Tech

Ali’s biggest change! Set up six major business groups, all of which can be independently listed

On March 28, Zhang Yong, chairman and CEO of Alibaba Group, issued a letter to all employees “Only by self-reform can we create the future”, launching a new round of corporate governance reform.

According to the plan, under the Alibaba Group, six business groups and multiple business companies will be established, including Alibaba Cloud Intelligence, Taobao Tmall Business, Local Life, International Digital Commerce, Cainiao, and Dawenyu. Business groups and business companies will set up boards of directors respectively, and implement the CEO responsibility system under the leadership of the boards of directors of each business group and business company, while Alibaba Group will fully implement holding company management.

In the letter, Zhang Yong hopes that every Alibaba employee will return to the state of being an entrepreneur before starting, “If you don’t embrace change, you will become rigid, and if you don’t change yourself, you will be defeated by the times.”

According to the letter from all members, while Zhang Yong is the chairman and CEO of Alibaba Group, he also serves as the CEO of Alibaba Cloud Intelligence Group; Dai Shan is the CEO of Taobao Tmall Business Group; Yu Yongfu is the CEO of Local Life Group; Jiang Fan is the CEO of International Digital Business Group ; Wan Lin continues to serve as CEO of Cainiao Group; Fan Luyuan serves as CEO of Dawen Entertainment Group. Other companies will also operate and manage independently.

This organizational governance reform was initiated by Zhang Yong and has been unanimously approved by the group partners and the board of directors. This round of reform started from the top level of the group, redefining and constructing the governance relationship between Alibaba Group and various businesses, which is considered to be “the most important organizational change in Alibaba in 24 years.”

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In the letter to all employees, Zhang Yong stated that “to solve the development of productive forces and create differences, we must first start with the transformation of production relations.” This is also the starting point of Alibaba’s organizational transformation. In 2015, Ali promoted the “China-Taiwan Strategy”, which once became the benchmark for corporate governance in the Internet technology industry; in 2020, Zhang Yong promoted the reform of the management responsibility system, and achieved Alibaba’s diversified governance by separating four major sectors, and established a number of independent companies. Loop Company.

From the perspective of Alibaba’s development history, the in-depth adjustment of the organization is constantly stimulating major technological and business innovations. For example, in 2011, one Taobao became “three Taobao”, and Tmall grew out.

One of the key actions of this change is that each business group establishes a board of directors and implements the CEO responsibility system under the leadership of the board of directors, while Alibaba Group fully realizes the management of the holding company. For each business, the independence of the governance structure means facing the baptism of the market, which corresponds to the possibility of innovation incentives. In the open letter, Zhang Yong said, “The market is the best touchstone. In the future, qualified business groups and companies will have the possibility of independent financing and listing.”

At present, Alibaba’s Alibaba Cloud, Cainiao and other businesses are already leading companies in the market, and there are constant rumors of financing listings for businesses such as Hema and Pingtouge. For the six major business groups and business companies, fully independent operation is conducive to the market’s better weighing of value, “making employees truly fight for their own business.”

In the past two years, Zhang Yong has repeatedly emphasized internally and externally that agile organizations are the path to achieve efficient governance of super-large enterprises with multiple businesses and formats. The formation of the “1+6+N” organizational structure this time is the natural result of the further deepening of the agile organizational concept, which means that Ali is entering a new stage of organizational governance.

At the same time, the functional departments of Ali Group will also usher in orderly changes. According to the letter from all employees, the middle and back offices of the group will be made light and thin in an all-round way, which means that the “big, middle and middle office” capabilities established by Alibaba since 2015 will gradually be absorbed by a stronger front office, serving more customers in a more agile way. Diverse development needs.

Attached is a letter from all staff:

Only by self-reform can we create the future——Decision on organizational governance reform of Alibaba Group

Dear Ali people:

As we enter the new fiscal year, first of all, I would like to thank you for your consistent efforts and contributions in the face of many new challenges in the past year.

Self-reform is always the best choice to maintain original aspirations and create the future. Since its establishment in 1999, Alibaba has continued to evolve and iterate through innovation and change, and has always used the advanced nature of production relations to drive the release of advanced productivity, create value, and lead development. Today, we will also usher in the most important organizational change in the 24 years since Alibaba was founded.

Today’s Alibaba has grown into a super-large organization with multiple businesses and formats. These businesses have different characteristics, face different market environments, different customers, and different development stages. At the beginning of the new fiscal year, we fully responded to the country’s call for “fighting the economy”, and took active actions with the goal of assisting small and medium-sized enterprises in comprehensive digital upgrading and building a modern commercial digital infrastructure. To promote the development of productivity and create differences, we must first start with the transformation of production relations, and the transformation must start from the top of the group.

Eight years ago, in 2015, the Group comprehensively proposed the China-Taiwan strategy, forming a One Company under the governance model of “large, medium-sized and small front desks”. Beginning in 2020, the group has actively advocated the creation of an agile organization and implemented a management responsibility system under a diversified governance structure. At present, a number of independently operated loop companies have been established.

Today, on this basis, we will further deepen the reform and move towards a new stage of organizational governance – building a “1+6+N” organizational structure, that is, under the Alibaba Group, we will set up Alibaba Cloud Intelligence, Taobao Tmall Business, Six major business groups and multiple business companies, including local life, international digital business, Cainiao, and Dawen Entertainment, have respectively established boards of directors for each business group and business company, and implemented a CEO responsibility system under the leadership of the board of directors of each business group and business company. Responsible for the results of their respective operations. The specific plan is as follows:

Established Cloud Intelligence Group, with me concurrently serving as CEO;

Established Taobao Tmall Business Group, with Dai Shan (Su Quan) as CEO;

Established a local life group, Yu Yongfu served as CEO;

Established an international digital business group with Jiang Fan as CEO;

Cainiao Group continues to have Wan Lin as CEO;

Established a large entertainment group, with Fan Luyuan (Mu Huali) as CEO.

In addition, other qualified business organizations will set up multiple business companies and implement corporate management in an all-round way.

Making the organization more agile, making the decision-making link shorter, and making the response faster are the original intention and fundamental purpose of this reform.

After this adjustment, in addition to meeting the compliance requirements of listed companies, Alibaba Group’s middle and back office functional departments will be fully lightened and thinned, and the group will fully implement holding company management. The mid- and back-office capabilities we have accumulated over the years will enter relevant business groups and companies in an orderly manner, and continue to play an important role in the development of the front-end business. The shared middle and back office services necessary for multiple business groups and companies will be provided through the model of professional service companies.

I would also like to thank the group’s middle and back office teams for their hard work over the past eight years. It is because of your valuable precipitation that there is a solid foundation for the implementation of this reform.

Facing the future, every business group and company must actively face the rapid changes in the market and technology, form their own development strategies, make quick decisions, work hard, innovate bravely, and face the test of the market.

Every Alibaba employee, no matter which business group or business company you are in, must let himself return to the state of an entrepreneur before starting, accept the baptism of the market with his own passion and strength, and create his own tomorrow. We believe that the market is the best touchstone. In the future, qualified business groups and companies will have the possibility of independent financing and listing.

The market will never stop changing, and a new generation of technological waves will continue to emerge. If you do not embrace change, you will become rigid, and if you do not change yourself, you will be defeated by the times. When the water hits three thousand miles, the 24-year-old Ali is ushering in a new opportunity for development. We have the courage and sense of mission to change, as well as the ability and confidence to change. To become a good company with a 102-year life, and insist on making it easy for the world to do business, it must always be self-driven, must have the courage to change itself, and must persist in walking on the road of self-change.

The future belongs to those who are firmer, more agile, and more embracing the future!

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