Creating the Psychological Safety to Innovate at PayPal

March 11, 2021

Twenty-two years ago, PayPal was started with the purpose of making moving and managing money easy for ordinary people. Today, the technology team’s “objective and mission is to grow to a billion active users and be the payments operating system for the planet,” moving away from “dated,” “traditional” payment infrastructure, said Sri Shivananda.  

Shivananda is the Executive Vice President and Chief Technology Officer at PayPal. In this episode of One Quick Thing, Shivananda discussed how PayPal scouts for emerging technology and creates its own digital solutions. 

PayPal’s Three Horizons 

When it comes to McKinsey’s Three Horizons, PayPal focuses 80 percent of its innovations on H1, Shivananda said. According to Shivananda, the company’s culture enables anyone to make day-to-day improvements. “You may be a customer support agent, an engineer, a person in the finance organization…finding new ways of making things better,” he said. “The good ideas come from just the inclusive culture.” 

Horizon Two at PayPal focuses on innovations that will yield results within the next two to three years, Shivananda said, “and we know that there is a specific business problem or customer problem that we are working towards.” Adjacency focus areas for the company include crypocurries and buy-now-pay-later offerings. 

Innovations that expand beyond a three-year period make up Horizon Three. “These are seeds that you put in knowing fully well that many of them may not necessarily pay a dividend,” Shivananda said. “But you have to be an explorer. … You have to stay in touch with the ecosystem, to understand markets, customer trends, and so on.”

This episode of One Quick Thing is sponsored by Doblin, a Deloitte business. Doblin is a global innovation firm that helps leading organizations find human-centered solutions to business problems. Together, their team solves complex challenges while helping organizations set their innovation strategy, build new businesses, and spur ongoing growth within their company. View their latest thinking on

Core, Context and Commodity  

When approaching the payment space, Shivananda said his team groups all activity into one of three categories: core, commodities, and context. “Core for us are all things related to payments…[and the] objective of getting to a billion active users and so on,” he said. “We must engage, participate, and probably do it ourselves.” Commodity includes offerings that “the whole world needs,” including payroll and email-related software. 

Context activities give the company a competitive advantage in the payments space, but “the experts actually sit outside the company somewhere,” Shivananda explained. These opportunities are pursued in partnership with those outside experts. 

Creating the Psychological Safety to Innovate 

When it comes to empowering innovation from all PayPal employees, Shivananda stressed that the company strives to create “a psychologically safe space to do that…so the best ideas emerge.” 

For example, Shivananda said, the company maintains a portal where employees can submit ideas. Anyone can then up- or down-vote other submissions. The best ideas appear at the top of the portal. Additionally, Shivananda pointed to the company’s annual innovation tournament. The three best ideas move to the final round, and the top idea receives funding. 

The company also encourages software development and product teams to build their own solutions. Shivananda said he looks for internal solutions created within the company to see what gains widespread use. “When one team tries new things, we just allow it to occur. We don’t even pay attention,” he said. “When 10 teams start to use something new, then we go, ‘Wait a minute, there is a trend there that we need to pay attention to.’ When 25 teams start to do that, we go, ‘Whoa, this is probably something we need to invest in.'” 

Shivananda also spoke to the importance of iterating upon failure: “The way you create a culture of innovation is to make sure that you are a learning culture based in a growth mindset. … Figuring out the best way to get at something takes failures in stride and takes failures as learning and not as an endpoint in something.”