Thesis work paper Case 2: Intuit Software

Intuit Software’s turnaround began in Nov. 29, 1999, when Stephen M. Bennett was headhunted for the job of Chief Executive Office (CEO). Like Adobe, Intuit had been stagnating and stumbling during the dot-com boom.
As the new CEO Bennett formed a turnaround team and began a major reshuffle of Intuits QuickBooks small-business programs and TurboTax consumer software.
Further, all money losing business like Intuits online finance businesses were sold or shutdown. Again, we see a consistent pattern on removing non-profitable projects as advocated by Blumling (Blumling et al., 2002) and Davidson (Davidson, 2001). Intuit also purchased half-a-dozen small acquisitions to beef up Intuits small-business offerings and to increase earnings. This follows the trend observed in the research above, of instituting a strategic turnaround by creating or purchasing new products (Hofer, 1980) to increase and stabilise cash flow (Sutton, 2002).
Intuits turnaround also shows the same trend as other software companies. With the new CEO and turnaround team changing the company to a disciplined and results focused organisation, before beginning any cutbacks (Davidson, 2001). He recruited former General Electric (GE) subordinates to run both of Intuits major divisions and demanded better-thought-out budgets and clearer objectives from all of his managers.
To make Intuit much more efficient, the goal was set to deliver like software's top performers whose margins are more than 30%.
To get employees focused on the bottom line, he adjusted pay incentives. Like Teng’s (Teng, 2002) preference for more worker commissions or bonuses, workers at Intuit with top performance reviews get annual salary raises up to 10%, even when the average raise is 4% or less.
Furthermore, the turnaround team began pushing GE-like programs to boost software quality and trim waste. An argument supported by Davidson (Davidson, 2001) on the huge cost of supporting bad quality software.
One result was that error rates for Quicken’s Personal Finance software fell to 2% during the release of the 2003 version from 22% for the 2002 edition. Intuit says its quality efforts have saved $10 million so far, with an additional $20 million due from projects under way.
Like Teng (Teng, 2002), Bennett requires Intuit managers to groom their replacements. He also follows Sutton’s (Sutton, 2002) opinion that only be leading and teaching by example in management seminars to the up-and-comers, can the disciplines needed to turn the company around become truly effective.
Strategically, Bennett follows the same advice of Pate (Pate et al., 2002) and Harker (Harker et al., 1998) on sticking to businesses product areas where Intuit was number one or two.
Hence Intuit focuses on its core competency of small business software for companies with up to 250 employees (these companies are still considered small by US standards). Its new software applications extend Intuits hold on this market by adding human resource and payroll functions.
Like most software turnarounds, the effect on the companies’ profitability was exceptionally quick, with a net income that went from an $82 million loss in 2001 to a profit of $140 million in 2002.