The Evergreen Strategy of Internet Technology Companies: Starting with Alibaba's Leadership Transition
The issue of succession in Chinese technology companies is just beginning to be explored.
About three years ago, in the autumn of 2020, I had a lively and intriguing discussion with two friends from the investment community in a café in the hutongs of Beijing's Xicheng District. We pondered over a question: Why do tech companies in Europe and the United States often manage to achieve a state of "independence from founders" or even "independence from any single individual," establishing well-structured corporate governance and management succession mechanisms, while Chinese tech companies frequently struggle in this regard?
Notably, over the past three decades, leaders who revitalized companies like IBM, such as CEO Lou Gerstner, came from outside the tech industry. Tim Cook, who succeeded Steve Jobs at Apple, had expertise in supply chain management, and Microsoft, under the leadership of Satya Nadella, an Indian-American CEO, has achieved significant success in areas like cloud computing.
A decade ago, investors were in panic, wondering, "What will happen to Apple without Steve Jobs?" And a bit later, they questioned, "What will happen to Microsoft without Bill Gates and Steve Ballmer?"
It has been proven that the successors of Steve Jobs and Steve Ballmer have performed admirably. In Silicon Valley, most tech giants have experienced corporate succession more than once, establishing effective management turnover mechanisms that do not rely on a single "genius CEO," thus avoiding succession challenges.
However, among Chinese internet technology companies, the establishment of sound corporate governance structures and orderly succession remains relatively rare. At that particular moment, among all major internet companies in China, only Alibaba had successfully completed a leadership transition. In September 2019, Zhang Yong (Xiaoyaozi) took over as the Chairman of Alibaba Group from Jack Ma, after serving as the Group's CEO for four years. Those familiar with the internet industry should acknowledge Zhang Yong's commendable performance during his tenure as the top executive, demonstrating diligence and achieving remarkable results. Cai Chongxin praised him as "outstanding."
Now, after serving as Alibaba Group's Chairman for four years and CEO for eight years, Zhang Yong has passed the baton to Cai Chongxin and Wu Yongming, as previously planned. Simultaneously, Zhang Yong has stepped down as Chairman and CEO of Alibaba Cloud. He will establish a forward-looking technology fund with $1 billion in group investment support, aiding Alibaba in creating a better ecosystem for future technological developments. My impression of this move is that it was both unexpected and reasonable.
Today, as the "1+6+N" organizational reform at Alibaba begins to show its effectiveness, completing the leadership transition holds significant significance not only for the company itself but also for the institutional development and succession of Chinese internet and technology enterprises.
Each generation has its own tasks, and each era has its unique characteristics. In the internet industry, where development is constantly evolving, the pace of "innovation and iteration" far exceeds that of traditional industries. During his tenure as Chairman and CEO of Alibaba Group, Zhang Yong consolidated the leading position of Taobao and Tmall in the retail e-commerce market while strategically positioning the company in emerging sectors such as new retail, new infrastructure, and new technology.
At the capital market level, Alibaba completed its secondary listing on the Hong Kong Stock Exchange and explored subsidiary spin-offs through the listings of Alibaba Pictures and Alibaba Health, laying the foundation for the subsequent "1+6+N" organizational reform.
At the end of 2022, Zhang Yong personally took charge of Alibaba Cloud and made contributions in the strategic exploration of "cloud computing + AI." Regardless of the perspective, Zhang Yong has fulfilled his historical mission for Alibaba Group, leaving a profound and long-lasting legacy of wealth.
The newly appointed leadership team at Alibaba Group faces a set of entirely new challenges. The global macroeconomic landscape is complex, the domestic internet industry is encountering a period of stagnation, and new technologies led by generative AI are sweeping across the world. Additionally, Alibaba Group is undergoing an unprecedented organizational reform. These challenges are unparalleled, and as the saying goes, "out with the old, in with the new."
Cai Chongxin, with his extensive international and capital market experience, along with Wu Yongming, who comes from a technical background and is well-versed in various business segments within the group, are the most suitable candidates to address these issues.