How PayPal Put The User Central To Their Innovation Strategy

The digital payment platform knows all about product innovation


In most companies today, innovation is something that’s encouraged in every echelon of the business. From customer support to the boardroom, companies flourish when anyone involved in an organization feels comfortable putting forward and developing innovative ideas. But too many companies have a warped or underdeveloped the idea of what innovation is actually supposed to achieve. In business processes, it is simply about making employee work more straightforward and cutting costs where possible. As for product innovation, the meaning can change from one company to the next.

Akshay Krishnaiah, PayPal’s Global Product Head of its Research Labs, subscribes to one specific definition of innovation. Speaking at last year’s Mobile Innovation Summit in San Francisco, Akshay explained that PayPal see innovation as: ‘Satisfying users’ current or future wants/needs by turning an idea into a product/service with speed and urgency, using minimal resources and cost.’ Most big companies, he says, will only consider the idea into product element of innovation. They will all too often ignore the wants of their customers and some go as far to dismiss these wants as invalid - think Steve Jobs and Henry Ford.

These companies have huge budgets, big resource pools, big teams, and big user groups, yet nimble startups are still able to outdo them. The unwillingness to fail, Akshay notes, is what causes the failure in the long term. Larger companies are all too often merely responding to what smaller more nimble companies are doing, rather than paving the way themselves with products that solve problems for the customers.

And for Akshay, it’s the customer that has to be central to the innovation. In his presentation he explained that PayPal was approaching product development in the wrong way. In neither the wider company or any specific department did it have a single catchpoint. ‘There was no organization or individual unit that could catch problems, groom through those problems, and work backwards toward solution.’ Most companies don’t do this - some get very lucky in their product development but on the whole companies are going in blind as to whether or not a product actually solves a problem.

This is how Akshay and his team and PayPal came to invent the Catchpoint Paradox. The paradox itself is the ‘lack of an organization to engage across the board with a sense of urgency and rapidly do the following:

1. Catch customer problems with the help of BUs

2. Validate them across one or more cohort of customers

3. Define them in a business context

4. Assess them against competition

5. Assess them on opportunity

6. Asses them on customer affinity

7. Prioritize them based on 4,5 & 6

8. Engage non-originating orgs to brainstorm solutions

9. Build MVP and validate solutions with identified cohorts

10. Share findings with everybody

Once this innovation strategy is built into a company, the mindset changes. ‘It slowly starts getting the whole company to be more customer-centric,’ Akshay notes. ‘Everything starts revolving around the customer.’ When a company is in the mindset wherein everything it does is intended to solve a customer problem, its output can be both faster and more effective.

The effects of this process, Akshay explains, can be quickly felt. When the idea was first put to the different teams at PayPal, there was initially some resistance. Some felt the process would be time-consuming, and would ultimately make the company less agile. ‘Five days. No really, five days,’ Akshay says proudly. ‘In five days, we were able to take a problem that was very important to our customers but very poorly satisfied - everyday shopping problems. We were able to work with four different startups, get the legalities through, validate it with the help of a startup called GutCheck. We able to reach customers from New Jersey to Bakersfield, California, validate our hypothesis, build a product, launch it, test it with users, in five days. Actually, in five days we were able to get more feedback, on Saturday we hacked, on Sunday we launched it with 26 users and we got raving reviews.’

Some of the steps mentioned are only necessary in larger companies, and startups can be even more agile than Akshay’s five day example. Importantly, the process should be as decentralized as possible. Akshay makes it clear that the product owner is very rarely someone in a role that will actually build the product. ‘It’s often someone from the strategy team, from the marketing team, from the technical support team, someone from consumer support team, someone like that. And they own it, because they are very intimately familiar with the problem itself, and we always have them engaged throughout the process.’ This not only gives that person a sense of ownership, it encourages the rest of the company to go and look for problems.

Putting the consumer at the heart of product innovation can not only make products more relevant, but speed up their development. Paypal’s Catchpoint Paradox should resonate with all companies large and small, and by considering a model similar to Akshay’s 10-point plan, solutions can be found and actioned on. 

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