“A Product That Lets People Hold on to Their Habits”

HBR: What role have consumer habits played in your company’s success? Cook: We paid really close attention to how people actually went about managing their personal finances before we created our first product—and we got the user interface to mimic those routines. Quicken was designed to look like a checkbook. And it wasn’t just about appearance—the interface operated like a check register. You put the next transaction at the bottom, for example, just as you do with a check register. Nobody else offered such a familiar interface. We followed people’s routines as we built out the product’s functionality. Back in 1984 people paid bills by check. So we made sure that Quicken could print checks on a printer very easily. That sounds straightforward now, but at the time, people were using the old continuous Epson inkjet printers, which made aligning check stock to print on the lines of the checks hugely difficult. We actually invented and patented an alignment technique to make printers do it correctly. No one else seems to have thought of doing that. What made you bet so heavily on consumer routines? It was Apple. I asked an employee there to show me a Lisa, and I saw that its desktop interface looked very much like the physical artifacts office people worked with—files and so forth. I remember leaving the Apple headquarters and driving to the closest restaurant just so I could sit down and take notes about what I’d observed that was so powerful in the design. “Later, at the launch of the Mac, I was struck by something Steve Jobs said about making computers as easy to use as a telephone. Think about that a minute. How easy was a phone to use back then? You had to memorize seven- or 10-digit numbers. If you dialed the wrong number, the system charged you, which was very expensive for long-distance, and then you had to start from scratch. If the line was busy, you got an unpleasant beeping sound. Phones had a really awful interface. So why did Jobs—a byword for elegant design—say he wanted to make Macs as easy as the telephone? Because everyone was used to it. Correct. Because of habit. People were used to typing these strings of seven or 10 digits. Now, whose habits do you pick? When we launched QuickBooks, for small businesses, accounting software was universally designed with accountants in mind, and users had to speak their language. But nine out of 10 small businesses had no accountant on staff—their books were kept by a civilian, who probably couldn’t tell a debit from a credit and didn’t want to learn. We discovered this by observing Quicken customers and decided to design the first accounting product with no accounting in it; we called it QuickBooks. Despite a flawed launch, we were the market leader in two months, because we had designed it to work with people’s habits. Now that a lot of small businesses use QuickBooks, their auditors have gotten used to it as well and are advising new clients to use it, producing a snowball effect. That’s all built on a product that lets people hold on to their habits. But don’t you find that habits change quickly in the digital space? Yes. People will adjust to a radical change if it offers a habit from some other context to relate to—particularly in the digital space. We’re now trying to make many habits—which are really just a way of simplifying your life—redundant. Take a typical freelancer, such as an Uber driver. Freelancers need to keep track of their expenses so that they can offset them against taxes. But it’s a pain to keep and categorize all your receipts and to list odometer readings and mileage for every business drive. Most freelancers don’t, and they lose thousands in tax deductions. So we’ve launched a service called QuickBooks Self-Employed that takes credit card and bank feeds and automatically categorizes expenses according to the merchant codes. It also automatically lists every time you drive, so you just swipe the business drives. Then, at tax time, all the information flows right to your tax preparer or tax software. If you’re making the habits that got you started redundant, where will your next advantage come from? It’s about network effects now, which is why we’re working on leveraging communities of users. With TurboTax, for example, we’re getting customers to answer people’s tax questions. We’ve created the largest and best source of answers on taxes—if you go to Google and put in a tax question, the link at the top will often be our answer. This is tapping a newer habit from the digital age: participating in online communities. But we couldn’t have created the community if we hadn’t worked with people’s routines in the first place.

“A Product That Lets People Hold on to Their Habits”

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