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How Intuit Drives Innovation (and you can too)

02/27/13

Kaaren Hanson HeadshotSmall companies are often founded by innovative individuals who by design or necessity lead their business into new and unchartered territory.  As a company matures that innovative spirit is often squashed under the weight of a fearsome bureaucracy.  One company that seems to consistently break this pattern is Intuit, extending its product line well beyond Quickbooks and TurboTax with a steady series of innovative offerings including SnapTax, a mobile tax filing app.

Kaaren Hanson, VP of Design Innovation at Intuit, believes that the trick is “creating a culture of rapid experimentation” and is speaking about that very topic at next week’s Columbia Business School’s Brite ’13 Conference. As you will see in my interview below, Kaaren is refreshingly honest, reminding those that want to innovate (at any size business), to “fall in love with the problem, not the solution,” that today “leadership is about experimentation” and “innovation is part of everyone’s job.”  But read on. There’s a lot more to this innovation thing than grabbing a white board and gathering the usual suspects!

Drew: Are we currently in the “innovation age” or is innovation simply an imperative for companies looking to thrive (versus survive) in a rapidly changing global economy?   
Kaaren: We have a long way to go. I would say we are entering the “innovation age.” Changes in how we work and think are beginning to take place, but most of the results and impact are yet to come.

Drew: Can you share a specific recent innovation at Intuit and speak to how it came into being?
Kaaren: How about preparing and filing your taxes in less than 10 minutes on your smart phone? That’s a recent innovation from Intuit we call SnapTax. After announcing mobile as a key priority for the company, Intuit CEO Brad Smith was asked by an engineer in an employee chat: “What the hell does mobile have to do with taxes?” He told them he didn’t know, but he knew they’d figure it out. A few months later a small team had an idea.  Intuit gave this small team the freedom and the resources they needed to dream and develop – and they came up with a mobile app to prepare simple tax returns on an iPhone, easily and accurately. That team’s work became SnapTax, which makes it easy to file a simple tax return on a smartphone in the amount of time it takes to find a parking space at H&R Block.

Drew: Does creating a culture of innovation also require a certain tolerance for failure?  Are there ways to mitigate the risks?
Kaaren: Who likes failure? A string of failures and you’re out of business. You have to learn from failure and use it like road signs that direct you to success. Having a culture where people savor surprises is important.  That surprise could be a big upside or a big downside. Intuit’s co-founder Scott Cook says it well: “If there’s something that’s really a big surprise, upside or downside, that’s generally the real world speaking to you, saying there’s something you don’t yet understand.” It’s less about mitigating risks and more about carving out space for people to experiment and learn from failure. One example from Intuit is our Lean StartINs. These are one or two-day events where small groups of employees come to test their ideas for new products or services.

Drew: What are the other big cultural changes required for companies to become more innovative?
Kaaren: Leadership models need to change, especially when it comes to how decisions get made. In the innovation age leadership is much more about Thomas Edison than Dwight Eisenhower. Leadership is about experimentation. It’s no longer about the boss making the decision or judgment. Instead, we  make the decision based on testing the hypothesis and experimentation. This is moving decision-making from the boss’s opinion to enabling the answer to prove itself with customers voting with their feet.

Drew: Innovation often seems to align with the corporate growth cycle—younger companies tend to innovate more than bigger ones either out of necessity or because the culture is younger and less risk averse.  How does the proverbial old dog learn new tricks?
Kaaren: It starts with having a strategy that will fuel growth through big economic and technological changes. Then give employees the freedom to experiment, and ultimately bring to life those groundbreaking innovations that will inspire more innovation.

Drew: Can the big guys do this without creating “skunkworks” or other splinter operations that are not just empowered to innovate but are really required to do so?
Kaaren: At Intuit innovation is part of everyone’s job. If the big guys want to see new ideas come to life at their company, they should democratize innovation. We offer unstructured time to all employees at Intuit, to give great people with great ideas the time and freedom to pursue them. Having an innovation awards program is also a good way to celebrate successes and reinforce the importance of innovation. When it comes to our innovation awards program, we provide the three things that innovators wanted most: recognition allowing access to leaders and other innovators, time to innovate on a project of their choice and financial reward.

Drew: Henry Ford is famous for saying, “if you asked people what they wanted, they would have said faster horses” and Steve Jobs was also a skeptic of the consumer’s ability to recognize the need for what would become a totally new category. How important is consumer input/feedback in your innovation process?
Kaaren: Just listening to what customers say is a waste of time.  Customer Driven Innovation is one of our core capabilities that differentiates us and allows us to deliver solutions that truly change people’s lives. One of our signature methods is something we can Follow Me Homes, observing customers “in the wild” – it may be their homes, coffee shops, or the train.  We notice what and how they are going about their daily lives and then probe deeply to understand the motivations and emotions that drive their behaviors.  These nuggets provide rich material for our innovations.

Drew: Presumably Intuit has had some failures along the innovation road.  Is it true that you can learn as much from failures as you do successes and if so, what have you learned?  
Kaaren: You can certainly learn from failure. It goes back to my earlier comment about savoring surprises. We recently learned this important lesson: fall in love with the problem, not the solution.

Many of Intuit’s customers are small businesses. We had a team that had been exploring opportunities in adjacencies to our payroll business, and found that health coverage is the most important employee benefit. Yet most small businesses don’t offer this benefit because it’s too expensive and too much work to administrate.  The Intuit team took that customer problem and found a way to create a new, low-cost health insurance plan solution. The insurance plan got positive feedback from customers and good overall results in market testing. However, when the team began offering the plan, they only sold four plans in five months. The team then went back to drawing board. They again examined the learnings from customers and added some new members to the team with different perspectives. This led to the team taking insurance out of the solution. Instead, they created a health debit card product to which employers would contribute an amount that they set for their employees to use for healthcare expenses. So the employer sets the cost, and employees get full choice with pre-tax dollars.

A key learning from the failed low-cost insurance plan was, fall in love with the problem, not the solution. In this case the problem still existed. The team needed to have a mindset that as long as they understood the problem, they could be flexible, iterate further and in the end make a product more likely to succeed. The team continues to iterate, and the Intuit Health Debit Card is performing well in a limited market release.

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