Daniel Zhang intranet interpretation of Alibaba's reform, "one when the conditions are ripe, one goes public"

On March 28, Alibaba Group Chairman and CEO Daniel Zhang issued a letter announcing the launch of the "1+6+N" organizational change. Under Alibaba Group, six major business groups and a number of business companies will be established, and qualified business groups and companies will have the possibility of independent financing and listing. After this organizational change, Alibaba Group will fully implement the management of the holding company.

Yicai learned that that night, in the video of Ali's intranet Q&A, Daniel Zhang said that "1" is Alibaba Group, as Alibaba's listed company entity will not change, but the group's operational focus will be separated from specific businesses. ...... When the child is older, he must go out and face the market independently. Alibaba Group is more like a big base, giving them good support. ”

"When the conditions are ripe, one goes public," Daniel Zhang said, hoping that Alibaba will grow several listed companies in the future, and continue to "have children" and grow more listed companies in a few years. "Going public is not only listing itself, but also a higher requirement to face the market independently. I hope everyone can fight for themselves and for the cause they are fighting for. ”

The following questions and answers are answered on the intranet according to the Daniel Zhang and the staff video editing and collation——

Q: In the employee letter, you said that this organizational change is the most important change in Alibaba's 24 years, how do you understand this sentence?

Daniel Zhang (Xiaoyaozi): Indeed, the magnitude of this change is unprecedented in Ali's 24-year development history, and it is the most drastic change in production relations.

Today's Alibaba, a number of businesses cover different fields, some are consumer business, some are entertainment, some are logistics, as well as Alibaba Cloud, Pingtou Ge, and toB related businesses, including the new company of Huanhua Lingyang, and so on.

Internally, we hope to make these companies truly market-oriented, truly release organizational vitality from the top-level production relationship, accelerate the organization, accelerate decision-making, and accelerate market response. Externally, in the face of market competition, the business can become more agile. At the same time, it also allows employees to change their mentality and really move towards fighting for their own business and fighting for their own field. I think this is one of the foundations of the most important change in our relations of production.

In 2015, we proposed the middle office strategy, which brought many advantages, and now many core capabilities are based on "big middle office, small front office". Today, such production relations need to be transformed. In order to make the organization run faster and better enter each main business, let each business form a closed-loop organization. The drastic changes in this production relationship and the magnitude of the challenges are unprecedented.

Q: Why did you choose to initiate this organizational change now?

Daniel Zhang (Xiaoyaozi): At the beginning of this year, I told you the word "enter", and the company should move forward. As I mentioned in my letter, the development and creation of productive forces cannot be separated from the relations of production. This change is the result of a series of changes in organizational governance over the years, especially after 2020.

In the past few years, we have done a lot of groundwork on business responsibility and loop governance. For example, after changing from the original headcount management to the total compensation management in the past two years, all managers think differently. For many companies that have looped, they have slowly become accustomed to this change. Because he has to take responsibility for himself and make his own choices, instead of saying "lack of resources, ask the group to want" and "lack this thing, listen to the group", the idea of relying on the needs will decline, and the initiative will rise.

We now set "1+6+N", "1" is a listed entity of Alibaba, and this will not change. 6 large business groups, from 0.5 layer to real 0 layer organization, take full responsibility for their own business. At the same time, the implementation of the CEO responsibility system under the leadership of the board of directors of each business group and business company, the core team must better think about how to face the market problems.

As we sit in Hangzhou today, it is hard to imagine how in Southeast Asia we should face the rapidly changing market environment and respond quickly to the actions of competitors. We are in different fields, and the cycle of each business is different. For example, Taobao has been 20 years old this year, and new businesses such as Quark, Lingyang, DingTalk, etc., are in different cycles. They are easy to find a benchmark in the market, and he should think about his business plan according to this logic, rather than saying that all the questions revolve around it being a member of the Alibaba Group family.

Today we have the confidence to take this historic step to make the organization simpler and more agile, starting from the beginning. When the child is older, he still has to go out and face the market independently, and we will support them well. Whether it is based on our past accumulation or from the objective needs of the market, we must take this step.

Q: What is the relationship between Alibaba Group and business groups and business companies in the future?

Daniel Zhang: Actually, each of our businesses is the object of Alibaba's investment, but it used to be raised in our own home, and now they are allowed to face the market independently, which is the same as we want to make external investments. So from this perspective, the focus of the group's operations will change.

In the future, the students of the group will reposition their work and functions from this perspective. This is a huge change. In the future, we will strengthen the brands of each business group, so that the team can have a sense of belonging to these brands, so that customers can connect with these brands, and Alibaba Group is more like a big base to do a good job.

Therefore, under this change, we emphasize that the relationship between Alibaba Group and various business groups and companies remains unchanged as follows:

First: Our mission - to make it easy to do business in the world, for the vast majority of businesses still established.

Second: vision. We still hope that every business that Ali goes out can live for 102 years and be a good company for 102 years. The two things of 102 years and good company should be the common pursuit of all of us. I think a good company represents a kind of social responsibility, and 102 years represents that we must continue to innovate to live for 3 centuries. These two are our bottom lines, and we hope to stick to them.

Of course, because the nature of different types of business is different, the team temperament is different, and the cultural characteristics will be obviously different. Today, the engineer culture of Alibaba Cloud in Yungu Park and the culture of our Youku and film industry classmates in Wangjing, Beijing, have different cultural temperament, and today we must face this reality, face this reality, and generously accept this reality and encourage diversity. So at the level of values, there will be more diversity.

A few years ago, I mentioned eight words: agile organization, simple culture. Through this change, we will really take a big step forward from the top four words, but the last four words will be changed from simple culture to multiculturalism, and we must accept multiculturalism.

Q: You mentioned in your employee letter that "qualified business groups retain the possibility of financing and listing". How should this sentence be understood? What kind of conditions are there?

Daniel Zhang (Xiaoyaozi): I think everyone will pay a lot of attention to this sentence. Today Alibaba as a whole listed company has diversified businesses. Looking at the world's large listed companies, some are larger than us; But the business is so diverse and spans so large, there are very few. From this point of view, diversified business, rather than put in a pot, a listing carrier to go out, it is better to meet the conditions accepted by the market, decisively let them face the capital market alone, mature one, listed one.

Listing is not only listing itself, but also a higher requirement to face the market independently. We hope to be able to come up with a number of listed companies, and a number of listed companies will be able to have children after a few years and separate more listed companies. In this way, our business can be considered prosperous and solve the problem of "who to fight for" for generations of employees. We want everyone to fight for themselves and for what they are fighting for.

Financing and listing is essentially a market test. From large institutions to small retail investors, willing to subscribe to your shares, it means that your business is done well and you are popular. That's a lot more powerful than playing 3.5, playing 3.75, scoring 3.25.

This also solves a fundamental problem: everyone does not come together to complete performance, but to do a business together. Whether a career is successful or not is not evaluated by performance, but by the market.

Customers first, employees second, shareholders third, this sentence is unchanged. If it can really create value for customers and employees, shareholders will like it, and the market will like it. The final market is the golden key, which is tested by the market.

Q: In the future, will the cooperation and synergy between businesses and businesses be different from today?

Daniel Zhang (Xiaoyaozi): That's a good question. I think that if the change this time is in one sentence, it is better to really use the market method to choose both sides instead of encouraging everyone to collaborate in various ways.

Of course, we will set some bottom lines in the middle, such as the compliance requirements of listed companies, financial reporting systems, financial standards, and listing compliance requirements, which must be met. On top of this, we hope to use business rules and commercial agreements to achieve cooperation. For example, Company A is using the services of Company B, and if Company B's services are good, he will continue to use them in the future.

Recently, we have been sorting out the collaborative relationship between various businesses. It is still emphasized that everyone can fix the cooperative relationship with each other in the form of a legal agreement. You can't change people, your mind changes. Why? There is a liability for breach of contract. Internally, we need to form such a serious relationship. Instead, when it is said that it is very good, as soon as there is a problem, something rimactic will occur, and then rely on the organization to coordinate. This is too inefficient, this has to change.