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Jack Ma – The Magician that Conjured Alibaba

It seemed appropriate that after profiling Jeff Bezos I should take a look at Jack Ma, the Chairman and founder of China’s answer to Amazon, Alibaba.

Jack Ma (real name Ma Yun) started Alibaba in 1999 as a means to harness the power of the internet to link Chinese exporters to local and international business customers – including in the West.

Jack Ma

A charismatic leader

It is harder to say which is bigger, Jack Ma’s bank balance (his personal worth is estimated at $29.5 billion1) or his personality. He is a natural entertainer and you can’t help but be enthralled by his rags to riches tale of growing up in communist China as the son of poor musical storytellers. In his many speaking engagements, Ma inspires his audiences with his never give up attitude and boasts of being refused entrance by Harvard 10 times and rejected for dozens of jobs. Watch “How to become a Billionaire”.

Globalisation and embracing the West

Ma’s intimate understanding of how to do business in his homeland has been a competitive advantage. But perhaps greater than his knowledge of China has been Jack’s curiosity about the West; starting when he was a teenager giving foreign visitors tours of his hometown Hangzhou in exchange for English lessons.

In my blog “How to build a future-ready workforce”  I discussed the importance of cross-cultural competency. Jack Ma’s fascination with western culture has seen him build and leverage relationships with powerful people across the world and turned Alibaba into a global player.

Innovation through improvement not invention

Ma attributes his success to identifying and seizing opportunities that arise out of problems. On his very first encounter with the Internet, Ma searched on ‘beer’. When he saw that no Chinese beers turned up in his search, his instincts kicked into gear and he decided that China needed an Internet company.2

Ma has also shown that innovation is possible without personal expertise and without creating something entirely new. With no coding or computing skills to speak of, Ma adapted existing online retail concepts specifically for China by engaging staff with the technical skills and know how to carry out his vision.3

The employees who became millionaires overnight

Like other billionaire success stories, Jack has his own set of wisdoms and mantras which are chronicled in books and videos like “Jack Ma’s 10- Rules for Success”. One of his rules for success is to focus on the culture of the company.

Alibaba’s values are enshrined in something employees call the Six Vein Spirit Sword – a shout out to Jack’s favourite martial arts fiction writer. Half of an employee’s annual performance appraisal depends on how well they embody Jack’s ‘kung fu’ values.4

Camaraderie is at the heart of teamwork at Alibaba. Every employee adopts a nickname, and it is not unusual for staff to take a break during an intensive work day to swim, do handstands or play video games. During Jack Ma’s years as CEO, tens of thousands of employees and their families would also attend Alifest, a stadium sized annual employee talent show where workers would sing, dance and perform skits. Even Ma could be seen at these events in crazy wigs and costumes singing Chinese pop songs.5

But it would seem Alibaba took the saying ‘work hard, play hard’ to extremes in the early startup days. It is suggested that the first employees earned barely $50 per month and worked seven days a week, often sixteen hours a day. Reportedly Ma required employees to be on call at all times and implemented a policy that new hires were to live no more than 10 or 15 minutes from the office.6

That said, the hard work paid off for many employees when the company shares they had been given as bonuses turned them into instant millionaires after Alibaba’s IPO in 2014.7 Today, Alibaba continues to tie new employee remuneration to stock in the company as a means of linking individual pay to company performance. (Read more about the relationship between talent management and company share price in my article).

Diversity and the empowerment of underrepresented groups

While Silicon Valley remains male dominated, Jack Ma is a vocal advocate for women calling them his company’s “secret sauce.” 8 Women make up 48% of Alibaba’s workforce, around 34% of Alibaba’s high-level managers, and a third of its founding partners.

Jack Ma also promotes the importance of empowering young people – particularly with technology. He recently established a $26 million scholarship programme with the University of Newcastle; a merit based scheme favouring indigenous and disadvantaged students and emphasising global and social awareness.9

Connecting people

At Cognology our purpose is to bring people together and help them achieve great things. We understand that by harnessing technology, we can help people collaborate at work more seamlessly, productively and successfully.

In many ways, Ma’s goals are similar. Jack Ma believes that technology and the internet has no limits and has devoted his adult life to connecting people and businesses across the world to make it easier to do business anywhere.

Works Cited

  1. “Jack Ma.” Forbes. Forbes Magazine. Web. 09 Apr. 2017.
  2. Stone, Charles Clark and Madeline. “The Incredible and Inspiring Life Story of Alibaba Founder Jack Ma, One of the Richest People in China.” Business Insider. Business Insider, 02 Mar. 2017. Web. 09 Apr. 2017.
  3. Zakkour, Michael. “How Jack Ma’s ‘Crazy’ Management Style Built a Technology Empire.” Entrepreneur. 29 Sept. 2014. Web. 09 Apr. 2017.
  4. “Magic Jack Ma and the Six Secrets behind the Success of Alibaba.” Financial Review. 21 June 2016. Web. 11 Apr. 2017.
  5. RPT-The Alibaba Culture: Kung Fu Commerce with a Dash of Theatre.” Reuters. Thomson Reuters, 08 June 2014. Web. 11 Apr. 2017.
  6. McFarland, Matt. “This CEO Banned His First Employees from Living More than 15 Minutes from Work.” The Washington Post. WP Company, 22 Apr. 2016. Web. 10 Apr. 2017.
  7. Daily, China. “Alibaba IPO Creates Thousands of New Millionaires in China – The Boston Globe.” BostonGlobe.com. 19 Sept. 2014. Web. 11 Apr. 2017.
  8. Kokalitcheva, K. (2015) “Female Executives are Alibaba’s ‘Secret Sauce’” Fortune. 20 May 2015 . Web 10 April 2017
  9. Low, Catie. “Alibaba’s Billionaire Founder Opens Australian Headquarters.” The Sydney Morning Herald. The Sydney Morning Herald, 03 Feb. 2017. Web. 09 Apr. 2017.
  10. “TIME Person of the Year 2014 Runner-Up: Jack Ma.” Time. Time. Web. 09 Apr. 2017.
  11. Barboza, David. “At Alibaba, the Founder Is Squarely in Charge.” The New York Times. The New York Times, 06 Sept. 2014. Web. 09 Apr. 2017.
  12. Image: https://upload.wikimedia.org/wikipedia/commons/3/38/Jack_Ma_2008.jpg

Warren Buffett – Not your average billionaire

This blog will be the first in a series of posts profiling some of today’s most successful business leaders. Each leader is recognised as a trailblazer in their own right; entrepreneurs and visionaries who have dared to challenge the status quo and write their own rules.

This series will explore their different leadership styles and approaches and look at how this has shaped their success.

I decided to kick off with a name you might recognise as being one of the wealthiest and most business savvy people on the planet.

Warren Buffett

Warren Buffett is the creator and CEO of Berkshire Hathaway, a holding company with interests in the likes of Apple, Costco and Coca Cola. [1]

Buffett has been a regular on the Forbes 400 Richest People in America list since 1982, and in 2008 was officially crowned the richest person in the world with a fortune of $62 billion.

Warren Buffett is the stuff of legends and has a cult-like following of investors that hang on his every word. But for me, it is not so much his financial prowess that I’m interested in, but rather how his distinctive leadership style has contributed to his celebrated status in the world of business.

Laissez Faire Management Style

Numerous books and articles written about Warren Buffett refer to his laissez-faire approach to management. A French term, laissez-faire loosely translates to “let them do” -basically let people do as they choose. This label seems fair given what I have come to learn about Buffett’s hands-off approach.

When Buffett buys a business, he leaves the managers alone to run the company the way they would have had he not bought them. Unlike other CEO’s, he doesn’t seek to exert control through traditional corporate plans or strategic meetings, and generally only communicates through his annual letter to the board. [2]

So how has Warren Buffett managed to successfully build an empire with assets worth $621 billion [3] whilst all the time remaining at arms length?

Adapting the Situation to Suit the Leader

Perhaps the secret lies in the corporate culture and operating environment he has carefully cultivated over the last four decades.

Engaging Top Talent
Warren Buffett has been quoted as telling his children “If you want to soar like an eagle in life, you can’t be flocking with the turkeys”. His personal philosophy is to surround yourself with good people whose behaviour is better than yours so that they inspire and challenge you. When hiring managers, Buffett looks for integrity, intelligence, and energy. [4]

Autonomy and Accountability
It stands to reason then that by choosing highly motivated and capable leadership, Buffett has been able to entrust his businesses to the stewardship of others. Handing over full autonomy is fundamental to the way Buffett operates. [2] (For more on the benefits and challenges of autonomy see A Sensible Discussion about Autonomy)

Meaningful Communication
Though Buffett’s communication with his people may be infrequent, his words have impact. He showers praise on the people who work for him in his annual letters but is also generous with advice. He breaks down complex financial concepts in a way that anybody can understand him.

Values-Driven Culture
In Part II of my blog Aligning People I discussed how a group united by values will achieve far more than one that’s driven by other agendas. Interestingly, Buffett only acquires well-led, profitable companies that share his values. He believes that a values-driven culture translates to strong business performance and credits a strong culture with the ability to attract and retain outstanding employees. [5]

If you want to soar like an eagle in life, you can’t be flocking with the turkeys

Authentic Leadership – Living the Values, Walking the Talk.

An ‘aha’ moment for me in my research into Warren Buffett was when I realised that the values he pursues in business he practises in all aspects of his life.

Thriftiness

Berkshire Hathaway only acquires firms with low debt and strict cost control. This reflects Buffett himself who is renowned for his frugal nature. He still lives in the same house he purchased in 1958 for $32,500 and drives himself to work everyday. [6]

Hard Work and Discipline

Lawrence A Cunningham in his book Berkshire Beyond Buffett wrote that,
“Buffett’s own success has been built through hard work, discipline, a no-nonsense acquisition strategy and unwavering adherence to core values”. [2]

Buffett demands the same level of discipline and commitment from his leaders. He asks only that they stay true to their core business and values. In other words, he expects them to keep doing what they know how to do and to do it well. No more, no less. [2]

Integrity and Humility

Cognology has found extensive evidence to suggest that integrity is a key attribute of exceptional leaders. Buffett is passionate about maintaining a reputation for doing the right thing and instructs his leaders to “zealously guard Berkshire’s reputation.” [7]

Buffett is admired for the humble manner in which he openly admits his failures and his willingness to share the lessons he has learnt. In turn he encourages his business leaders to “face up immediately to bad news” and not let problems fester. [7]

But Warren Buffett is not as warm and cuddly as he might seem. He has shown that he is also a man prepared to deal with any leader that has breached what he holds sacred. A Buffett biographer once noted that “when a leader violates corporate values or generates reputational damage, the axe falls swiftly.” [2]

Letting Go

At 87, Warren Buffett has no plans to retire. People will remember Buffett for his extraordinary ability to pick good investments. But in truth, a lot of his success has been due to his ability to identify talent and retain top performers for the long term.

His leadership style has been shaped by his own personality: his honesty, his integrity, his humility, and his other deeply ingrained values. He has succeeded in demonstrating that you don’t have to maintain tight control over your people to do well in business. Success can in fact come from letting go – so long as you have laid the right groundwork to begin with.

References

  1. CNBC, [Online]. Available: http://www.cnbc.com/berkshire-hathaway-portfolio/.
  2. L. A. Cunningham, Berkshire Beyond Buffett : The Enduring Value of Values, Columbia University Press, 2014.
  3. Market Watch, “marketwatch.com,” [Online]. Available: http://www.marketwatch.com/investing/stock/brk.a/financials. [Accessed 09 03 2017].
  4. Vintage Value Investing, [Online]. Available: http://vintagevalueinvesting.com/wp-content/uploads/2017/01/Warren-Buffett-University-of-Florida-Lecture-Vintage-Value-Investing.pdf.
  5. L. A. Cunningham, “The Philosophy of Warren E. Buffett,” The New York Times, 05 02 2015.
  6. A. Mohr, “www.investopedia.com,” 22 07 2016. [Online]. Available: http://www.investopedia.com/financial-edge/0412/the-everyday-lives-of-frugal-billionaires.aspx.
  7. W. Buffett, “berkshirehathaway.com,” 31 12 2014. [Online]. Available: http://www.berkshirehathaway.com/letters/2014ltr.pdf.