Intuit:

A Story of Innovation and Change

Creating and Sustaining

Competitive Advantage 

Managing Innovation and Change

Engineering 298A.2

Fall 1999 
 
By 

Randi Thomas   SID: 12991986

and 

John Musacchio  SID: 13334022

Contents:
Introduction
   Obsessive about listening
I. The Beginning
    Maniacal when it comes to customer research and feedback
II. Growing Up
III. The Rush to Online Banking
IV. Moving To The Internet
V. Core Competencies and Company Culture, Philosophy, & Values
VI. The Present (1999)
VII. Summary

from http://ww.cs.berkeley.edu/~randit/papers/ Intuit-case-final.doc
http://216.239.57.100/search?q=cache:ZmDRxK-i_68C:www.cs.berkeley.edu/~randit/papers/Intuit-case-final.doc++%22intuit+feedback%22&hl=en&ie=UTF-8

Introduction: 

Since its inception Intuit Inc. has been a company that has repeatedly transformed itself. Its founder and chairman of its executive committee, Scott Cook, has beenobsessive about listeningintently to his actual as well as potential customers, and about observing the pulse of the market space in which Intuit is playing. By effectively navigating quick turns to take advantage of potential opportunities, and by being willing to abandon plans when a change in market climate is sensed, Cook has adeptly guided Intuit and seized the opportunities that have presented themselves. As a result, Intuit has become a company with dynamic capabilities. It is highly entrepreneurial and autonomous with a flat hierarchy. Although its goals and visions have undergone repeated restructuring and change in order to position the company to seize these perceived opportunities, at any one moment in time Intuit and its management have had high-powered incentives and a clear vision of its immediate goals. In addition, Intuit is a company willing to experiment and take calculated risks. It is one for which innovation and change are a matter of course and an understood and expected way of doing business. According to his associates, Cooks brilliance lies in his uncanny ability to seize on a problem, hear from all sides, and synthesize a coherent solution. He has taught his company to do the same. Cooks ego is absent from most decisions: the weight of the evidence carries the day. This is the philosophy upon which Intuit has been built and with which Intuit keeps its competitive advantage in the unpredictable online commerce Internet world of today. 

In section I (The Beginning) of this report we discuss the story of Intuit's founding in the early 1980's. In particular we review how Scott Cook transformed an idea into the first release of Quicken, Intuit's personal finance management software. We also explain how Cook designed and marketed the product to create demand when personal finance management software was an entirely new product category, and how he convinced people to abandon their easy-to-use pen and paper checkbooks for the Quicken software. 

Next, in section II (Growing Up), we review how Intuit transformed itself in the late 1980's from a small start-up company into a major enterprise without compromising its ability to innovate and without forsaking its almost fanatical attention to its customer's demands for easy-to-use products. 

In section III (Rush To Online Banking) we discuss the period from approximately 1995 to 1996 in which there was a failed attempt by Microsoft to buy Intuit. It was during this period that Intuit had to gain a competitive advantage over Microsoft as well as over traditional financial institutions in establishing the facilities that would give users the ability to do online banking, to electronically access their checking accounts, and to even pay their bills over a network. Up until this point Intuit had created and marketed stand-alone software products using autonomous innovations, but now to be successful and to gain competitive advantage Intuit was faced with the challenge of orchestrating a systemic innovation that required close collaboration with banks and transaction clearinghouses. 

In section IV (Moving To The Internet) we discuss the period from 1996 to 1997, during which Intuit abandoned its original online banking strategy in favor of a new strategy, trading its proprietary network and transaction-fee-based revenue model for the public Internet and a revenue model based on advertising and referral fees. Intuit was quick to sense the change in market conditions that demanded this new strategy, and wasted no time in transforming itself to move along this new path. 

In section V (Core Competencies and Company Culture, Philosophy, & Values), we review the values and competencies Intuit developed over the years that enabled it to make so many radical transformations in its short history and to keep its competitive advantage while doing so. 

In section VI (The Present), we discuss the innovations Intuit is making at present to expand and improve its product offerings. We focus on the development of its Quicken.com financial services portal, on the OFX file standard Intuit has cooperatively developed to encourage and facilitate the transfer of financial information over the Internet, on its BankNOW for the Web software development, and on its newest Web site offering, the My Accounts suite of services.  

We conclude, in section VII (The Summary), by grouping the many variables, factors, forces, and reasons discussed in the previous sections that have contributed to Intuits success into four major categories. We then use this classification scheme to summarize the many capabilities and competencies Intuit has used since its inception to rapidly innovate and change and to thus first obtain and then consistently maintain its competitive advantage.  

I. The Beginning 

In 1983 as Scott Cook watched his wife Signe pay the bills, he realized that every household in America has to pay bills. He reasoned that it was a tedious task that begged to be automated and that  this is something computers should be good at. With this epiphany and using the marketing skills he had developed earlier in his career working at Procter & Gamble as an assistant brand manager for Crisco, he set out to develop, market, and launch a high-tech product that would reach a mass market. Thus the idea of Intuit, the company, and its first software product, Quicken, was born.

At this time Cook realized that by targeting people who use pen and paper to pay their bills he was not only identifying Quickens competition (pen and paper), but he was also defining Intuits first market segment. Pulling a pencil from his pants pocket Cook proclaimed, This is our main competitor. This guy is low-cost, easy to use, and it won't crash and eat your data. Virtually every one of our customers switches from this when we get them. He understood that he would have to create a whole new demand for a totally new product and then cleverly build a migration path from the old technology (pen and paper) to the new one (software running on the PC) by educating the public. 

Cooks first step was to hire TomProulx, a Stanford University student. Together they would design and Tom, using the PC in his dorm room, would create the software code that would easily write checks and store personal financial data, i.e. the Quicken prototype. From the start, Cook placed great emphasis on, and was relentless in doing, customer research. So his first strategy in 1983 was to survey potential customers via the telephone. He learned that although people liked the idea of having more control over their home finances, they thought actually doing it would be much too tedious and time consuming. Probing further, he learned that PC users were eager to simplify their tasks of bill paying, budgeting, and monitoring their investment portfolios, but they were unwilling to learn computerese to do so.  

Not satisfied with just doing the telephone survey to get customer feedback, Cook went one step further. He enlisted the Junior League, a women's' volunteer organization, to test his product. He then sat next to each user with a clipboard, observed, and took notes as the person attempted to write a check using the prototype. 

Using all this feedback, Cook and Proulx honed the prototype to mimic the way the customers were manually doing these tasks. For example, customers could pay a bill by completing an on-screen form that looked exactly like a check. Cook explained, You cant alter peoples habits. That's why Pampers were white and looked just like cloth diapers in the beginning. Once you get people hooked, you can move them to colors. 

These principles of first designing the graphical user interface of each new software product to conform to the way people are used to performing the task and second of placing great emphasis on using customer feedback to shape the final product have been, and still are, fundamental to Intuits company culture. In fact, Intuit is maniacal when it comes to customer research and feedback. The usability lab runs full-bore throughout the design of each product. An ombudsman funnels suggestions from telephone help lines into a central database, where they are categorized and analyzed. Engineers are sent out to customers homes to watch them grapple with the software.  In short, Cook applied the consumer marketing techniques he had so adeptly learned at Proctor and Gamble to the software/financial services arena. The outcome: the first layer of the company's cultural and philosophical foundation was laid and Cook  figured out how to run a company that can identify market needs and consistently develop easy-to-use computer software to meet them. Furthermore, as we will see in the later sections of the paper, Cook, and through his leadership Intuit, not only embraced these techniques in 1983, but, because they were so effective, continued to develop and hone their use in the Internet and modern-day software

In 1984 Quicken went on sale. It was the 43rd personal finance software package to be put on the market and began its retail life with only a limited distribution through banks. Although, it was found to cut in half the average bill paying time of three hours, it still took almost another two years for Quicken to break into the marketplace. Unfortunately, during this time period, the good reviews that Quicken got from trade publications generated sales for Intuits competitors in the retail market and Intuit was left with the limited sales it generated by continuing to market its package through banks. Clearly having the better mousetrap was not enough.If Quicken was going to succeed, Cook was going to have to find a way to beat a path to his customers door by securing better distribution channels. 

As a last resort, in 1986, Cook and Proulx spent their last available cash, $110,000, to finance a direct marketing campaign designed to bypass the retailers. They ran a series of advertisements in trade publications such as PC Magazine and Byte. To their delight, orders came pouring in and Egghead Software, at the time a 186-store chain, wanted to stock Quicken.  

To their credit and in their wisdom, Cook and Proulx did not rest on their laurels. Cook continued his market research and customer trials, and Proulx continued to make the suggested refinements to the software. By 1988 sales of Quicken surpassed those of the then market leader, MECA's Managing Your Money and Intuits annual revenues were at $33 million and growing fast.

II. Growing Up

From the VCs Cook and his team learned much. For instance, they learned how to find good legal advice. In addition, Doerr introduced Intuit to a strategic planning system he had used as a manager at Intel in the 1970s. McMurtry, recognizing that Proulx was a more creative thinker than an administrator, was instrumental in persuading him to resign as head of R&D and to put his energies into working on acquisitions and future business. Consequently a new R&D chief experienced in product development was appointed and greatly expanded the number of products launched. Meanwhile, Peter Wendell, whose great strength is people management, taught Intuit management how to think about the business in new ways. He instituted a different, Socratic style of management which involved asking the searching questions that would assist people in reaching novel conclusions rather than ordering or telling people what they should be doing.    

Thus with Cooks full support and approval and the VCs careful guidance Intuit efficiently and quickly eased through its first big transformation. This added another solid philosophical, cultural, and experiential layer to the foundation upon which the company would continue to build its dynamic capabilities. Furthermore, because these changes brought about immediate successes, Intuit management learned to trust Cooks business intuitions and consequently the stage was set. Intuit was primed and ready to undergo any future transformations that had Cooks blessings with equal ease, efficiency, and speed.  

Having thus undergone its first big transformation with the introduction of the VCs, by 1990 Quicken had positioned Intuit as the leader in the expanding personal finance services arena and so the company began looking into other areas of growth. In particular Intuit partnered with CheckFree, a company whose technology would enable Intuit to offer electronic bill paying to its Quicken users. The contract covered from 1990 until June of 1995. In addition, in 1993, Intuit announced a public offering (an IPO) of 1,500,000 shares of its common stock and then used the capital that it raised to purchase Chipsoft, Inc., the creators of TurboTax and MacInTax, which are tax preparation software products. This move enhanced Intuits product offerings since the new software provided a more complete, closely integrated financial service solution to its customers. Also in late 1993 Intuit established a long-term partnership with VISA. Both companies agreed to create products and services that would fully automate financial tasks.  

During this period of time, Intuit also extended its own product line. Pocket Quicken was developed for use on a personal digital assistant (PDA) such as Apples Newton. In addition, QuickBooks, which was designed for small businesses and required no knowledge of debit and credit accounting principals, became the number one bookkeeping software package. QuickPay and QuickInvoice were easy to use software packages also developed for small business users to do payroll processing and invoicing. Adhering to Cooks original philosophy, each new software package was extremely successful because it was carefully designed and field-tested for ease of use, customer acceptance and feedback.  

Given such success, 1994 was a year of expansion and fast growth for Intuit. Early in this year Intuit acquired Best Computing, a Virginia based company that offered its tax expertise and an existing call center. This acquisition enabled Intuit to provide nationwide technical support for its tax products. In July of 1994, Intuit then acquired National Payment Clearinghouse  (NPC), an Illinois electronic service center, that was renamed Intuit Services Corporation (ISC). This acquisition enabled Intuit to offer on-line banking services to Quicken users because the new NPC facilities provided the necessary communication between these users and their banks as well as the capability for these users to send payments to merchants after their banks had approved their instructions. By integrating a bill paying facility within Quicken, Intuits goal was to attract many more customers. The plan was to partner with banks and/or processing companies in order to encourage merchants to accept electronic payments. As reported by the ABA Banking Journal, By serving as an intermediary, Intuit hoped to generate the high volumes on both sides necessary to make true electronic payments a reality. Intuits repositioning itself as an electronic transaction intermediary was the company's  first step in moving from being an autonomous innovator to a systemic innovator, a transformation which will be discussed in more detail below. 

By late 1994, Intuit was clearly the leading provider of personal finance management software. Its best selling product, Quicken, had an installed base of 6 million users while its closest competitor, Microsoft Money, had less than 1 million users.  Intuit was beating Microsoft at a time when Microsoft was snatching market-share away from once dominant companies like WordPerfect (word processing software) and Lotus (spreadsheet software). In October of 1994, not being able to beat Intuit, Microsoft offered to buy it for $1.5 billion in stock, and talks between the two companies began in earnest. The potential merging of the two companies was immediately attacked and the Department of Justice began an investigation.   

By 1995 Intuit had 7 million installed users, had grown into a $400 million company, and Quicken had captured 75% of the market for personal financial management software. Cooks insistence on building Intuit upon products that were easy to use and understand (because consumer feedback drove their design) earned the company high ratings from software reviews and enormously helped Intuit maintain its leadership position in the personal finance segment.  During this period, however, it became clear that the merger with Microsoft was not going to happen since fighting the Department of Justice was costing Microsoft too much time and money. The merger with Microsoft was officially abandoned on May 20, 1995.

III. The Rush to Online Banking

At this juncture it was clear to Cook, always a visionary, that the future of the financial services industry would be providing on-line services.  He recognized that more and more people owned computers with modems that were capable of accessing on-line services, so it was now feasible to offer on-line banking. He further recognized that the past fifteen years had seen a dramatic rise in the level of technological aptitude throughout the general population. It was obvious to Cook that the ability for consumers to manage their finances, pay bills, and transfer funds between accounts would be a huge, value-added service, and thus a potentially profitable one to those who could provide it. The only question was which players  (banks, software companies, etc.…) would be first to provide these new services and dominate this new market. Intuit had two huge advantages over all other potential entrants; it had the largest customer base of people technologically savvy enough to use a novel, on-line banking system, and it had the experience and the insightful leadership necessary to quickly transform itself in order to take advantage of this new potential on-line banking opportunity.  

Until mid 1994 Intuit had mainly focused on developing and improving independent pieces of software and thus had made incremental, autonomous innovations that would improve its product lines. This meant that features and improvements could be added to Intuits software, such as to earlier versions of Quicken, without having to coordinate outside of the company. On-line banking, however, would involve systemic innovations, demanding tremendous amounts of coordination between Intuit and outside financial institutions so that the end user could electronically access information and carry out transactions between many different institutions seamlessly.   Intuit management would have to orchestrate the huge task of transforming the company from one that had mastered making autonomous innovations to one that could be equally effective making systemic innovations.  

As mentioned above, Intuit began laying the foundation for its move towards the systemic innovation of on-line banking in 1994 when it acquired NPC, a traditional transaction-processing center, which it renamed Intuit Services Corp. (ISC). In 1995, Intuit then proceeded to expand ISC's operations by building a proprietary network into which users could directly dial using their modems. A network hub to coordinate ISC's available services as well as new security features were also added. Intuit, having thus acquired the necessary complementary assets to carry out its systemic innovation, then integrated these components with its financial software to make a complete system. The Washington Post reported, In theory, it was efficient and secure; as a private network with heavy safeguards between the customers and the banks, it limited the chance that a malicious hacker could break into an account.  The profit model for Intuits new online banking infrastructure was simply to charge customers a small fee for each transaction that was performed using its infrastructure system and to charge banks a small amount per click made by its customer while within the Intuit infrastructure system. Assuming millions of customers would adopt and use its system, a large number of financial transactions would be made and thus Intuit would see substantial revenues.  

Obviously making alliances with banks was key for Intuit to be successful in the online banking arena since without these alliances users would be unable to access their bank accounts with Intuits software interface. To this end, in July 1995, Intuit succeeded in getting 20 large banks to participate in their on-line banking efforts, but, with so many major banks in the United States, this left hundreds of large banks not yet allied with Intuit.  

However, Intuit had many reasons to believe that more bank alliances were on the horizon. In particular, bank mergers and acquisitions were the current trend and banks were under increasing pressure to reduce their costs in order to improve their own performance either to avoid becoming takeover candidates themselves, or in order to support profitability after a merger/acquisition. Online banking would allow banks to reduce the volume of paper and phone transactions and the number of costly retail branches, and therefore reduce costs, while still offering higher levels of round the clock customer service. So at this time, mid 1995, it seemed that banks had much to gain by embracing online banking, and therefore there was a high probability that they would be willing to form the alliances that would give them the capability to do so. If this were the case, by guiding the company through its second transformation, Cook and his management team had made sure that Intuit would have a competitive advantage, and therefore would be ready, to seize such a potentially big opportunity.  

In hopes of using consumer demand to further pressure non-participating banks into making alliances with it, Intuit focused on gaining access to more potential customers for online banking in two different ways. The first effort was in October of 1995 when, with a perspicacious eye on the future, Intuit took its first step toward its Internet strategy: it released Quicken 96, which was the first version of Quicken to give its users access to financial information via the public Internet. Specifically, the Quicken 96 release tightly integrated a customized version of the Netscape Navigator browser that then allowed Quicken users free access to Intuits new financial World Wide Web site called Quicken Financial Network (QFN). At the same time, Intuit formed a partnership with Concentric Network Corp., an Internet service provider, which then meant that Intuit could also offer its Quicken users optional, low-cost full Internet access with the newly integrated Netscape browser as well.  

The QFN site was designed to be a complete reference guide to help private investors make sound financial decisions. It was divided into areas that focused on different financial topics (i.e. QuickBooks and small business topics, TurboTax and personal tax issues, professional accounting topics, etc.) According to Intuit press release dated October 19, 1995, the plan was for the QFN site to initially focus on topics of interest to Quicken users, and then grow to include a range of personal financial information and services for everyone who wishes to make smarter financial decisions. As stated above, Intuit hoped that by making useful financial information available to Internet users who are not currently Intuit customers, a broader audience would be reached which would not only gain Intuit access to more potential customers, but, according to the same press release, would also help Intuits financial institution partners broaden their reach.    

Not surprisingly, the QFN Web site also had an area where customers were encouraged to give Intuit feedback and suggestions about the kinds of information and functionality they desired. Being true to company philosophy and culture, Intuit then used this information to shape the future development of the Quicken Financial Network, which, in turn, made the site even more popular and successful thus accomplishing its original goal of gaining access to many more consumers.  

Moreover, to achieve even more exposure to consumers and to further enhance the QFN Web site, in November of 1995, Intuit acquired GALT Technologies, Inc., a major provider of mutual fund information on the Internet through GALTs NETWorth service. Thus, timely and comprehensive mutual fund information could be accessed via links from the QFN Web site. Continuing to take advantage of every potential opportunity the expanding Internet had to offer, on February 19, 1996, the company announced yet another Internet innovation, QuickTax 1040A/EZ. This software allowed all taxpayers who were planning to file simple returns for 1996 to download everything necessary to file their 1040A and 1040EZ from the World Wide Web for only $9.95. This, in turn, gave Intuit the opportunity to reach even more consumers and to gain its QFN Web site and all its products and services even more attention and exposure.  Note that this first effort, the launching of its new QFN Web site in order to gain access to more potential consumers, although successful, did not directly advance Intuits primary online banking strategy. Instead this effort was a forward looking, experimental, complementary path that, as will be discussed below, was a very wise and insightful choice for Intuit to have made. It should also be noted that at this time, 1996, Quicken users still had to rely on Intuits proprietary network in order to perform such online banking services as accessing their bank accounts and paying their bills. 

The second major effort Intuit launched to gain access to more potential consumers came exactly one month after Quicken 96 and the QFN Web site were announced when Intuit formed its partnership with AOL in November of 1995. The agreement was to jointly provide electronic banking to AOL members. In addition, Intuit agreed to revamp its online area on AOLs Web site to include links to its QFN Web site; AOL agreed to make Intuit software products available for sale on its Web site, and both companies agreed to jointly sponsor promotions to introduce each others products to the others customer base. Thus AOL members gained the online capability to access their bank and credit card accounts from their AOL account in order to pay their bills and to do online banking. Intuits press release stated, AOL customers will be able to access account data and bill payment services directly from participating financial institutions via AOL and Intuit Services Corporation (ISC), the same facility that links Quicken users to their financial institutions. For those banks currently offering electronic banking services via Quicken, no additional equipment or programming will be necessary to offer these services via AOL; a single connection to ISC will enable banks to communicate electronically with the millions of Quicken users and the millions of AOL members alike.  

Since the partnership combined Intuits 8 million users with AOL's 4 million members, it clearly achieved Intuits goal of gaining access to more potential consumers. As mentioned above, Intuit hoped this increase in consumer demand for online banking would put pressure on the non-participating banks to form an alliance with it.   As Cook explained, Intuit is building electronic channels for banks to reach millions of existing customers and to attract new customers. These types of electronic banking services are already available to Quicken users; making them available to the fast-growing millions of America Online subscribers will help us to expand our services to customers who are not currently users of personal finance software. 

In addition to helping Intuit expand its services, the AOL partnership also provided an opportunity for Intuit that could have easily been overlooked were it not for the company culture and philosophy that were, by now, firmly in place.  Specifically, the company had many facilities in place from which it could obtain customer feedback and it was fastidious about responding immediately to this customer input to create or recreate software that offered its customers exactly what they wanted: convenience, ease of use, and desired features. Thus studying the feedback obtained from the AOL customer research activities, Intuit management astutely identified a new, emerging segment of PC users who, up until now, were not getting what they wanted, i.e. super fast, zero hassle banking. Intuit called this new market segment the Transactors, and contrasted this segment with another segment it labeled the Organizers. According to Intuit, Transactors don't want to organize, categorize and track their finances like Organizers do, they just want to pay bills and avoid overdrafts as fast as possible with zero hassle.  According to Intuits research, 40% of the non-buyers of personal financial management software such as Quicken fit into the Transactor market segment. 

As stated, company culture dictated that the company respond as fast as possible to customer demands. So in June of 1996 Intuits answer to the Transactors was its new BankNOW software, which was free to all AOL subscribers. It provided PC users the ability to do speedy, hassle free online banking and bill payment transactions using an all-in-one screen approach that required no navigation. The first version of the BankNOW software allowed 6 million AOL subscribers to link with participating financial institutions to do online banking in September 1996 and was a competency enhancing endeavor for both Intuit and AOL. Here then is yet another example of the Intuit culture and philosophy driving the company's innovations, changes, and path. Specifically, the Intuit philosophy of fully valuing, actively seeking out, and then immediately embracing consumer feedback inspired the creation and launch of its BankNOW software. Steve Case, chairman and CEO of America Online, Inc. (AOL) acknowledged that  Intuit has unique insights into the minds of consumers and an unparalleled ability to convert those insights into high value, high impact personal finance software. Were looking forward to making these advancements available to our six million members. 

Remarkably, in less than one years time Cook, along with the rest of Intuits management, had successfully and efficiently guided Intuit through its second transformation in which the company expanded its competencies to include making systemic innovations. In so doing the foundation and infrastructure necessary to do on-line banking was laid and in order to reach more consumers, the company took the first steps of its Internet strategy. Thus for the second time in seven years Intuit effectively navigated another quick turn and efficiently and nimbly underwent major changes in order to take advantage of what Cook perceived as a big potential opportunity in online banking for his company 

IV. Moving To The Internet

In September of 1996, in response to this threat from Intuit and other such companies against their business, a consortium of 15 banks announced the creation of Integrion, a new system for handling online commerce. The banks looked forward to benefits gained from economies of scale and from keeping control of the transaction process itself, since the new system allowed them to brand their own products, something they could not do with companies like Intuit in the middle. Furthermore, Integrion promised its member banks secure connections with their customers by providing access via IBM's private (and therefore secure) network. Although Intuit by now had 37 partner financial institutions linked to its online financial software, the 15 banks making up the Integrion consortium held approximately half of the household accounts in the US and Canada, and they hoped to encourage more banks to join their consortium.  If Intuit continued down its current path, ISC and its proprietary network would be in direct competition with Integrion in forming bank alliances. Clearly this was a significant shift in the online banking market space that did not exist when Intuit launched ISC and it was one that Cook and company did not anticipate.  

In addition to this new competition for bank alliances, which posed a serious threat to its financial success in the online banking market, Intuit also faced another financial problem. The fees that Intuit and other online service providers were able to charge were steadily declining.  Customers were simply not willing to pay for online transactions, when they often could perform these transactions using traditional methods (i.e. checks) for free. As mentioned above, the banks also resented having to pay the click fees. Furthermore, by the fall of 1996, according to the New York Times, consumers and financial institutions have [had] shown a preference for conducting business over the Internet rather than over proprietary networks like Intuit Services.  This further impacted Intuits ability to charge the click fees, which, in turn, compromised its financial health. The Internet changed everything. Cook said. According to an analysis published in the Washington Post, As the Internet became a more popular and widely used communications network, eclipsing proprietary networks such as the Microsoft Network and America Online, the idea of click fees melted away. No business could justify charging consumers such fees when they were already paying a monthly bill for network services.  This turn of events seriously threatened Intuits ability to reap the revenues that Cook and his team had thought were possible when they originally set up the profit model for their online banking endeavor. Again according to the Washington Post, The vision that animated Intuit and industry giant Microsoft Corp. that of selling elaborate software middlemen that would link consumers electronically with banks and other businesses has faded. Instead, businesses are using Internet technology to connect directly with their customers…. Indeed, among the few big winners so far in online commerce are purveyors of traditional retailing and banking services.

Furthermore, since Intuits core competency is running a software company, running the ISC proprietary network, which provided the back end of the transaction processing business and which constituted the pipes and plumbing of transaction processing became a drain of its resources. Cook stated that transaction processing had become a distraction. It was a sizable investment of dollars but also of management time and resources, in a business that is not central to our core competencies. Without the click fees to cover the costs of running this proprietary network and with the Internet eclipsing proprietary networks, ISC was becoming a liability and a drain for Intuit. 

Moreover, the public Internet was clearly becoming enormously popular yet Intuit was still offering a large percentage of its services on its own proprietary network, which, for reasons stated above, was nothing but a drain on its resources. Hence, in two years time, conditions in the online banking environment had changed significantly and were not at all what Cook and his team had anticipated they would be when they had launched Intuit into its online banking transformation. 

To their credit and in keeping with the culture upon which the company had been founded, it didn't take long for Cook and his management team to fully realize the deleterious situation into which they had lead Intuit, and, at the same time, to become fully aware that a change in the market climate was afoot. Bill Harris, Intuits then executive vice president, stated, We were naïve and arrogant. Naïve because we prided ourselves on doing customer research, and I don't think we did a good job of listening to [the banks] and understanding them. And arrogant because we thought that a good technical solution was as far as you had to go. We thought, Gosh, wont people beat a path to our door!  Clearly the Intuit leadership eagerly embraced any valuable knowledge that could be gained from their online banking failure experience.

Consequently, being a company with dynamic capabilities, Cook and his team knew the time had come to abandon plans (providing the back end of the transaction-processing business), and chart a new course (providing front end banking services over the Internet). Hence Intuit faced another critical juncture in which it would be necessary to modify its entire strategy if it was going to prosper rather than suffer from the new developments in the online financial services environment. A strategy would be necessary that did not rely on transaction fees, that would encourage banks to become involved rather than scaring them away, that would take advantage of the growth of the Internet, and that would leverage Intuit's unique capabilities in creating user friendly financial software. The time for the third major transformation in Intuits thirteen-year history had come. Cook and his management team would have to navigate through yet another quick turn if Intuit was going to rechart its course to seize the opportunities being provided by the Internet. 

No strangers to instant changes in strategy, Cook and his team immediately rose to the occasion and almost overnight had Inuit gearing up for a new role, a new way to play middleman. Scott Cook says his company has a new concept which he called intelligent matchmaker for helping consumers find just the right products, and helping producers find the consumers. To this end, in September of 1996 Intuit sold ISC and its electronic bill-payment processing business to Checkfree, its main competitor in that field, for $227.6 million in stock and announced its intentions to focus on its core software businesses and on expanding its services over the Internet. Cook proclaimed,

Our goal is to speed the adoption of electronic connections between individuals, small businesses and financial services providers. Two years ago, our strategy was to offer a secure private network connection between our customers and financial services providers. Today, rapid advances in the safety and reliability of the Internet as well as its phenomenal acceptance by individuals, small businesses and financial services providers make the Internet the central focus of our overall connectivity and business strategy.

In addition to giving our financial services provider customers more choice, our decisions to open our products to direct Internet links and to sell ISC in exchange for an equity stake in CheckFree creates more opportunity for Intuit as well. We are now free to pursue new software and Internet businesses while continuing to participate in the bill payment processing business, creating benefit to both Intuit and our full range of customers. 

Wall Street analysts applauded this announcement since they agreed that Intuits future opportunities were in providing a front end consumer interface to the Internet and not in running the back end services. In addition the analysts noticed and commended Intuits agility and flexibility. Its a strategy shift, Lise Buyer, an analyst at T. Rowe Price in Baltimore, said of Intuits announcement. But its impressive that Intuit is willing to reverse course so quickly.  

Furthermore, Intuit announced that as part of their new business model they planned to publish new open connectivity standards by the spring of 1997 which will let any bank support home banking through Intuits Quicken personal finance software, regardless of the payment processor used. Embracing what they had learned from their online banking failure, Cook and his management team realized that by opening Intuits financial software and Web-based services to direct connections with financial service providers using the Internet, it would accelerate the adoption of electronic financial data exchange and communication between these providers and their customers. This, in turn, would serve Intuits interests by removing the barriers that these same customers, individuals and small businesses, faced when trying to use Intuits online financial products and services. To facilitate these open connectivity standards Intuit joined its technology partners in consultation with the leading financial institutions to develop a comprehensive framework for exchanging financial data electronically.  According to the Intuit Whitepaper, the framework was an “integrated collection of easy-to-use specifications and protocols called OpenExchange™. The goal of OpenExchange is [was] to significantly accelerate the adoption of electronic methods of interaction between consumers, businesses, and their financial institutions. Its aim is [was] to help make electronic financial connectivity easy, safe and ubiquitous. Intuit hoped that OpenExchange would make the exchange of financial data more palatable to the banks and other financial institutions, and therefore would alleviate their fears and paranoia as described above. 

Clearly then, Intuits sale of ISC and its move to a new business model were motivated in part by its need and desire to appear friendlier to the banks. Cook acknowledged that many of today's [September 17, 1996] announcements are directly in response to questions we've had from our financial institution partners. … We fully anticipate that Integrion, rather than being a competitor, will be an ally in attempting to get more consumers and more financial institutions doing business electronically.  Intuits efforts were not in vein. Banks were delighted with the new turn of events since they anticipated the new arrangements would mean lower transaction fees and greater access to Quicken for them.  

Thus without missing a heartbeat, Intuit transformed itself once again. The company adopted a new strategy that met all of its requirements. This new strategy did not rely on transaction fees. It encouraged banks to become involved rather than scaring them away. It took advantage of the growth of the Internet, and it leveraged Intuit's unique capabilities to create user friendly financial software. With this third transformation and with the sale of their proprietary network, Intuit went from a company that bought and controlled all of the complimentary assets necessary to affect their systemic innovations to a company that does not own or control any of these complimentary assets.  Cook and his management team craftily maneuvered the company so that it would become more palatable to banks. They had successfully moved the company into a position that could only accelerate the adoption of its software offerings. Thus Intuit had smoothly and quickly made its third transformation and was on its way to becoming a dominant financial services player utilizing any potential the Internet and the World Wide Web had to offer.  

V. Core Competencies and Company Culture, Philosophy, & Values

In particular, the launch and subsequent expansion of the QFN Web site into the current Quicken.com Web site and of the BankNOW software for AOL subscribers are two excellent examples of the dynamic capabilities and core competencies that are in place at Intuit. Specifically, Intuits second transformation, which focused the company on doing online banking using a proprietary network, took place in the spring of 1995 just after Microsoft's attempt to buy Intuit was abandoned. In the same year, although Intuit was fully committed to its online banking strategy via a proprietary network, it launched, and then continued to expand, two new initiatives that utilized the public Internet, which, at this point in time, was not yet enormously popular. These two initiatives were its BankNOW software for AOL subscribers (launched in June) and its QFN Web site on the Internet (launched in October). The point is that the company's culture and philosophy was such that Intuit was willing and had the competencies in place to experiment with alternative, promising directions in order to take advantage of two potential opportunities. Thus Cook and his management team had the sagacity, wisdom, and foresight to have laid a very solid foundation for a possible future move to the Internet, while simultaneously pursuing its primary online banking strategies on its ISC proprietary network. 

Clearly Cook and his management team were doing their homework. They had competencies in place that we can now say for certain exemplified a profound intuition, insight, understanding, and connection to the pulse of the online financial services arena and they used them in dynamic ways to lead the company. Moreover, as we will see below, Intuit has been able to sustain its competitive edge in a very volatile environment precisely because it has continued to embrace the same sort of forward thinking experimentation. It has become part of the Intuit culture and philosophy to launch new endeavors in multiple areas of potential opportunities, in a manner analogous to how investors diversify their portfolios to hedge against sudden changes in the market. By staying sensitive to and aware of the slightest changes occurring in the financial services arena and then by leveraging its own expertise and intuition, the Intuit management team carefully guides the company in choosing into which markets to launch such endeavors. Thus no matter which way the financial industry swings, Intuit already has a first strike advantage and therefore a competitive edge.  

Furthermore, the company philosophy places a high value on its employees. Cook himself said, We have achieved these accomplishments because of Intuits people and our entrepreneurial philosophy about empowering people. According to Cook, Intuit hires great people and then gives them responsibility, and ownership to create great things. We help people grow and we reward their achievements. … The entrepreneurial environment here is a high-energy atmosphere that commands innovation and spontaneity. So Intuit achieves a competitive advantage because management, as part of the company culture, rewards employee learning and innovation. Furthermore, according to Cook, Intuit insists that their senior managers understand our whole business, not just one piece of it. So we educate, inform, and actively move people around.  This means that there is a higher probability that the company knowledge assets are held by multiple people, which insures that the knowledge assets are tied to the company, not to individuals. In addition, empowering the employees means happier, more contented employees who want to stay with the company. Thus there is also a higher probability that knowledge that is held by an individual is more permanently tied to the company. Additionally, by moving people around, knowledge is conveniently spread throughout the organization. Each of these assets are born from the company culture and philosophy, adds to Intuits competitive advantage, and thus contributes to making it the forward thinking, innovative, successful company that it is. 

Intuit has also created a company culture and philosophy that fosters change and therefore innovation. Since management insures that employees are supported and rewarded, not hurt, by change, everyone on board at Intuit expects, embraces, and does not fear change. In addition, because of their track record, the company culture supports Cook and his management team in being astutely aware and sensitive to industry movements and the accompanying potential opportunities so the company knows how and when to make changes. Thus with this combination of management having the awareness, insight, and knowledge necessary to effect a change and the employees embracing change, the company culture gives Intuit a real competitive advantage as we have already seen above. With these assets in place, Intuit is a company that can transform itself smoothly and efficiently with a minimal amount of disruption or resistance no matter how big or small the change might be.    

Another differentiating priority that is a very large and important cornerstone of Intuits culture and philosophy is the maniacal attention the company pays not only to its employees, but also to its customers and its business partners as well. In Scott's words, We seek not just to deliver WOW! to our customers, but to our employees and business partners as well. … We actively seek solutions where Intuit wins, our partners win, and our customers win. When all three work, powerful results can happen. Intuit actively and aggressively seeks out feedback from all these groups by doing surveys and having the mechanisms in place to capture feedback whenever and wherever it might occur. Then, no matter from where the feedback comes, it is seriously considered, evaluated, and almost immediately incorporated if at all possible. For instance Cook tells the following story:

During a job interview a prospective product manager made several suggestions regarding improvements to the user interfaces in Quicken. Two hours later the candidate stopped to visit with the interviewer and saw that his suggestions were already implemented in a prototype and up and running on the screen.

This philosophy that Cook brought to Intuit from its inception has become an integral part of the company's culture and way of doing business and it is one of the biggest reasons that the company has survived and is thriving today. 

VI. The Present

Furthermore, after successfully completing its third strategy transformation it has not been necessary for Intuit to undergo another such transition to date, since the strategy choices made by Cook and his management team for the third transformation seem to have served and positioned the company very well. Since that time, Intuit has been impressively and explosively expanding its holdings, so much so that it would be impossible to comprehensively cover all that the company has accomplished in this report. What follows is meant, therefore, to be an illustration or sample as well as a corroboration of the many innovations and changes that the company has successfully undertaken, of the significant role the company's culture and philosophy have played in these successes, and of the strategies and competencies the company has used to gain and maintain its competitive advantage. To this end, the discussion will be woven around four of Intuits current endeavors, namely: its Quicken.com Web site, its involvement in the Open Financial Exchange (OFX) project, its BankNow software, and its newest Web site offering, the My Accounts suite of services.  

By June 1997, just eight months after the initiation of its third strategy change, Intuit had reshaped much of its business around sharpened Web sites. As mentioned above, its strategy was to use the power of the Internet and the PC to revolutionize how people managed their financial lives, according to Bill Campbell, Chairman and acting President and CEO. Everything that Intuit has done since then has been with that focus in mind. More specifically, first Intuit relaunched its Quicken Financial Network (QFN) Web site and redesignated it as Quicken.com in the hopes that it would become the first stop for consumers searching on the Internet for a wide range of financial information. Bill Harris, Intuits then executive VP stated, We want to provide the best place for consumers to find financial information on the Internet.

This new Quicken.com Web site offers expert financial advice, links to financial data, tools for managing investments, financial news and information, a forum for sharing ideas with others interested in similar issues, and the ability to buy some types of financial products (transactional capabilities). Of course the site has links to all of Intuits desktop products such as Quicken, TurboTax, and QuickBooks. Moreover in late 1999 and early 2000 Intuit created other Web sites such as TurboTax for the Web and QuickBooks.com and put links to these sites on its Quicken.com site. In addition, at the heart of the Quicken.com site are links for specific financial concerns such as insurance (QuickenInsurance.com) or mortgages (QuickenMortgages.com) (market spaces), which offer help to consumers in sifting through the many available policies in order to find one that best suits their needs. This is what Cook meant when he described the company's new strategy as being intelligent matchmaker.  He explained, There will be a new kind of entity firms that help customers find the product [that best suits their needs] … and helps vendors find those people and sell to them. The intent was for Intuit to be one of these entities in the financial services market space, to assume a role of pulling information together rather than just selling its own products.  

To achieve this intent, Intuits site allows people to input the features that are most important to them (for a specific financial product such as an insurance policy), click the mouse, wait for a search and a compare of all available options to complete, and then choose from the resultant list of choices that match most of their needs. When it was introduced, the value added by this Web site was a whole new level of improvement for consumer finances and the use of this site was free to the consumer. Here again we witness Intuits skillful ability to innovate while filling a niche in the market space hitherto unnoticed and untapped. The revenue model for Intuits new Web site was, and still is, to simply charge finders fees to vendors for steering customers to these vendors products, and also to offer advertising space in selected places on its Web site. In order to be profitable, therefore, Intuit must attract many customers to its Quicken.com and other gateway sites. To this end, the company invested $40 million in Excite, a leading Internet search engine company, in order to have pointers to Intuits financial information displayed on the Excite home page. In addition, the company has maintained and expanded its relationship with AOL and therefore has exposure to its approximately 20 million subscribers as well.  

In fact, it is clear that from its beginnings one of Intuits core competencies has been in the area of forming alliances. Cook and his management team have repeatedly demonstrated that they place a great deal of importance on forming alliances because these alliances are not only vital for the company's success, but they also augment the company's knowledge assets which then allows the company to keep its competitive edge. Intuit is quite adept and prolific at forming such alliances. To date the company has formed alliances with over 80% of the largest financial institutions in the United States. Moreover, it is not uncommon for Intuit to lure a potential partner by offering a no risk, competency-enhancing capability to the company to gain the company's trust and confidence. One such instance was the 1999 agreement between Intuit and both Fidelity Investments and The Vanguard Group, the nation's two largest mutual fund companies, to offer registered users of both companies' web sites free usage of Intuit's Quicken TurboTax for the Web. Another instance was the agreements Intuit made with more than 350 financial institutions offering a similar deal, i.e. access to Quicken TurboTax For the Web in January of 2000 for the 1999 tax year. Besides opening opportunities for possible future partnering with these entities, these agreements also give Intuit free exposure to the customers of all the participating companies as well as an opportunity to build on its company reputation and thus to increase brand recognition for its products. These benefits, in turn, give Intuit a competitive advantage and better its position in the financial services arena.  

Since forming alliances with financial institutions is now and always has been the only way for Intuit customers to gain access to their financial information, partnerships with these entities is essential for Intuit to survive, to continue to innovate, and to keep its competitive edge. Recall that in 1996, to further enable financial institutions to partner with it, Intuit developed OpenExchange™, a comprehensive framework for exchanging financial data electronically, which would then facilitate the financial institutions in adopting electronic methods of interaction and thereby lure them into an alliance. Intuit was the pioneer and laid the groundwork for such a framework but then in January of 1997 was joined by CheckFree, Microsoft, the Integrion Financial Network, and Visa Interactive. Together they announced the creation of a single, unified technical specification, called Open Financial Exchange [OFX]. This specification was the convergence of Microsoft's Open Financial Connectivity, Intuits OpenExchange, CheckFree's electronic banking and payment protocols, Integrion's Gold Message Standard, and Visa Interactive's ADMS network. The unified specification of OFX streamlined the process financial institutions needed to go through to connect to multiple customer interfaces, processors and systems integrators. According to an Intuit press release dated September 15, 1997, OFX supported a wide range of [online] financial activities including consumer and small business banking; consumer and small business bill payment; bill presentment and investments, including stocks, bonds and mutual funds, and thereby enhanced Intuits desktop and Web-based software. OFX Version 1.0 was released for use on February 14, 1997. The plan was to add other [online] financial services, including financial planning and insurance support at a future date. 

By December of 1998, according to Mark Goines, the senior VP of Intuits consumer division, the number of companies providing OFX connectivity to financial institutions and their customers, otherwise known as OFX service providers (OSPs), reached a critical mass. He stated that, "these companies have existing relationships with nearly every financial institution in America." Consequently the adoption of online financial services by those financial institutions that had not yet entered the online market was greatly accelerated. By the time version 2.0 was released in January 2000, thirty-two OSPs working with Intuit committed to endorsing this new version of the OFX standards for Web-based financial data connectivity. Such endorsement signifies that there is a growing overall market demand for online financial services, and that Intuit is very well positioned to pull a large share of these financial institution newcomers into making alliances with it. The benefits for Intuit are clear. The more financial institution alliances Intuit has, the broader its customer access base, the higher the number of hits on its gateway Web pages, and thus the bigger its revenue will be. Furthermore, OFX version 2.0 enhances the financial information exchange over the Internet not only by adding support for 401(k) and 1099 statement downloads, but also by bringing OFX into XML compliance. Since using the XML tools enables users to interact with yet even more content and applications on the Internet, the Intuit Web site will attract a large share of these users as well.  

Thus we see that Intuit has taken a leading role in the development, adoption, and promotion of the OFX standards, which are instrumental in driving the growth of the online financial services industry. By assuming this role the company not only guarantees itself an aggressive, dominant, key, visible participation in the development of the future of the online financial services industry, but it also insures that the standards adopted will be absolutely compliant to all of its own software products. In addition, as part of its involvement in this collaboration, opportunities to make the necessary alliances with financial institutions, OSPs, and a large number of independent, online consumers are more forthcoming while Intuit also earns the distinction of being one of the industrys respected leaders. All these benefits position the company well for forward growth, expansion, innovation, and change, build upon Intuits brand equity, which brings with it many perceived quality benefits, and give the company its commanding competitive edge.  

Since diversifying its endeavors is part of the company culture, and since being a profitable, prosperous company requires Intuit to attract consumers to its gateway Web pages, Intuit developed several strategies to reach and attract the financial services consumers, one of which is its OFX involvement described above. Two other examples of such efforts are its BankNOW software and its My Accounts suite of services.  

As mentioned above, the BankNOW software was first launched in June of 1995 and targeted the 40% of AOL subscribers who were non-buyers of personal financial management software such as Quicken. Thus the BankNOW software was an attempt to tap into a new market segment of potential consumers, the AOL Transactors. But the 1995 software did not provide access to those Transactors who were Internet users but not AOL subscribers. When Intuit saw what a success the BankNOW software was for AOL Transactors, however, it quickly seized upon the next opportunity presenting itself, and developed the BankNOW Internet edition, announcing its release on May 20, 1997. This version supplied millions of PC Internet users the same fast, single screen, no navigating, hassle-free way to check their account balances, pay their bills, and transfer funds online just as the 1995 version did for AOL subscribers. Consumers could quickly and simply download the Internet edition of the software from the QFN web site or from the Web sites of participating financial institutions. Thus as Intuit increases the number of its alliances with financial institutions across the country, it has the competencies in place to offer financial products that will attract and serve both the Organizer and Transactor consumers in each institutions customer base. In other words, Intuit is working all fronts, targeting all possible online financial market segments, and thus maximizing the number of consumers it is attracting to its gateway Web sites. 

Where Intuits BankNOW software ultimately attracts more consumers by tapping into a new market segment, its My Accounts suite attracts more consumers by offering value added services. According to an Intuit press release dated November 17, 1999, the My Accounts suite of services was designed to allow consumers to view and manage their finances anywhere using a Web browser. It allows consumers to easily create their own personalized financial dashboard and then to view and pay all their bills, manage multiple investment portfolios and view credit card and bank accounts balances all from a single Web site. According to the same press release the service is unmatched in the industry, since it is the first service in which consumers can manage accounts from multiple financial services and billers in a centralized location. To gain even more exposure for the My Accounts suite, Intuit also intends to provide this functionality to other portals and bank Web sites. Excite@Home and Concentric are both expected to offer Intuits new financial services to their subscribers in the near future. By Spring of 2000 the service is expected to be available on WebCrawler,AOL.com, and other additional major Web portals.   

Speaking about the benefits provided by the services in the My Accounts suite, Eric Dunn, CTO for Intuit, stated, "Independently, these financial management services provide significant benefit to consumers by saving them time and money. Intuit's consolidation of these tools in one location increases the value exponentially…. As we have stated above, Intuit places a great deal of emphasis on its products being convenient and easy to use for its consumers and on quickly responding to changes and enhancements suggested by its users. These are the forces that drove the design of the My Accounts suite of services and the reasons that the suite has been so enthusiastically received by Intuits user community since its announcement on November 17, 1999. According to Bill Campbell, "My Accounts by Quicken is another example of how Intuit is revolutionizing the e-finance space by empowering individuals to easily evaluate and act on their financial information any time, anywhere. The average consumer has multiple banking, brokerage and billing relationships and our research shows that many consumers would like their account information aggregated in one place." Once again, by carefully listening to its consumers, Intuit has not only innovated to fill a niche that was, until now, unfilled, but also seized another golden opportunity to attract even more potential consumers to its gateway Web pages by utilizing every resource available, including other gateway Web sites and portals.    

Since the My Accounts suite presents a summary of the consumers accounts on a single Web site, for the suite to be truly functional and successful, Intuit must again form partnerships with many different industry and technology leaders such as online bill publishers and processors, online brokerages, credit card providers, and banking institutions. The Intuit press release dated February 2, 2000 stated that the suite had the ability to access data from more than 40 leading banks, brokerage and credit card providers … by connecting with financial institutions through a variety of methods, including OFX, Web Connect, scanning, and H-Connect. In the two months since the My Accounts suite had been first launched, almost all of these partnerships had been formed, which is another example of the company's partnering competency and expertise at work here in the present era. Moreover, Intuit made it clear that it intends to continue to add to this list of alliances in order to broaden the suites capabilities and to thus attract more users. The November 1999 press release stated, Soon consumers will also be able to view their bank account balances and transaction information from additional financial institutions from this same personal finance page.

In order to deliver on its promise to increase the number of institutions from which it could download financial information, Intuit partnered with the HTML data consolidation firm, Yodlee, and thus acquired a new competency, the ability to provide the H-Connect technology to its partner financial institutions. According to the February 2000 press release, this new H-Connect technology, which stands for connecting via HTML, provides an opportunity for these institutions to offer broad data aggregation services to its customers without having to invest in costly infrastructure because it requires only customer permission for data consolidation to take place; there is no permission or action required from the financial institution. The choice is left completely up to the consumer. Acquiring the ability to utilize this new technology is yet another example of Intuits ability to remain flexible and open (in this case to other technologies besides its own spawned OFX), and to thus create new paths of possibilities and opportunities for itself that would otherwise not have been available. This new H-Connect competency along with its other connectivity technology competencies and its partnership forming competencies will enable Intuit to continue to expand and innovate the My Accounts suite services. This expanded suite, in turn, will attract users from all segments of the financial services market to its gateway Web pages, and to its desktop and online products as well. More Web site traffic and more users will insure Intuit a competitive advantage today, and will directly translate into revenue profits for the company as well.  

Thus we see that Intuit is presently a successful, thriving, hard driving Silicon Valley type of company competent in seeking out and making advantageous alliances and partnerships and in attracting new, and sustaining its old customers. We see today at work in the company the same culture, philosophy, and values that have served it so well from its inception and that have successfully positioned the company and given it the competitive advantage it now enjoys. Intuit's ability to adapt to market conditions by routinely examining and reevaluating its fit in the environment, to reorganize when necessary, and to continually innovate on many levels has been and presently is serving to keep the company profitable, productive, worthwhile, and therefore successful.  

Today it's traditional desktop products, i.e. the Quicken, QuickBooks, and TurboTax software, continue to dominate the financial management market. For example Quicken has a 70% share in sales and a total of 12 million copies sold to date.  Likewise, Quicken TurboTax also wins 7 out of 10 retail customers, and QuickBooks receives an 80% retail market share (in terms of dollars) in its market category. At the same time, there is strong evidence that Intuit's Internet strategy for future growth is working. For example, Intuit expects that Internet revenue will make up 25% of the company's total revenue, an enormous increase from 1997 when online revenues accounted for less than 5% of revenues. Quicken.com is proving to be extremely popular, with 257 million page visits in January 2000 alone, of which 7 million were unique visitors. An astounding 75% of all federal returns filed electronically by individual taxpayers filed through February 11, 2000 were filed with Intuit products (either TurboTax boxed software, or Turbo Tax for the Web). Intuit's effort to partner with banks has also been extremely successful. Over 1031 banks support online banking with Intuit's products, and about 60% of all checking accounts in the US can be enabled for online banking through Intuit. Intuit, a company that began so modestly only 17 years ago, is presently the undisputed leader of financial software companies, and is also leading the pack in the transition to online banking and Web-based financial services. 

Clearly Intuit has and presently continues to skillfully and successfully navigate its way in the uncharted waters of the online finance world where sudden twists and turns are to be expected and embraced, where business models are … generally untested and unproven, and where no one knows what will work, who will win or how durable winning positions will be.

In terms of the second category (Organizational Structure), Intuits flat, non-hierarchical organization, its small size, and the high-powered incentives in place at Intuit, which strongly link employee rewards with his/her own performance as well as the company's performance, have all contributed to the company's ability to be flexible, to quickly respond to market environment movements, and to transition easily and efficiently when necessary.  

As we've identified throughout this report, Intuits attributes in the third category, Internal Culture and Values have been critical in its success. In particular, its willingness to take risks and experiment, embrace change, innovate radically, be non-myopically mindful, value and educate their employees, and most importantly listen to its customers,  partners, and employees to achieve a high quality outcome in which all parties win have driven Intuit to become a successful, primary player in its arena of online financial services.  

Finally, we've seen repeatedly that Intuit has developed a keen ability to enter into essential and lucrative partnerships, first with the venture capitalists that helped propel the small entrepreneurial company into being a complex company able to make systemic innovations, then with the alliances needed to bring its customers the information they required, and finally with other industry players in order to develop open standards that served both Intuits own needs as well as those of their customers. 

With its successful presence in all of these important categories, it is not surprising that Intuit has so effectively embraced innovation and change, that it so effectively took its market position, and that it can now maintain this leading position. We believe that, should Intuit continue along its current path, it will not only remain the dominant player in the online- and computer-based financial marketplace but it will continue to deliver WOW to its customers, to its partners, to its employees, and to the rest of the financial world as well.