How PayPal rallied a 4,000-strong move to Agile

Keeping a step ahead of the competition is tough in any business. For online payment processor PayPal, staying competitive included getting 4,000 IT and product operations employees to embrace a faster, iterative and more practical way to develop software.

In part one of this CIO Innovator Q&A, PayPal's VP of technology business operations, Kirsten Wolberg, explains why the company decided to move from a Waterfall model to an Agile methodology -- and the four components of its new way of working. Here she talks with SearchCIO's Linda Tucci about the costs associated with getting 4,000 people on board -- including hiring coaches and designing an open floor plan. Among the benefits? Wolberg points to an unprecedented surge of new customer products.

With these big transformations, it's not always feasible to calculate ROI, especially on a short-term basis, but I'm curious: What did you have to invest in terms money and resources to get this Agile transformation off the ground?

Kristen Wolberg: We had a transformation team of over 110 people across the organization. Each of those individuals was doing this not as their full-time job, but in addition to what their day job was. So, we didn't hire up an additional 110 people; we got passionate volunteers to work with us going above and beyond in order to help drive this transformation.

I had a small group of individuals on my team of about 10 people who worked full time and were dedicated to this. But essentially, they are the enterprise resources that we put against any enterprise transformation, and this is where we focused those resources and will focus those resources for the duration.

Kirsten Wolberg

In terms of hard dollar costs, we had the costs associated with changing the furniture out, and that was roughly $2 million. We had the costs associated with hiring external Agile coaches. Those coaches came from a third-party partner we work with -- and we spent roughly $5 million on coaching last year. Those are the only hard dollar costs. The rest was mobilizing the rest of the organization to move through the change that we needed to move through.

How did you pull that off?

Wolberg: I'll set the scope. We had roughly 4,000 people, and these 4,000 people were from the technology organization as well as from the product organization. In a two-week time frame, we reassigned all of these individuals to sit on scrum teams -- and those teams were cross-functional scrum teams that were aligned with [the] product lines I mentioned previously. Once formed, the team had to make a decision on any existing work in flight: Were they going to finish their work in flight in the old way, so to speak; were they going to transition and start to do that work using Agile; or were they at a natural stopping point and could start on something new? Anything new would obviously be started within Agile; [for] anything that was, say, roughly three-quarters of the way through, it probably made sense to finish it in the old way; then if you were less than halfway done it probably made sense to transition to Agile.

We gave the teams basically two months from May until the next major release, and then after July, all of the teams needed to be working in the new way. So basically, how we pulled it off was by having a migration strategy that enabled teams to choose the best path and then we gave them tools to help them make that migration. (Rally is our Apple tool --they put their stories into Rally to help drive their work forward.) We had a lot of different touch points. We had coaches on the ground for teams, we had video training, we had in-person training, and we could just continue to iterate as all of the teams moved into the new way of working.

Of the 4,000, did you end up losing a lot of people who said, "Ehhh I just can't do this."

Wolberg: We didn't at all. There are definitely people who were quick to make this change and those who were more resistant to making it. I think [that] overall PayPal has been focused on bringing in top talent and having an environment that attracts top talent. The transformation is certainly part of that story. Some of the other innovative things we're doing from a technology perspective are the second part of that story. But within this space, we have lost some people (I think they call it not-regretted attrition) in the sense of those who are not finding that this is the kind of environment they want to work in [and] are finding other positions they are more suited for. For people who don't love it here, oftentimes we do not regret [when] they [choose] another path.

We want people here who want to be here, who are engaged and understand the mission we have and are really connected to our customers and are passionate about we're doing. What's great about PayPal right now is that we're really attracting those types of engineers because they have opportunities to work in the way they would be working in any startup, in terms of an Agile perspective, from a workspace perspective with the [new] open floor plan and cube spaces and collaborative environment, and from a technology perspective. We're really bringing in and creating some of the leading technologies that engineers want to work in. And because our cycle time has improved so much, from [several] months to two-week cycles, I think this is the kind of dynamic environment where really great engineers want to come and work.

With these big transformations, often there is a crisis that precipitates them. Can you give me a sense of what was so bad about PayPal before that prompted leadership to say, "We've got to shake this up?" Is it competitive pressure, or the payment industry is in turmoil, or you have to worry about emerging payment methods?

Wolberg: I would certainly give credit to [former PayPal president] David Marcus and the leadership team. We wanted to disrupt PayPal before there was an external crisis. We recognized there is an increasing number of competitors in the environment and that we have a great customer base and very loyal customers. The way to void that is to be complacent and to not stay in touch with how you can stay relevant. We are driving not just to stay relevant, but to really drive the industry and reinvent payments and the entire commerce experience. In order to do that, we can't just continue with business as usual.

You asked about the cost side of the equation. I look at the other side and ask, 'What did we get?' Over the past 18 months we released 58 products, and that is more than we have ever developed and certainly far more than in the last several years. We opened up our ability to really start delivering for our customers and pushing the ball forward.