In the June issue of Harvard Business review, Intuit, the American software company, was labeled “a design-driven innovation machine.” InnovationManagement talked to Roy Rosin who was Intuit’s first innovation leader, building the company’s innovation programs and working with teams on creating new products and services.

Intuit produces software for small business accounting – can you tell us something about the innovation requirement in that line of business?

Intuit has undergone a tremendous transformation over the past few years and today does much more than small business accounting.  So while we are innovating in our core businesses like QuickBooks, where the group is making great strides in helping small business owners save time in managing their business, we now have product lines supporting small business owners across their efforts to build profitable businesses.

One element in enabling growth at times is redefining what you are, to no longer be a big fish in a small pond as we were in small business accounting.  Once we realized that small businesses were hoping we’d help them succeed – not just manage their books – we started to see how much more was possible. We help them grow their business by making it easy to have a web site and get found on the web, process payments in their stores or on mobile devices, and manage their employees.

First and foremost is in really getting to know our customers.

Solutions have to be immediately intuitive and highly cost effective.  But most of all, you simply have to focus intently on helping these folks who are already working so hard to run their business and handle everyday problems, whether those are to bring in new customers, work more efficiently with their accountant or retain their valuable employees.

We now measure ourselves on how effectively we help the small business owner get the outcome they want, and that focus means we’re seeing the world through their eyes. If we’re working on a new service to bring new customers in the door for a small business owner, the first measure of success is whether we did in fact bring in those new customers…not the revenue we’re making or the number of subscribers to our service.

You have a structured approach to innovation at Intuit – what techniques do you use at the front end, to generate ideas that are suitable to your clients?

There are a few approaches where we’ve found a good measure of success.  First and foremost is in really getting to know our customers.  Not just what they say and ask for, but in seeing and understanding the context behind those needs.  While I think we’ve always been customer focused, we’ve increased our commitment to getting out into their world, seeing how work really gets done, and even doing the work ourselves to get a good feel for why existing solutions fail.  It’s a normal business practice to see Intuit teams out at a small business shop, in the field with a contractor, shadowing an Accountant, in a Starbucks with a 20 year old who wants to do their taxes right there on their mobile phone or even working the cash register at your local candy store.

We also give our employees the time and freedom to evolve ideas and insights they have from these customer interactions, as well as from their everyday life experiences.  People have the option of spending about 10% of their time pursuing ideas they’re passionate about, and that’s generated some compelling new opportunities.  One individual used the time to act on insights from small business owners, who don’t have HR departments, overwhelmed with handling employee payroll questions.  He created, where hundreds of thousands of employees are now checking their own vacation balances, adjusting their own withholdings and more with a cloud based solution.

This time is also where our new innovation management business, called Intuit Brainstorm came from.  A few employees recognized that all the current enterprise collaboration systems were really just idea collection tools where – as others told them – ‘ideas go to die.’ They designed an enterprise platform that connects ideas to the people who can improve and act on them, helping many ideas get the visibility and input they needed to thrive.  In the process, they created a new product we now license to dozens of leading companies.  Another favorite story here reveals the roots of our healthcare business.  Dan Robinson, an engineering manager on our Quicken team, unfortunately had a child with a disorder that led to medical bills in excess of $1 million.

We also give our employees the time and freedom to evolve ideas and insights they have from these customer interactions.

Dan knew he could make managing healthcare expenses easier, and what he started – in the time and process allowing employees to show us opportunities we may not yet appreciate – led to the acquisition of Medfusion and our business now helping over 40,000 doctors’ offices get paid faster while meeting the federal governments Meaningful Use requirement of providing patients with convenient, timely access to electronic medical records.

Finally, all of this is done in the context of our design process.  That process reinforces the importance of divergent thinking and rapid iterations with customers before locking in and scaling new ideas prematurely or in the wrong direction.  Such divergent thinking and testing of multiple different solution approaches quickly often allows you to uncover ideas that not only others missed, but that you missed in your first attempt at solving a problem.

How do you manage innovations through to product and service? What types of processes do you have in place to guide a new idea through and to iterate quality?

We’ve gotten pretty good at various methods of rapid validation, where we expect teams to identify the big assumptions or uncertainties in what it would take to be successful and then design experiments to test where their beliefs may not match reality.  You’ll see teams quickly prototyping in some areas, and in others using storyboards with lead users or employing advanced methods of concept testing.

We also have fun with what some folks call fake-o backends, where you rapidly create a usable pilot on top of a technology you’d never use to scale an offering, but where it’s good enough to get quick reactions from prospective users.

In getting better at knowing which are key questions to ask at the right point in the process, and identifying the few critical assumptions you have to quickly test, you free entrepreneurial thinkers up to move faster and try things.  You learn mostly by doing, not by thinking, so in an approach that values real evidence you’ll do a better job in placing your bets. Instead of picking a few ideas and making big bets based on a PowerPoint and a spreadsheet that can be made to show any growth required for funding, you’re getting lots of ideas moving fast and then having the opportunity to get that bigger and more focused investment in the next stage based on actual evidence. An important lesson learned was in applying the right metrics at the right time.

Instead of focusing on getting big fast – which does most often lead to scaling the wrong thing or in the wrong way – you’ll see teams more appropriately focused on solving the problem an order of magnitude better than alternatives, on driving active use and on generating word of mouth, designing experiences where users will tell others.  This approach allows small pilots with all the energy going towards helping the prospective users achieve those measurable benefits they were seeking.

We’re very interested in the growing role of an innovation manager, Chief Innovation Officer, and the strategic nature of that role. How does your company embed innovation through those roles? How far up the line does the innovation requirement and report go?

I agree these are important roles, but not for the reasons some might think. We think of innovation as something owned by everyone, not something that happens in a narrow or centralized way.  All of our business leaders and employees are motivated to find better ways to solve important problems.  Business leaders also manage across time horizons, and have been able to take a portfolio approach where they’re paying attention to delivering on current term commitments while setting a foundation for future growth.

Where I’ve seen innovation leaders play a critical role is in creating the environment in which great entrepreneurial work can blossom.  That can include many of the topics we’ve hit above, from helping establish programs that engage employees, decision processes with metrics appropriate for new projects or visibility and celebration for entrepreneurial work already happening in the organization.  I can’t emphasize that last one enough.  So much of this is an exercise in change management, where measuring, creating visibility for and celebrating the behaviors you want to see more often makes all the difference.

So much of this is an exercise in change management, where measuring, creating visibility for and celebrating the behaviors you want to see more often makes all the difference.

Effective innovation leaders are cheerleaders and evangelists.  They create broad awareness of early wins that gets organizations excited about new thinking and maintains that excitement while you’re waiting for material shareholder outcomes.  They’re also connectors, connecting innovators to others who can help them and their new ideas along the way.

A big part of creating that environment has to do with paying attention to the obstacles that prevent new ideas from taking root.  I’ve seen issues ranging from no bandwidth from critical functional partners – like never making it to the front of the legal queue when competing against big revenue projects – to the inability to rapidly get in front of customers…to everything in between.  Identifying and eliminating all those obstacles to progress is a great role for someone specifically focused on enabling new thinking across businesses or product lines.

Finally, innovation leaders play a critically important role in building new skills in organizations.  This work can take many forms.  It could involve bringing in new thinking and lessons from other successful practitioners – as our founder Scott Cook has done for us – accelerating Intuit’s awareness and understanding of high impact business practices from leading innovative companies and winning entrepreneurs.

Innovation leaders play a critically important role in building new skills in organizations.

Another example would be building networks of specialists with skills important to new projects.  HBR recently covered Intuit’s Innovation Catalysts, a growing group of people with skills ranging from ethnography to effective problem definition or rapid prototyping.  They inject design thinking skills into new projects that help these new efforts’ chances of success.  That program was grown by design leaders like Kaaren Hanson and Suzanne Pellican in Kris Halverson’s group (our Chief Innovation Officer).  Our Chief Innovation Officer has usually reported to our CTO but we also have innovation leaders reporting to the people who lead our divisions.  And when you see the active role our founder takes here, or how Brad Smith our CEO is a powerful evangelist for rapid experimentation and innovation programs, you see how far up the line innovation leadership goes.

Have you looked at Open Innovation as a potential route? Do you have views on its value to your business?

We do believe in Open Innovation and have increasingly made it part of the mix.  We have relationships with universities we value.  We stay close to leading venture capitalists and their portfolio companies, as seeing the latest efforts in areas adjacent to or directly competing with our businesses continues to expand and inform our thinking.  We have worked with our supply chain on driving innovation and have reached out beyond our own walls to tap what will always, by definition, be a far greater expanse of problem solvers than any company could have internally.

Most of our new high growth businesses operate in close partnership with third party firms providing an aspect of the solution, whether in mobile payments, employee management, SnapTax, or dozens of other innovation efforts.  Open Innovation and its many facets will continue to be tested and I’m quite sure the solutions that come from outside our walls will drive value to our businesses.

What do you consider your greatest success in innovation?

Creating an environment where creative, entrepreneurial people can see their ideas quickly turn into actions, whether experiments, prototypes, or other forms of forward motion.  Entrepreneurial, creative people who see a problem want to solve it.  They want a culture where a better insight has a chance of seeing the light of day as a solution – whether a new process, product or service – that improves the world in a meaningful way.  The fact that we have so many more people now quickly testing and trying out new ideas in a culture that both encourages and supports their efforts is the success I’d point to.

SnapTax is one of my favorite new offerings, where millions of consumers can now simply tax a picture of their Wage and Tax Statement using the camera on their mobile device, answer a couple questions and click ‘File’ to be done with their taxes in minutes.  The app knows how to identify the pieces of information from the picture, grab them and enter them in the right places of a tax return.  Consumers have been delighted with the experience.

There are many individual projects I could easily name, as I’m proud of the work being led by teams across Intuit.  I’m proud of our mindset, as we no longer see innovation just as new products and services, but are well versed in and pursuing business model and commercial innovation.  I also love the skills I’m seeing exhibited across the company as teams rapidly experiment and validate their beliefs before we scale investment.  But if I had to point to one thing that makes me feel Intuit is poised to do great things, it’s the fact that we’re continuing to build a culture where new ideas can emerge, move forward, gather evidence and prove to decision makers – who may not have sought nor initially embraced them- that they merit time and resources.

By Karin Wall, Chief Editor

About Roy Rosin and Intuit

Roy RosinIntuit Inc. is an American software company that develops financial and tax preparation software and related services for small businesses, accountants and individuals. Roy Rosin, VP, Innovation, leads Intuit Brainstorm, Intuit’s innovation management platform and spent several years building the company’s innovation programs and working with teams on creating new products and services. Roy has been at Intuit for 17 years and used to manage the Quicken software business. He’s fanatically passionate about understanding and solving the problems consumers and small business owners experience in managing their finances and their businesses.