Ali has changed dramatically and is sick to large companies

E-commerce newspaper Pro

2024-05-27 09:34Published on the official account of Guangdong E-commerce News

Alibaba's annual report was released, and the letter to shareholders was reinvigorated

The three-year profit is close to halving, and the market value has fallen by 7% compared with the peak......

On the first anniversary of its self-transformation, Alibaba has handed in a less than satisfactory answer.

In fiscal year 2024, Alibaba's revenue reached 941.168 billion yuan, and adjusted EBITA profit increased 12% year-on-year to 165.028 billion yuan.

According to Wind statistics, in the past two or three years, Alibaba's net profit deducted from non-attributable to the parent company has continued to shrink, from 150.5 billion yuan in fiscal 2021 to 80 billion yuan in fiscal 2024, a decline of 46.9% in three years.

On the day of the release of the annual report, Ali Hong Kong stocks and U.S. stocks both fell.

As of the close of the U.S. stock market on the 23rd, Alibaba fell 2.3% to $80.80 per share, with a total market capitalization of $205.8 billion, down nearly 70% from the high of $619.5 billion on June 25, 2021.

Alibaba's U.S. stock price

Along with the annual report, Tsai Chongxin and Wu Yongming issued the first jointly signed letter to shareholders in their capacity as chairman and CEO of Alibaba Group.

"The past fiscal year, which ended March 31, 2024, was a watershed moment for Alibaba."

In the letter, Tsai Chongxin and Wu Yongming elaborated on "who Alibaba is" and strategic trade-offs in the new development stage, and shared Alibaba's development strategy and how to invest in the future.

Who is Ali? Two core businesses – e-commerce and cloud computing.

Alibaba's strategic direction? User-first, AI.

Alibaba's operating principles? Long-termism, extreme focus, clear purpose, and a sound team incentive mechanism.

Capital management? In fiscal 2024, Alibaba generated $21.6 billion in free cash flow, creating value for shareholders through cash returns and earnings growth.

Investing in the future? Alibaba will continue to invest in two areas: accelerating core business growth and staying ahead of the curve and innovation, including AI.

"Alibaba is always focused on the future." Tsai Chongxin and Wu Yongming wrote in the shareholder letter that in the past 25 years, Alibaba has experienced continuous growth, but also has some symptoms of "large company disease", and they also expressed their determination to actively combat the "big company disease" and maintain the entrepreneurial spirit:

"In the next 10 years, we will once again see ourselves as a start-up, staying true to our mission of 'making business easier to do in the world' and continuing to innovate with an entrepreneurial spirit. We will uphold long-termism, choose for today, and invest for tomorrow. ”

(Swipe up and down to view the content of the letter to shareholders) Source: Alibaba

After the issuance of the shareholder letter, #阿里宣布对大公司病开刀#冲上微博热搜.

Regarding how Ali solves the disease of large companies, it has aroused heated discussions among netizens. Some netizens expressed concern, "Isn't it just layoffs" and "Will the operation be fired" Some netizens also proposed to reduce internal friction and reporting, and retain more employees who work hard.

How to cure the disease of a large company?

First of all, we need to figure out, what is the "big company disease"?

Can't get a meeting? A variety of reporting options? Or is it pretending to be sophisticated industry slang? "Align granularity", "open up the underlying logic", "play a good combination punch", "reasonable optimization", ......

When a company grows and grows, it is often followed by bloated organizations, inefficient decision-making, lack of innovation, and brain drain......

This is not the first time Ali has mentioned the disease of large companies.

Last month, Jack Ma suddenly posted a post titled "To Reform and Innovation" on Alibaba's intranet. This is also the first time that Jack Ma has published a long article on Alibaba's intranet since his retirement five years ago.

In the article, Ma Yun said, "The core change this year is not to catch up with KPIs, but to recognize yourself and return to the track of customer value." We're going to go from being a slow decision-making organization back to efficiency, market, and simplicity and agility again. ”

Regarding the new management composed of Tsai Chongxin and Wu Yongming, Ma Yun believes that "the new management faces the problems and faces the future, believes in young people, fully empowers the young team, and makes decisive and clear trade-offs about what we want and what we don't want." ”

(Swipe up and down to view the content) Jack Ma's intranet post Source: Alibaba's intranet

In Jack Ma's view, Alibaba's decision-making problems caused by the illness of large companies are being reversed by the new management.

The focus of large company disease often lies in tissue design.

It is worth mentioning that in the middle of last year, Alibaba launched the largest human resource system reform in recent years, involving many core issues such as employee performance and hierarchical system.

One of the most important changes is the abolition of the P-series position hierarchy and the change to 14-28 levels.

Ali's WeChat notice broke the news Source: Weibo

The original P8 and above employees take the form of organizational appointment, and there is no longer a promotion or demotion, but the salary and bonus are determined according to the business scale and team size; The salaries and bonuses of employees in grades 14-28 will not only be linked to the level, but will be gradually separated from the level and bonus in the future.

You must know that Alibaba's professional title system has always been an important template for benchmarking in the Internet industry. As long as you say to the outside world, "My position corresponds to Ali's P number", people in the industry can judge a person's level based on this.

But inevitably, as the company grows, the system has too many layers and is slightly bloated. In this reform, Ali cut the rank of P8 and above, bulldozed the internal structure, and further improved the efficiency of the company's internal decision-making and execution. With the reduction of levels, the company is also more flexible in how to move employees.

In addition to the flattening of the organization, Alibaba is also further promoting the rejuvenation of management and injecting more fresh blood and innovation into the development of the enterprise.

In December last year, Wu Yongming concurrently served as the CEO of Taotian Group, and he also served as the CEO of Alibaba Group, Taotian Group and Cloud Intelligence Group. After serving as the CEO of Taotian Group, Wu Yongming successively promoted six young managers to take over the key business of Taotian Group and report directly to it.

The reform of the younger management team of Alibaba is extending to more business segments.

However, it is difficult to ignore that Alibaba's organizational restructuring has also been accompanied by layoffs. According to Alibaba's financial report, Ali has reduced the number of employees by 14,369 in the first quarter of this year, accounting for about 5% of Alibaba's total employees.

For such a large-scale layoff, Ali did not give a detailed explanation. It seems that this huge ship can only continue to sail by reducing its weight.

Pinduoduo is racing and overtaking, how can Ali win?

Recently, Pinduoduo released its financial report for the first quarter of this year, achieving a total revenue of 86.812 billion yuan, a year-on-year increase of 131%; Net profit attributable to ordinary shareholders of Pinduoduo was 27,997.8 million yuan, a year-on-year increase of 246%.

This is the fifth consecutive quarter that Pinduoduo's performance has exceeded market expectations.

As of the close of trading on May 23, Pinduoduo closed at $147.09, up 1.13%, with a total market value of $204.274 billion, surpassing Alibaba's $201.212 billion.

Source: Oriental Fortune Network

Some time ago, Ali Jingdong successively announced its results for the first quarter of this year. Among them, Alibaba's revenue in the first quarter was 221.874 billion yuan, a year-on-year increase of 7%, and the net profit attributable to ordinary shareholders was 3.27 billion yuan, a year-on-year decrease of 86%;

JD.com's revenue was 260 billion yuan, a year-on-year increase of 7.0%; net profit attributable to ordinary shareholders of the company was 7.1 billion yuan, a year-on-year increase of 13.9%.

So far, the first quarter performance of "cats and dogs" has all been put on the table, and the high and low are immediate. Pinduoduo's high growth rate in revenue and net profit in the first quarter completely "crushed" Ali and JD.com.

That inconspicuous "slash" has now really become a "big brother". Ali, who ate a mouthful of car exhaust again, how can he overtake?

Users and AI have been repeatedly mentioned by Ali's senior management since this year. Ma Yun, Cai Chongxin, and Wu Yongming mentioned their faces, and Ali must understand these two directions.

Users come first, and Alibaba is paying close attention to user experience. Recently, Ali programmers re-published Jack Ma's old posts 20 years ago, and beat the whole company for chicken blood.

Twenty years ago, Jack Ma said, "I firmly believe that the biggest beneficiary of a real, great, and outstanding e-commerce website should be users, and the biggest builder should also be users!! ”

20 years later, Ma Yun said, "Return to Taobao, return to users, return to the Internet" "The AI era has just arrived, everything has just begun, and we are at the right time!" ”

This year's 618, it can already be clearly felt that Ali is changing, Taobao is changing: Taobao web version upgrade, APP homepage revision, 88VIP unlimited return package freight......

Alibaba sees AI as the most powerful variable to transform and accelerate business growth. At present, Alibaba has launched a number of AI products such as Taobao Wenwen and Wanxiangtai Unbounded Edition, and has also invested in large-scale model startups such as the dark side of the moon and MiniMax.

According to the annual report, Alibaba invested a total of about US$800 million to purchase about 36% of the shares of the dark side of the month. The Dark Side of the Moon is currently a big potential stock in the AI industry.

Ali, who is hovering at the trough, is looking for a way out while self-examining. Some people say that knowing mistakes can be corrected; Some people say that there is no return.

Surgery on large companies is only the first step in scraping bones and detoxifying, and it may take a long time to really eradicate the lesions and completely cure them.

In the next decade, let's wait and see where the "start-up" Ali will go.

Author | Pandora

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