CASE: M-364

DATE: 05/12/16

EBAY: DESIGNING CULTURE CHANGE

THE INNOVATION PLAYBOOK

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INTRODUCTION

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In September 1995, eBay fulfilled its first transaction by connecting a seller with a buyer who

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wanted a laser pointer. Since that time, the company has outgrown its initial identity as an online
auction site to become one of the world’s premier global commerce platforms. Over the years,
the company has transformed how the world shops and has helped millions of people launch
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businesses.
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A public company since 1998, eBay Inc. had seen its share of ups and downs. In the mid-2000s,
the company’s stock price was cut in half and its market cap shrank by almost $30 billion. When
CEO Meg Whitman selected John Donahoe to take over in April 2008, investors worried that
Donahoe’s corporate background in management consulting would not effect a major enough
change to turn the company around.

Donahoe surprised investors, moving quickly to restructure and refocus the company on its core
commerce and payments businesses at eBay and PayPal. He divested Skype, which was non-
core to the company’s commerce focus. He reduced the company’s global workforce to align
costs and resources more closely with the company’s growth strategy. He launched a multiyear
effort at eBay to modernize the company’s technology platform and drive commerce innovation;
focused investments at PayPal to drive global growth and innovation; began making strategic
acquisitions in commerce and payments to strengthen the company’s capabilities; and introduced
a customer-centric mindset across the company.

Stephany Yong, Jessica Dodson, Tina Sharkey (CEO, Sherpa Foundry), Dane Howard (Global Brand Experience &
Design, eBay Inc.), and Professor Jennifer Aaker prepared this case as the basis for class discussion rather than to
illustrate either effective or ineffective handling of an administrative situation.

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 eBay: Designing Culture Change – The Innovation Playbook M-364 p. 2

These efforts worked, driving significant growth and shareholder value. The successful
turnaround of eBay’s core business was widely recognized, and the company became an early
innovation leader in important areas such as mobile commerce. Meanwhile, PayPal’s growth
and momentum continued, underscoring its enormous long-term potential as a global leader in
digital payments.

Leading a purpose-driven, customer-centric organization was central to Donahoe’s strategy.

Following the success of his initial turnaround and restructuring strategies, Donahoe began
focusing on the next iteration of eBay Inc.’s growth in 2012. Design thinking became a central
element in this phase. Donahoe recognized the emerging importance of design thinking in
Silicon Valley technology companies, and he saw design thinking as a natural evolution from his
customer-centric focus.

This is a story of how Donahoe, as a Fortune 500 CEO leading a multibillion global technology

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company in a highly competitive and changing commerce and payments environment, embraced

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design thinking as a key ingredient of culture change and a catalyst for growth. The eBay story
illustrates how much can be accomplished in a short timeframe with strong, focused leadership;

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an inclusive, broad-reaching process; and a commitment to building community and culture.

This case study reflects efforts underway at eBay Inc. during 2013 and 2014 to embrace design
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thinking to enhance product development, enrich customer experiences, and improve talent
recruiting and retention. In July 2015, the company separated PayPal as an independent,
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publicly traded company. As independent companies, eBay and PayPal continue to embrace
design thinking as an important driver of culture, growth, and innovation.

CUSTOMER CENTRIC, PURPOSE DRIVEN

As a first step, Donahoe initiated a discussion with eBay’s design leadership team on the
importance of design thinking, a process that started with user empathy in understanding
problems and fast-paced, iterative brainstorming and prototyping of solutions to solve that
problem. From there, Donahoe anchored on a simple goal—to build eBay’s reputation through
craft and care in the company’s products, while injecting purpose and soul into the organization.
This purpose would emphasize a commitment to giving the world a better kind of commerce, one
enabled by people, supported by technology, and conducive to creating opportunity for anyone,
anytime, anywhere.

The cultural change would also require leadership to reassess eBay’s core values and refresh its
approach to product development and employee engagement. Rather than facing familiar
challenges related to product launches and driving sales, the eBay leadership had to figure out
how to instill the notion of design thinking among its thousands of employees. The company
focused on developing a design-oriented culture that prioritized building products and services
driven by empathy for the customer experience.

The “Connected Commerce” purpose at eBay became firmly grounded in a framework that
connected eBay to its customers, each other, and the world. As a result, the organization’s
 eBay: Designing Culture Change – The Innovation Playbook M-364 p. 3

purpose was rationalized against the discipline of design, as summarized on the company
website:1

 Connect to customers – eBay works for the betterment of its customers—a

diverse mix of people, brands, nonprofits, and developers. They expect eBay to
create smart solutions that improve their lives and businesses, both locally and
globally.

 Connect to each other – Across eBay, we are a powerful network of talented and
driven people who challenge one another. We don’t believe in “winner takes all.”
We believe it takes all to win. We believe you should be you, so we’ll embrace
your unique personality and point of view, and help you shape and define your
success. Together, we’ll do amazing things.

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 Connect to the world – We design a new and better kind of commerce; one that’s

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enabled by people, supported by technology, and creates more opportunity for
everyone. Across eBay, the experiences we generate allow millions around the

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world to participate in commerce, to connect, and to flourish.

Seek Independent Design Voices

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Design’s increasingly influential role in shaping technology companies first became apparent
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with Steve Jobs and Apple’s highly customer-centric focus. More recently, this customer-centric
approach is guiding companies such as Airbnb, whose CEO Brian Chesky disrupted the
hospitality industry by building an end-to-end customer-centric experience.

As he set out to drive change at eBay, Donahoe reached out to Chesky to learn more about
design thinking. Chesky showed Donahoe how product development is more than pixels; using
design thinking, product development is an immersive end-to-end experience based on deep
customer empathy and insight. Chesky and Donahoe developed a mutual mentoring relationship,
and in the months that followed, Chesky continued to be an advisor to Donahoe, as well as
speaking to eBay designers and leaders. To meet the challenge of how to move the design
initiative forward to eBay’s thousands of employees, Donahoe identified leaders that eBay
employees would respect, leaders that shared Donahoe’s vision and had experience in
implementing design thinking in their own work.

In late 2013, Donahoe met John Maeda of the Rhode Island School of Design (RISD), and
formerly of the MIT Media Lab. Quickly establishing a strong rapport with Maeda, Donahoe
saw the power of design thinking to change culture more broadly and engaged Maeda to help
lead eBay in that journey.

As the president of RISD, John Maeda brought together creative, independent thinkers to create
one interdisciplinary community. As a luminary at the intersection between design and
technology, Maeda was a key proponent of how science and art could transform the way
technology companies affected people’s lives, spearheading several initiatives that combined
1
https://designplaybook.ebay.com (February 19, 2016).
 eBay: Designing Culture Change – The Innovation Playbook M-364 p. 4

computer science with art. Having led research activities at MIT and having worked with
corporate sponsors of the Media Lab, Maeda understood how technologists felt about their work,
separate from issues of design.

In January 2014, Donahoe appointed Maeda to be the chair of eBay’s Design Advisory Board.
Maeda spent much of his career cultivating and bringing together interdisciplinary talent, so his
new job fittingly was to empower the design leaders and talent across the company. For the next
six months, Maeda worked with eBay’s design leadership to understand who and what inspired
eBay employees. To accomplish this, he listened to designers across the organization, heard
their stories, learned about their work, and appreciated their ambitions. Maeda went on to
identify designers from across eBay who could emerge as leaders within their respective offices.
This move would be a substantial change from having designers act as final editors in the
product development process; instead, designers would serve as torchlights of inspiration, ever-
present throughout the strategy and development stages of the product lifecycle.

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Later, in June 2014, Donahoe and Maeda organized a global leadership summit at eBay for the
company’s top 180 leaders to have an immersive day in design thinking, modeled after executive

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training exercises used at the Stanford d.school. Through this session, designers walked the
leaders through a design thinking exercise to solve the problem by empathizing with different
stakeholders, practicing need finding, and brainstorming different solutions. The design summit
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was a physical expression of community that gave employees a chance to witness Donahoe’s
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commitment to bring design thinking to eBay.

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Prototype the Culture, Craft Stories

The Design Playbook

The company needed a way to record eBay community lore and share those stories both
internally and externally. It needed a way to substantiate and speak about its new culture and the
changes it was going through—it needed a playbook. Donahoe recruited Dane Howard, eBay’s
director of global brand experience, to lead the initiative. The playbook would be a digital and
physical representation of eBay’s design initiative and how it shaped the eBay community.
Creating such a playbook was new to eBay. Until then, eBay had never made an explicit,
concerted effort to document its approach for designing for commerce, but would now take a
fresh approach:

Because design isn’t just about crafting pixels or making products—it’s about
creating possibilities. And when we get our entire company to see what’s
possible, anything is. So we’re starting with this Playbook. A living document
that defines our beliefs and approach to design.2

The process involved in creating the playbook turned out to be a unique exercise in getting all of
eBay’s businesses together to talk about challenges they were facing, and then storyboarding
narratives and extracting insights on how design could help eBay excel and grow. The driving
executional force behind the playbook was a design “Jam” session that comprised 30 designers,
copywriters, and leaders, who contributed over 63 stories about design thinking deployed across

2
Excerpt from the eBay Playbook, http://ebay.com/design/ (February 19, 2016).
 eBay: Designing Culture Change – The Innovation Playbook M-364 p. 5

eBay. The new playbook also included stories of how eBay community members leveraged its
services to build their businesses. As a part of the design session, physical books were
prototyped and a ceremony was held for new and existing studios to train and acclimate
designers about the language and content in the playbook. Based on the feedback, the team
accelerated the project to make it operational in 2015.

Photos from eBay’s Playbook Design Jam Session

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Source: eBay Inc.

Customer Stories
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Perhaps the most substantial outcome of the design transformation was the creation of a global
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design community across all of the eBay companies. Through the stories told in the Design
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Playbook and the eBay Blog, employees came together over their common passion for making
people’s lives better through the products they were building.

One standout story centered on the journey of eBay’s largest used cycling parts partner, The
Pro’s Closet, and its founder, Nick Martin.3 In 2003, Nick sold everything he owned on eBay,
except for his bike and his bus. With this new sense of freedom and mobility, Nick travelled in
his van and raced his bike professionally across the country. Eight years later, Nick quit riding
professionally, but his passion for cycling and sustainability persisted. Through eBay, The Pro’s
Closet provided cyclists with an avenue to buy used parts online with the same level of service
they would receive from their local bike shop. The company also enabled athletes, teams, shops,
and companies around the world to free up physical space by selling unused parts to people who
would give them a second life. Nick’s business ran entirely on eBay Inc. services, from building
his online storefront on eBay, to using PayPal for secure international transactions. The Pro’s
Closet story was representative of the “Connected Commerce” theme: eBay products connected
entrepreneurs like Nick to businesses and customers around the world.

Infusing Design into the Organization

Design thinking helped eBay frame questions like, “How do you think about problems through
the lens of the customer?” and “How do you combine those insights into a great experience that
is the foundation to building a great company?”

3
http://ebay.com/design/connected-to-our-customers.html (February 19, 2016).
 eBay: Designing Culture Change – The Innovation Playbook M-364 p. 6

Well into the cultural design transformation, Donahoe continued to push forward the spirit of
design thinking. After Dane Howard and the design team identified some eBay stories, they
shared them on the blog and in the official eBay Design Playbook. Donahoe read the stories and
wrote personal notes of thanks and recognition to the contributing eBay employees. The effect
of being recognized by a CEO committed to an innovative and collaborative company culture
would, in turn, inspire designers to align themselves more closely to the organization and assume
greater leadership roles.

Measuring Impact of Cultural Change

The cultural redesign across eBay’s companies was on a multi-year journey. In the initial year,
the organization focused on creating momentum to celebrate design. Although the company was
not entirely certain what measurements it would use to define success for the design initiative,
soft metrics would help eBay to track employee engagement.

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A number of key indicators pointed to the early success of eBay’s cultural transformation’s
positive momentum. The fact that Donahoe personally spearheaded the design initiative was a
testament to how important he felt design thinking would be to eBay’s current and future growth.

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In addition, the emphasis on design studios at each of eBay’s campuses, coupled with eBay’s
stories in the Design Playbook, represented tangible examples of the campaign’s progress.
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The company was clear that success would ultimately be measured by product innovation,
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improved customer experiences, and recruitment and retention of talent. As an initial step in the
cultural change process, the design task force under Howard began to measure success by seeing
how many designers they were able to meet, how many articles and stories they were able to
produce, and how many external events, panels, and conferences eBay was able to participate in.
In addition, the team created “beat” reporters inside each of the design organizations to create
and write articles about the studio, in addition to having them lead several in-person community
events.

CONCLUSION

What was most remarkable about the human-centered design initiative at eBay was its emphasis
on creating fulfilling experiences for not only its customers, but also for its employees. It was
rare to see a senior leader of a billion-dollar company personally take it upon him or herself to
think about organizational growth in terms of design, as opposed to the bottom line.

Faced with the challenge of how to facilitate a cultural change across multiple subsidiaries across
multiple countries, Donahoe could have gone to an outside agency or consultancy to support him
in putting design at eBay Inc.’s core. Instead, he leveraged internal design talent and brought
thought leaders into the company. His approach fostered strong engagement across eBay’s
design community and drove rapid cultural transformation.

A short 12 months later, eBay had achieved the following:

 Full participation by over 300 employees in the design movement

 eBay: Designing Culture Change – The Innovation Playbook M-364 p. 7

 The launch of a new online communication portal, in conjunction with over 15 related all-
hands meetings
 More than 700 executives’ direct participation in the design thinking agenda
 1,800 leaders committed to design thinking as a means to drive better products and processes
 Launching a global commitment to design, manifested in the eBay playbook and shared with
the world via the company’s website.

These achievements led to tangible examples of improved products and customer experiences, as
well as improvements in eBay’s reputation as a strong place to work for design talent.

Great design is the way an organization recruits, develops, and nurtures talent to build products
and experiences that resound with customers. Great design also manifests in the way an
organization’s culture challenges assumptions, improves its products, and empowers its
employees to derive fulfillment from their work. By integrating design into the architecture of

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its business, eBay prioritized great design by putting its designers at the forefront of a cultural

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transformation that will help eBay achieve its vision of “Connected Commerce”—that together,
they can create a better and more sustainable form of commerce for everyone.

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