hugh-mulotsiIf you were asked to compile a list of the most innovative corporations, it might not occur to you to include a tax, accounting, and finance software provider. But few companies have embraced the art of the startup within a large organization better than Intuit. The makers of TurboTax and QuickBooks have created a work environment that rewards employees for thinking and acting like entrepreneurs. What’s more, it has been tapping the collective wisdom of the crowd for insights and ideas that have led to new and successful products.

Recently, I caught up with Hugh Molotsi, Vice President of the Intuit Labs Incubator, to find out more.

Where do ideas for new products come from?

At Intuit, we don’t think of the people who come up with our new ideas as some special group and the rest simply follow their lead. We think of ourselves as a company of 8,000-plus innovators, where good ideas can come from anywhere. In fact, some of the best originate from frontline employees because they’re the ones working directly with customers.

What does Intuit look for in new employee-generated products or ideas?

Every employee is taught two core capabilities. We have something called customer-driven innovation, which is basically how we decide what problems we are going to tackle and how to think about those problems. Then we have something called “D4D,” which stands for “Design for Delight,” and that’s Intuit’s version of design thinking. It’s been simplified so it can be taught to everybody. In addition, we have a program called “Unstructured Time.”

405x650_Homepage_Tower_DGIs that like Google employees spending 20 percent of their work time — the equivalent of one day a week — working on their own stuff?

I think 3M gets credit for being first, but yes, although at Intuit it works out to be of about 10 percent of workers’ time, when all employees can pursue projects they’re passionate about. They come up with the ideas and work on them. With unstructured time you get everyone innovating. It’s grassroots innovation from which we hope to draw growth in the future.

Sounds good in theory. Have any products come out of this?

If you look at some of our more recent offerings, things like SnapTax, a mobile app that lets you start and finish your taxes on your phone, started as a project from a small group of people using their unstructured time. Similarly, GoPayment, our mobile payments application, came through the same pipeline. And we have an app called ViewMyPaycheck, which has its roots in unstructured time.

Is there a protocol for employees to test their ideas?

We’ve really embraced the lean startup methodology, this notion of designing experiments as a way of finding out whether ideas are good or not. We’ve tried to move away from a world where we rely on a lot of research, have people come up with fancy decks and spreadsheets, then pitch these ideas to executives. Instead, we’re trying to create a meritocracy of ideas where people can actually work on them, get data from customers by putting these minimum viable products in customer’s hands, then, based on that, learning if the idea is good or not. Of course, in that process, you can iterate and make improvements. The lean experimentation works really well with unstructured time. If you’re just building a minimum viable product it doesn’t take a huge amount of investment to vet an idea.

You mentioned SnapTax as a product that percolated up from Intuit employees. How did it happen?

If you rewind to 2009, one of our teams had an idea: people might want to be able to do their taxes on their phones. Back then it seemed a ridiculous idea because doing your taxes is supposed to be a long, laborious process. You need a lot screen real estate. Who would want to do deal with that on their phone? Nevertheless, the team created storyboards and showed them to customers, asking, “Would you use this?” It was virtually unanimous. Customers said, “No, I would never use that.”

Now, storyboards themselves are not true experiments because they show somebody something and then they have to imagine how it would apply to their lives. Undeterred, the team created a minimum viable product that was essentially a mobile app with several screens for tax filing, although in truth there really wasn’t much behind them. One of the innovative things the team did was claim that a user of the app could snap a picture of a W2 and it would pull up the information it, which if you are a 1040 easy filer, that’s over half of the information that you need to provide to complete your taxes. Just by supplying those fake screens in the mobile app, customers did a complete 180. All of a sudden customers said, “Wow, this is great. Can I keep this and use it for my taxes?” From there progress was incremental. They built the app in 2009 and released it to California tax filers the following year.

You can see the mobile trend. Last year, almost 5 million people who filed with TurboTax logged in at some point during their tax prep experience with a phone or tablet. This year, that number is already up 20 percent year over year, indicating the acceleration of people relying on mobile devices for tax preparation. Now we’re well positioned to take advantage of this.

After a potential product shows that it has legs, what comes next? Does Intuit incubate these ideas?

When a team forms around a particular idea, we consider it an internal startup. Just like traditional startups need incubation, so do teams working during unstructured time. Some of it is simple coaching on best practices, but a lot of it is practical. Things like, “I need a designer to help me with designing the app. I need some engineering help. I need help with hosting. I need access to a payments API and the organization is blocking me. I need somebody to help me get through that.” That’s where “Intuit Labs Incubator,” comes in. We’re set up to help teams across the company. Our goal is to get more experiments into the hands of customers.

Are any ideas out of bounds?

I’ve never encountered a situation where somebody was doing something that would lead me to say, “You know what? You need to stop that.” But if somebody wanted to do something that involved illegal gambling or pornography, yes, we would probably go to them and say: “Look, no. You can’t do that.” I think employees have good judgment and a good sense of what’s appropriate to be spending work time on.

How many ideas are employees pitching? Are we talking dozens, hundreds?

I can tell you exactly, because we track them using a collaborative software called Brainstorm, which itself was created by a group of recent college hires in their unstructured time. In 2013, Intuit employees entered 1,810 new ideas into our idea collaboration tool, and over its lifetime, Intuit has listed almost 10,000. It’s useful because everyone in the company can see a new idea and if they like it or have a similar idea they can ask to join your team.

And how many of these 10,000-plus ideas have led to products?

We have a database that has almost 300 success stories. We don’t think that’s an exhaustive list — it’s just the ones we’re able to track — and not all of them ended up as products. Many are features that ended up in bigger products or internal process improvements. If somebody develops a script that can run twice as fast, and they did that in their unstructured time, it becomes something that’s adopted as a new build script. To us, though, that counts as a success.

How do you know employees on unstructured time are not just screwing around?

We don’t. It’s completely possible that some people could be squandering it and not doing anything of value.

Does that bother you?

No, not really, because the focus is on employees’ passion and giving them time and freedom. I think if you look at the overwhelming success we’ve had from giving people that freedom, to me, if it turns out there’s an employee here and there who misuses it – that’s well worth the cost.

It’s the price of engagement.

Yes.

But why does it matter if employees are engaged?

Studies show that companies that give employees more autonomy in terms of deciding what they work on tend to have higher engagement and better retention. With higher engagement, employees are more productive, and more productive employees mean better business results. As a company we’ve made achieving high engagement a priority. That’s how unstructured time came about initially. We had one small business group that was the first to experiment with it. It was immediately so successful that, a few years later, 2008, our CEO, Brad Smith declared it for everybody. By everybody, it’s everybody; it’s not just people in product development. It’s people in legal, HR, finance, customer support. Every Intuit employee is eligible for unstructured time.

You said good ideas come from all over the company. Can you share specific examples?

Sure. Customer support identified a common problem that we often ran into when the credit card of a customer on a subscription would expire. The system would attempt to charge the user, the transaction would fail, and there would be the painful process of trying to get the user to come back to update their credit card information. We actually lost customers because of this. It wasn’t a good experience for the user or for the agents who had to recover the information. So agents from the order management team in finance conducted a bunch of lean experiments to figure out how to improve the process. They came up with a system to notify the customer well in advance of the expiration date on the credit card with a prompt to change the credentials. In the first year they introduced the change, they saved the company $8 million. What’s really noteworthy is that the idea came from customer service agents who are on the front lines manning calls.

Then there was an idea for an immersive recruitment website that arose from a group of Human Resources employees during an idea jam. And another example involves Bitcoin. The idea sprang from some of our engineers who are excited by the possibilities of a borderless currency. It is a capability within Mint (the personal finance application that is a subsidiary of Intuit) and allows a consumer to track his Bitcoin portfolio through our integration with Coinbase. We also have a couple of other things brewing with a payment service that allows small businesses to process credit card transactions, and we’ll soon be adding Bitcoin payments to that.

Again, these are all experiments that were initiated and started with unstructured time with employees.

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[Featured image via hughmolotsi.com, Dancing Giants illustration by Hallie Bateman for Pando]