It’s lunchtime at Intuit in Mountain View, California, and the company’s almost daily ritual is underway in the cafeteria: Office hours with Scott Cook. Intuit’s billionaire co-founder perches on a stool in his everyday wear of running shoes, a button-down oxford shirt, canvas jeans and a Swatch as four product managers explain their new idea, code-named Peppermint: An online marketplace like Craigslist that would allow hair salons, landscapers and dentists, or any of the 50 million small businesses that use Intuit’s QuickBooks accounting software, to connect with potential customers under the halo of being ‘Intuit-certified service providers’.
On a table between Cook and the Peppermint quartet is a giant piece of white oak tag divided into little boxes labelled with the big questions: What’s your idea? What’s your vision? What’s your leap-of-faith assumption? What’s your hypothesis? The upper rows of boxes have fluorescent pink and yellow Post-it Notes in them scribbled with answers.
There are dozens of such projects and experiments going on across the company. Cook meets monthly with 14 or 15 similar teams, meaning that most of his workday lunches are occupied by one brainstorming session or another. Right now this one isn’t going so well. Cook gently interrogates with his lips pursed and hands held out over the oak tag.
How are you going to vet the service providers?
We could use credit scores or Yelp ratings.
Okay. How would you show if there’s buyer dissatisfaction?
We could let people know by looking at how often their customers switch.
But they’ve already switched. That’s a lagging indicator.
We know people are interested in the service.
To prove the market interest, the quartet had set up a Google AdWords campaign, spending a couple of hundred bucks on a text ad that ran next to searches for dentists, hair salons and landscapers. It read: “Intuit-recommended service providers to meet your everyday needs” and linked to a dummy webpage thanking the visitor for being part of a study making QuickBooks better. They figured 10 percent of the ad click-throughs would yield a signup. It turned out 20 percent did.
That’s good, replies Cook, but what does ‘Intuit-recommended’ mean? How do we reliably vouch for them? You really have to test what you can deliver. It’s not the right test. I’m not sure I believe the results if it comes up positive.
The Peppermint quartet looks crestfallen, but they agree Cook is right. They pack up, promise to tighten their idea, do some testing with real businesses and go through some more trial and error. With a little bit of money and in a short amount of time, a new product idea at Intuit stepped toward viability.
This is how things get done at the software company. In the last few years Cook and CEO Brad Smith have recast a big tech firm, with $4.1 billion in revenue and $17 billion in market valuation (similar to Yahoo’s), in the image of a startup: Fast-moving, embracing uncertainty, continually learning. And it’s worked: Intuit is making its second appearance this year on Forbes’ annual list of the world’s 100 most innovative companies, moving up 27 spots to 57. New ideas are put to test constantly. In 2006 the TurboTax group experimented with just one tweak to the website during the 100-day tax season. This season they ran hundreds of tests. Intuit tells Forbes that more than $100 million of its revenue in 2012 came from products that didn’t exist three years ago—a tenfold increase from 2010.
Plenty of companies are a religion, where people take their cues from the top. Intuit is a science lab, where anything can be tested and proven incorrect. “When you have only one test, you don’t have entrepreneurs; you have politicians. When you have lots of ideas you have entrepreneurs,” says Cook.
He’s found a kindred spirit in Smith, who became CEO in 2008. “Genius and a thousand helpers are not going to solve the problems of today or tomorrow,” says Smith, 48, who speaks quickly with a ready smile and a West Virginia twang. (He grew up in Kenova, West Virginia.) “There are very few Steve Jobses out there. We run small teams and lots of rapid experiments. No politics. No PowerPoints.”
Intuit had to adopt this fast mode. It faces a challenging growth prospect. Close to one-third of the US economy already flows through its software via payroll, invoicing and taxes. How much more can it get? The small business economy is as tepid as the economy overall. Intuit’s two biggest products, QuickBooks and TurboTax, which produce over half of its revenue, already locked up their fairly mature markets. QuickBooks has more than 90 percent retail market share for small business accounting software. TurboTax has 90 percent of consumer federal tax app sales.
The plan it is deploying in startup time is a move to the cloud and to mobile. In the past three years, Intuit has made a priority of replacing the no-growth packaged software business with faster-growing online versions of its big hits and with subscription services such as online and mobile banking software. Of Intuit’s 60 million customers, more than 45 million now use online or mobile versions of its software, up from 10 million in 2008. Seven million of those 60 million are active mobile customers.
One project inspired by Ries’ ideas is what’s called the Lean StartIN. It’s an intense two-day product brainstorming session in which three- to five-person teams are expected to come up with an idea and a series of tests to prove its merit. The first one was held in January in San Diego with 11 people. The next one, in February, had 52 people present at the company’s Mountain View headquarters, with Smith as chief judge.
(This story appears in the 26 October, 2012 issue of Forbes India. To visit our Archives, click here.)