For Intuit CEO Steve Bennett, business success is about “thinking smart.” And for business software company Intuit, which produces programs such as Quicken and TurboTax, that means thinking like the customer. As a corporation, the company’s central strategy has been to listen to its customers, respond to their concerns, and provide products that reflect how customers work and live on a daily basis.
Bennett has embodied that customer-focused attitude ever since he arrived at the Mountain View, California, company in January 2000. He’s enthusiastic about the company’s “follow-me-home” program, where Intuit designers literally go home with consumers to watch them interact with their products and figure out what might not be working. At Intuit, he says, “customer feedback is the foundation for everything we do.”
Bennett might not have been the obvious choice to take over at the customer-friendly Intuit in January 2000. He’d spent 23 years at hard-driving GE, often in financial services divisions. While Intuit is by no means a small company—it employs 8,100 employees and generates revenues of $2.34 billion—that’s a far cry from the 20,000 people Bennett once oversaw. Still, it’s a complex organization that carries out roughly 30 million transactions a year. Says Bennett, “Something I learned at GE was how to handle complexity.”
Since Bennett’s arrival, Intuit has grown even more complex, as the company has expanded product lines and pushed deeper into the business software market. In the past seven years, Intuit also has purchased 14 companies to increase its customer base and diversify its product offerings beyond accounting and tax preparation software.
All the activity has kept the company robust—and its employees content. This year, Intuit ranked No. 33 on Fortune magazine’s list of “Best Companies to Work For,” moving up from 43 and 64 in previous years. Like customers, Intuit employees are encouraged to express their views, particularly through quarterly Webcasts where they can talk to Bennett directly.
Bennett also is committed to bringing his expertise to the business school. He sits on the dean’s advisory board for the University of Wisconsin-Madison, the school where he received his bachelor’s degree in finance and real estate in 1976. He has participated in the school’s CEO Summit and John J. Oros Executive Leadership Speaker Series. He knows that his own motto of “think smart, move fast” can also help guide business students who are entering the working world hoping to become the next generation of leaders.
When you took the job at Intuit, you had no background in software. What would you tell business students who might someday be new CEOs at companies where they have no background in the industry?
At the end of the day, leaders add value because they are content or domain experts, or because they are facilitative leadership experts. When I was hired, Intuit needed facilitative leadership, not someone who was an expert in software. Domain expertise alone, especially in technology, does not lead to success. As a matter of fact, it can get in the way of success. There are a lot of examples of company founders who had great domain experience but didn’t turn out to be great general managers.
When you’re a new CEO going into a company, you have to be able to assess what the company’s good at and what it’s not so good at. You have to figure out how to help the company improve its performance. You might need to focus on your product, your talent, your customers, or any of a multitude of factors. You bring your background, your experience, and your passion.
You spent more than 20 years at GE, so you were steeped in its Six Sigma culture of process improvement and quality control. Intuit’s culture was far more relaxed and customer-focused. How did you decide what parts of Intuit’s existing culture to honor and what parts needed to be changed to ensure its success under your leadership?
It’s important to take what you’ve learned elsewhere and apply it to a new situation. Intuit was known for customer-driven innovation, and GE was known more for strategic and operating rigor, as well as execution. When I arrived at Intuit, the company had great ideas, and it was approaching $1 billion in revenue, but it didn’t have the strategic or operational rigor to execute those great ideas. What I brought was an ability to execute.
On the other hand, Intuit already had great operating values when I arrived. There were ten operating values written out, and I changed only one word. No. 9 used to be “Think fast, move fast.” I changed it to “Think smart, move fast.” I used to joke with my team, “I don’t know about you, but getting dumb things done fast doesn’t do much for me.”
So the values were in place. But as we grew and developed multiple businesses, the complexity went up exponentially. We had to find a way to operationalize the culture, the values, the execution, and the scale. This was where my GE experience paid off. Today at Intuit, we are launching more new products and growing faster than we ever have in the history of the company because we have married customer-driven innovation with a capacity to execute.
That customer-driven innovation has always been one of Intuit’s greatest strengths. In fact, the company is known for actually “following the customer home” to see which features of its products work and which features are difficult, especially for nontech people. Why do you consider these sessions so important?
When we do a follow-me-home, we’re getting customer feedback—but even more important, we’re observing the customer. I don’t think breakthrough innovation comes from customer feedback. No customer said, “Could I have a Walkman, please?” The Walkman was invented because someone watched people who were trying to listen to music while they were running.
I think the idea could apply directly to deans at business schools. It’s dangerous to design a product or a program around what customers or students tell you they want. You may end up fulfilling their needs, but you won’t be designing for delight, which is innovating to solve a need they didn’t know they had.
Our job is to help customers do their mission-critical tasks in a way that’s really easy, that offers great value, and that delivers unexpected “wow.” Whenever we do a follow-me-home, we try to learn two things. What can we do to make our existing products and services better? And what unmet, underserved need can we solve by launching a brand-new product?
Give me an example of how customer feedback helped you develop a new product.
When Quicken was launched in 1984, it was designed for consumers. Scott Cook, who co-founded Intuit, did some research and found that 46 percent of Quicken customers were using it for their businesses. He thought it must be bad research and threw it away. He did another survey the next year and found that 48 percent of the users were small business buyers. This was the “aha!” moment. Intuit did follow-me-homes to determine how to build a great accounting product for small businesses, and we launched QuickBooks in 1993.
We then began looking at other needs a small business owner would have, such as organizing the payroll and completing credit card transactions. We’ve developed products that address these important areas. The people using our products and services tend to be self-directed—they want to do everything themselves. The easier we make it for them to run their businesses, the more positive word of mouth we create, and the more new customers we win.
Whenever we do a follow-me-home, we try to learn two things. What can we do to make our existing products and services better? And what unmet, underserved need can we solve by launching a brand-new product?
Our biggest market is still among the nonconsumers, the people who are not using any accounting software at all. We don’t grow by taking market share from others; we grow by expanding our categories or creating new categories. That’s really the whole business case for customer-driven innovation.
How have you used customer feedback to refine an existing product?
A couple of years ago we were doing follow-me-homes on TurboTax, and we were watching a woman do her taxes. When she got to the charitable deduction screen, the first question was, “Did you make any charitable contributions?” She checked yes. The next question was, “Were they cash or not cash?” She had paid with a check, so she checked “not cash,” and she was brought to a whole new screen. It turns out that the only people who think checks are the same as cash are accountants and the IRS.
Based on situations like this, we ended up hiring editors from People magazine to rewrite the product interviews in English, not tax jargon. We made that move because of what we learned through direct observation, by watching a customer interact with our product.
We also do hundreds of what we call end-to-end studies, in which we bring the customers in and observe them. I think that year, we had 500 employees in our TurboTax business, and 350 did direct observation of customers using the product. It’s amazing what you can learn. There could be a problem with the wording, with the presentation, with anything. It’s not what we think that matters, it’s what the customer thinks.
You work hard to find out what the customer thinks by seeking input through blogs and online communities and even feedback buttons in the software itself. You also have more than 6,000 customers who have joined what you call the “Inner Circle” so they can give you feedback about the usability of products like TurboTax. What kind of insights do they offer you?
They tell us what they like and don’t like about TurboTax. We analyze their comments in terms of frequency—how many people tell us something—and impact. Two years ago, rebates were the No. 1 source of negative feedback in terms of both frequency and impact. So we eliminated rebates.
All sorts of interesting feedback comes out of this partnership with customers. But in general, we use these insights to make our existing products better, not to solve important unmet needs. To take care of those, we need to do direct observation.
After you become CEO, Intuit first broke the billion-dollar threshold, and then the $2 billion mark. What would you tell business students who were studying CEO strategies for growing their businesses?
My theory of business is very simple. Be in good businesses with strategies to win. That’s the first discrete decision you have to make as a CEO. Are you in a good business? There are lots of good businesses, and lots of really bad businesses, and things change over time, so you have to make a continuous evaluation.
At Intuit, we constantly reshape ourselves. For instance, we love Quicken, but it’s not a winning business right now. Because of online banking, it’s half the size it was when I came to Intuit. On the other hand, TurboTax, which was at $217 million when I came, will be in the neighborhood of $800 million this year. The whole QuickBooks ecosystem, which was at $350 million, will be more than $1 billion this year. We’ve also bought a number of small companies. So we’ve dramatically grown our consumer tax and small business products as a way to reshape our portfolio and develop strategies to win.
We’re quite rigorous about choosing both a good business and a good strategy. We like the Peter Drucker quote: “If you weren’t already in a business, would you enter it today?” I think it’s easy to just stay in the business you’ve always been in. But if you want to be in a high-performing company, you’ve got to make sure it’s a good business. That changes all the time—and it changes even more dramatically in technology than in more stable sectors.
Great leaders understand that time is an investment, not an expense.
If you want your company to grow, you also need to have talented and engaged employees who can delight customers. It’s important to make sure employees stay engaged. We’re quite pleased because our engagement as a company is at an all-time high.
How do you measure something like that?
We work with a consulting firm to survey our employees annually, asking them how it feels to be an employee of Intuit. The 50 questions boil down to about five that have been statistically proven to align with what we call employee engagement, which really is a surrogate for morale. We take it very seriously.
The search for the right employees is something else you take seriously. At a presentation at Harvard Business School a few years ago, you noted that one of your top concerns for the future is attracting and developing key talent. What are you looking for in the people you hire?
If we’re hiring MBAs, we look for experience and track record. In addition, we look for graduates who meet our leadership model, which has five complements. The first is business acumen; the second is the ability to execute effectively. The third is the ability to build strong teams. Because we think leadership is about overcoming organizational inertia, the fourth centers around having the courage to lead change. The fifth is the ability to act as a role model of our operating values.
In addition, what I look for personally is an understanding of the person’s mindset. An assessment of the leadership profile will tell me about their skills, but I spend most of my time trying to learn how they handle challenge, how they overcome adversity, how they think. I think mindset is ultimately the single most important determinant of somebody’s success.
You’ve mentioned leadership a number of times, and leadership is a critical topic at business schools. What do you believe are the essential skills and characteristics of a top leader?
I think there are three. The first is having the courage to use judgment. Business rules never substitute for judgment, and business decisions are almost never black and white. Ninety-five percent of business decisions require qualitative assessment.
The second is prioritizing how you spend your time. Great leaders understand that time is an investment, not an expense. Combining their skills with the proper allocation of their time, on the right priorities, is critical for leadership success.
The third is building strong teams. A leader should have high standards for hiring employees—then the leader should grow their talent by teaching them how to fish, not by feeding them.
As a member of the dean’s advisory board at the University of Wisconsin in Madison, you get a chance to offer your input about management education. What advice would you give to business schools in general to help them create graduates who are truly prepared to go into business today?
Graduates need to understand that an important part of leadership is learning. To turn out great learners and leaders, schools must help students be comfortable being vulnerable to what they don’t know.
Graduates also need to learn that, when they work with teams and employees, they need a shared vision of what success looks like. It’s important to put this vision in writing—it often gets convoluted if it’s only expressed orally. It’s also important to facilitate constructive debate with your team about what success means.
Business schools should create scenarios where students assess and diagnose internal and external environments, develop plans to achieve desired future outcomes, execute those plans effectively, and then assess and diagnose whether those outcomes are being achieved.
What additional piece of advice would you give to business students right now as they’re preparing to graduate and enter the working world?
It goes back to what I said earlier. A person adds value to a company by being a content expert or a facilitative leader. I would tell students to be clear on how they add value on both of those fronts.
Even more important, I would say, “Have a passion for your job, or you won’t excel.” The world is very competitive, so figure out what your passion is. If you want to have a great career, align it with your passion and then figure out how you can add value.