Design Thinking at Alibaba

This report discusses the impact of design thinking on Alibaba's business operations and its innovation strategy. It highlights the ways in which design thinking has helped Alibaba scale and manage large amounts of information and data. The report also provides recommendations for organizing innovation activities and developing additional innovation capabilities.

Running head: DESIGN THINKING AT ALIBABA
Design Thinking at Alibaba
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Executive Summary
This report has been elaborated on discussing about the design thinking process and
initiatives taken by Alibaba, a Chinese retail firm. It has highlighted that various different
ways by means of which this company was impacted by the advances of 'design thinking'
movement. With the same, it has also shed light on the impacts of design thinking on
Alibaba’s business operation and has provided several different ways by means of which the
organisation’s innovation strategy best responds to the innovation trend mentioned in the
paper. It has been found that with the help of design thinking, Alibaba is now able to scale
and manage the staggering amounts of information, transactions and data, which was
otherwise impossible.

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Table of Contents
1. Introduction............................................................................................................................2
2. Discussion..............................................................................................................................2
2.1. Company Background and innovation trend...................................................................2
2.2. Concepts and their relationships.....................................................................................3
2.3. How the creation of an innovation strategy ensures strategic alignment within
organisations and why it is important....................................................................................4
2.4. Impact of the selected innovation trend on Alibaba........................................................4
2.5. Business model canvas....................................................................................................5
3. Recommendations..................................................................................................................7
4. Conclusion..............................................................................................................................8
References:.................................................................................................................................9

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1. Introduction
In contemporary era, the leading companies all around the globe are integrating the
design thinking techniques into their strategies of innovation for expanding their insights and
helping the executives to envision some new possibilities. Design thinking has the potential
of catapulting the companies to dazzle new heights. Most of the large corporations worldwide
are embracing design thinking as of the fact that the great designers could help the ones with
very little or no imagination for vividly experiencing a world that does not yet exist. For this
report, Alibaba, a Chinese retail firm, has been selected as an example of a business that was
impacted by the advances of 'design thinking' movement as described in the paper by Liedtka
(2018). This paper shall highlight the impacts of design thinking on Alibaba’s business
operation and would provide several different ways by means of which the organisation’s
innovation strategy best responds to the innovation trend mentioned in the paper.
2. Discussion
2.1. Company Background and innovation trend
Alibaba is a Chinese retail and e-commerce firm that is taking many popular global
advances in the e-commerce ecosystems and catering to the increasing demands of the huge
and growing middle class customers of China. It was founded in the year 1999 by Jack Ma. It
provides a type of free services to each and every one and contains B2B, B2C and C2C
services. The company also provides search engine in Taobao.com, some secured e-payment
services and the data centric cloud computing services. In the year 2009, the company created
a Single’s day, holiday and Valentines’ day culturally adapted for the Chinese population
(Zhou, Lee & Hyman, 2017). In the year 2011, the people who were single given gifts one
another through Alibaba at 11:11 a.m. or p.m. The time was set so because of the fact that all
of the 1’s add up to many “singles”. Also, in the year 2013, the company became the first

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every companies in the history to deliver and sell about a total of 6 billion dollars of goods
and services in a day. Alibaba is best known for its innovation. It is build the faster cloud
based streaming processing platform in the world, which many other significant competitors
of it like Amazon is lacked in.
2.2. Concepts and their relationships
Design thinking helps the organisations to innovate, grow and improve the financial
performance of the organisations. According to Geissdoerfer, Bocken and Hultink (2016) is a
process that makes use of designing principles for solving the complex problems and helps
the companies to identify the opportunities, unlock the innovation and at the same time,
improve their businesses. Deign thinking has a lot to do with the organisational environment,
innovation trend, innovation strategy, innovation capabilities, innovation value creation and
capture (Teece, Peteraf & Leih, 2016). There is a significant relationships among all these
elements and concepts. It is to note that organisational environment is composed of the
different institutions and forces surrounding a company that influence its operations,
resources and performance. It comprise of all the elements that prevails outside of the
boundaries of the organisation and have the potential of influencing a part or all of the
company. Innovation trends are generally set for shaping the corporate landscape today
(Mazzucato, 2016). It also influence the organisational environment as in order to cope up
with the recent trends, needs to change with the change in time and demands of the
customers. In order to ensure successful alignment with the innovation trends, it is very
important for the companies to plan for growing the market shares and profits by means of
service innovation and product innovation (Franca et al., 2017). For successful innovation
strategy to get implemented and lead in positive results, innovation strategy should indicate
whether a product improvement or breakthrough innovation approach is best suited. In this
whole process, creating innovation value is the very first step. The value in the process of

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open innovation is driven by the value creation of the actors as well as the potential of
capturing the values.
2.3. How the creation of an innovation strategy ensures strategic alignment within
organisations and why it is important.
Innovation strategy refers to the plan of growing market shares and profits through
service and product innovation. In contemporary world, for any business to become
successful, it is very important to stay competitive (Prajogo, 2016). Therefore, the businesses
need strategic innovation for understanding the marketplace and producing the new products
for meeting the needs of the customers. In absence of strategic innovation, one would not be
able to keep up with and let alone for staying ahead in the fast paced business world of today.
Strategic alignment refers to the process of linking the innovation strategy with the vision,
objectives, strategies and goals. The time and the cost that are required for creating a new
service or products are very large and they lack in perfect alignment and execution of the
innovative strategy in this case becomes highly wasteful (Franca et al., 2017). The creation of
an innovation strategy ensures strategic alignment within organisations by means of
improving the efficiency, guaranteeing long term success, increasing the market success,
decreasing the costs and time, reducing the processing time, initiating the process of
innovation and reducing the risk of becoming obsolete because of the competitors in the
market. With the same, it also helps in improving the chance of survival because of better
solutions that are spawned from the new technologies.
2.4. Impact of the selected innovation trend on Alibaba
As mentioned earlier, Alibaba is best known for its innovation (Zhao, 2019). It is
build the faster cloud based streaming processing platform in the world, which many other
significant competitors of it like Amazon is lacked in. With the help of this innovation,
Alibaba very quickly scales and manages the staggering amounts of information, transactions

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and data, which was otherwise impossible. In the year 2016, at the time of Singles Day sale
of Alibaba, the platform of the company processes about 175,000 transactions in a second,
which means, about 10 million of orders per minutes (Wu, Li & Kee, 2016). Each and every
transactions was kept secured and safe, though the total number was out of the world. It is
also to note that because of the cloud based streaming processing platform, the servers of
Alibaba at present store about 1000 petabytes of data and this is a number that is still unheard
of anywhere else. With the help of these data, the company is able to offer personalisation
and high level of customer service, which is turn ultimately leads of remarkable customer
experience. It is also continuously innovating in the field of deep learning, neutral networks
and machine learning, all of which make the launches of product take some days to get
completed. The cloud based streaming processing platform has also opened up several
opportunities for Alibaba. Batch data processing and more simplified stream along with equal
expressiveness and reliability.
2.5. Business model canvas
Figure 1: Diagram of a business model canvas

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The Business model canvas of Alibaba clarifies all the important entities, the
important elements of the customer relationship, the key resources, the cost structure, the
customer segment as well as the revenue streams of Alibaba.
 Customer Segments- The most important customers of Alibaba for whom it is creating
value are the exporters, the importers, the wholesalers, the digital shoppers, the multi-
sided, the e-commerce buyers, the massive internet users and the individuals and
companies.
 Value propositions- Alibaba ensure to make it easy for doing business anywhere,
enabling the businesses for transforming that way they market, making and open and
collaborative system of e-commerce, giving a wide range of products to choose from,
providing electronic payment systems to make the customers easy pay for their products
(Parker, Van Alstyne & Choudary, 2016). It is also to note that Alibaba provides a pay for
performance services along with the digital marketing services by means of its Alimama
marketing technology platform. With the same, in the year 2016, the company also
officially unveiled the Roewe RX5.
 Channels- Alibaba wants its customer segments to be reached through subsidiaries,
websites, affiliates and its mobile applications. At present, the customers are reaching
accessing the service of Alibaba through these channels. With the same, it also reach its
customers through different media and PR relations.
 Customer relationship- Alibaba does its business through C2C, B2B via web portals and
B2C process and at the same time, it also provide the flexibility of online money
transfers, online auction hosting, self-service, customer assistance and automation as well.
Alibaba also provides its customers the personalised service, online product purchase
service have same-side and cross-side network effects.

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 Revenue Streams- Alibaba’s Business model has some e-retail subsidiaries like
Tmall.com, Taobao.com and Aliexpress. They all generate the revenue in a comparative
business pattern. It is also to note that these three portals are the ones to affect the revenue
model of Alibaba. All targets different audiences and there are a total of six different
subsidiaries of Alibaba Business Model and they are- Aliexpress, 1688, Alimama,
Alibaba Cloud, Ant Financial, and Cainiao Network. These subsidiaries work for making
Alibaba a very big ecosystem.
 Key activities- The key activities in which Alibaba is involved include E-credit lines,
branding, shipping, logistics, customer service, Business identities, innovation and
research and development, IT infrastructure maintenance, engineering and payment
processing.
 Cost Structure- The companies and the sellers are able to set up their online store on the
internet business stages of Alibaba and make a nearness for a substantial continuously
expanding the gatherings of the customers. With the same, it is also reasonable for setting
up while contrasted with any physical store and decreasing the time and cost in the
process of searching clients and items.
 Key resources- The key resources that Alibaba requires are the software platform and the
employees.
 Key partners- The key partners of ALibaba are the Banks, governments, IT companies, IT
customers, the engineers, mobile operators and the insurance companies.
3. Recommendations
 Organising its innovation activities- For organising its innovation activities, Alibaba
should develop a well-deigned framework for innovation is required to be put in place.
The company needs the processes of innovation management for responding to the
internal and external opportunities and leveraging its creativity. It should try to integrate

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generation of idea as an integral part of the day to day activities. It should drive the
internal innovation by means of dedicated innovation teams, innovation outposts,
workshops, in-house accelerators and hackathons.
 Additional innovation capabilities- The Company should develop some additional
innovation capabilities in terms of advanced technology. Alibaba should ensure that the
externally sourced innovation are in the form of partnerships, incubators, acquisitions,
partner led mergers, social listening, accelerators and crowdsourcing.
 Innovation Initiatives- One of the most effective innovation initiatives that Alibaba could
make use of is that of internet based advertisements and augmented and virtual reality
 To ensure that it creates and captures value from innovation, Alibaba need to have a good
bargaining position in terms of owners of the complementary assets that needed for
leveraging the innovation. It should always monitor its competitors in the market so that it
maintains its bargaining power for capturing value. With the same, the company should
put in the place the processes of risk management
4. Conclusion
Technologies are accelerating at a fast paced and at the same time, the information
availability is also exploding. The business managers who respect the power of design
thinking and must understanding that it could challenge their companies to seize upon the
change and create the services and products that are new and astonishing. Alibaba is the
biggest IPO in the world and has grown into one among the biggest tech giants in the world.
It is synonymous to ecommerce in China. As a B2B exchanging stage, the company is the
undisputed champion that has associated exporters with the companies that are spread
worldwide. It is build the faster cloud based streaming processing platform in the world,
which many other significant competitors of it like Amazon is lacked in. With the help of this

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innovation, Alibaba very quickly scales and manages the staggering amounts of information,
transactions and data, which was otherwise impossible.
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