chairman supervises the CEO, but that is completely not the case. If a chairman sticks to the traditional mindset of a Chinese boss, he can never handle his relationship with the CEO well. A chairman has his business to do, that is to decouple from the company, like a rocket shrugging off its booster on its way into space. The rocket still ascends rapidly, but its energy no longer comes from the original booster. This is the message I want to convey: before I was 48, my job was my life; after 48, my life becomes my job. I want to tell young people that I can now treat my life as my job. If you work hard enough, someday you can do the same. On the other hand, if I still have to work when I am 80, well, brother, you’d better not step in this river. Moreover, I want to let people know that I, Jack Ma, at age 48, see that many young people have surpassed me. This is an undeniable fact. If this hasn’t happened, my past 10 years of work would have been in vain.

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Q Xiao-Ping Chen: Well, that’s because you have

cultivated talented workers.

Jack Ma: If you don’t give employees

opportunities, why train them in the first place?

I asked my colleagues whether they want their

48-year-old boss to be brain-crushed and repeat each simple message five times. They dare not overthrow me, so I must overthrow myself first. I tell my staff I want them to appreciate that their founder knows how to enjoy and experience life. On the other hand, picking a successor is like having a baby. You must be young and healthy to have a baby, right? I’m now 48, still with a clear mind, and it’s now the right and best time to look for a successor. If I wait until I’m in my 60s or 70s, with a muddy mind and twisted ideas, I will for sure deliver a sick baby. No person can kidnap my company, and I won’t allow the company to kidnap people either. So I decided to step down.

Q Xiao-Ping Chen: It’s uncommon in the business

world that a 48-year-old CEO retires. Your comments

and action are quite daring.

Jack Ma: Yes, I speak boldly, and that’s my personality. If one day I talk plainly and calmly, then something must be wrong with me. I say

what I think and I do what I say. If one day I do something different from yesterday, then I admit that

I was wrong but at the time I thought it was right.

My actions match my thoughts; I never speak one way and think another. If not, that would cause my employees and the whole society to distrust me. When you realize you have made a mistake, there are two possibilities: one is hit the wall and

keep hitting; the other is to turn back. And I started to bruise my ideas while hitting the wall. Of course,

it might be dangerous for coming up an idea, because

they are based on experiences from the past 10 years. Are they still applicable in the future? I’m not so sure. So I decided to give younger people a chance.

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Executive Perspectives 企业家视野专栏 However, their values must match with our long- term core concepts.

Executive Perspectives

企业家视野专栏

However, their values must match with our long- term core concepts. Obviously, I’m not going to give that role to a professional manager, but I will pass the torch to the one who holds firmly to our values, and is stronger than us.

The successor must come from within the company

Q Xiao-Ping Chen: Do you mean that the CEO

who replaces you must be trained and cultivated

within your company?

Jack Ma: Of course. We already stated it in the corporate constitution: never allow outsiders to become CEO. Even if Alibaba is at the edge of bankruptcy, airborne rescue troops are forbidden. The new guy must have worked in the company for at least five years before the corporate constitution allows him to be a leader.

Q Weiying Zhang: Did you really make that

decision?

Jack Ma: Yes! We wrote it into the corporate constitution: no airborne guy, never ever. You can join the company at age 30 and after 5 years, you can still be promoted…The president of a country must be born in the country or have lived there for decades. If you don’t love this country, you can only be a problem solver but not a leader, so what would I need you for? What I need is a leader for the company, am I right? Chinese traditional medicine makes sense in this way: cure a person, not a disease. If the disease is cured but the person dies, what is gained? You may cure one disease, but what about the others? I want the person to be cured, and I want to have someone who really loves the company, understands it, and is willing to bear the responsibilities. If you can’t find this guy, that’s only because you didn’t prioritize this requirement enough. If we didn’t write it into our constitution,

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the board will say: hey, this guy is not good enough, let’s try another one. The investors can never love the company more than you do. They point fingers left and right and this could potentially damage the whole ecosystem of the company. What if you invited a wolf who might think it is right to eat all the sheep? That’s the only way he can prove himself, and that’s one of the reasons why nine of ten mergers and acquisitions fail. We are solving the problems at the system level.

Q Xiao-Ping Chen: Great, the following question

is closely related to what you said. From founding Alibaba, to becoming the CEO, to becoming CEO and chairman, and now stepping down as CEO, you have taken different roles in the company. At different times, how have you positioned yourself in the company’s management? What circumstances would make you come forward or step aside?

The time to repair a roof is when the sun is shining

Jack Ma: If the company is in danger, I will always throw myself in and try my best to help. This is my responsibility. When the company is close to success or when I see that the company is already successful then it’s time for me to leave. Furthermore, when the company is at its best time, it is time to start reforming because the time to repair a roof is when the sun is shining. You cannot fix the roof when it is raining because you might slip and die. Fix the roof on a sunny day; stay at home and relax on a rainy day: that’s corporate responsibility. Let others set off celebratory fireworks.

Q Xiao-Ping Chen: Let others to celebrate and you

leave quietly.

Jack Ma: Yes. A leader should let others set off the celebratory fireworks. It cannot be done by him and must be done by a stronger person. The success

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Executive Perspectives 企业家视野专栏 of a CEO should be determined by the number of person he

Executive Perspectives

企业家视野专栏

of a CEO should be determined by the number of person he trained that can surpass him.

Q Xiao-Ping Chen: Now you have decided to step

down on May 10th, does it imply that you have

successfully found your successor ?

Jack Ma: Of course. I have plenty. I’m now persuading them to see the challenges after catching a golden brick from the sky as I did before. I spent more than 10 years, especially the first few years, trying to give back to society gratefully. The new CEO should also be grateful and willing to share by returning the wealth to society. A CEO must sacrifice for others and do a better job than others.

Q Weiying Zhang: Is it possible that if you choose

one man on your team to be CEO, the others who were not chosen may take their teams and leave?

Jack Ma: It is possible. But I told them already that I would not be like Jack Welch, as his method caused too much of a struggle. A scenario in which I choose one person and others will leave is not going to happen here. Long ago I already drove out those I felt would not be good partners. I'm not going to cause trouble for the person I pick. I will fix the trouble myself. However, I might choose a good partner who will benefit you but might not be quite compatible with you. If you can’t collaborate, then you can’t be a great leader. In the past three years while I was training potential successors, I found their weaknesses and would make them to work hard to overcome their weaknesses.

Q Xiao-Ping Chen: So you were training their

endurance.

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CEOs must have vision, breadth of mind, and strength

Jack Ma: Right, and that’s the course the potential CEO must take. If you were a general fighting on the frontier and one day I called you to withdraw from the burning battlefield to work backstage for three years, it would be like putting you into cold storage at your peak. And when you are at your lowest point, I suddenly inform you that you now can go somewhere to take an important role. I trained the most sturdy and enduring people. If two guys are not a match with each other, I can

assign them to different jobs because there are full of opportunities and they can each spread their wings. In other words, the emperor who killed his brother to secure his position was stupid. That’s not the Taoist way and definitely not Buddhist way either. If

I can’t get their positioning right, that’s my problem, not theirs. I tried to figure out what happens if the two confront each other before I solve the problem. Is he sturdy and enduring, does he have a breadth of mind? I have three requisites for a CEO: vision, breadth of mind, and strength. Compared with others, you need to have better long term vision and

a broader heart to endure unfairness. The heart gets

broader by experiencing injustice, and people get tougher only by suffering unjust treatment again and again. Strength is endurance. If a guy returns smiling after rounds of being beaten up, then he is the one I want to be my successor.

Q Xiao-Ping Chen: How many men in your

company have been beaten up by you like this?

Jack Ma: Oh, a lot. It’s not like my Dad beating me when I was a child; I did that on purpose.

Jonathan Lu Zhaoxi was appointed CEO of Alibaba Group

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Executive Perspectives 企业家视野专栏 Q Xiao-Ping Chen: To train them. Jack Ma: Right. As a teacher,

Executive Perspectives

企业家视野专栏

Q Xiao-Ping Chen: To train them.

Jack Ma: Right. As a teacher, how can you not criticize people, not discipline them, and not encourage them? If he is an excellent leader, then he should know that my deeds are from my true love.

Q Xiao-Ping Chen: People from different levels

may have different understandings about what

you do.

Jack Ma: Right, when I criticize and punish someone, this person will feel pain and anguish, will curse me, will think it’s impossible to work for me for a long term, and will feel terribly mistreated. But this training system is cultural, and it actually fostered today’s system of competition. I can tell that there is seldom such a system among Chinese Internet companies. This morning in the conference, we were discussing that competition in China is actually a competition for talents, and competition for talents is in turn a competition of education, and that is related to the education reform. The

reform should not start at colleges, but at elementary schools. Good or bad national policy depends not on the quality of colleges but on the quality of elementary schools. Only good elementary schools can build a solid base for Chinese children. When

I was young, a good English teacher told me I was

doing well and then I did better and better. But

a bad math teacher totally killed my interest in

mathematics. Without a good base, how can you compete with other companies and survive? So when people compete with me in e-commerce, I tell them that it’s only one of my expressions. We may switch to the airline business, and we will still succeed. We tried finance, e-shops, Taobao Marketplace, Tmall, and now AliFinance is doing quite well too. These are only manifestations. A hepatitis patient may be yellow-faced, or totally worn out, but that is just a manifestation.

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Q Xiao-Ping Chen: Right, the key is that his liver

fails.

Jack Ma: It’s the same as growing a business. What’s the essence of strength and speed? It’s all about having great core values. Such competition will also become a world pattern in the future.

Q Xiao-Ping Chen: Well said, but I have a question.

You said that to cultivate a talent, to train him, you sometimes punish him intentionally by totally ignoring him, and that he may have felt the treatment was unjustified. How did you tell him that you were treating him that way for his own good? Did you tell him openly or did he figure it out on his own?

Jack Ma: I would never tell him that I did so as to train him on purpose.

Q Xiao-Ping Chen: Well, not directly of course. So

how do you do it? I mean to give him a hint that it’s

for his own good, when he feels down and upset?

Jack Ma: A narrow-minded person would feel that he was set up, by me or someone else. I would let him be. If he were too narrow-minded to bear the injustice, I would totally ignore him; let him dry up for at least 3 months.

Q Xiao-Ping Chen: What happens if he can’t take

it anymore?

Jack Ma: He will come to see me. He will be mad for sure. It’s impossible for a narrow-minded person to take being treated so badly.

Q Wei-Ying Zhang: There are in fact a lot of people

who went through this kind of “suffering”, including

Liu Chuanzi and Yang Yuanqing of Lenovo.

Jack Ma: Key point is that, if a person is

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Executive Perspectives 企业家视野专栏 lacking something, I will not pick on him; I never will. Because

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lacking something, I will not pick on him; I never will. Because you can find faults without searching for it. You can find many of my faults if you pick on me. You will always hit that wall. If something is wrong, I tell him so, and then I will watch his attitude. If he admits his mistakes, then there is no problem. I fear the most when he doesn’t admit to it, and then makes the same mistake tomorrow. I will never place a victorious general in the most difficult war; I will definitely choose someone who has been defeated countless times but succeeded a few to fight on the most critical battlefield, because his failures will make him more careful. A man who has never failed will fall hard when he does, then you will die miserable. If he is not open, easily discouraged, and easily loses control, you should just let him be and ignore him after punishing him. After three months, if he still can’t dig himself out, you call him in and have a talk. If he comes on his own initiative, you can tell after half an hour whether he has really changed or is just trying to please you. Talk with him, let him open up, breathe out all toxins. Some guys have broad minds; they treat this procedure as using face to mop the floor, to actually gain dignity. There are some people I would always criticize in every meeting, because they are open minded and can take criticism. I will keep criticizing until they can’t take it anymore. I not only treat the CEOs this way, but expect every department manager to have the same tolerance. I now structured the company into 25 business units, with 25 young business leaders each having 3-5 assistants. I have spent a lot of time building up this graduate class, so-called Feng Qing Yang class. I spend lots of time each year to teach them about the values of our corporate culture.

Q Xiao-Ping Chen: Continuing to progress in

cultural concepts.

Jack Ma: Of course, it’s not feasible to teach everyone in just one way. Everyone is different and has a different personality. I hope my company can

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be like a zoo of different animals with different personalities. If everyone is the same within a company, then the company becomes a farm, raising

a bunch of pigs or chickens. With different animals,

a company can have a good ecosystem, and you must

know how to deal with different people. Otherwise, you can’t deal with society and you can't get along with your clients. A leader must suffer, endure, and have vision to stand out compared with employees.

I died thousands of times, and I will not fear another

death. Young people can easily catch up with your skills, but courage is what makes a leader. At our last meeting in Taiwan, Dr. Morris Chang (Zhang Zhongmo)2 discussed innovation. The first thing I said on stage was that Taiwan is hopeless if people in their 70s and 80s are talking about innovation. You believe you are stronger than young people? You’ve got to be kidding. No way can old men be more creative than young people. We should support young people in their innovative efforts. They are more powerful than we are. So by retiring at 48 I show the Taiwanese how to do it. I may not be as wealthy as Bill Gates, but I am retiring earlier than he did. And I think this is what makes me interesting, just kidding!

Corporate mission has to be aligned with social development

Q Xiao-Ping Chen: You are a founder of a Chinese

company where it places a lot of emphasis on building corporate culture. What is the ideal culture

for Alibaba? How should it be accumulated and sustained? Would you please give some detailed examples?

Jack Ma: In the 21st century you must understand your mission and your reason for existence. In the past century, companies could prosper by simply grabbing one good opportunity. Big companies today in the 21st century, you must understand a theory: you must solve social problems before solving corporate issues. Only then can

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Executive Perspectives 企业家视野专栏 August 2013 www.IACMR.org the company last forever. Therefore, Alibaba has

Executive Perspectives

企业家视野专栏

August 2013 www.IACMR.org

企业家视野专栏 August 2013 www.IACMR.org the company last forever. Therefore, Alibaba has been hoping

the company last forever. Therefore, Alibaba has been hoping to solve social problems, problems of innovation, and employment issues. Alibaba is no longer simply a company, but an ecosystem. I lost interest in making a company 5-6 years ago. The difference between me and economists and management theorists is that they are making use of their knowledge, but I use my actions to change the world. I change things from the bottom up, I train people that are born in the ‘80s where they grew up having access to the Internet, and when they think this way on their first day, the society will naturally be different.

Q Xiao-Ping Chen: The key is to maintain a good

corporate culture.

Jack Ma: Yes, corporate culture should be connected to societal values. That is to say, values and mission come before a corporate strategy can be formulated. After the strategy is laid out,

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organizational structure can be created, followed by talent recruitment. It is one coherent system. I did not understand that in the past, but I have gained more understanding over the years and have created something systematic of my own. Today’s Alibaba is not built by stitching pieces together, but by missions and values. Our corporate culture can be summarized with four simple words: openness, transparency, sharing, and responsibility. Those words correspond with my understanding of the Internet. The Internet has developed so rapidly because it is open, transparent, sharing, and assumes responsibility. This is why I have to bring our corporate culture and Internet culture together, because if these two cultures are incompatible, it will have a very sad outcome. In my view, the Internet is our future. Some say that the Internet should become a national strategy. The national strategy shouldn’t be Internet, but should be the market economy, and the spirit of entrepreneurship, sharing the same resources. Regardless of how we feel, the society

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Executive Perspectives 企业家视野专栏 will become more open, transparent, responsible, and sharing. If your company

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will become more open, transparent, responsible, and sharing. If your company has such a culture, it will naturally get stronger, and this is why I would want our company to achieve this culture. I personally believe that our company is the most open in China, at least in its strategy. I can always share my strategy with others. People say that Tencent won’t allow them to visit, Google and Amazon won’t allow us to visit. But with us, we would welcome you to come visit our office whenever you want. What am I thinking? Hypothetically, if you took my strategy and did a better job, then I would be at fault. Because that would mean my culture, my vision, my mission, and my team are incompetent. What I do is systematic strategies, in this perspective, I will have to be open and transparent. I wish all society to open up. We have opened up our intranet to the public for two years. We are reconstructing it. When it’s done, anyone can find out who is doing which project. You can all take a look but you cannot comment on our webpage. You can comment somewhere else, but if everyone gives an opinion about our business, that would ruin everything. We contributed a great deal of our revenue to a fund for environment and water resource protection. We’ve been doing this for many years and this amount is in the hundreds of millions. But how do we decide who gets to spend this money? Or how to spend this money? I cannot say that I’ve established a democratic system, but we have elected 10-member out of 25,000 employees and formed a committee to be responsible for this fund. Each employee would be his own campaign team, to explain his ideas, understanding, plan, and so on. Eventually, the 10 elected nominees would form the fund committee and all the project proposals must undergo their approval before taking on any charitable activities. With such a complicated process, we notice the good and bad which sometimes lead to having things undone. The key is to have leadership, and for someone to be responsible. For years I have been saying don’t

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love me, just respect me. It’s impossible to unify the thoughts of many people, and even harder to unify the opinions of more than 20,000 people. It’s enough to unify their actions. Unifying action will lead to unifying minds. We have a system that cannot go public yet. We have been testing it internally at the management level and not all employees may know about it yet. After 3-5 years, if the test is successful, I believe we will have an ecosystem that can help tremendously in improving China’s economy and innovation. Furthermore, this system should include our accumulated management experience. In the world of management, China has originated nothing; indeed, we lack roots and systems. We have a mix, a hotpot that is not genuine cuisine.

Morality is at the core of our culture

Jack Ma: I believe we have inherited much value from our ancestors. Of course that doesn’t mean we refuse Western ways. They are more advanced than we are, so their knowledge is part of the world management doctrine. I just offer food for thought. After my retirement, I hope to make some valuable contributions to companies like ours. SOEs talk about prohibiting the firing of employees. But what is the big deal if the biggest possible loss is to not be a chairman anymore? Sometimes we invite people to come to teach, for example, about marketing. But if they teach us how to sell combs to monks (Chinese monks all shave their heads), I won’t ask them back because they are teaching us to be liars: monks don’t need combs. We are talking about how to create customer value and you are teaching us how to sell combs to monks and calling that good sales skill? Give me a break.

Q Xiao-Ping Chen: Something is wrong with the

value system.

Jack Ma: Exactly. I once decided not to hire

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Executive Perspectives 企业家视野专栏 a guy who was good at communication, logic, and management. We were

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a guy who was good at communication, logic, and

management. We were almost ready to hire him, but

he concluded the interview by saying he would bring

a lot of former clients with him when he joined us.

I immediately changed my mind and said thank you

but let’s find another opportunity to work together. I could see that if he left our company, he would take away some of our customers as well.

Q Xiao-Ping Chen: That’s a moral issue.

Jack Ma: Yes. I wanted him, but not his clients. That’s the moral problem. I think Alibaba has become more stable in recent years not only because of good performance. I don’t encourage employees to start their own businesses because Alibaba’s mission is to help others start their businesses. We have 7 million sellers on our platform, join us if you want to help them, but if you want your own business, then you’d better stay away. If you must join I will not turn you away, but in principle I don’t like that type of person. If you join, we have 7 million sellers working hard to start their own businesses and your job is to help them do that. If you want to be one of those 7,000,000 people, I will certainly support you. So, when I talk about a culture of openness, transparency, sharing, and responsibility, it’s also about acting and convincing others.

Q Xiao-Ping Chen: I can’t agree more. You

specifically emphasize the importance of having core

values. I believe that your core values are the “Six Meridian Swords” as you named: customer first, teamwork, embrace change, integrity, passion and commitment. How did these values form? What role have they played in Alibaba’s development? How have they influenced employees?

Jack Ma: Well, I didn’t devise these values alone. In the first year we gathered all the founders to think about this, we started from the 1995 Chinese Yellow Pages, and went through pains and

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struggles, but never gave up, outsiders didn’t know, we were the first Internet company in China but because we were in Hangzhou no one knew about it. When I returned from Seattle at the end of 1994, we discussed what unified us. We didn’t do well in business, but we stuck together. Why?

Q Xiao-Ping Chen: Was it because of you?

Jack Ma: No, if it was because of me, then what was it about me that made people not want to leave? Together we wrote down the 20 reasons for staying at this company and eventually combined them into nine. From then on, every new employee had to follow these nine principles, which later on became the basis of our employee performance evaluations. Rather than measuring sales performance, we focus very much on assessing these values. After some time, we refined the nine principles into six core values, also called “Six Meridian Swords.” If employees can’t abide by these core values, they will have to leave. Regarding evaluations, I recently made a new discovery, that small companies tend to like people with good sales performance but poor values, the so called "wild dogs".

Q Xiao-Ping Chen: Because they bring more

money to the company?

Jack Ma: Yes, it’s true they make more money, but the money is from dishonest dealings, and may cost the company in the long run. When that generation becomes company leaders, the company will be weak because they get used to being dishonest and taking advantages. That's the biggest hurdle for small companies if you ask me. It’s the "wild dog" culture. Meanwhile, the hurdle for big companies is what I call the "little white rabbit" culture where people get along well but don’t necessary perform well. I killed two “wild dogs” in 2002 when I proposed the "one yuan profit" policy. The company

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Executive Perspectives 企业家视野专栏 was suffering from serious losses, and at the beginning of the year,

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was suffering from serious losses, and at the beginning of the year, we had a meeting. At that meeting, I asked what Alibaba could do to survive in the Internet business where everyone was giving kickbacks and without kickbacks you

could not survive, but it was a violation of our basic principles. The meeting started at 8 am and lasted until 4:30 pm. Every body said that wasn’t how we wanted to live. At 4:30 pm, I concluded the meeting by saying: “As the founder, I would rather shut down the company than giving kickbacks. That is

a behavior we will not tolerate. We want to make

money, but if we rely on kickbacks to make money, we will fall one day - just like the others. I don't want to do that. For people who support giving kickbacks, they can choose to leave right now. That's my principle.” Half a year passed. Our revenue was RMB800,000. And we found out that sales from two employees accounted for nearly 50% of the revenue. Both had been giving kickbacks.

Q Xiao-Ping Chen: So did you let them go?

Jack Ma: I fired them, firmly and decisively. This is how from 2005-2006, the company started fostering its own value system.

Q Xiao-Ping Chen: And that's about what you can

do and what you cannot do.

Jack Ma: I'm not sure what we can do, but I'm quite clear on what we cannot do. And that formed the base of Alibaba’s culture. In a meeting with the Wall Street investors, I explained that I always put customers first, employees second, and shareholders

third. Putting the shareholders first is capitalism’s biggest mistake, because shareholders do not have

a long-term vision for the company. If you cook the

books to please your shareholders, who will pay the price? Your customers will. What is our purpose? Only customer satisfaction can benefit us all. So we are all clear on this: customer first.

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We talked about “Customer First” at a meeting with more than 200 people. An investor told me that if he known that I put customers first and shareholders third, he would not have invested in Alibaba. I said it’s not too late, and that he should then sell his stocks immediately. He was shocked. Of the millions of people in this world, I knew that someone will believe in putting customers first. Afterwards, some other investment companies also started selling Alibaba stock. I have my principles, right? Maybe I am not so pretty in private, but my performance is good. I refuse to believe that you can’t find one person in this world who puts the customer first; there are so many people and so many investors in this world. Fairness is part of Alibaba’s core values. We have a clear message: we will not tolerate kickbacks; we will not tolerate someone who says they will poach customers during a job interview; we will start small and will never cook the books; and we will fire someone who visits only three customers.

Q Xiao-Ping Chen: What do you mean by “visiting

only three customers”?

Jack Ma: If I find out that a salesman planned to visit five customers daily but only visited three but still reported five, I'm going to fire him. If he cheated on those little things, how can I trust him again? If he is honest, I will not fire him for visiting only three customers instead of five. But if he lies to me, how can I trust him? How can we work together? Trust is an important part of our culture at Alibaba from early on.

Make Integrity a Priority

Q Xiao-Ping Chen: Your company outlines

integrity very clearly in the employee handbook. The

company reportedly even has a special department to ensure integrity.

Jack Ma: I must clarify that the department

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Executive Perspectives 企业家视野专栏 is for integrity, and has nothing to do with the government, which

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is for integrity, and has nothing to do with the government, which has the same pronunciation as integrity in Chinese.

Q Xiao-Ping Chen: You also have a special

detective officer who can sense if anything goes wrong. Even so, something went wrong in 2011; that is, the B2B customer incident, and the incident at ju.taobao.com in 2012. Can you discuss these incidents?

Jack Ma: Today I can proudly say that I really stuck to my principle of integrity when handling those incidents. The degree of openness from a company the scale of Alibaba was very rare compared to other companies in China at that time. We proactively brought the 2011 and 2012 incidents to light. When we disclosed the incident we had already pretty much handled the situation. I understood very clearly that it was the right thing to do. We need to put integrity as our priority; revenue is only second. Integrity is connected with the very root of your culture; what we are building is an ecosystem and a platform that will truly benefit hundreds of thousands of people. During the 2011 B2B incident, David Wei’s team was under extraordinary pressure, especially as we saw a lot of scammers particularly in Fujian province in China. They got on Alibaba.com and started to scam people. We reported them to the police multiple times but no one was arrested, it was no use.

Q Xiao-Ping Chen: Were people passing the buck?

Jack Ma: The ultimate problem is that we’re pretty powerless. If you look at Alibaba as an ecosystem, we have about 350 million people on the platforms and more than 34 million companies living within it. I am operating an ecosystem of more than 600 million people. If 1% of them are bad guys, that means I have 6 million troublemakers. We found out later that some scammers often moved locations – those from Fujian would go to Shanghai, Guangzhou, and then Zhejiang. At the time, some

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young people would get a job at our company and then after the 3-month new employee training, they would do well in the first month or two and then leave abruptly after signing a bunch of contracts.

Q Xiao-Ping Chen: Really? It's unbelievable.

Jack Ma: Yes, they are like the spies we only see in movies and novels.

Q Weiying Zhang: What’s the percentage of these

companies in all of your customers?

Jack Ma: Perhaps 1%, it was a serious issue. The way we handled this issue sets an example for the entire company and the entire society that any Alibaba employee who dared to do the same thing again would face an immediate “death penalty.”

Q Xiao-Ping Chen: It is absolutely not going to

happen again.

Jack Ma: Many people still thought it was definitely a storm in the tea cup. But this was cancer and must be rooted out; otherwise the cancer cells would spread quickly. Although it was painful back then, pain was not the same as suffering. If we avoided the pain today, we would suffer tomorrow, and suffering is scarier than pain. When the suffering becomes unbearable, we will be finished. So I took the action on purpose, to demonstrate to all that I will not accept such behavior. One may find it hard to imagine – pulling out the CEO and his entire team. I was determined to make a big deal out of it.

Q Xiao-Ping Chen: You handled it very well.

Jack Ma: It was not evil behavior that we hate; rather, we hate indifference to evil behaviors.

Q Xiao-Ping Chen: Great. After that incident

I wrote an article, entitled The Character of a Company. But why did similar incidents occur in

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Executive Perspectives 企业家视野专栏 Taobao after that? Jack Ma: I was about to disclose the Taobao

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Taobao after that?

Jack Ma: I was about to disclose the Taobao incident when a magazine in Guangzhou preempted it. Of course the article was quite exaggerated. I thoroughly analyzed the whole situation and found that the real problem was with Taobao's senior management. The Internet developed so fast that we neglected Alibaba’s strict training system in our basic process of recruitment and training. At that time I felt it was really hard to run a small business, so I offered free services. Actually I offered free services three times. The purpose of the first time was not to beat others; it was because we had no clue about the business model and did not know whether what we offered was useful or not. Therefore, the starting point was to explore and define a model. Later I said we would have to charge for the service in five years, but then came the financial crisis. Ok, let’s keep it free. After offering free services a few times, the industry reached RMB700 billion in that year. In a RMB700 billion free market, it is natural that you have all kinds of people. We desperately needed people, so all types of job candidates were introduced by employees, or recruited as interns.

We can only be protected by a set of core values

Jack Ma: It was really scary, what should we do? I told my colleagues that this had to be handled seriously. However, nobody is perfect. It was really a social problem, not just an issue with us. The most important thing is to cultivate our immunity, the core of which is our values, our systems, and our interests. Under this circumstance we set up the Integrity Department with six employees. Probably no other company in China has an integrity department.

Jack Ma:Our integrity department is very efficient. What we want is not a fire brigade but a fire station to fundamentally solve both technical

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and system problems. It is not difficult to solve system problems. We adopt an “interlink assurance” policy that binds supervisors and subordinates in the recruitment process, meaning that today I am

your boss, so I am accountable for what you do, and

I shall shoulder responsibility together with you if

you do something wrong. I request my direct reports to tell me the truth. If they hide the truth from me, I would be inculpated if anything goes wrong. I also observe people when I talk to them. If

I find that someone has something in his hands, something must be wrong. This is what a "sensing officer" does. If someone does not look into my eyes, he is either not happy with me or hiding something from me. I would have a chat or a drink with him. If I cannot see the problem, then it is my problem, using the wrong people or neglecting my supervisory duty, and my boss has to bear the responsibility too. This is the first level of interlink assurance. Otherwise everybody would say they are not aware of the issue, and it would always be someone else’s responsibility. I want to hold everybody accountable. Second, each customer complaint is

investigated. Competition between customers is cutthroat. If we all sell tea, and you take bribes from a seller, others will blow the whistle. Once we find out there was bribery involved with a shop, it will be closed forever and can never re-enter the Taobao and Alibaba system. Their reputation is ruined, which is

a terrible thing for many people. Regarding whistle blowing, if one of your employees receives a report letter, the shop will be closed if the claims are found to be true. So the briber is also afraid, as he knows that many people can blow the whistle. If your employee does it, other employees can report it; if you give money, your employees would definitely know, and if they report it, your shop will be closed. That’s why I deal with the source. Our interlink assurance system, our cultural system, and technical system all support our efforts. We have hidden lines encrypted in all our programs that keep track of everything, just like leaving footprints in the snow. Once I suspect

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Executive Perspectives 企业家视野专栏 you, I will definitely chase you no matter how far you run

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you, I will definitely chase you no matter how far you run and bring you back to jail. By this I am telling employees that even if you have taken the money, you would not dare to spend it as you would fear getting caught. This is how we operate – six people, reporting with real names, and immediately investigating reports. Reporting with real names is a commitment. I feel that this system is working well. Of course we are still improving it. Meanwhile, we resumed our recruitment. Starting from last year, I am most proud of the change in the company's recruitment budget. When we were planning headcounts at the beginning of the year, I asked how many new hires we were aiming for, as we aimed to double our revenue. They told me we needed additional headcount of 7,800, and at a minimum our new headcount could

not be fewer than 6,000. I told them I disagree. They asked how many I thought would be appropriate.

I said 200 people. The response was that it was

absolutely not possible. Then I said it must be 200;

if we had one extra headcount, all the managing staff

would have zero year-end bonuses. Three people do five people’s job and get four people’s pay. I said I had been listening to them in the past five years and we had recruited so many people, but how many of these people were really necessary for our future development? They kept saying 200 people would not do. But last year we reduced 600 heads and doubled our revenues! We achieved RMB19 billion in sales with a reduction of 600 employees. Now they are extremely careful when making hiring decisions. We are not going to hire only little white rabbits. There are too many rabbits, and wolves start to eat the rabbits. So now we have only 200 people. And there is something interesting in the managing of the company now. For example, if we had three people and doubled our revenues. As we become more efficient at our jobs, I will be more demanding. Adding one headcount (including security guards and cleaners) at Taobao will have to be justified by adding RMB100 million in sales volume. It

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is fine if you want to hire more people; you just need to increase sales by RMB100 million for an extra headcount. And this year, I will increase it to RMB140 million for an extra headcount. So you can see that we don’t have to budget our headcount; it is automatically linked with sales turnover: year before last it was RMB100 million for an extra account, last year was RMB120 million, and this year is RMB140 million. You want to add one person, just increase your sales by RMB140 million. No need to talk to me. I'd be happy if you want to hire 1,000 more people. It is really your call. Now with upright force growing and evil trends declining, the problem is solved. From the perspective of management, problems are inevitable as long as there are people and organizations. These problems are not necessarily bad. When the water is too clear, there will be no fish in the pond. We are in such a social environment, and I get to understand many things through my experience of handling those incidents. It all boils down to whether you are willing to challenge, whether you are willing to take responsibility, and whether you are willing to sacrifice yourself for the future. I have never felt ashamed of myself; I show my wounds to people, not to you but to my employees, and I hope they will remember what I have done in the history of Alibaba. Perhaps my employees will ask our CEO in the future: Jack Ma did this, so why can’t you? As I said this year, if George Washington, the first president of the United States could retire, so can I.

Q Weiying Zhang: By retire do you mean your

reassignment as the group’s chairman on May 10?

Jack Ma: Yes. I will have three missions. The first is regarding Alibaba’s current influence. Today, Alibaba has exceeded everybody’s expectation. It has influenced people’s consumption styles, production and manufacturing styles, and also lifestyles. Its impact on retail and the entire future of mechanisms and ecosystems will keep increasing. If I were just

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Executive Perspectives 企业家视野专栏 a CEO, I would operate the company following the corporate logic. But

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a CEO, I would operate the company following the corporate logic. But as the chairman I must look at the company from a higher level, as I must ensure that the company keeps abreast with society’s progress. Economists like Zhang Weiying do not have the tools to change the world, so you can only influence the world through speeches and writings, while I have the real means and tools, but I am not able to speak out like you.

Q Xiao-Ping Chen: You change the world with

your actions.

Jack Ma: That’s true. Some people say that Jack Ma does not want to be responsible. The truth is, I have many responsibilities on my shoulders, but I must keep quiet. My beliefs tell me to map out my strategies from a national and global standpoint. My second mission is to build a talent training base, and to build our culture. The third is charity work. What is charity work to Alibaba? It's waking up the kindness. If you have kindness, your products will be good, and your kindness will affect others. Alibaba does charity work; our existence contributes to the employment of 10 million Chinese people and the survival of over 10 million small businesses. How we do things will affect what a countless number of households purchase; therefore products and services must come from kindness. I told my colleagues to do the right thing and don’t make me to have to come back! I have my own life. The more enjoyable my life is, the happier you are, and the more peaceful my heart will feel. If I am irritated, you will be even more so. A company’s first founder generation should have a good life so that employees won’t complain in the future. Those understandings are related to human nature, Buddhism, Taoism, and Confucianism, which I hope will all be practiced.

Q Xiao-Ping Chen: In all these years running

the business, have you ever encountered conflicts

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between personal relationship and business rationality? Looking back, how do you think the conflicts between relationship, loyalty, and rationality should be handled?

Jack Ma: This is a rather complicated question. Without feelings we are just machines, and it is natural that people will get close to one another eventually. But if we focus too much on human relationships, we cannot form an organization, or a company that can scale and impact the society; instead, we can only impact ourselves. In general we are doing fine in this respect, including the departure of some founding partners, including my wife. She was the no. 2 employee of Alibaba. But we had no choice. But leaving does not necessarily mean the relationship is ruined. My wife can be mad at me, but I am not angry with her, as I know that she does not work for me today but works for the mission we committed to years ago. As a CEO, I try to stick to the commitment. I told everybody that they can hate me, but that will not make me give up my commitment.

Q Xiao-Ping Chen: Do you think they hate you?

Jack Ma: No, it is not possible, they may just feel sad and lost. In the process of change, some people may be unable to adapt. Unlike other companies, I would not reassign them to run another department or another company just to make them feel better.

Q Xiao-Ping Chen: So you don’t do that.

Jack Ma: Right. If you do that, you are just covering the existing problem with another one, and then you will have more and more problems. I have learned many hard lessons, in 2003, for example. So I won’t allow this to happen now. I feel that is my responsibility. You can hate me, but don’t hate this company. The reason that I choose to retire

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Executive Perspectives 企业家视野专栏 at the age of 48 is that I want to phase out

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at the age of 48 is that I want to phase out myself before someone else phases me out. This is how I understand myself.

Q Xiao-Ping Chen: Lastly, would you like to share

your best experiences in starting and managing the

business?

Jack Ma: My experience in starting a business is to start with things that make you happy, and also start with the easiest rather than the most difficult things. My management philosophy is “use people with doubt and use those who you doubt” rather than “trust who you choose and do not pick who you doubt.” From a management perspective, I believe in letting people judge instead of asking them to do things.

Q Xiao-Ping Chen: What do you mean by letting

people judge?

Jack Ma: I mean making judgments. Starting up a business is to entrust people who excel, for example, you would ask Zhang Weiying to do things because you think the his ideas are great; whereas entrusting people with the power to make decisions means you would let Zhang Weiying to make decisions because you believe he is more capable than yourself. These are two totally different mindsets. To trust who you choose and not pick who you doubt is very basic, however, using people with doubt focuses more on a person’s capability than his/her integrity. In Chinese, the word trust consists of two parts – trust and entrust; I believe in Zhang Weiying, but I will not ask him to take the president position of a multi-national company. Therefore, I’ve always believed that we should use people with doubt and use those who you doubt. Let different types of people give it a try. This may work. It turns out many talents are discovered by those who doubt. Management is a long-term process, entrusting

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August 2013 www.IACMR.org

people who excel and entrusting people with the power to make decisions are two different levels. We have people who are in their 70s but still like to make judgments and decisions by themselves. It makes them feel accomplished, but at the same time, they have deprived others of something they want to do. You have the power and do others have to kill you to get the chance to make decisions? You can have your own life only if you entrust people with the rights to make decisions, life is important, so is happiness. I think as Chinese enterprises improve, more people will focus on charity work. Bill Gates called me the other day and asked me to pledge donations.

Q Xiao-Ping Chen: Really? Tell us about your

thoughts on this topic.

The Significance and Means of Charity

Jack Ma: Well, Gates came to Beijing for his all-out donation campaign. I went there and met with them. I asked Warren Buffett about his age. He said he was in his 80s. And I asked him why he didn't donate in his 40s. I told him that I would donate as well if I were in my 80s.

Q Xiao-Ping Chen: But Gates donated at an early

age.

Jack Ma: Yes, but the issues in China are much more complicated. You can’t see the real China in Beijing, Shanghai and Guangzhou, you should go to Qinghai. I absolutely agree that today's business leaders should assume social responsibility, and many of them have done that. Meanwhile it is really important for us to think about this issue. We have not developed a clear understanding about what money is and how to manage donations. Gates has his foundation to manage donations; but which foundation can we donate to in China?

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Executive Perspectives 企业家视野专栏 Q Xiao-Ping Chen: That makes sense to me. Jack Ma: In addition,

Executive Perspectives

企业家视野专栏

Q Xiao-Ping Chen: That makes sense to me.

Jack Ma: In addition, I told them that they should go to London and Japan to talk to the rich people to donate. Why did they come to China only?

Q Xiao-Ping Chen: But the Russians donated.

Jack Ma: Gates called me again a couple of days ago. He said if I do this, it will send a strong message to China. I believe what we really need is to build up a charity system. The amount of donation won’t matter as long as we have a sound charity mechanism. I don't think merely donating can actually solve the problems, and currently the most urgent problem is to awaken people's social consciousness. I’m doing charity in China in my own way. So I told Gates that we could cooperate in the future. Even if we can't, it's still OK with me, for I will use my way to do good things for the Chinese society.

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Q Weiying Zhang: A recent survey in the U.S.

found that people who believed in the market donate

more money and do more volunteer work than those who believed in the government. One explanation is that those who trust the free market and free enterprise feel more obligated to help others. Publicizing your good deeds is not being a real philanthropist, and worrying about revealing your bad deeds is true evil. We do good deeds to make others happy. Nowadays, in China, many are forced to donate rather than it being a voluntary act.

Jack Ma: I do things to make others happy, but I won't brag around about it. China’s prosperity could not be achieved without the hard work of countless entrepreneurs, and that's our biggest contribution to the Chinese society.

Q Xiao-Ping Chen: We can only choose our way to

contribute to the society. Jack, thank you for sharing

your stories and wisdom, this is certainly another way to contribute to our society.

We thank Eve Yan for her translation of the original interview in Chinese.

Footnotes:

1 David Wei (Wei Zhe) was the CEO of Alibaba.com from 2006-2011.

2 Dr. Morris Chang (Zhang Zhongmo) is the founding Chairman of Taiwan Semiconductor Manufacturing

Company (TSMC) Ltd. in 1987. TSMC pioneered the "dedicated silicon foundry" industry and is the largest silicon foundry in the world. Morris is known as the father of Taiwan's chip industry.

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