Smart Business: What Alibaba's Success Reveals about the Future of Strategy

Zeng served as Alibaba's chief strategy officer and wrote this to generalise from what the company built into a theory of how businesses should be organised.

His two mechanisms are network coordination and data intelligence. Network coordination means the company organises a network of independent participants rather than performing activities inside its own boundaries. Taobao does not buy or sell products; it coordinates millions of merchants, payment providers, logistics firms, photographers, software developers and financing providers, each of which specialises. Data intelligence means the decisions inside that network are made by algorithms operating on data generated by the network's own activity, continuously and without human intervention: pricing, search ranking, credit decisions, inventory allocation and marketing spend are all set by machine.

His argument is that these two together produce what he calls smart business, and that the combination scales in a way that neither does alone. A network without automated decision-making cannot coordinate at scale. Automated decisions without a network have limited data and limited reach.

The operational implications he draws are specific. Business processes must be reconstructed so that every step generates machine-readable data, which he calls datafication. Decisions must be turned into algorithmic models with feedback loops. The firm's role changes from executing activities to setting the rules, incentives and infrastructure of the network. Strategy becomes about designing the network's architecture rather than about positioning.

The theory is derived from one company in one market and the generalisation is asserted. Zeng was an executive there, so the account presents Alibaba's structure as the outcome of design rather than of circumstance and competition. The book also predates the Chinese regulatory intervention that constrained platform companies from late 2020, which changed the environment the model depends on.