Tuesday, October 24, 2006

PDMA 2006 - Scott Cook Keynote

Scott Cook is the founder of Intuit.

The company was founded when Scott noticed his wife having trouble balancing her checkbook.

Intuit has 16M customers for Quicken and 72% market share.

Dick Drew, 3M employee, was working on sand paper. He went to see how autobody repair shops were using sand paper. The shop employees were complaining because tape would pull paint off the cars. He started working on a tape that would lay down cleanly but come off easily, leaving no residue.

McKnight, the CEO came in to talk to Dick and wasn’t happy he was working on his new invention. McKnight told him to stop and work on sandpaper instead because they knew how to sell sandpaper. Dick followed orders for about a day. McKnight came back a few months later and saw Dick still working on tape. He didn’t say anything. Thanks to him not saying anything, Dick was able to invent masking tape and cellophane tape.

“The bottleneck is always at the top of the bottle.”

-Peter Drucker

This was a shot taken at senior management (which is at the top).

5 Principles for Innovation

  1. Celebrate the entrepreneur
  2. Aim high ... to change lives
  3. Innovation comes from mindset change
  4. Savor surprises
  5. Put your customer metrics above your money metrics
Then Scott told the story of the invention of containerized freight. The time in port dropped by 36 fold 50 years ago. Don’t focus on the boat in the water, focus on the boat in port was the mindset change. Others had worked on making faster ships. This story illustrates principles 1, 2, and 3.

QuickBooks story...

They were launching a product that had 1/2 the features at twice the price and had no recognized brand. It had bugs in it, bad bugs. The advertising was really bad too. Their internal goal was to catch up to the market leader in 2 years. In 1 month QuickBooks became the market leader!

The story started 2 years earlier. They surveyed Quicken users and found out that 1/2 of the users were using it in an office setting. It bugged Scott, because it was for home use. So he went and found out what was going on. Turns out the reason was that small business users hated accounting. So they built accounting software that worked the way that these business users actually worked. That was what made it such a success, despite all the blemishes.

The key to a mindset change is savoring surprises. When you hit something that you don’t understand, that’s an opportunity to learn something.

Success starts with humility. Sometimes our own beliefs are what are holding us back. All our minds are packed with furniture. The key to innovation is removing the furniture to make room for the new furniture.

“Empathy is not just about walking in another’s shoes…first you must remove your own shoes”

-Indian proverb

They identified five distinct taxpayer types. One of them was a “worry warts”. These people were willing to do the work of preparing taxes but they worried that they were doing something wrong. So they introduced a version of TurboTax with an integrated online chat that can help him access live assistance.

“Discovery consists of seeing what everyone else has seen and thinking what nobody else has thought.”

-Albert Gyorgyi, Nobel Laureate

Here’s another problem they’re working on. Some businesses, such as a bike shop, want to be found by web users but they want the users to come to the store. The problem has been getting their inventory on the web. So Intuit has integrated QuickBooks with Google to upload the inventory information in QuickBooks with AdWords and Foogle.

Soon Froogle will be integrated with Google.

The last point is to put customer metrics ahead of financial metrics. Careers are made or lost on profit numbers. But what metrics exist for customers? Profit is easy to measure, customer metrics are not. So what’s a good metric?

“The only way to grow a business is to get customers to come back fro more and tell their friends”

-Enterprise Rent-A-Car

So Intuit measures (on a scale from 0 to 10) whether their customer would recommend Intuit products to their friends. They categorize the response as:

  • 0-6 detractor
  • 7-8 passive
  • 9-10 promoter
This is the final metric that Intuit tracks:

net promoter score = % promoter - % detractor

Now Intuit is working on health care. They’re developing a medical bill application for consumers with big medical expenses. It was invented by an Intuit employee whose son was born with a dire medical problem. The employee designed some software to help manage the medical bills. He then worked with Intuit to look for others with the same problem. That’s how a new product was born.

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