Former President and COO of Alibaba Mr. Savio Kwan talks about leadership
Savio Kwan understands human motivation. He is a celebrated authority on corporate culture, most notably for transforming the way Alibaba does business. Luckily for the MBA students at the University of Hong Kong, he is happy to share his hard-won wisdom.
This story sounds like a fun joke. But it’s illustrative of the impact Mr. Savio Kwan has had on the global business world.
Bill Gates hosted a dinner party for fellow CEOs. Jack Welch, the charismatic and long-serving CEO of GE, whose name is synonymous with leadership attended the event. Jack Ma, the wildly ambitious visionary CEO behind Alibaba was also in attendance.
The two Jacks started a conversation.
“I want to thank you, Jack,” said Jack Ma.
“For what?” asked a bemused Jack Welch.
“For training Savio Kwan.”
Savio Kwan’s career has been a remarkable one. He has worked in the upper echelons of the business world. He has forced open new markets, working in a variety of sectors, and he has weathered both social change and financial crises. But what is even more remarkable is the consistency of his commitment to deeply embedding integrity and values in the heart of the companies he has worked for and to turning a strong corporate culture into the company’s greatest competitive advantage. These are lessons that he has been sharing with HKU MBA students for over a decade, as a mentor and guest lecturer.
“Everyone said, ‘you will meet interesting people doing your MBA.’ But not even in my wildest dreams could I imagine myself to be mentored by Savio Kwan,” enthused his latest mentee, current MBA student Hong Phuc Nguyen.
A remarkable apprenticeship
Savio Kwan was born and raised in Hong Kong. He grew up on Temple Street in Kowloon, in what was one of the most densely populated neighbourhoods in the world. Like most children raised in traditional Chinese families, it didn’t even occur to him to disobey his father’s wishes that he become an engineer. And so, Savio became an apprentice engineer.
Ultimately finishing his master’s degree at Loughborough University, he became a systems engineer and found a job in Cambridge, England. He excelled at work, but felt stifled, and at the age of 26, the thought of spending decades grinding his way up the corporate ladder felt wearisome. “I looked at the boss and thought, it will be 20 years before I get there. Probably more, because I was a Chinese working in a British firm with only British managers.”
And so, Savio applied to London Business School. He did his research and concluded it was the best fit for him, and so he only applied to LBS, confident that he would accepted.
Instead, he received a rejection letter.
Stunned, Savio immediately jumped into his beat-up car and sped from Cambridge to London in less than two hours. He quickly talked his way into the Dean’s Office, and that afternoon found himself sitting across the table from Professor Charles Handy.
“Why have you rejected me from LBS?” Savio asked bluntly.
Handy, an Irish-born management pundit, best-selling author, and social philosopher, looked Savio in the eye and told him. “You have make a good case for how you much you will learn and how much you will leverage your London Business School education and network. But why should we take you? What will you do for London Business School?” Furthermore, he explained, Savio’s boss had written a polite recommendation, but one full of mixed messages. “It’s clear that your boss does not want you to leave,” Handy added. “You should have had a clearer conversation with your boss about why you are applying to business school. Rewrite your essays, get a new letter of recommendation, and I’ll reconsider your candidacy.”
Savio drove back to Cambridge and immediately got to work. “I need this degree,” he told his boss. “If you don’t write me a good recommendation, I’ll quit anyways.”
His reapplication was successful and Savio was accepted to LBS. His company offered him full sponsorship. The UK government awarded him a student bursary.
Under Charles Handy, Savio began a life-long apprenticeship in the exploration of human motivation, of corporate organization, and of the design, execution and stewardship of company culture. One of the most interesting aspects of Savio’s personality is that he manages to reconcile the steely logic of the toughest businessman with the curiosity and compassion of an unjaded optimist.
This is Handy’s influence. Handy and Savio are both interested in the successful organization and allocation of human capital, but both are humanistic in their approach—passionate about learning what makes humans strive for excellence and endlessly inquisitive about how to make work meaningful and fulfilling.
Savio is the first to acknowledge his intellectual debt to Handy. In 2015, he established the Charles Handy Endowed Chair at LBS.
Savio has given to successive waves of HKU MBA students the same advice Handy gave him: “think deeply about what you can contribute to your MBA programme.” He warns students not to think that the MBA alone is a ticket to great jobs and financial security. “You must learn about yourself, understand what you’re good at, and what you can bring to a company that no one else can.” Only then, Savio says, will you find a good fit in a company where you can truly excel.
Mastery of the game
After business school, Savio’s career took off. He steadily worked in cross-cultural roles, including nearly twenty years at GE’s medical devices unit, where he was responsible for sales, marketing, operations, business development and establishing joint venture companies in Asia. At GE, he had his first taste of values-driven leadership in action in what was seemingly an impossible situation. And this is where he thrived.
“I shared my capstone project report on GE with Savio,” recalls Nihir Mehta, an MBA alumnus recently mentored by Savio. “He found it too traditional, too polite, and his advice to me was very clear. Put yourself in the shoes of the leader or decision maker and think from his point of view. Sometimes one has to take some hard decision in corporate life for the greater good.”
Savio speaks from experience. His careers has been full of hard decisions.
Under Jack Welch, GE was governed by a strong set of principles and an unwavering commitment to clean business practices. When Savio began doing business in emerging Asian markets, his sales people relentlessly insisted that bribery was “just too ingrained in the culture” not to pay kick-backs to clients. “We don’t pay bribes,” Savio repeated firmly to his teams. It became a mantra that exasperated his team, who insisted he was naïve and out of touch with Asian business cultures. Nearly three quarters of their meetings ended with either an overt request or at the very least a surreptitious acknowledgement that a bribe was expected, they reported. Despite the difficulties, Savio stuck with his decision.
“We don’t pay bribes,” Savio insisted time and time again. “That’s not what we stand for. It’s not a sustainable way of doing business. And it’s not the right thing to do.”
Tired of his team’s insistence that they needed to pay bribes, he worked out a new plan, which he rolled out to his team’s shock and dismay.
“When you set up a meeting, you tell the potential client up front that GE has a strict policy. We don’t pay bribes. If they decline to take the meeting, you’re not wasting your time. If the potential client takes the meeting, understanding that we don’t pay bribes, you do whatever it takes to sign them. If 30% of the market doesn’t engage in dirty business practices, then we’ll focus on getting 100% of those clients.”
With these instructions, the sales reps angrily went on their way. But after a few months, the strategy began to work.
Savio’s team captured 85% of that 30% of the market. After a short period of time, they were leading their competitors in terms of market share.
In Savio’s mind, this experience vindicated his belief in the importance of value-driven leadership. It also ironically became the inspiration for Alibaba’s business model.
“Savio, if we pay bribes, and things go wrong, who goes to jail?” Jack Ma wondered out loud.
Savio had been brought in as President of the floundering tech start-up only a few months before. The company was burning through cash at an unsustainable clip, and had, by Savio’s reckoning, only a few months left before it would have to close. Savio, used to the comfortable trappings of the corporate elite was now living in a RMB 120 a night hotel. He had fired a good portion of the staff originally lured away from Silicon Valley, who were being paid salaries that seemed outrageous compared to meagre wages earned by the local engineers.
“Savio told me time and time again that one has to rise above the ‘doing’ and focus on the ‘winning’ side of the equation. The first hurdle is usually to get to know and define what ‘winning’ is for the project in hand. This is always much more difficult than one thinks,” Nihir Mehta remembered Savio telling him.
And so, Savio needed desperately to define what ‘winning’ looked like at Alibaba, which then, didn’t even have a well-defined business model. Savio knew that even more important than defining the business model was defining what sort of company Alibaba wanted to be.
The team spent long hours working on defining the values that the company would stand for. Jack was able to wax romantically about his vision and his dreams for the company. Savio, the pragmatist, insisted that Jack’s vision be written down, debated, refined and streamlined into a set of core values. These debates were often far-reaching.
“If we get caught paying bribes, Jack, you’ll probably go to jail!” Savio laughed.
But Jack didn’t laugh. “If I go to jail, will you come to visit me?” he asked in a serious tone.
“If you’re in jail, I’ll probably be in jail, too,” Savio responded.
“Ok, then. No bribes!” Jack said resolutely. “It’s not worth comprising ourselves and taking that risk. But if we can’t pay bribes, we’ll be crushed by our competitors in most of our business lines.”
Savio, recognizing the issue, wisely suggested that they then concentrate all their resources and capital in the one space where paying bribes wouldn’t be necessary: connecting suppliers with customers.
And so Alibaba, the e-commece giant, was born.
Within the company, Savio, with his patient, persistent commitment to tailoring, re-packaging and focusing Jack’s outsized visions, was soon given a nickname: The Alimama. As the Chief People Officer, he set about creating a comprehensive people development programme that concentrated on identifying strong performers who embodied the Alibaba values that the leadership team had worked so hard to develop.
Today, these values—and the work Alibaba does to maintain them—are credited as the competitive advantage that has allowed Alibaba to retain its customer focus and its agility in the face of massive growth.
Generosity of spirit
“Joining Alibaba was the best decision of my life,” Savio avows. “I was thinking about retirement, but then I was given this unbelievable opportunity.”
He may have been thinking about retirement, but Savio shows no signs of slowing down. He remains a non-executive director at Alibaba and joined British American Tobacco as an independent non-executive director in January 2014. He also co-founded A&K Consulting, advising entrepreneurs about start-up businesses in China.
But he is most passionate when he talks about education.
Savio remains extremely active in educating the next generation of business leaders. He is in huge demands as a guest lecturer at business schools around the world, where he delivers talks on integrity, values-driven leadership, and, of course, the Alibaba story. He is a natural communicator and engaging story-teller just as effective in front of a lecture theatre as he is in more intimate settings.
He is also a devoted mentor. “I got connected with Savio through the MBA mentorship program, where he has been taking on one or two mentees each year. This gave me opportunities to have one-on-one conversations with him once a month for six months,” says Hong Phuc, the current student.
“I am still in touch with a good number of my mentees,” Savio says warmly. “I’ve been invited to quite a number of weddings throughout the years!”
The article is written by Silvia McCALLISTER-CASTILLO