Smart Business: What Alibaba’s Success Reveals about the Future of Strategy
Harvard Business Review Press (September 2018)
How Alibaba is “reconstructing entire industries with almost every business, be it traditional, or brand new”
In a previously published book, Dragons at Your Door: How Chinese Cost Innovation Is Disrupting Global Competition (2007), Ming Zeng and Peter Williamson explain how and why managers will need to go beyond merely equating innovation with providing more functionality and greater sophistication, and start creating business models aimed to deliver high technology at low cost, and variety and customisation without a hefty price premium, and to unlock latent demand by offering the kind of value for money that turns today’s cosy niche segment into tomorrow’s mass markets.
In Smart Business, Zeng shifts his attention to lessons to be learned from Akibaba’s success in terms of the “three faces” of cost innovation: how offering high technology at low cost, a near-impossible range of choice, and “speciality products” at volume prices have created impressive inroads to markets long assumed impenetrable. He carefully organizes valuable information, insights, and counsel within three Parts. First, he introduces what he characterizes as the two core pillars of smart companies: “Network coordination enables large-scale business networks, while data intelligence ensures efficient operations and decisions across the network.” He describes in detail the transformation of the business landscape “through the duel forces of network coordination and data intelligence…The transformation of the business landscape is best understood — and achieved — in terms of network coordination and data intelligence.”
Then in Part 2, Zeng lays out the principles and practices as well as strategic implications of the process by which companies become smart businesses. “For smart businesses, the game is now one of coordination among interconnected players, where data intelligence makes all the players smarter…In Part 3, I turn to organizational implications of the new strategic environment…operating as a smart business requires a different process of formulating and executing strategy. These changes in turn mandate a different kind of organization, with different processes, systems, and roles for managers.”
To those in need of an insider’s perspectives on doing business in China, I highly recommend Smart Business as well as Dragons at Your Door.