PayPal Shows How 7 Rules Of 'Lean Scaling' Saved It From Bureaucratic Paralysis

PayPal is one of the textbook successes of a venture-backed startup: It was acquired for $US1.5 billion by eBay back in 2002.

But by 2011, PayPal was in a rough spot.

Go straight to the 7 rules of lean scaling >

It had internal problems in design, product, and engineering, and especially in how those three sections worked together. Namely, that they didn’t.

In many ways, PayPal looked like a large, old company. Production was divided over nine organisations, and it took 37 tickets just to get a bug fixed and pushed live.

So PayPal decided to go back to its startup roots. The company now works smarter and faster. It has launched a new PayPal mobile app, and new experiences in checkout, merchant servicing, and onboarding experiences (PayPal has even been thinking about how to buy stuff in outer space.)

PayPal’s senior director of user interface engineering, Bill Scott, described how the company solved PayPal’s issues in a PowerPoint at a conference last month.

The slideshow in its entirety is pretty long (you can read it all here), so we plucked out some highlights.

It's 2011, and here are PayPal's main problems.

Here's an example: The product team needed to send official 'product requirement documents' (PRD) to the design team before the design team could send the engineering team the user experience (UX) specs, which needed to happen BEFORE the engineering team tried the product out on users. And then the users might hate the product.

PayPal needed to get lean, like a startup: learn fast, move fast, fail fast, iterate often, change directions when necessary.

There are three key principals that drive lean user experience. Real understanding is key, regardless of whether it's 'documented.'

You need your teams to be close-knit and strong.

You need to keep your customer in mind at all times.

Lean engineering requires you to create test environments for a small number of users to get valuable feedback on your idea. Getting bad feedback can be scary, but if you don't get it early on, you will end up committing to something that's bound to fail.

Using the feedback that you received, create a prototype quickly -- your minimal viable product (the simplest version of what you are making). You have to embrace rapid iterative testing and evaluation (RITE) to keep improving that product.

Because lean engineering requires so much iteration, you need to make sure that you are putting together products that can be changed and re-adjusted on the fly, as you learn from your users.

Each team working on something within the larger company should operate like a startup ('think it, build it, ship it, tweak it').

You need to learn to tell the difference between progress and wasted effort and understand that abandoning a hypothesis to pivot is not a bad thing.

Always focus on solving new problems. Keep iterating. Keep growing.

You have should have shared space where engineering and design teams can physically work together. If not possible on a permanent level, use shared space for several weeks at the beginning of a project, or use 'high bandwidth' communication like Skype.

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