Intuit: Journey from Waterfall to Agile
Intuit Inc. is a software company that develops financial and tax preparation software and related services for small businesses, accountants and individuals.
When you think of a company with revenues of more than $4 billion dollars, employing more than 10,000 people and is 30 years old, last words you might associate with the organization is lean and innovative. However, Intuit, a software behemoth, has over past few years has reinvented itself, in the words of its co-founder, Scott Cook, into a “30-year old startup”.
In 2008, Intuit was struggling with its business, as its main source of revenue, QuickBooks’ growth had stagnated and the new features didn’t help in acquisition of new customers. Scott Cook sensed he needed to shake things up as the status quo would make them a relic of past in a fast moving industry such as Software Products and Services. He knew QuickBooks needed an overhaul fast and also Intuit needed new products in its repertoire to generate more sources of revenue. One day, he happened to stumble upon a unique video where a person named Eric Ries spoke about “The Lean Startup” method, this stirred Cook’s curiosity. He decided to invite Ries to Intuit HQ to talk to leaders at Intuit.
Lean Startup
Eric Ries, a graduate from Yale University, was your average tech nerd who loved building new products and wanted to be an entrepreneur. His first company there.com failed in 2003. He co-founded IMVU in 2004, which turned out to be a huge success. Bitten by his previous failure, he knew IMVU could fail as well but he sought to find out a way to mitigate the risk of failure. This led to the origination of the Lean Startup philosophy, for which Ries became an evangelist.
Lean Startup functions on the following model:
The idea is to come up with a hypothesis for a product or feature build a minimal viable version of it, ship it to your customer, analyse the data from customer usage and then validate your learning through the next iteration of product.
Waterfall
Intuit and most of the other software companies used the Waterfall method of software development process to build their products. The waterfall model is a sequential design process, in which progress is seen as flowing steadily downwards through the phases of conception, initiation, analysis, design, construction, testing, production/implementation and maintenance.
The process was very time-consuming and used to take a lot of resources without any assurance of success. This was a very high risk strategy to have and was not serving Intuit well.
Agile
Agile, as opposed to Waterfall, is an iterative method of managing the engineering process which allows the product and service being developed remain highly flexible. Lean Startup method is nothing but an extension of Agile development process.
Eric Ries spoke to various leaders at Intuit who all had great ideas regarding QuickBooks and other new products. However, what they lacked were the resources required to test out these ideas. Due to Waterfall method, Intuit had large teams working on a product and there was no room for side projects for the developers to work on.
First thing, Ries suggested was to break the large teams and split them up into smaller teams and each of them should work on a small product or feature for which turnaround time is really low. Secondly, once they have built it, it can be pushed to certain consumers to see how they react to it while maintaining a control group to see the true difference the feature made. Lastly, based on the results, the team can build on it or move onto the next idea.
Scott Cook was thoroughly impressed by these ideas and structured the changes to move away from Waterfall to Agile. And results were pretty staggering, the share price of Intuit rose from $29 in December 2009 to $47 in December 2010 (55% increase). Today, 20% of US GDP flows through QuickBooks.
Moreover, to unleash the innovative potential of its workforce, Intuit formalized Innovation Time policy, which dictates that employees have to spend 10% of their time on development of new ideas on their own. This enabled Intuit to come up with a whole new suite of product offerings.
The Lean Startup method not only helped Intuit to turn around itself but also helped them attract and retain top notch technical talent in the predatory environment of Silicon Valley. Working on innovative idea in a safe cocoon of a large company is a great incentive for innovation hungry engineers.
Sources:
- The Lean Startup by Eric Ries
- http://venturebeat.com/2013/03/29/qa-why-scott-cook-sees-intuit-as-silicon-valleys-30-year-old-startup/
- http://techcrunch.com/2011/09/13/instagram-and-intuit-founders-discuss-lean-startups-pivots-and-what-makes-a-product-successful/
- http://www.forbes.com/sites/hbsworkingknowledge/2013/02/25/lean-startup-strategy-not-just-for-startups/
- https://hbr.org/2013/05/why-the-lean-start-up-changes-everything
- http://www.wired.com/2012/05/ff_gururies/
Thanks for sharing! I remember using Quickbooks many years ago and thinking that this software was going to die out since it was so antiquated and stagnant. It’s fascinating how a shift in operating model could turn a software (and an entire company) into something that is more relevant for the current generation. I now use the cloud version of Quickbooks and it’s definitely a lot sleeker and more user friendly than its desktop predecessor!
The use of the Agile method is definitely catching on in the IT departments of many non-traditional industries. I recently worked with 2 companies who were going through Agile adoption, one which was an industrial goods manufacturer and the other was a large bank. The method requires a significant shift in mentality and in skill set, and one of the biggest challenges I’ve seen in the successful adoption is attracting talent.
I wonder if Intuit may lose some of its competitive advantage (e.g. ability to attract top talent) as Agile continues to catch on in different companies and industries? Or do you think that the Agile mindset has already propelled Intuit too far ahead of the competition?
I think Intuit is still a decently big name in the Valley to attract good enough talent and it’s difficult to substitute 30 years of market expertise. However, there have been companies like Zenefits, who are disrupting the Small and Medium Business Software products. Will be interesting to see how Intuit reacts. Thanks for the comment.
Sounds like an impressive change!
I would like to get more background/color around the product – I am not familiar with Quickbooks, and it made a lot more difficult to apply and understand all the great things you wrote. Just a sentence or two would be helpful (in addition to your brief mention of the company’s business). Maybe how the Company made money through Quickbooks, what are the advantages and what are the challenges. This would give a better perception of what’s at the core.
But otherwise agree with the above post on that it is awesome to see how an operational change can unleash so much value at a company!
Quickbooks products are geared mainly toward small and medium-sized businesses and offer on-premises accounting applications as well as cloud based versions that accept business payments, manage and pay bills, and payroll functions.. It was revolutionary product when it was released in late 80s. Prior to the Agile process, Quickbooks was very antiquated software which was not very easy to use and was losing their market share to competitiors.