Innovation in business

XVII.3 May + June 2010
Page: 44
Digital Citation

The role of leadership in winning design

Don Fotsch

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Three and a half years ago, I signed on as the leader/VP of user experience and design (UED) at PayPal, one of the undisputed Internet darlings of our time. PayPal wanted a leader with a strong design orientation along with a general manager's business acumen. I loved the business, loved the culture, and was eager to apply my previous product/GM experience at businesses such as Apple and AOL, plus years of partnership with IDEO. This was a really "good company" enjoying admirable growth. But the question in my mind was, How could design help PayPal become a great company with ever more loyal customers?

While the PayPal business was prospering, its experiencecreation engine was not. Key design functions had been scattered around the company or simply did not exist. We didn't seem to know design's role in business success, nor did we seem to know its role in success with customers, at least not in any measurable fashion. We had virtually no Web analytics to measure key metrics such as checkout conversion. It literally took months and quarters to make important changes to our website. Not surprisingly, designers within the company said they would literally tell friends and family that they "worked at PayPal but didn't work on the site"—even though they actually did! The first day on the job, I was asked at an all-hands meeting, "What do you think of our site?" I paused and thoughtfully responded, "A face only a mother could love."

Over the course of the subsequent three and a half years, we made significant progress toward creating arguably one of the strongest design shops in the financial-services industry. In the process, we addressed many of the shortcomings noted above and helped accelerate PayPal's trajectory from good to great. Notable achievements included building a global team with skills that could scale with the business, creating and executing to design and brand standards, payment flow–conversion improvements across the board, driving significant revenue gains, and some of the highest employee engagement and retention scores in the company. How did we do it? And what was the role of the executive leadership in achieving this progress?

Early on, we established a simple definition of design that everyone could understand: "Every pixel and every drop of ink." Though we evangelized this definition regularly with other groups in the company, our principal goal was to get everyone in UED and product-management teams to realize that the various design functions needed to be accountable for every customer touchpoint and their role in creating it—whether it was a page on the site or the design of a PayPal booth at a tradeshow. This orientation was met with appreciation outside of UED because of the accountability emphasis. Most important, it helped reorient all design functions toward the customer experience we were creating versus the design function in which we each worked (e.g., visual-design deliverable, content/writing deliverable, research deliverable). We had to break down those design silos and get experience-oriented—this approach helped drive that change.

back to top  Design is the Business

As the most senior person in the company accountable for design, I felt strongly that everyone needed to have a common understanding of design's relevance to the business. So early on, I would start every update on our team's progress with a slide that literally had nothing on it. And I would say, "This is the summary of all the PayPal revenue achieved without the aid of design." Everyone got the point. Most important, the folks in UED began to feel like partners in the business, not just order takers. To further reinforce the business-partner mentality, we held regular quarterly all-hands meetings in which we reviewed performance versus plan on key design objectives like design standards deployment, right along with sharing PayPal financial performance to plan (revenue, profitability, etc.). Everyone on the team began to see how our work on key projects was contributing to PayPal's financial results, which reinforced design as a business partner. Sharing project work publicly with the whole team on a quarterly basis again reinforced how important it was for all design functions (visual, UI, research, analytics, writing, etc.) to work together to get the customer experience right in order to achieve the business results. For example, to deliver an effective PayPal sign-up page/form, the form fields have to be sensible, the writing must be clear and understandable, the visuals need to be brand-aligned, and the experience instrumented in support of measuring conversion and capturing customer feedback. Yes, it's a simple concept, but PayPal had grown so fast that we hadn't taken the time to get our collaborative execution synchronized. It became increasingly clear that getting it done was key to achieving the kind of checkout conversion improvements we were looking for on our payment flows and sign-up flows, globally.

back to top  Design Functions Unite

With a growing sense of design relevance to the business, we needed to get clear on the competencies required to deliver winning design work. Our list included user research, Web analytics, user interface design, visual design, product content, marketing copywriting, copyediting, creative direction/brand and user experience architecture. User experience architecture was a new and critical role created specifically to drive deep partnership with our technology team, particularly the architecture team, to speed up the cycle time for making site improvements, thereby accelerating the "iterative design cycle." It was my job to get strong leaders in place for each of these functions and then turn them loose. We emphasized identifying and hiring leaders with solid domain expertise (i.e., content, UI design, etc.), exceptional people-management skills, and a demonstrated ability to focus on leading the UED team together versus focusing only on their own design-function silo. We got the right leaders in place, and to their credit, they constantly worked the skill mix of their teams to make sure we had the right skills to deliver the work at hand in a quality fashion.

How did they do it? First, they constantly optimized assigning/hiring the proper individual contributors for the project work at hand, and they stayed on top of career-development discussions with each team member to ensure that everyone was getting regular feedback about their performance. We further emphasized the importance of people management and leadership by committing to a 93 percent retention rate across our global team, at the suggestion of our content leader. This goal was reflected in every UED manager's performance goals, including mine. We consistently hit the goal, and it definitely drove home the importance of career-development and performance-feedback discussions.

back to top  Design as Business Partner, not Service Function

Early on, we had a tendency to "execute the order" even if we thought it did not make sense. At times, we literally had people saying, "I know this won't make sense to the customer, but it's what the product manager (or marketing manager) wants." Wow! Over time, we replaced that tendency with a joint approach with product managers, marketing managers, and engineers, who constantly asked, "When this product/ design/email is doing its job for the customer, how will we know, and who is that customer?"

I personally drove this approach home via executive design reviews for every project, and we later switched, at the team's suggestion, to mostly peer design reviews, which were even more effective and efficient. As a leadership team, our focus on analytics—making sure we could measure intended customer and business benefit, such as checkout conversion and related revenue uplift—during every design review reinforced design as a business partner. We got into the habit of literally reviewing every project, whether product- or marketing-oriented, resulting in more and more design folks, product managers, and marketing managers crisply stating their measurable customer and business goals at the beginning of each design review.

back to top  Measuring Design Success

I'll never forget, early on in my PayPal tenure, asking folks whether we had any analytics that would tell us, for every 100 customers who try to pay/check out with PayPal, how many are successful (i.e., payment conversion). Early on, we had limited data on this, which seemed somewhere between odd and staggeringly hard to believe. After all, checkout (paying for something online) is the core of the PayPal business. I then asked, "Do we believe that the limited data we have is accurate?" The entertaining answer to that: "Absolutely not." Again, these are the types of "good problems" you encounter when your biggest problem is keeping up with growth. We aggressively pursued instrumenting every payment flow and tying checkout conversion to revenue achieved. We calculated, and evangelized throughout the company, the revenue lift that a 1 percent improvement in conversion for all our top payment flows brought about. Suffice it to say that a 1 percent change in one payment flow can literally swing revenue to the tune of millions of dollars per year. Given that business impact, our analytics team became very disciplined at working with product managers to set targets for conversion improvement and subsequent revenue increases. Not surprisingly, conversion improvement became a favorite area of investment with particularly big fans in the finance department.

back to top  Standards? Giddy Up!

So you've got a solid team, great skills, and great people managers. And the partnering with other key groups and functions is cranking along. Then the question hits you.... How many times do we really need to redesign the fields on a signup page? Or how many times do we need to revisit whether the login should be on the right side or the left side of the page? Ultimately, our design leaders did a fantastic job of getting our design-standards effort going in partnership with engineering. Effective standards require two core parts, the design and the code, which is the technical implementation of the design. We struggled for a while trying to get our standards efforts going; we just couldn't seem to get our design standards aligned with the Web coding efforts in engineering. Eventually, I personally teamed with one of our key engineering vice presidents to actively drive and support the standards effort. He and I met with the design and engineering standards team every two weeks to track standards creation and adoption to plan, and to ensure that impediments to progress were quickly addressed. The designers and engineers driving the standards greatly appreciated giving regular status updates of their efforts to the sponsors of the initiative, the vice presidents of design and engineering.

As the standards library grew, we saw major reductions in time/resources required to design and code new projects. In fact, our business plan showed that continued build-out of the presentation tier (including content-management systems) and continued development of design and brand standards would allow the global PayPal Design team to support 20 to 40 percent annual revenue growth with design budget growth of flat to plus-5 percent. The key lesson here was, don't build a larger team, but rather build tools, systems, and processes that will make the team you have wildly more productive. This applied to many parts of PayPal, which to this day continues to grow handsomely. In order to grow profitably, more investments are being made in architecture, systems, and tools to make existing employees more productive versus hiring more people and hoping they scale productively.

back to top  Customer as True North

With many of the aforementioned improvements in process, we still often struggled with different people in different functions across PayPal having different priorities when it came to what to fix next for the customer. Getting our Web analytics in place was good, and we already had a rock-solid user-research competency, but neither was helping us to fully understand what issues and frustrations customers were having with the actual PayPal experience, in some type of companywide priority order. This lack of aligned priorities changed as a result of two things. First, we established a standard to put a site-feedback link at the bottom of every webpage. And second, an eBay–wide commitment was made to measuring and improving NPS (net promoter score), which measures the likelihood that your customers would recommend your stuff to friends and family. Site feedback was particularly powerful for understanding shortcomings in new or improved products/pages as we rolled them out. Anyone in the company could subscribe to a daily email that highlighted the top 10 most positive and 10 most negative customer comments in the past 24 hours. In early 2009 we rolled out improvements to the account-overview page, which is the first page that PayPal customers see when they log in to We read the customer comments every day as we ramped the changes and addressed the customer feedback. We were getting customer reaction and insight in almost real time, whereas in the past, much of this precise feedback either would have never been received or the issues would have shown up later in the form of phone calls to customer service, where issues tend to be more difficult and costly to analyze to root cause.

back to top  Approachability and Conversations

As I reflect on the design (customer and business) accomplishments at PayPal and the bumps along the way, I mostly recall time and again saying, "The quality of our customer experience will reflect the quality of our conversations as designers, writers, researchers, and product managers—with each other and with our company colleagues in marketing, engineering, and customer service." I tried to consistently reinforce the importance of collaboration, healthy confrontation, and approachability as foundational to great teamwork/relationships that would in turn yield great design work, great customer experiences. As the design executive, I made a conscious effort to live this approach by trying to know everyone's first name on the team—more than 180 folks globally. Getting those names right was a bar I did not always clear, but the global team made a hell of a lot of progress in a couple years, learning to "move as one."

back to top  Final Word

To conclude, I hope I've been able to effectively communicate at least some of the key aspects of the role of executive leadership and interdisciplinary collaboration across a company, helping accelerate "good to great" design and business progress. Additionally, I hope this article furthers the reality that design isn't an important thing; in its truest form, it is the only thing.

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Don Fotsch is a senior product executive with general-manager experience. He's an entrepreneur whose obsession is blending firsthand customer insights with the limitless potential of technology and the Internet to create phenomenal customer experiences worth paying for and talking about. Fotsch is currently chief product officer for and adviser to Green House Energy Management, a green startup in stealth mode. He has spent more than 20 years defining and delivering breakthrough products to global audiences, including PayPal's category-creating Mobile Student Account, PayPal's industry-leading checkout and payments experience, AOL for Broadband, online sales channel Redesign, the award-winning 3Com Audrey, the industry's first 56k modem at USRobotics, and the Apple Power Macintosh line. At PayPal, he was most recently vice president of product management and design. Fotsch has an undergraduate mechanical-engineering degree with honors from Marquette University and a master's in management from the Kellogg School at Northwestern University.

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