Two Cents: When your founder and inspirational leader leaves

As Jack Ma stands down from Alibaba with billions in the bank and an entire leadership philosophy in his name, how does anyone follow in his footsteps?
By: | September 12, 2019
Topics: China | News | Two Cents

When a CEO leaves a company, it can be a challenge to replace them with someone who can seamlessly carry on where they left off. But imagine how hard it is when that person is also the founder, the inspiration, and the heart and soul of the company. Apple had the same challenge when Steve Jobs stepped down for health reasons in 2011, and in the sporting world, Manchester United struggled to replace legendary manager Sir Alex Ferguson when he retired in 2013. Now tech giant Alibaba face an equally perilous position as Jack Ma calls it a day after 20 years in charge.

Although he announced his plans a year ago to retire and devote himself to education, there is still lots of uncertainty despite the forewarning. On the positive side, Ma is handing over his chairmanship to CEO Daniel Zhang with Alibaba in very good shape. It is valued at more than $500bn and is the darling of Wall Street (it’s listed on the NYSE).

When Ma made the announcement last September, Shares of Alibaba fell nearly 4%. But since then it has recovered and is up about 10% over the past 12 months, buoyed by some strong financial results. Revenue was up a 42% for the April-June quarter, which is even more impressive given it came during some turbulence in China as economic growth slowed and a trade war with the US escalated.

But while things look rosy, the company is still facing some big challenges and there are concerns over its long-term prosperity. One of the biggest problems facing Alibaba is how to gain more users to help it continue its phenomenal growth. One solution has been to tap into less-developed regions, by integrated its e-commerce services into Douyin, a short video app for rural Chinese. But will that be enough to keep investors happy?

The main issue is that most of the company’s income comes from the domestic market. While globalisation has always been part of Alibaba’s long-term game plan, this might be tricky now its high-profile ambassador has gone. In a way, Alibaba is already fairly global. Head-quartered in Hangzhou, it employs 103,000 employees around the world, with data centres in 10 countries outside China, including Southeast Asia.

But can it expand globally without Ma, its public face? Having jostled with the controversial billionaire Elon Musk in a live debate recently, Ma probably endeared himself to a new army of fans. It’s unclear if new boy Zhang will be able to pull off such a stunt. Ma was charismatic, inspirational and admired around the world.

At 54 years old, he could have continued for another decade at least at the helm. But one must admire him for quitting while he’s ahead, and going back to his fist love of education. Virgin founder Sir Richard Branson is still in charge at 69, and Warren Buffet is both Chairman and CEO of Berkshire Hathaway at the ripe old age of 89. Some people just don’t know when to quit.