What Drives Innovation at Intuit? Customers or Competition?

SOB FacultyQuickbooks Online3 Comments

Important! This is not a post about whether I like Xero better than QuickBooks Online or vice versa. I want to make it clear right up front. I genuinely love both companies and I have formed relationships with many people at both companies and I would invite them all into my home – at the same time even. Both companies have the most amazing people working for them, and both companies have made amazing products.

This post is very specifically aimed at exploring how Intuit as a company innovates and develops their products, with an emphasis on QuickBooks Online, or QBO.

People like to say that Xero is giving Intuit and its QuickBooks Online product a run for its money. I’m guilty. I’ve thought it. I don’t anymore. Here’s why. I have heard many versions of it said in many circles on and offline – including a specific comment thread in our Facebook group called ABBO – Accountants Bookkeepers, and Business Owners. Here was one comment and then a follow up:

One thing which has always been a pet peeve of mine is gossip. When people talk about what other people said or did. I have always felt and usually I am the first one to say that if you have a problem with someone you should take it up with them directly. Also lose the “problem” because you may just not have all of the information. Bring on the scientific method of “inquiry.” Assuming you’re not an ego maniac this shouldn’t be a far stretch. You might just be wrong!

I decided to drink my own Kool-Aid on this one, and since I am fortunate to have developed good relationships with people who actually work at Intuit, I was able to ask them the question point blank.

Kim Amsbaugh, the senior communications manager at Intuit, was able to schedule a call with myself and Intuit’s VP of Experience Design, Klaus Kaasgard, as well as the Director of Product management for QuickBooks Online, Kevin Kirn, so I could get the question answered specifically. As I prepared for this meeting, I reached out to Intuit’s Accountant and Advisor Group Communications Director, Chris Repetto, and asked him why he thought Intuit had been so successful in the face of competition over the years and how Klaus and Kevin could help me (and you) better understand Intuit’s strategy. He replied:

“Klaus can share the journey he has been on for almost a decade to continually improve the product, share the strategy behind our innovation, and the roadmap that we are following for future enhancements. Kevin can talk with you about the current product features and how he is working with accountants and small businesses to create and introduce new and improved features every few weeks.

What you’ll see is that the constant in our innovation strategy is always the customer. As the market leader, we have always been challenged and always will be. Sometimes it’s Microsoft, or Sage or Peachtree or Xero. Tomorrow it’ll be somebody new who right now is working on a great idea. It’s not the challenger that drives us, it’s solving customer problems. We’ve been very successful by staying focused on and prioritizing the needs of our customer first, regardless of whomever is looking to challenge us, and we’ll continue to do that.

At the end of the day, it’s great that you are hearing from a lot of people that QBO is improving – and that’s all we really care about.

chris

I don’t expect you to take their word for it. After all Chris, Klaus, & Kevin all work for Intuit. So let’s look at what I took away from my conversation with them. Just the facts – and then you can decided for yourself what really drives innovation at Intuit.

For starters, let’s look at the history of QBO. It was launched in 2001. I’ve never heard anyone in or outside of Intuit argue that this was way ahead of it’s time. A few interesting tid-bits Kevin and Klaus shared with me about that particular time period and what was happening on the Internet:

  • In 2001 Sales force & photo sharing (SAAS Services) were coming up. The more sensitive the info, the less inclined people were to jump in.
  • In 2009, organic customer growth really started happening – even though it wasn’t being talked about – with no marketing QuickBooks online started to grow.
  • The Overhaul of QBO started in 2010. Idea was to reinvent a lot of the internal parts. Xero did not yet have a big presence in the US.
  • Throughout the 2000’s, Intuit re-launched bank feeds and other things, but also realized they were doing it piece by piece. Around 2009, a complete top to bottom overhaul of QuickBooks Online began.
  • Kevin was brought on in 2010 just when a complete overhaul of QuickBooks Online was gaining momentum. He was 1 of 2 PMs then; today there are about20 product managers dedicated to QBO.
  • In 2012 with a few wins under their belt (new data centers, money bar, revamped bank feeds, QBOA, global launches, desktop migration, iphone/android apps, etc.) Intuit decided to go even bigger and launched the Harmony project
  • The brand new QuickBooks Online, a.k.a. “Harmony” was launched in 2013.

So, it appears that it wasn’t about competition. It was about developing a product that solved customer’s problems. It was about changing the customer’s lives so profoundly they couldn’t imagine going back to the old way.

Not convinced? OK let’s keep going.

Here’s a look at some of the things Intuit does internally as part of their product development efforts. Intuit has a process of innovation called “Design for Delight,” which is a principle based on going beyond customer’s expectations and delivering such an awesome experience that they want to tell the world about it. As an Intuit VIP, I was invited a couple of years back to participate in this “D4D” process, which starts with having a deep understanding and empathy with the customer, generating lots of ideas and narrowing them down the key ones to test, and doing rapid experiments WITH customers and getting immediate real-world feedback from end users before iterating and testing again. I can share with you first hand, that no one at Intuit ever asked us to look at Xero and see how we could use what they were doing to make QuickBooks Online better. In fact, as any good market-leading company does, Intuit simply does not talk about “competition,” and give them the free publicity and perception of relevance that start-ups and other players desire.

Design for Delight

Here’s what did happen with Design for Delight. It was actually a really cool experience. We were asked to form groups. Each group was asked to thin about one particular area of the QuickBooks Online product. We were to assume NO LIMITS in terms of what could be done. We wrote ideas on what we would like to see in terms of what the product could do. My group came up with some really cool stuff, like a QuickBooks mobile app that uses geo location tracking to let you know when you are near a client so you could stop in and pay a service call to them. There were so many more ideas. Eventually we presented our ideas and came up with one concept of a product area or enhancement that could be developed next. Each group presented what they came up with.

The following morning, which was the last day of our event we were presented with some things that the actual software engineers had begun to work on based on the things we came up with.

Follow Me Homes

Scott Cook founded Intuit in 1983, and since Day 1, started the “Follow Me Home” program with his early Quicken customers to really see how he could help them. The Follow Me Home program essentially is exactly what it sounds like. With permission, Intuit employees go to homes or businesses of Intuit customers – and even people who don’t use their products – and watch them complete the tasks that they would use Intuit products for. The idea is that by watching, not asking, you can learn far more about how to create and improve your products in ways that delight users. As Henry Ford once said, if he had only listened to customers he would have built a faster horse.

Interesting side note, Intuit created QuickBooks after watching Quicken customers try to manage their business finances with the personal finance product!

What started with Scott Cook and Quicken in 1983 is still done today across all of Intuit’s products. I was pleasantly surprised to learn that every employee, regardless of what department they’re in, participates in this follow me home program to better understand customers. In many ways, everyone at Intuit is a designer.

One example of a somewhat recent (December ‘14) innovation that was definitely a customer-driven innovation was the “Money Bar.”

–When Intuit saw that people were making mistakes (e.g. posting a deposit to income instead of receive payment on invoices), they created a  Money Bar (below) that solves this problem by making it clear how the money flows. No one asked for a “Money Bar,” Intuit saw that customers were struggling with managing their cash flow and created an easy to view solution to solve that problem.

I asked the question,

“How is feedback handled?”

Klaus and Kevin explained that they listen to the customer and the accountant (who are also customers).

Intuit has a team of people that go through all sources of feedback and organize it in terms of what can/should be invested in a product. A great product manager can understand this quickly and improve upon it.

They use feedback as a benchmark for what to innovate. The challenge of course is how to satisfy a broad base of users in a single product?

I asked about some of the features that I personally hear about all the time, such as improved sales commissions calculations, and more robust inventory.

Many of these features are on the road map. So why doesn’t it come out? It’s a matter of sequencing / prioritizing. When you have a product that scales you don’t want to throw too many features out at once.

The velocity of release and innovations is unprecedented. About every four weeks QuickBooks Online is updated and improved.

QBO & Inventory

In addition to building features, Intuit also solves customer problems through acquiring a company or a technology to quickly get a feature into the product. In May 2014, Intuit acquired Lettuce, a startup that provides a robust inventory and order management system.This is as sophisticated as QB Pro & Premier and some QB Enterprise. Lettuce also has a real-time automated order management system and the ability for customers to manage orders and inventory easily will be fully integrated with QBO. Once this is done, PO’s will be available because they are already included in QuickBooks Online. Lettuce did not have PO’s. Once integrated, QuickBooks Online will have a much more robust inventory infrastructure. It will be fully entrenched in QBO – not an app.

QuickBooks Labs

This is where you can, “Come play in our high-tech playground” as Intuit puts it.

Go check it out. I bet you didn’t even know it was there.

So, as I said earlier, and as so many in the online community have commented, QuickBooks is getting better and better. And the reason for the continual improvement is the same reason they created QuickBooks Online in 2001 – to help customers. It’s Intuit’s singular focus on delighting customers that made them number one and though its 14 years after the initial launch, it seems that now is the perfect time for QuickBooks Online. Intuit just announced their second quarter earnings and the growth of QuickBooks Online worldwide is staggering. 100,000 NEW subscribers started using QBO in the last three months. The number of QuickBooks Online subscribers grew by 50 percent in the second quarter, up from 43 percent growth last quarter and there are now 841,000 QBO subscribers worldwide – are you one of them? If not, you may want to give QBO another look. At Intuit’s pace of customer-driven innovation, the product is better than it was last month, but not as good as it will be next month.

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3 Comments on “What Drives Innovation at Intuit? Customers or Competition?”

  1. Hi Seth,

    I am an Intuit fan by default as I use their QuickBooks product here in Australia (released as Reckon Accounts and managed /re-coded by Reckon for about 20 years or so). However, I can tell you that Intuit (with less than 5% of the number of users of Xero, and around 2% of the number of Reckon users) do talk about Xero – a lot! … and MYOB, and of course Reckon (who broke with Intuit last year so they could develop their own, some say better as it’s only a year old, cloud product.

    The difference in the US is that they are the market leader and that gives them a level of comfort and marketing ascendancy. But here in Australia, they are not even in the top 5, with MYOB, Reckon, Sage, SaaSu, Attache and later on the scene, Xero, all in stronger market positions.

    Hence we see Intuit acting a lot differently in their marketing approach – because they have to. So to say they never worry about what the competition is doing, well, that’s just not true…

    Just check out https://numbersproveit.intuit.com.au/pdf/faq-booklet.pdf to see what I mean.

    Yours faithfully,
    Mick

  2. Hi Seth,

    You know I’m a big fan, but this article just didn’t ring true for me.

    “The Overhaul of QBO started in 2010. Idea was to reinvent a lot of the internal parts. Xero did not yet have a big presence in the US.”

    Even if Xero didn’t have a big presence in the US (they didn’t enter the US until 2012), it was building quite a successful following globally. I will give Intuit the benefit of the doubt that they saw the writing on the wall, saw the potential of cloud accounting, knew its current product would be unable to effectively compete in its current state (regardless of the competitor) and decided to fix that proactively.

    “The brand new QuickBooks Online, a.k.a. “Harmony” was launched in 2013.”

    The full release didn’t really hit the masses until May of last year. Xero had already been in the US market for a couple of years and was starting to pick up steam. The release wasn’t pretty (check out my blog post from 6/22/14: https://www.catchingclouds.net/beyond-the-clouds/feeling-forced-into-the-new-quickbooks-online-why-i-prefer-xero).

    “Design for Delight”

    You described pretty much every software development process in existence.

    With that said, I don’t want to take away from the fact that Intuit is doing this. It’s great to get feedback, particularly from experienced accountants, but my point is that this is not unique. We regularly provide feedback to every company we work with. All good companies pay attention and adapt their tools. It keeps them in touch with the market and competitive.

    “When Intuit saw that people were making mistakes (e.g. posting a deposit to income instead of receive payment on invoices), they created a Money Bar (below) that solves this problem by making it clear how the money flows. No one asked for a “Money Bar,” Intuit saw that customers were struggling with managing their cash flow and created an easy to view solution to solve that problem.”

    In my opinion, this is how a software company solves an education problem. My argument is that a company that cares about the success of a small business would work toward aligning the small businesses with accounting professionals instead of adding more and more features to make the product more “do-it-yourself-y.”

    “They use feedback as a benchmark for what to innovate. The challenge of course is how to satisfy a broad base of users in a single product?”

    I think this is a fundamental difference between Intuit and Xero. Xero has built a core accounting platform simply because it doesn’t *want* to be a single product that satisfies all users. In the cloud there is no longer a need to be a Swiss army knife. That’s what add-ons are for… to create the perfect accounting system that is unique to each small business’ needs.

    “The velocity of release and innovations is unprecedented. About every four weeks QuickBooks Online is updated and improved.”

    It isn’t unprecedented, that is what the cloud is all about and most SaaS companies are using Agile or other development processes to release new features at least monthly. Xero is releasing both smaller, incremental updates every few weeks and major updates every 4 to 6 weeks. WITHOUT any disruptions to any users worldwide.

    I agree with you that Intuit is a fine company, but I’m just not convinced about your premise. I think Intuit wants to be the leader in the cloud accounting space (and arguably already is), and I think Xero is starting to throw up a few roadblocks. I don’t think there’s an either / or answer to the question you’ve posed. In my opinion, Intuit is clearly responding to BOTH customers and competition.

  3. Thanks Mick, A global company has different go to market strategies depending on the region they are operating in and their position in the market. Intuit is the global leader in online accounting solutions and is a well known brand in the U.S. In other regions, Intuit is like a start up and needs to operate differently and focus more on brand awareness strategies. One thing that remains constant regardless of where Intuit operates, however, is our focus on customers.

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