Discoveries

Volume 15, 
#8, 
November, 2017

Tags: 

Lessons for Business Longevity
How Intuit’s practices have helped it outlive competitors

by 

Sheila Mello

I did a double-take when I read the recent Fortune article about Intuit’s 34-year run of success. The article lays out the reasons why Intuit is number eight on Fortune’s new “Future 50” ranking of companies best positioned for growth.

My surprise arose because the explanation for Intuit’s decades of success reads like a list of the points I’ve made for the last 15 years in our Discoveries newsletter about how organizations can delight customers—and thrive and grow as a result. I’d like to think someone at Intuit was reading Discoveries, although I know industry-leading companies already do these things. Either way, the proof that these ideas work—in the form of Intuit’s revenues, profits, and potential—is affirming.

So, how does a company that started in 1983 with a single piece of financial software grow into a $36-billion giant with financial performance that, according to sources cited in the Fortune article, put it in the 99th percentile of all public companies? It takes a relentless focus on business practices that often run against the grain, the willingness to avoid complacency at almost any cost, and what some people refer to as “radical transparency.”

But the exceptional thing about Intuit from my perspective is that it doesn’t have to be exceptional. There’s no reason why your company can’t adopt the practices that have made Intuit so successful, especially those that relate to understanding customer experiences. I encourage you to read the Fortune article about Intuit, the “master of self-disruption.” Pay special attention to their success factors. And read my take below on what stands in the way of more companies following these straightforward—but not always simple—approaches.

Find the right leader, who leads by example

The Fortune article points out that Intuit “is becoming an ecosystem,” going beyond selling products and services (an idea Wayne Mackey discussed in last month’s Discoveries article about how a company’s information may be more valuable than its products). Intuit CEO Brad Smith has led this charge for the last ten years. A more conservative leader might not have done things like deciding to open up the company’s proprietary so other companies can build products on it, a move that has paid off and is part of Intuit’s strategy to place itself at the center of the ecosystem.

But I can’t lead that way because…

  1. …my company has been in business for 100 years and we’re too old-fashioned/entrenched/set in our ways.
  2. …the board of directors would never put up with that kind of risk-taking!
  3. …we sell a commodity product and there’s no “ecosystem” around it.

To which I reply:

  1. …then you may have another couple of decades left before a new market entrant eats your lunch. Probably not even that long.
  2. …will they put up with dwindling returns and sinking profits? Your job is to take calculated, not reckless, risks based on solid evidence about your market, as when Intuit moved into the mobile market based on market trends and used current mobile success stories to convince reluctant managers.
  3. …then you are in a perfect position, as Wayne’s article on informatics-enabled development explained, to create and dominate that ecosystem.

Embrace surprise and question assumptions

The Fortune article mentions Intuit’s focus on “‘savoring the surprise’—digging into data that seems odd or nonsensical to find business-changing insights.” It cites the example of the genesis of QuickBooks, one of its most popular small-business offerings, which came about because so many Quicken users described using the product at work. At first, this made no sense. Why would people balance their checkbooks at work? Digging deeper to understand this surprising result, Intuit learned that customers found current small-business accounting software too complicated and similar to big-company accounting offerings. Intuit introduced QuickBooks as a solution. In another example of bold strategy execution, Intuit sold Quicken, its flagship product, in 2016 to focus strategically on QuickBooks and TurboTax.

But my company can’t/won’t embrace surprises because…

  1. …we’re market experts who already know what our customers want and why they do what they do.
  2. …we’ve defined our market and we’re not going into adjacent markets.
  3. …we don’t ask our customers those kinds of questions.

To which I reply:

  1. …this is one of the most dangerous misconceptions in product development. Often the best way to understand what your next move should be is to be as ignorant as possible. What if you knew nothing? What if you had never heard of an automobile, or a house, or a cellphone, or a floor mop? What if you only knew that you had to get from one place to another, keep yourself dry in inclement weather, talk to kin in distant cities, or prevent your feet from sticking to the floor? You’d learn surprising things with the capacity to make you question your assumptions.
  2. …your next market might not be the one you’re in. You might need to redefine your market to stay relevant.
  3. …if you don’t have some kind of formal process for gathering customer input, you need to create one, stat.

Experience total customer immersion

To dig deeply into its customers’ challenges, Intuit does not convene focus groups or administer online surveys (at least not initially or exclusively). According to the Fortune article, “Its most effective tool is the ‘follow-me-home.’” A small group of Intuit employees gets permission to visit customers in their homes or offices. This isn’t customer interviewing; it’s customer observation. CEO Brad Smiths spends up to 100 hours in such observations and lauds it as a way to quickly get a complete picture of a customer’s challenges.

I don’t know the details of Intuit’s visits, but they sound like the customer visits PDC helps clients arrange and conduct. The one caveat I would add is that you must focus the visits on problems, not products. Observing customers using your product gets you great information about your product, but doesn’t necessarily open up the conversation into areas that will yield new solutions.

Here are our keys to success when you observe your customers:

  1. Keep your talking/listening ratio at about 10%/90% (observe).
  2. Do not, under any circumstances, ask customers or potential customers about your product (don’t lead the witness).
  3. Set up a framework to process the data you gather.
  4. If it’s not written down—word for word—or recorded, it didn’t happen (avoid filtering).

Reward failure

The Fortune article cites “permission to admit mistakes, shortcomings, and failures” as a key element of Intuit’s success. For example, a few years ago, the head of Intuit’s TurboTax raised the product’s prices and customers revolted. The leader owned the mistake and instead of being punished is now a rising star.

But that wouldn’t work at my company because…

  1. …anyone who admits a mistake would be fired.
  2. …management says they want a culture of innovation but it doesn’t actually work that way.
  3. …at my company, you might be able to admit a small error but a big one will end your career.

To which I reply:

  1. (and 2 and 3)…none of those are ways to make employees feel comfortable with risk-taking. You need to reward risk-takers and learn from their failures. A learning organization is a winning organization.

Can your company last and thrive over many decades as Intuit has done? Yes, but only if you are willing to undertake the often-difficult work of digging beneath the surface of what your customers appear to want—and developing the business practices that will allow you to take these insights and turn them into customer-delighting products.

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