Jack Ma yields for new Alibaba top manager

Jack Ma's stepping down as CEO of Alibaba is designed to make way for a more management-focused successor as the company prepares for its mega-IPO by 2015

PUBLISHED : Wednesday, 16 January, 2013, 5:39pm
UPDATED : Wednesday, 16 January, 2013, 5:39pm

It seems like nothing happens at e-commerce giant Alibaba these days that isn't interpreted in terms of its implications for the company's upcoming mega-IPO, and the latest announcement that founder Jack Ma will step down from his CEO position isn't any different. From my perspective, this kind of move was almost inevitable, and should be a good one for Alibaba in the run-up to what is likely to be China's biggest-ever IPO for an Internet company sometime between this year and 2015. After all, Ma has always been a very strong salesman and a "big picture" guy. It's become increasingly clear that he wants to focus on the strategic direction of his company rather than day-to-day managerial issues that have become increasingly important as Alibaba grows in size and complexity.

Ma announced his intent in a very open way, sending out an email to employees saying he would hand over the CEO title of the company he founded to a successor by May 10, as part of a broader transition to a younger generation of new leaders. Not surprisingly, Ma will retain the role of executive chairman, meaning he won't be leaving Alibaba anytime soon and will continue to make all the major decisions.

In many ways, the move looks similar to what Google (Nasdaq: GOOG) co-founders Sergey Brin and Larry Page did in 2001 when they brought in Eric Schmidt, a seasoned manager, to head their company. Since then, Page has come back to return to the CEO position at Google, but Schmidt remains firmly in charge of the company's as its executive chairman.

Ma's move to the chairman's post comes after a busy period for him, which most recently included a couple of major restructurings to try and make the company more manageable. Under the latest of those completed earlier this month, Alibaba was reorganized into 25 business units, each headed by a president or general business manager.

That restructuring reflected the fact that Alibaba has come a long way from its roots as an online marketplace for small businesses to buy and sell their goods. The company now encompasses a wide range of business areas, ranging from its core C2C, B2C and B2B online marketplaces, to electronic payments and other financial services, to cloud and mobile computing.

I always got the sense that Ma was interested in the big decision-making processes that led to the creation of many of those units, but was less interested in overseeing their day-to-day operations and development. Presumably the new CEO will be more involved with that kind of daily management duty, as well as making sure the company's many business units work well together to achieve synergies and take advantage of each others' strengths.

In terms of who exactly Alibaba will name as its new CEO, I would expect it to be someone relatively young, probably in the 40-45 year old range, and probably someone with overseas management experience or experience managing an overseas-listed company. The person is also likely to be a Chinese native.

From the IPO perspective, the naming of such an executive would undoubtedly help to generate investor buzz and excitement around the company as it prepares to make its blockbuster public offering. The presence of such an executive will add more clarity to the company by identifying a clear potential successor for Ma. It will also ease concerns of investors who may feel that Ma is trying to do too much by himself.

At the end of the day, everyone will be watching to see who exactly Ma names as the CEO, and whether he gives that person not only the guidance but also the independence that he or she will need to succeed in the position. I have no doubt that the process of identifying candidates is already well underway, and the candidate who emerges will be similar to Google's Schmidt in having a wealth of managerial expertise.

Bottom line: Jack Ma's stepping down as CEO of Alibaba is designed to make way for a more management-focused successor as the company prepares for its mega-IPO by 2015.