Intuit Inc. is a leading provider of financial management, tax and online banking solutions for consumers, small and mid-sized businesses, accountants, and financial institutions. Best known for its accounting software QuickBooks, Intuit has learned since its start in 1983 that failure is nothing to be feared. Scott Cook, Intuit’s cofounder, has developed a systematic process of innovation that includes regular free-association sessions, customer interviews, and “follow me home,” visits to customers. The goal is to identify customers’ “pain points” and resolve them by making adjustments to Intuit’s product offerings. Each division uses this process to arrive at a product that people will pay for, use, and enjoy. One problem with striving to have customers enjoy your product when you are selling financial software is that for most people finance is inherently not enjoyable. Despite Intuit controlling 79 percent of the retail software market for tax preparation, there are approximately 20 million people who continue to prepare their taxes without the use of tax software or a professional tax preparer. To continue its growth Intuit must understand the needs of these consumers and find products that will fit their needs. So, it would seem that Intuit’s biggest competitor is the consumers themselves. In order to become more receptive to customers’ needs, the company had to become more tolerant of failure as employees began making what would have at one time been considered outlandish suggestions (such as a tax-preparation product that would adjust to the user’s emotional state) in an attempt to innovate. No one endorsed this movement more than Scott Cook. The defining moment of Cook’s philosophy came when Quicken, a product for assisting individuals manage their personal finances, was starting to take off. Market research revealed that customers were using Quicken to manage their business finances, but Cook wrote the discovery off as an anomaly. After a follow-up survey revealed an increasing number of business Quicken users, Cook realized the market potential for an accounting software product aimed at small businesses. Rather than dismissing his initial mistake of ignoring what the market was trying to tell him, Cook recognized where he went wrong and began to teach his employees to “savor the surprises.” He instilled the notion that employees should not only be open to signs in the market but also actively seek them out. This lesson has translated into the company dispatching employees to visit customers. Those initiatives led to annual revenues for QuickBooks amounting to over $700 million. What makes Intuit’s management philosophy unique? The focus on new ideas for growth. A few years back Cook had concluded that the size of the company, nearly $1 billion with 4,000 employees along with the management’s lack of operational experience, had led to the failure of several of Intuit’s initiatives. Cook believed in his ability to develop new ideas, but wanted the new executives to bring into the company the much needed discipline required for successful execution. Thus the company embarked on a strategy of disciplined innovation in the search for new ideas. Here is one example of the search for good ideas. Based on research conducted by employees meeting with customers, Intuit found that more than half of American small business owners who have computers continue to use simple spreadsheets or pencil and paper to manage their finances. In response, Intuit formed a ten-person team to explore why these people were not using QuickBooks. The team discovered that the small businesses with which they spoke did not make the association between accounting and good financial management. The next step for the team was to simplify QuickBooks by stripping out features. The group took the prototype to their potential customers to get feedback. Again they were told that the product was too complicated. Customers wanted to be able to track the money coming in and the money going out. The team realized that some customers were getting hung up on the accounting terminology, so they relabeled inputs like “accounts payable” as “money out.” The first prototype had reduced the number of QuickBooks setup screens to 125, but by the end of the new product’s development, the team had reduced that number to 3. The process involved six cycles of customer interviews and led to QuickBooks: Simple Start Edition. The product was launched in September 2004 and outsold all accounting software in the United States except for QuickBooks. Over the last few years the strategy has worked with 2009 revenues of $3.2 billion and growing to 7,800 employees. By encouraging employees to try new things, Intuit has been able to keep the entrepreneurial spirit alive and well. Visible gestures, such as awards for ‘The Failure We Learned the Most From,” have kept the culture that Cook instilled firmly rooted. Compare the elements of failure described in the chapter to the perspective Intuit takes with new ideas. How would you recommend Intuit handle failures?