Why business students like the Alibaba case and Jack Ma

March 23, 2013

Jack Ma wikipediaWhen Asian business students are asked to write about leadership, one of their favourite topics is the Chinese telecommunications giant Alibaba, and its dynamic leader Jack Ma

This is hardly surprising. The company has grown through the vision and enterprise of its founder. Already a host of corporate stories are developing around him and his giant baby, recently valued at 35 billion dollars.

The Jack Ma story

Jack Ma fits the profile of the creative entrepreneur. His decisions are imaginative. He describes his leadership journey in vivid anecdotes which suggests that he has a well-developed transformational style. An English teacher and graduate of Hangzhou, Mr Ma became a skilled web site builder, one of the first in China.

When he was thinking about going international he looked for a corporate name that worked in Chinese but which also had global connotations. Once when in America, someone mentioned the story of Ali-Baba to him, and he thought he had found what he was looking for. He tested his idea quickly and locally, as found there was surprising recognition of the story from the Arabian Knights, and the magic password Open Sesame which opened up a cave full of treasures.. Yes, my company could be remembered for opening up a place full of treasures, he thought. Ali-Baba had brought prosperity to his village.

He listed the new name slightly differently, noticing that it was also effective when written in Chinese characters.

A sprawling conglomerate

Alibaba, founded in 1999, was to grow into the largest private corporation in China. It was described by Bloomberg Business Week as a sprawling conglomerate of web-based companies. The largest elements are Taobao and the Alibaba group. The former is a Chinese version of E-Bay and was to become market leader in e-commerce in China

Its Business relationship with Yahoo has been controversial. Alibaba grew and prospered under its founder-leader, Yahoo struggled to compete in its more global business.

Time to quit says Jack Ma

Recently, the founder has decided to hand over the leadership to a senior executive Jonathan Lu in advance of an anticipated initial public share offering which is being predicted to match that of Facebook [or more, as Facebook's shares have dipped this year]. The South China Post stated:

The announcement came a few days after Alibaba, which Ma founded in 1999, announced a sweeping restructuring that will divide the group into 25 business units under the direction of two committees, one for strategy and the other for operations. In an e-mail sent to Alibaba’s more than 24,000 employees worldwide on January 15, Ma said he decided to relinquish his position as chief executive because the company had people who “are better equipped to manage and lead an internet ecosystem like ours”.

Ma described how he realised years ago that he was not suited to be a traditional chief executive of a big firm. He said that “at 48 I am no longer ‘young’ for the internet business”. What he aims to be is “a good partner to more capable colleagues”, which he intends to accomplish by continuing his role as executive chairman.

Ma described the restructuring as “the most difficult reorganisation” in Alibaba’s history. But it is a bet to stay competitive in the mainland’s fast-growing e-commerce market. JP Morgan has estimated this market to be worth US$436 billion in 2015. The move fuelled speculation that Ma was laying the groundwork for Alibaba’s initial public offering, which the company has denied.

What happens next?

Predictions are generally favourable. I agree with The Economist [March 23rd 2013] which noted that while the future is promising “…there is nothing inevitable about Alibaba’s future fortunes”. I urge students of leadership to do a little ‘map testing’ before accepting that newspaper’s casual SWOT analysis: [1] that Alibaba could overreach itself; that [2] it would face the risk that ‘foreign governments will clamp down’ and [3] face an internal threat because ” The Communist Party is bound to be jealous of an outfit that has so much data on Chinese citizens.”

I’m afraid that piece of analysis would have not obtained a particular high grade, if it had been supplied in a student assignment on Alibaba’s prospects.


The Shareholder Spring. Nice idea but will it turn into glorious summer?

May 23, 2012

Successful attempts by shareholders to restrict executive bonuses have been hailed as the outbreak of a Shareholder Spring. But, like the Arab Spring, summer may be a long way away

According to City A.M., the media group UBM has been the latest organization to experience a Shareholder Spring.

More than 47 per cent of investors failed to back the directors’ remuneration report, a result that would have been considered extraordinary before a recent spate of shareholder rebellions against pay levels at underperforming firms.

Protests focused on the substantial share option given to UBM’s finance director Robert Gray and a change in rules that meant performance-related bonuses would no longer take retail price inflation into account – possibly making it easier for executives to hit targets.

A spokesman for the firm said: “The Board has a continuing commitment to a process of active engagement with Shareholders and takes careful note of the lower percentage majority in favour of the Remuneration report. UBM’s executive remuneration policy is designed to reward and incentivise its senior management appropriately for an increasingly successful, growing and global company.”

Shareholder anger

Also in the UK, Aviva, Pendragon and Trinity Mirror have been corporations which have all faced the displeasure of shareholders.

Erika Morphy, writing for Forbes on leadership and its financial dilemmas, explores the Shareholder Spring through events at Yahoo

She suggests that shareholder pressures have been influenced through financial reforms in the United States such as the Dodd Franks legislation.

The so-called Shareholder Spring explains events at AOL, at Citigroup, which recently got its outstretched hand smacked by shareholders over a $15 million pay package for its CEO, Vikram Pandit, and at Credit Suisse and Barclays, which also received rejection by shareholders on compensation.
“Most famously, the Shareholder Spring has claimed Yahoo’s CEO Thompson’s head, if reports are true” she notes.

While recognising some victories for shareholders, Morphy concludes that “For the most part, companies are still firmly in control of their shareholders. Thompson is an exception, undone by a tin ear and flat-out stupidity in the way he marketed his credentials”

Leaders We Deserve has followed events at Yahoo since the controversial sacking of Carole Bartz a year ago [April 2011] which led to a temporary surge in its share price. Ms Bartz had taken over from Yahoo co-founder Jerry Yan in 2009.

Government plans do not convince

In the UK, the so-called events of Shareholder Spring seems more potent than those in the United States. The greater activity and pressure from large shareholders may demonstrate lack of conviction that government intervention through Vince Cable will be enough to address investor concerns. These reforms were mentioned in the forthcoming government plans last week.

The darling buds of May

The Arab Spring of 2011 is turning out to be not so much a tipping point, as a complex series of unresolved tensions throughout the Middle East. The Shareholder Spring may in that respect share some of its complexities.


Acknowledgement

Now is the Winter of our Discontent Button by ObsessionDesign, zazzle,co.uk.


Carol Bartz is fired as CEO of Yahoo

September 7, 2011

Carol Bartz

Carol Bartz

Carole Bartz was fired by a phone call as CEO of Yahoo. What does this tell us about the corporate culture?

Correction

The intitally published version of this post suggested Carol Bartz was ‘fired by an email’. That turned out to be false and I apologise for the error. She was fired in an unexpected telephone call. The core of the original post was that dismissal by email would have been outrageous. I’m not convinced about her ‘dismissal by mobile’, although there could well be mitigating circumstances for that. There remains an interesting story of how Ms Bartz has been treated since her appointment as one of the most successful female executives in Coprorate America.

Carole replaces Jerry

Ms Bartz took over at Yahoo in 2009 from one it its co-founders Jerry Yan. She made organizational changes, cut costs and attempted to move out of search-oriented business.

According to the BBC Ms Bartz emailed her own staff yesterday [Sept 6th 2011] to say

“I am very sad to tell you that I’ve just been fired over the phone by Yahoo’s chairman of the board”

Larry Magid, a technology analyst said the company has not seen enough of a turn-around under Ms Bartz’s leadership. “She hasn’t done anything to change the company’s fortunes, and they are still anxious to find a leader who can move them up,” he said. Critics also claim that Yahoo has failed to make significant strides in two of the most lucrative segments of the market; search and social networking.

Tim Morse, the company’s chief financial officer will serve as and interim chief executive while the board of directors select a new CEO. Shares of Yahoo jumped at after hours trading on the news [6th Sept 2011].

Bartz and the Glass Ceiling

In an earlier Leaders we deserve post we looked at the impressive track record of Bartz. The press comments on her appointment suggested that the Glass Ceiling was still alive and well for female executives in Corporate America. It also hinted at ageism (Bartz was in her 60s on appointment).

Dismissals we deserve

It can be argued that Carole Bartz ‘deserved’ to be fired for failing to meet the expectations of the marketplace. However, the manner of her firing may tell something about the culture of Yahoo, and attitudes to women and ageism in global corporations and financial institutions.


Does Carol Bartz disprove or confirm the glass ceiling theory?

February 19, 2009
Carol Bartz

Carol Bartz

The appointment of Carol Bartz replacing Larry Page as head of Yahoo has provided leadership headlines. Do the stories confirm the view that despite her success, prejudices against female executives still remain widely intact?

An article by the Economist on the appointment of Carol Bartz [January 17th 2009] prompted one irate reader to object of the double standards applied to male and female executives. The Economist painted a picture of someone driven by insecurities of early maternal bereavement who developed excessive discipline and who rejected notions of work life balance. For good measure the article added that at 60, she was “strikingly old” to lead an internet company.

A sympathetic and informative piece in Forbes by Carol Hymowitz

outlined evidence of her leadership capabilities at her previous role at Autodesk and makes the point that Bartz is one of

.. still just 23 woman at the helm of the nation’s 1,000 largest companies. Besides Bartz, only Paula Roseput Reynolds has been at the helm of two public companies–AGL and Safeco.

Hymowitz contrasts this with the frequency with which ousted male CEOs are hired into other big leadership roles. Her story continued:

[Bartz] was CEO at Autodesk for 14 years, much longer than most chief executives, whose median tenure is just five years, [where she] quickly imposed a more traditional management structure, with schedules for product launches and regular performance reviews. While doing this, she also coped with breast cancer, which she was diagnosed with just days after joining Autodesk Afraid to tell anyone that she had a “female disease,” she took off just a month from work after having a radical mastectomy, instead of the prescribed six to eight weeks.

During the dot-com boom of the late 1990s when Autodesk, many of her employees were suddenly being wooed to dot-com start-ups with the promise that they’d become millionaires. She convinced her best talent to stay put but also realized the Internet was radically altering business–and Autodesk had to adapt and learn to use the network to design, manufacture and market products differently.
As a business leader, Bartz also is known as someone who doesn’t hold grudges and is willing to change her mind. At one point, she fired Carl Bass, the company’s technical wizard at the time, over strategic disagreements. She quickly realized this was a mistake, hired him back a few months later and eventually named him her successor.
Bartz admitted she wasn’t ready to retire when she handed over the CEO spot to Bass in May 2006. “I cried my eyes out,” she said in an interview then. But she also knew Bass was getting offers elsewhere and she concluded that stepping aside was the right thing to do instead of spending years grooming another successor. “It’s very good to leave a job when you still love it,” she said at the time.

What do you think?

I know that female leaders in the business world have not been given the same sort of publicity as their male counterparts. I scan the papers regularly to add examples to my meagre collection. Carol Hymowitz argues that the glass ceiling is still pretty much intact. That is to say, the lack of case examples reflects a deficit of women in top executive roles. It’s an old argument. Is Hymowitz right that it is still salient? What do you think?


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