Jack Ma
31st May 2020

The upper part of strategy(mission, vision & values) is for attracting excellent talents while the lower part(organization, people and performance management) is for helping talents make the role.

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I would usually talk about strategy in my first lesson. What is strategy? Strategy is about the judgement on future. The strategic ability is to assess the ability of CEO. CEO is at the same time the Chief Strategy Officer in the company. If a company makes mistakes in making strategy, CEO should be the first one to be blamed.

Strategy is consisted of two parts. The upper part includes mission, vision and values while the lower part involves organization, people and performance management. The two parts need to be strung together. The upper part is the key, but without matching organization deployment, talent development system and performance management, it is also impossible to win the battle.

Mission

Mission is to answer the question why do we exist.

The critical point to unite an organization is the mission. For example, what customer values are we going to create for our customers? Why we can do better than others?

I want to tell you, every enterprise should regard the mission as the key point for its organization. Even a small restaurant can have a mission. The mission is to make good food to make every customer satisfied. It’s simple and clear. The mission of an organization is not for others outside the company to believe, but for the CEO, the founder, the team and the staffs to strongly believe. We must not treat this as intangible, we must make it as tangible as possible. Mission plays the most important role in making all the business strategies. We need to make sure every movement should be pivoted around the mission.

Vision

Vision comes after mission. The minimum requirement for a vision is to have at least 3-year goal. For example, I want my company to become a profitable company within 3 years with certain amount of revenue. How will my employees grow? How many customers will we have? How will be my reputation about in the society? The clearer, more careful and more logical you think about the vision, the better. It is more difficult to design a 5-year, or even 10-year vision.

Vision decides the mentality in making strategy. When you have clear mission and vision, you will have the clue, the logic and the long-term perspective when you are making decisions. What I fear most is chaos. Without mission and vision, you don’t know how do you win, you even don’t know how do you lose. If you have very clear vision in the strategy map, you can fix it very quickly if something goes wrong.

Values

What are values? Values are the common methods and principle of doing things. Values are about bringing people together with the same goals. People may have different personalities and backgrounds, but we must do things in the same way.

Only enterprises with a sense of mission and vision can attract excellent people and super first-class people. And the super first-class people are usually odd. It’s the most difficult for them to work together. If they can work together, you will win.

Values are not set by the boss. I sat down with the first group of colleagues and discussed for a long time, why we get together, what we appreciate each other and what we will never do.

The company’s values can not be only on the wall, it needs to be assessed. The culture is formed because of values assessment. Performance and values should be both assessed. Only when these two are done well can there be bonus, stock and promotion. This is a complete set of assessment mechanism.

Organization


Some companies are not defeated by their opponents, but rather because their organization is reluctant to change even when they saw changes are happening in the markets as well as in their opponents.

While I was in the position as an CEO, I put the most thinking into questions like how should I change the organization in 3 months, 6 months according to the change of situations. I need to figure out want shall be kept, what shall be given up, and what shall be prioritized. Prioritization is to decide the top 3 things that must be done. It is often the case that you have “seven pots while just 3 lids”, which means you have 7 potential business opportunities that you want to develop but only 3 business leaders to delegate. The only solution is to throw 3 pots away.

There are all kinds of thoughts and ideas in an organization. Re-organization takes much more efforts than defining business strategies. It might take 3 hours’ arguing and debating to define a business strategy. But you would feel much more painful and torn to change a person’s role or restructure an organization, which is the real challenge of being an CEO. The difficulty of the CEO role lies in how to have the team united instead of fallen apart.

It is a common dilemma for most of the companies that there are more things to be done than capable people to be delegated. Good organization structure is the key to narrow the gap. While there is a short in people, organization capability functions as a backup, and vice versa. Human resource (People) and good organization structure can back up each other.

People


The most important product of a company is not the products manufactured, but people. Products are decided by people.

A company shall put the most resource and focus on people. What is the most important investment on people? It includes the building of company’s atmosphere, company’s culture, mechanism of fair play and training system. All these are very important.

There was a very good manager review mechanism, which is based on 3 months’ review on manager’s performance. Normally in the review, I would not talk about business performance with them. Put that aside, I would say “let’s talk about people and team. What is the training plan and what is your succession plan”? Next time when the people management plan is ready, we then can talk about business performance. The thinking behind the review is to make managers realize that a leader shall have everything ready in terms of business and people, any time, anything. Managers will be trained to have a full picture thinking to be trained and reviewed in this way.

There is a saying “To repair the roof when there is sunshine.” When business grows fast and smooth, we need to tell the growth is due to business itself or driven by the leader. You can test by relocating the business leader to another business unit with difficulty in gaining growth. It’s a hard decision to make but it’s worth it. There must all kinds of hardships on the path of business leaders’ growth.

You have to have this in mind: the best managers are trained and developed in your organization, not hired externally. A good company train and develop people by organization and businesses, which we call “borrow the false to cultivate what is true,”. Both organization and businesses are “false”, good people trained and developed are “true”.

KPI

Lastly let’s talk about KPI.

KPI shall be treated very seriously as it consist all the key elements of a business which contains mission, vision, values, organization and people, what shall be kept and what shall be given up. All these are represented by KPI.

You need to figure out what you want, what your employee want, what your clients want and how to unify the interests from the 3 perspectives. To set KPI, there must be “bargains”. “Bargains “is a way of two-way communications. If KPI is decided merely by the manager, employees will lose the opportunity of getting trained.

When KPI is delivered to a team or organization, what need to be made sure that the KPI will not suffocate them or drown them. The purpose of KPI setting lies not only in completion of business results but motivate people and their talents, so the business results can be achieved in innovative ways.

There shall be monthly reviews as KPI is set. KPI need to be connected directly with incentive mechanisms. Give incentives to what you want, and penalty to what you don’t. As mentioned before, we applause for the process and pay the bill for the results.

To conclude, the upper 3 key elements of a strategy is to attract people, manage people and how to align mission and vision with those extraordinary people. These 3 elements are abstract but core of the core in a company’s strategy. The lower 3 elements of strategy is to secure mission, vision and values are executed with talent people function well in the organization. A good strategy can integrate these elements together.