Lucy Peng: The Heart, Head and Hand of an Organization
What do the terms “strategy” and “corporate culture” mean?
I often ponder the question, “What is strategy?” and my answer is simple: strategy is customer value. Without customer value, there can be no strategy. But what exactly is customer value? Let’s take Grandma’s Home as an example — one of China’s largest restaurant conglomerates. Their customer value lies in providing delicious food and a comfortable experience for customers waiting in line.
To further explain this concept, I believe that customer value equals benefit multiplied by experience. This belief stems from my personal experiences working at Alibaba and Ant Financial over the past decade. Benefit refers to whether users feel they are getting what they paid for from our products or services.
Why do we prioritize user experience? Because even if you provide benefits that satisfy them, poor user experience can greatly diminish their overall satisfaction with your company. Therefore, while benefit remains core to creating customer value, enhancing user experience can double it — but bad experiences will significantly reduce its impact.
So where should companies start when developing their strategies? Regardless of size or industry (whether a startup or a large corporation like Alibaba), every company must begin with their “original heart” — the most important aspect of any successful strategy.
This brings us to the second dialect of strategy: culture and organization. Culture reflects how you behave as a company; it permeates everything from reception areas to washrooms and beyond. At Alibaba and Ant Financial campuses alike, visitors immediately sense our culture through videos played around campus or advertising positions placed near squatting pots in washrooms.
Our culture also shines through in how we communicate with partners/users, provide service/support, dress ourselves professionally yet comfortably…all these things contribute to defining our corporate identity.
In summary: Strategy = Customer Value; Culture = How You Behave
The implementation of strategy and culture.
What is the methodology behind linking strategy and organization maps? As an entrepreneur, it’s crucial to have a clear understanding of your business and industry. This map represents your strategic thinking, which is essential for success.
It’s important that you’re not the only one who understands this map. Your core leadership team and staff must also be on the same page regarding resource deployment. Otherwise, people will focus solely on their own tasks instead of working together towards a common goal.
Alibaba’s strategy map consists of e-commerce, logistics, and finance — all aligned with its mission statement: “To Make it Easy To Do Business Anywhere.” Over 17 years, Alibaba’s strategy has evolved based on continuous self-reflection and asking “why” questions.
As CEO, it’s vital to possess both business acumen and interpersonal skills when managing talent structure and culture. You should work closely with HR to create a clear communication plan about organizational thinking based on the strategy map. Failure to align with HR can result in misaligned priorities between departments.
When Savio (Savio Kwan, who used to work in GE China since 1986, and later joined Alibaba as COO) joined Alibaba in 2001, Alibaba was at the turning point from a grassroots team to a professional team. At that time, I was in charge of HR team. Savio, Jack Ma, and I spent a lot of time on how we should turn the strategy map to the organization map. We did a lot of training and discussions about every detail of “Alibaba Nine Sword Value System”.
It may sound incredible. At that time, we could hardly survive (in 2000, the Internet bubble burst and the whole industry fell into cold winter. Just after the Spring Festival of 2001, Savio Kwan and Joe Tsai flew to all over the world to shut down all offices outside Mainland China. Even most of offices in Mainland China were shut down as well, leaving only a few people in Hangzhou, Beijing and Shanghai offices. Meanwhile, the senior management team took the lead to reduce their wages by half and the advertisement budget were totally cut out.). But, do you know what were we discussing about internally at that moment? You may not believe that we discussed about our values — what was the meaning of “customer first”, “straight forward without hurting” etc.
We did a survey recently. In the past two years, all Alibaba partners, who have most limited time in the company, spent more than 20 working days in the past two years, and they would permanently get together 3–4 times per year, 2–3 days each time only to discuss the topics of Partner System: what is the value of partners? Why do partners exist? What should partners do? How to evaluate the responsibility and values created by a partner? As well as the future, vision and mission of the whole group. I think we have to invest our time in these things. There is no short cut.
Alibaba’s business strategy map has evolved into today’s organization map. What is the organization map? It is our mission, vision and result. The Heart power, Head power and Hand power in the middle of the triangle — The 3H powers are the key component of organization energy level. As an organization ability and organization strategy, each of the three parts is indispensable.
The Heart Power of an Organization
Heart power refers to what an individual truly believes in and is passionate about. In a business environment, the lowest hanging fruit can be attributed to head power (brain) and hand power (execution). Startups initially possess the capability of executing fast once they have a direction. However, as they progress into later stages, execution takes a toll on them, leading to questions regarding their purpose and why it requires so much effort.
During my conversation with a female entrepreneur who runs a rapidly developing platform, she expressed her frustration at having to deal with complex situations from investors, competitors and team members. She posed rhetorical questions such as “Why do I exist?” or “Where is my value?”. As an entrepreneur starting up your own business venture, you must believe in something that motivates you — whether it’s making money or achieving significant accomplishments. This belief may encourage you to move quickly at first but will not sustain you for long-term success.
Another type of belief involves liking one’s product or service and wanting to share it with others. Witnessing people enjoy these products/services brings immense happiness which serves as motivation for entrepreneurs.
The third type of belief revolves around helping others lead better lives; this was Alibaba’s core principle — making it easy for businesses everywhere. The company aimed at supporting SMEs during their most challenging financial times through Ant Financial services. Such beliefs are altruistic in nature.
These beliefs are related directly to how confident individuals are about creating value for their users; hence heart power plays an essential role.
Quite often, it is the small things that drain our emotional energy. It could be a tiny stone in your shoe that prevents you from walking far.
For instance, in today’s complex investment scene, many of my friends are facing challenges at different stages of their startup. As a team transitioning from grassroots to professional level, the original members may feel unappreciated while the new professionals see chaos within the company. How do you balance this? Where do you draw the line when disrupting traditional industries? What impact will it have on established organizations?
Consider shared economy business models; they are bound to encounter hiccups. Will you retract and question what went wrong or why stakeholders doubt your approach? Where do you find motivation when investors, customers and partners question your decisions?
These are real issues entrepreneurs face. Are you motivated by profit or creating an impact? Your lifestyle also plays a role — do you want to continuously create value for society?
On a practical level, these questions shape your business model; philosophically speaking, they reflect your values system. I believe belief (heart power) is crucial as it determines how we live our lives and who we become as individuals. Everyone has pondered this at some point — inspiring others requires heart power.
What does heart power look like? It’s warmth and intensity that others can feel through our actions — inspiring and exciting them along the way.
The Head Power of an Organization
Why is the role of a leader becoming increasingly important in organizations today?
Firstly, the current entrepreneurial environment is extremely challenging. When Alibaba was founded in 1999, we were all very young — including Jack Ma who was as young as many post-1980s entrepreneurs are today. Although it was difficult at that time, we were fortunate to have survived by a narrow margin. Today’s entrepreneurial environment is even more complex than it was then.
Secondly, there are abundant resources available today — particularly funds. If you have an idea, you can find opportunities to make it happen. However, finding an untapped market or “blue ocean” has become increasingly difficult.
Thirdly, over the past 18 years, the development of the internet has permeated every aspect of life in China and has had a profound impact on society and people’s mindsets. This influence extends to China’s entire economy and cannot be separated from its social system. Practitioners must meet higher requirements due to this complexity.
If you lack intelligence or your team lacks intelligence, dealing with such complexity becomes impossible. The most crucial step is returning to basics: asking yourself questions like “what value do I offer my customers?”, “who am I?”, “where did I come from?” and “where am I going?”. These philosophical questions should be asked constantly throughout each day so that your brain does not become exhausted.
In later discussions about different organizational modes and how leaders can integrate their team members’ abilities effectively.
The Hand Power of Organization
What is Hand Power? It refers to the level of execution that an individual can achieve. While someone may possess good Head and Heart power, their hands and feet may not be able to keep up with their thoughts. This can result in slow action or inability to act at all, leading to vague plans.
We often encounter such individuals who talk a lot and have appealing ideas but struggle with implementation. They fail to attract enough customers or achieve satisfactory performance in specific business indices.
The 3H organizational abilities determine different management systems and implementation frameworks. These abilities reflect hiring criteria, review systems, and organization methods. When teams face difficulties, how they respond is closely related to their 3H abilities — just like a knee-jerk reaction.
Curated by Alibaba Global Initiatives
Author: Lucy Peng, Co-founder of Alibaba Group, Former Chairman & CEO of Ant Group
