Jack Magic or the company culture behind the success of Alibaba

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Alibaba has no revolutionary product, no groundbreaking technology and took off with no business plan and no government support. In his almost-insider account, Alibaba: The House that Jack Ma Built Duncan Clark argues that the key to the company’s success was its culture, coined by Jack Ma.

There seem to be four aspects of Alibaba’s company culture that distinguish it from other Chinese companies that were founded at the same time but never became quite as successful : unforgiving work ethic, customer-first approach, unorthodox hiring and charismatic leadership. Clark provides a lot of evidence that these are not only declared values but the actual values the company continues to live by.

1. Seven days a week

Hard work appears to be appreciated at Alibaba more than outstanding skills. The mascot of Taobao, one of Alibaba’s ecommerce sites is a worker ant symbolizing that “even the smallest creatures can prevail over their enemies provided they work closely together.”

The cult of hard work is not merely symbolic though and expresses itself on a daily basis. The team selected to create the Taobao site has been asked the following : “The company has decided to send you to do a project, but you are required to leave your home and you must not tell your parents or your boyfriend or your girlfriend. Do you agree?” The team then started working in a small apartment and was encouraged to do handstands “to change perspectives” during breaks from coding.

Another quote similarly stresses the importance of hard work at Alibaba, especially at the very beginning : “working for Alibaba would be no picnic. the pay was low: the earliest hires earned barely $50 per month. they worked 7 days a week often 16 hours a day. Jack even required them to find a place to live no more than 10 minutes from the office so they wouldn’t waste precious time commuting.”

2. Customers first

Quite natural for the ecommerce companies in the West, putting customers first was a very bold move in China at the time when Alibaba was launched. Once again, it wasn’t only declared but was actually a value the company lived by as it, for instance, charged no fee on its sellers’ listings or transactions.
Caring customer service also allowed Alibaba to retain its users when facing competition from eBay or local players. “Alibaba customer service team found themselves at times working as a free tech support to clients answering questions such as how to reboot a computer. But wedded to its customer first tenet Alibaba resolved to respond to every email within 2 hours.”

3. Not the top talent

One of the important decisions made by Alibaba’s leadership when the company was founded was to keep its headquarters in Hangzhou at the time a somewhat provincial town two hours from Shanghai. By growing the company far from Beijing Alibaba lost access to the capital’s talent pool consisting of alumni of the country’s elite universities. This, however, wasn’t an issue for Ma. “When building up his team Jack preferred hiring people a notch or two below the top performers in their schools. The college elite, Jack explained, would easily get frustrated when they encountered the difficulties of the real world.”

Ma is also quoted as saying :” it is not necessary to study an MBA. Most MBA graduates are not useful. Unless they come back from their MBA studies and forget what they have learned. Then they will be useful.”

Alibaba’s Chief People Officer, Lucy Peng, shares a similar, non-standard approach : “Alibaba employees don’t need experience, they need a good health, a good heart and a good head.”

The advantages of hiring inexperienced graduates from Hangzhou over the arguably more qualified candidates from Beijing are obvious : less valuable candidates are more grateful for the opportunity they have been granted. They will work harder and remain more loyal to the company.

4. Jack Magic

Alibaba most likely wouldn’t have survived the competition from eBay, the SARS epidemic and the burst of the dotcom bubble without its charismatic leader, Jack Ma.

Ma’s unconventional personality is most visible during the company-wide events where he’d dress up, dance and sing but Alibaba’s employees are confronted with it on a daily basis. Employees are for instance asked to choose nicknames from Ma’s favourite novels. These nicknames are then so deeply embedded in their conscience that their colleagues forget what their actual names were. Their commitment to the company is such that early Taobao employees agreed to be the website’s first users selling all that they had at hand on the site. It’s also the Alipeople (aliren) who were the first users of Laiwang, the company’s failed attempt at launching a messaging app.
When a case of SARS was identified at Alibaba and its employees quarantined at their homes, they never stopped working, motivated by an email from their leader saying : “We care for each other and we support each other. We never forget the mission and navigation of Alibaba. Tragedy will pass but life will continue. Fighting with catastrophe cannot prevent us from fighting for the enterprise we love.”

Ma also bounds the employees together by finding them a common enemy to fight – be it eBay or another Western company – and defining highly ambitious goals – for instance, to create the world’s biggest ecommerce company (already achieved) or to surpass Amazon as a web services provider.

Although challenged on the domestic market, most importantly by Tencent, Alibaba remains by far the world’s biggest ecommerce company. Though its business model evolves, its culture remains intact. Its initial objective “to last for 104 years” seems attainable.

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