How Ecosystem Thinking Serves the Consumer
Sharon Gai, Director of Global Key Accounts at Alibaba Group with her talk How Ecosystem Thinking Serves the Consumer.
Companies are like breathing organisms. The balance brings about the best experience for an end-user. There are 3 main strategies to make ecosystem thinking work to a company’s advantage. Each small team is like a cell. Recently, a popularized management framework is called the amoeba framework, where each small team has its own P&L and are responsible for revenue and cost. The logic is if each small team is conscious about controlling costs and increasing revenues, then the whole company would be profitable.
Strategy 1: Follow a customer’s needs. It will naturally lead you to an ecosystem.
There is the classic trap of – “Build it and they will come”. Think instead in “Build where they want to go”. Just like how we have everything we need in nature, the food chain, habitats, all living things act in harmony and exist in symbiosis because each entity’s needs are satisfied by the environment he or she is in. Otherwise, the entity would cease to exist.
Tying to Alibaba: this is similar to how the company was started. The first ALi.com was to put factories on the map. Next, Taobao was to sell products to local consumers, next Alipay was set up to facilitate escrow. Each business unit was grown organically, following the needs of the customer, whether that was a merchant or consumer.
Eventually, each dept will work symbiotically with each other, each dept functions like its own small company serving its function in a larger company, just like the parts of a cell.
Strategy 2: Horse racing.
Sometimes different things can only be accomplished with select individuals. Putting two different people or BU’s on the same project might have different results. One might fail, the other might succeed, so “horse race” was invented to describe an internal business’ decision to put two players on a similar path and see which one wins. When you are locked into one team trying to achieve a goal, you are limited to the power and resources of that team. People, time, etc are all limited. But when you split this goal into two or more separate teams, suddenly you have two ideas on how to tackle one problem, two ways of operations. The best usually wins.
For eg. At Ali, we often have two different BU’s working on the same problem. For instance, we will have Lazada Indonesia as well as invest in a local eCommerce player. Both platforms are trying to accomplish the same goal, grow the number of online users in Indonesia, but the same goal is accomplished by two different teams.
Strategy 3: Darwinism and embrace change.
Just like how some species become extinct, or some biological functions become obsolete and naturally vanquish, a company’s departments and employees are similar. There is the classic saying of “the only constant is change”. There is another saying, “embrace change”. Change is not to be feared, no one can predict the future. The surrounding environment, the market, the industry you play in, your competitors are all self-prophesizing entities that you, the company cannot control. Know to see opportunity and act on it rapidly if there is one, but also know to accept the uncontrollable and inevitable. At Ali, we have a 361 system for controlling the flow of employees (30% get a good rating, 60% get an average rating, 10% gets a poor rating) those who have a poor rating for two consecutive quarters, will need to consider leaving the company or changing departments. This way, the company naturally retains the correct talent for the correct depts through natural selection, just like the principles of Darwinism.
Conclusion: Corporations are made of people. As structural and cold as they may be, because they are ultimately made of people, they become a living organism with their own direction, goals, inadequacies. They can leverage the 3 strategies as explained above: follow customer’s needs, horse race and embrace change to navigate the ever-evolving and ever-complicated market.
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