Smart Business by Ming Zeng from Alibaba

What Alibaba’s Success Reveal about the Future of Strategy

Embrace new technology to connect all your players and redeisgn industries.

\[Smart\ Business = Data\ Intelligence + Network\ Coordination\]

• Data Intelligence: Enable large scale business networks
• Network Coordination: Ensure efficient operations and decisions

The value chain can be configured to achieve scale and customization with network coordination and data intelligence. Network coordination is autonomous management of the simultaneous interactions of multiple parties to a business task. Instead of passing the tasks sequentially, the network help all parties cooperate together to solve the problem effectively and efficiently than the vertical integration. This would help the key elements of business: scale, cost, speed and customization. Network coordination unbundles business activities from the traditional supply chain. Data Intelligence combines data, algorithms and adaptable services. This term emphasizes the constant stream of data by user engagement being used by machine learning algorithms to make business smart which is the core competitive advantage. The essence of data intelligence is the digital cycle from data collection, machine learning process and feed back into the business settings.

The three fundamental cornerstons of smart business are adaptable products, datafication and machine learning.

• Adaptable Product: The interface deliver customer experience directly while gathering consumer feedbakc to adjust the customer experience directly.
• Datafication: Encode business problem into digital form
• Machine Learning: Process the data to create value to optimize product logic or market dynamics.

Business must be made directly by machines not by humans supported by data analysis. The core of a smart business is powered by algorithm.

1. Datafy the physical world: put capabilities and assets online
2. Software the business: Encode decision making chains
3. Get data flowing: Institute APIs to allow data connections
4. Record data in full: Record live data in its entirely
5. Apply machine learning algorithms: Coordinate and optimize

The value provided through business ecosystem is connecting relatd parties like buyers and sellers, searches and advertisements, information and social network. Though this, the competitive advantage is the matching efficiency to enable the growth of business tasks and services.

Is connecting buyer and seller effectively and efficiently the eventual goal of strategy

• Key strategic question is whether the company possesses true competitive advantage is whether the entire ecosystem provides much better customer value than to existing solutions

• disruptive is appealing to low-end or unserved consumers and then migrate to the mainstream market