A few years back I had the opportunity to soak up the wisdom of Scott Cook, the founder of Intuit, as he reflected on the history of his company. Intuit is the maker of Quicken, QuickBooks and TurboTax accounting software applications.
Intuit recently announced its quarterly results – an incredible 13 percent increase in revenue and a 16 percent rise in operating income. This is a company that has enjoyed steady success for a long period of time, and Cook’s remarks reveal insights into why.
Cook revealed the backstory behind the launch of QuickBooks, Intuit’s small business software. Prior to QuickBooks, the company was focused exclusively on Quicken, its groundbreaking consumer product. Subscribing to a belief in a “relentless focus on the customer,” Cook said Intuit was slow and perhaps a bit reluctant to expand to another market. In fact, the idea for QuickBooks arouse when Intuit discovered that 50 percent of Quicken users were using it for business, a fact Cook says he basically ignored for two years.
When they did decide to get into the small business market, Cook and his team did it with nerve. “If you go to a new segment,” he said, “you have to be relentless about building from the ground up. You can’t just hack something together.” Shortly thereafter QuickBooks, “the first accounting software to do accounting without accounting,” was born. The target was companies with fewer than 20 employees who weren’t accountants and didn’t want to be accountants.
With a combination of diligence and urgency, Cook did his homework, drawing on his experience as a brand manager at Procter & Gamble. “It’s very common for people to say they do one thing and then actually do it a slightly different way,” he said, citing as an example the fact that people say they sort laundry more often than they actually do. He focused his team on developing a product with the right functionality, while recognizing the danger of feature creep that tends to plague new software (and delay its launch). “The reason we do version one of any product is so we can do a great version three,” Cook said.
Version one was good enough to win a commanding share of the market, despite a price point ($99) that was double that of competing products. The price was, Cook admitted, “built on a hunch,” but because QuickBooks was dramatically different its price was fairly inelastic.
Since that time Intuit has steadily added features and functionality (and margin) to the QuickBooks suite of products, which now start at $199.95. The company confidently promises that the software will pay for itself in 60 days.
Cook has since relinquished his CEO title (he’s now chairman of the company’s executive committee) but his influence is still apparent and there’s no reason to mess with success. “The difference between a groove and a rut,” Scott says, “is whether your stuck.” I’d say Intuit has been in a groove for some time now.
Steve McKee is a BusinessWeek.com columnist, marketing consultant, and author of “When Growth Stalls: How it Happens, Why You’re Stuck, and What To Do About It.” Learn more about him at www.WhenGrowthStalls.com and at https://twitter.com/whengrowthstall.