Younger people in management were also given the power to make decisions, Tsai said.
"It means that actually letting them make some decisions and letting them make mistakes and train them so that they can recover from mistakes," Tsai added.
Wu and Tsai also scrapped plans to list Cainiao, Alibaba's logistics arm, marking a U-turn on previous commitments.
"Eddie is winning plaudits internally for having trimmed the old and built the new. Jack [Ma] and Joe [Tsai] ultimately made the decision to bet on him and it's paying off," Duncan Clark, an early advisor to Alibaba and chairman of BDA, told CNBC by email.