Intuit Goes All Out to Solve the Innovator’s Dilemma. Is It Working?

11/6/12Follow @wroush

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the senior executives, and they and Scott were so supportive that they let us carve out more time from our daytime jobs.”

The team’s weekly routine sounds a lot like the process inside an early-stage startup. According to principal experience designer Alan Tifford, it went like this: On Monday, the team would evaluate feedback from customers and prioritize the list of problems they were having with the application. On Tuesday the team would “go broad” and brainstorm ways to fix the problems. On Wednesday they’d “go narrow,” crystallizing the ideas down to just a few.

Thursday was coding day—“I was usually up really late putting together the prototype,” Tifford says. Friday was testing day, when the group either brought mini-focus groups into the office or went out to coffee shops to get feedback from strangers. On Monday, the whole cycle would start over.

After about 25 weeks of that, in January 2010, Howe and Tifford’s team released a California-only version of SnapTax. A 50-state version, for both iPhone and Android, came a year later. It’s been a huge success for the company, with over a million downloads so far. At $29.99 per return, it’s usually the top-grossing app in the iTunes App Store during tax season. And it’s winning the company new customers: over half of the people who used SnapTax to file their taxes in 2012 had never used an Intuit product before.

That could be an important sign of the company’s future. “People just expect that they will be able to do these everyday tasks without having to be tied to a computer in any way,” Howe says. “Young kids in their twenties haven’t done their taxes a lot before, and they think it’s scary. When they see it on the phone, represented in such a simple streamlined way, there is a little surprise and delight.”

Afterburners on Mobile

But even as Intuit introduces new products like SnapTax, overhauls old ones like Quicken, and adopts a range of new tactics to cultivate broad-based innovation, it’s got the rest of the world to worry about. Consumer expectations of mobile technology continue to rise, fueled by an unending stream of hardware innovations from the likes of Apple and Samsung. Mobile could turn out to be the best thing that ever happened to the company—or it could be the beginning of the end. It all depends on how the company’s leaders respond. To stay relevant and competitive, the company will need to be strategically smart, not just tactically smart.

Already, Intuit has completed one big strategic shift, as it has introduced online versions of the big moneymakers, TurboTax and QuickBooks. (Intuit killed the online version of Quicken in 2010, reasoning that Mint.com performed the same functions better.) “Moving from the desktop to connected services was a big change,” says Stansbury. “The skills required to do that are actually quite different, and you encounter issues of scale, data privacy, and performance that are just not relevant when you’ve got an overpowered PC on your desktop just to run one program.” Over the last four years, Stansbury says, the company has systematically retrained hundreds of software engineers who used to work on desktop programs like the original Quicken so that they understand how to deliver database-driven applications over the Web.

QuickBooks on an Android device

At Intuit's 2011 Innovation Gallery Walk, an Intuit product manager demonstrated QuickBooks running on an Android device.

But even before the company had completed that journey, the smartphone arrived, changing everything once again. The Mint.com acquisition was part of the company’s response, but Intuit couldn’t expect Patzer and Mint.com’s 34 other employees to infiltrate and alter the larger company’s culture overnight. So nearly two years ago, the company undertook what Stansbury calls a “change management exercise,” beginning with another off-site meeting for CEO Brad Smith and other top executives.

“That was when we first rolled out the idea that we need to be getting going on afterburners on mobile” across the company, says Stansbury. Meetings with vice presidents came next, then product managers. The exercise was partly about making sure Intuit executives understood the opportunities and challenges inherent in mobile app development and distribution. It was also about getting more retraining and hiring underway, so that Intuit didn’t have to outsource as much of its mobile development. (Luckily, “moving from SaaS to mobile turns out to be easier than moving from desktop to SaaS,” Stansbury says.)

The exercise ended in summer 2011, and Stansbury says the results so far have been “stellar.” In the last year, the company has introduced more than a dozen new mobile apps. The number of people using its mobile products has tripled; mobile revenue has increased by a factor of 10; and the average rating for Intuit apps in the iTunes App Store has increased from 3.0 stars to 4.3 stars.

And there are more mobile products in the pipeline. But already, Intuit is moving on to the next thing. The change management exercise for 2012, according to Stansbury, is all about platforms—that is, getting everyone in the company thinking about how to open up Intuit’s infrastructure so that outside developers can connect to it and, in theory, build apps and services that enhance the value of Intuit’s own network.

Building a platform also means tapping the expertise of users themselves. One model here is TurboTax Live Community, launched in 2007 as an online forum where taxpayers can answer one another’s questions. “Amazingly, there are people who spend tons of time, out of the goodness of their hearts, answering all kinds of tax questions, and people are as happy with those results as they are with our own customer support,” says Stansbury.

The Live Community model has spread to other Intuit products, and now there’s so much data in the forums that the company has been working with MIT Media Lab computational linguist Henry Lieberman to come up with natural-language search tools to help users find the answers they need faster.

Risk Tolerance

Still, for all its exercises and off-sites and initiatives, there are reasons to doubt whether Intuit is moving far enough, fast enough. The company remains perilously dependent on TurboTax for its revenue. Because it is, in effect, the nation’s biggest tax accounting firm, its revenues are extremely uneven; it usually loses money in the first and fourth fiscal quarters and makes it up in the second and third. (Intuit’s Black Friday is April 15.) Even scarier, there’s a risk that the entire TurboTax business will go away after 2014, when an agreement keeping the federal government out of the e-filing business is set to expire.

At a more fundamental level, Intuit is a company that came of age during the PC era. Microsoft’s success spreading Windows (and its failure spreading Money) created the perfect conditions for Intuit to build a near-monopoly in personal finance and small-business accounting on the desktop. It’s hard to imagine any company achieving a similar feat in the era of … Next Page »

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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