Culture Eats Strategy for Breakfast: How MercadoLibre Transformed Itself to Boost Achievement

Driving organizational change is no walk in the park, especially at a company as big as MercadoLibre. The largest e-commerce platform in Latin America, MercadoLibre supports millions of users in 13 countries. And while a radical technical overhaul in 2010 helped the company achieve the success it sees today, the process of getting there was “not a rosy story.”

In a talk at Velocity Santa Clara this week, MercadoLibre’s chief technology officer and senior vice president of product Daniel Rabinovich shared the company’s journey over the last few years and how its technical decisions impacted its organizational culture.

Daniel Rabinovich

It all started four years ago when Rabinovich realized that MercadoLibre was suffering from the so-called “snowball effect” caused by monolithic architectures. “We had one database, one large piece of code, one team, and it was all getting hard to manage,” he explained. “It was taking us two weeks to push code, and it was an operational nightmare.”

This monolithic architecture created a passive/defensive culture within the company, one where compliance became more important than achievements. “If you want achievement to be your objective, then you need empowerment. And for empowerment to happen, you need flexibility,” said Rabinovich. Based on this theory, MercadoLibre made a concentrated effort to move away from its existing architecture and culture to a decoupled architecture with a more constructive culture.

Giving up control to achieve empowerment

MercadoLibre made this shift by giving up control in six key ways:

  1. Split up the company into many independent “cells.” These smaller teams essentially operate as their own little companies, with their own teams, source code, infrastructure, data, and processes.
  2. Allowed each cell to operate and monitor its own infrastructure. Using tools like OpenStack, New Relic, and OpsGenie, each cell is responsible for the stability and scalability of its products.
  3. Relied on peer pressure to compensate for lack of control. MercadoLibre employees can do pretty much whatever they want within their individual cells, but strict rules control what they expose to the rest of the world. The teams must adhere to the company’s API best practices, and internal clients have all the right to call out offenders.
  4. Implemented strict rules for API usability, and many tools to achieve it. As Rabinovich explained, “APIs are not just for machines. They need to be learnable and usable.” Thus, MercadoLibre does everything it can to support API usability and make an API first and foremost an “interface for humans.”
  5. Eliminated the QA Group. Having developers test their own code was another way of generating empowerment. But it was also “one of the worst years of my life,” recalled Rabinovich. “Imagine the power shift you had to face if you were a QA head … even people I considered friends at the company were telling me I was insane.”
  6. Eliminated the Product Management Group. Definitely one of the more controversial changes at MercadoLibre (and one that got some chuckles from the Velocity audience), this change meant that product development heads also became product managers, or “sponsors,” for a project. “Sponsors produce a high-level goal, similar to a tweet, versus product managers creating detailed specs.”

Daniel Rabinovich 2

One thing that product managers do provide, however, is consistency across the company’s offerings. To compensate for that lack of specialization, MercadoLibre created staff groups that contribute expertise to the cells on an as-needed basis.

By achieving empowerment through the above steps, MercadoLibre has not only been able to attract the right kind of talent, but also innovate much more rapidly and on a wider scale.

Culture trumps strategy

What did Rabinovich learn from the whole experience? “Culture eats strategy for breakfast. Take it seriously.” If you don’t, he warns, you’ll have to undergo dramatic change that comes with a cost.

To learn more about MercadoLibre’s story, read this case study.

Images by Asami Novak for New Relic.

Asami Novak is director of content strategy and development at New Relic. Prior to joining the New Relic team, she wrote marketing and ad copy for a variety of B2B and B2C companies. Her editorial writing has appeared in WIRED and Dwell, among other publications. View posts by .

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