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Introducing Open Innovation at Intuit: Harnessing the Power of the Crowd

Jan Bosch, VP Open Innovation

Intuit Proprietary & Confidential

Overview

•  Introducing

• How Intuit grows

• Internal innovation

• Open innovation

• Lessons learned

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From Research to Industry

Head of research lab (Nokia, Finland)

Industrial research

Engineering Process (Intuit, USA)

Industrial development

Professor of software engineering (RuG, Netherlands) (BIT, Sweden)

Academia (+ consulting)

Open Innovation (Intuit, USA)

Innovation


A Leading Provider of Business and Financial Management Solutions

Intuit at a Glance

• Founded in 1983

• FY 2009 revenue of $3.1 billion

• Traded on the Nasdaq: INTU

• Employs more than 7,800 people

• Offices across the U.S., Canada, India and U.K.

• Nearly 50 million people use our QuickBooks, Payroll, Payments, TurboTax, financial institution solutions and Quicken products and services


Revolutionizing People’s Lives… Solving Their Important Problems…

Creating Innovative Products and Services


Our Ecosystem: Millions of Customers and Developers

250,000 Accountants

1,600 Financial Institutions

serving

9 million End Customers

7 million Small Business

Users

12 million Consumer

Quicken Users

75,000 Developers

19 million TurboTax

Users


Markets and Opportunities

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Small Business: QuickBooks

Plus Payroll & Payments

Tax Health Care

Global

Financial Institutions


Fortune Top 100 Places to Work


Most Admired: Software Industry

2004 2005 2006 2007 2008 2009 2010

7 Years in a row


Game Plan to Win: Connected Services Intuit’s focus is…

And capitalizing on three significant market trends…

By creating and acquiring…


Overview

•  Introducing





11


Intuit’s 3-Legged Growth

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Mergers & Acquisitions

Internal innovation

Open Innovation


Internal Innovation

New organic source revenue

(runs scored)

Quantity of ideas

(at bats)

Quality of ideas

(right pitch)

Execution against ideas

(mechanics)

ƒ

New organic revenues…

… which are outputs from how we innovate

1

… are driven by 3 factors…

Ideas

Approach

People

Priorities

ƒ


The Intuit innovation system


Internal Innovation Mechanisms

• Unstructured time •  Idea jams • Tool: Brainstorm •  Intuit Labs • Horizon planning

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Unstructured Time

• Block and protect 10% of employees time – Recognize in project schedules – Aggregate into bigger blocks – Establish a “no meeting day”

•  Innovation events every 4-6 months –  Focused time and competition drive energy & results – VP (and up) engagement…and customers are there, too –  Tracks for ‘prior work,’ ‘same day sprint,’ and ‘business challenges’

• Recognition, rewards and celebration of UT successes –  For teams (best award = more time) – And for managers who enable teams – Start with organizations with passion and drive…create & celebrate success

• Fun tools and clear, lightweight processes –  Idea visibility…enabling collaboration to improve ideas (Brainstorm) – Matchmaking to get x-functional teams to critical mass (Brainstorm) – Clear the obstacles to getting working code out fast (IntuitLabs.com) – Review groups and mentors in each business

10% time


• 35% engagement across Intuit; 50% at some customers

• 6x new releases with 60% reduction in TTM

– Viewmypaycheck: idea to in-market release in 3 months, it now has 90,000 active users and a 4.5 rating

•  Fits naturally into existing workflows, e.g. email, and helps connect people with relevant skills and interests

• Recommended as the platform of choice by Bain & Co, etc.

– Innovation tournament at a 45,000 employee services company and saw a 5x increase in participation from the previous year

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IntuitLabs.com…removing obstacles

•  Step-by-step release checklist

•  Covers IP, security, privacy, legal, branding, hosting, etc.


Horizon planning

Breakdown of our businesses & investment into 3 stages

Extend & Defend Core Businesses

Build Emerging Businesses

Create Viable Options


Overview

•  Introducing





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Intuit’s Engagement with the Outside •  What Intuit has to offer – Brand – Customer base –  Products capable of acting as platforms for innovation – Developer ecosystem –  Technology and market due diligence – Marketing and distribution channels –  Infrastructure – Equity

•  What Intuit may receive –  The usual – M&A opportunities – Access to complimentary technologies, products, services, business models

and channels –  resources to support Intuit-funded development – new applications and increased demand for Intuit products & services –  favorable terms on future development and commercialization agreements –  options to increase ownership in future

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Phase 1: Establish Current State

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Open innovation A huge opportunity that we are exploiting to less than 30% of its potential; successes exist, though

Structure of study 28 innovation leaders across the company interviewed More than 100 years of Intuit experience

Proposed key initiatives •  Awareness: Open Innovation event •  Desire: quantitative Open Innovation objectives for BUs •  Capability: focus OI efforts on academia, VCs/startups, suppliers and crowdsourcing

Several key inhibitors need to be addressed •  Mindset and Culture: Not Invented Here syndrome •  Organizational: Lack of executive attention; Intuit is insulated and inward focused •  Skills: Traditional open innovation core competencies eroding


For Each “Dimension” – Self Assessment*

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0%

10%

20%

30%

40%

50%

60%

70%

* Average of self assessment by innovation leaders on how effective their BU is in exploiting each “dimension” of Open Innovation on scale from 1-5 (5 being best), converted to percentage points.

Several interviewees included CDI in their assessment of Open Innovation with the

customer. The author respectfully disagrees with that assessment


Proposed Key Initiatives

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Institutionalize Open Innovation •  Attention in Operating reviews •  Celebrate successes

Build Awareness •  Organize Open Innovation event (external and internal successes)

Create Desire •  Quantitative (metrics-based) Open Innovation objectives for BUs •  Long term BU scenario planning workshops with external partners

Develop Knowledge and Capability •  Focus Open Innovation efforts on:

•  Academic partners – to break myopia •  VCs & startups – for non-M&A partnerships •  Suppliers – to drive growth by reducing Intuit investment in context

•  Adopt crowdsourcing • For ideas and challenges: external Brainstorm


Phase 2: Undirected Open Innovation

• Academic partnerships: MIT Media Lab (Center for Future Banking) – Future of Payments workshop – Future of Personal Financial Management workshop – Broad attendance of sponsor weeks – Individual meetings between innovation leaders and research

groups – Graduate students as summer interns at Intuit

Results: Great at ideation – Intuit staff came away feeling energized and full

of new ideas Technology transfer from Media Lab to Intuit Summer intern initiated 3 valuable innovations at BU

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Stanford Technology Venture Partners - Global Innovation Tournament


Entrepreneur Day #2 What: •  Half day session with selected entrepreneurs and startup companies

to explore partnerships Why: •  Find new business opportunities •  Source leading edge technologies How •  Broad call for proposals to several communities •  Involve BUs to select ~60 companies to attend •  Give each company speed dates and demo opportunity •  Provide feedback within 48 hours Results •  Business partnerships in place, several trials ongoing now •  Entrepreneur day #1: 10% success rate; #2: > 25% •  Very positive feedback from participating companies •  Great exposure in (social) media

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Intuit Proprietary & Confidential 27 www.entrepreneur-day.com


Strategic Supplier Innovation Contest

What: •  Contest for strategic suppliers to submit innovative proposals for

collaborative growth efforts Why: •  Drive growth with already established partners •  Offer venue for strategic suppliers to differentiate and engage

beyond current relationship How •  Announced at Strategic Supplier Summit •  Involve BUs to evaluate 60+ proposals from 30 suppliers (alliances) •  Selected a winner, two runner-ups and 38 ideas were followed up on Results •  Around 5 of the ideas taken forward by the BUs with strategic

suppliers •  Very positive feedback from participating companies

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Phase 3: Directed Open Innovation

Transition to: • Asking for technologies and solutions that we want to source from the outside • Continuous interaction with communities and partners around innovation (instead of periodic events)

• Specifically: Crowdsourcing

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Crowdsourcing Approaches

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Intuit Proprietary & Confidential 31

www.intuitcollaboratory.com

Intuit Proprietary & Confidential 32


Four Use Cases …

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Share your best idea with us

Send us your best collaboration proposal

Look at our technology needs and solve them

Participate in a challenge and win!


Phase 4: Integrating Open Innovation

• Up to now Open Innovation is still viewed as separate of “business as usual” •  Final stage is to embed open innovation as an integral part of innovation and development processes

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Lessons Learned

• Even in a very innovative organization, opening up the innovation process to the outside is difficult •  In order to get early wins, focus initially on the late stages of the innovation process – revenue (even a little) is a great motivator •  InnoCentive/Hypios/NineSigma-style challenge formulation not successful internally (yet) – not sure if it fits Intuit or software companies in general • Even if a topic is a strategic priority, a specific opportunity may still fail if it’s not on the internal top-3 or top-5 list • Transition to undirected to directed open innovation (getting a shopping list) proved to be difficult •  Implementation at Intuit had to be adopted to our specific needs and particularities

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Conclusion

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Phase 1: Build awareness

Phase 2: Undirected OI

Phase 3: Directed OI

Phase 4: Integrate OI

YOU already know the answer, but the organization does not

Events build awareness and create the first early successes Limited effort required from organization

Getting a CDI driven company to express what it needs before it needs it Software companies are different …

Open innovation is an integral part of the innovation and R&D processes

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