With 242 million people in China expected to shop online in 2013, spending an estimated US$265 billion, China’s e-commerce industry is a force no-one can afford to ignore. Jack Ma, the head of Alibaba Group, China’s largest e-commerce company, discusses how the sector has been generating grassroots economic opportunities and changing lives in China and beyond, and what the future of e-commerce will be like.
Jack Ma career advice: You don’t have to be Smart to be Successful
Alibaba and the Future of Business
Alibaba hit the headlines with the world’s biggest IPO in September 2014. Today, the company has a market cap among the global top 10, has surpassed Walmart in global sales, and has expanded into all the major markets in the world. Founder Jack Ma has become a household name.
From its inception, in 1999, Alibaba experienced great growth on its e-commerce platform. However, it still didn’t look like a world-beater in 2007 when the management team, which I had joined full-time the year before, met for a strategy off-site at a drab seaside hotel in Ningbo, Zhejiang province. Over the course of the meeting, our disjointed observations and ideas about e-commerce trends began to coalesce into a larger view of the future, and by the end, we had agreed on a vision.
What Is Smart Business?
Smart business emerges when all players involved in achieving a common business goal—retailing, for example, or ride-sharing—are coordinated in an online network and use machine-learning technology to efficiently leverage data in real-time. This tech-enabled model, in which most operational decisions are made by machines, allows companies to adapt dynamically and rapidly to changing market conditions and customer preferences, gaining a tremendous competitive advantage over traditional businesses.
Automate All Operating Decisions
To become a smart business, your firm must enable as many operating decisions as possible to be made by machines fueled by live data rather than by humans supported by their own data analysis. Transforming decision making in this way is a four-step process.
Step 1: “Datafy” every customer exchange.
Ant was fortunate to have access to plenty of data on potential borrowers to answer the questions inherent in its lending business. For many businesses, the data capture process will be more challenging. But live data is essential to creating the feedback loops that are the basis of machine learning.
Consider the bike rental business. Start-ups in China have leveraged mobile telephony, the internet of things (in the form of smart bike locks), and existing mobile payment and credit systems to satisfy the entire rental process.
Renting a bike traditionally involved going to a rental location, leaving a deposit, having someone give you a bike, using the bike, returning it, and then paying for the rental by cash or credit card. Several rival Chinese companies put all of this online by integrating various new technologies with existing ones.
Step 2: “Software” every activity.
In a smart business, all activities—not just knowledge management and customer relations—are configured using the software so that decisions affecting them can be automated. This does not mean that a firm needs to buy or build ERP software or its equivalent to managing its business—quite the opposite. Traditional software makes processes and decision flow more rigid and often becomes a straitjacket. In contrast, the dominant logic for smart business is reactivity in real-time.
The growth of Taobao, the domestic retailing website of Alibaba Group, is driven by continuous software of the retailing process. One of the first major software tools built on Taobao was an instant message tool called Wangwang, through which buyers and sellers can talk to each other easily. Using tool, the sellers greet buyers, introduce products, negotiate prices, and so on, just as people do in a traditional retail shop. Read more. Click here!
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