Intuit Does the Right Thing

Sometimes I think companies forget they are in business to serve their customers. That is why I love stories like this. Intuit made a mistake, and they corrected it. The more common approach in America today is to blame someone else and not take responsibility. Here is what happened:

At this point you might be thinking, "Huh? What does an activation feature have to do with almost $100 million in lost revenue?" As it turns out, the activation feature was new to TurboTax 2002, and it required users to unlock the program on one host computer. Instead of being able to install the program on multiple computers (say, both the PC in the den and the laptop at work), customers could load the full-featured version of the software only on a single machine.

When Intuit launched the copy-control program, it predicted that revenue would increase, since customers who had previously purchased only one TurboTax program would have to buy a separate copy for each computer in the house. That assumption was dead wrong. Instead, the move triggered a consumer backlash the likes of which Intuit had never seen.

To its credit, Intuit listened to these complaints and reversed course. "We're taking a mulligan," says Julie Miller, a company spokeswoman. "The customer reaction was unexpected."

Unfortunately for customers — and ultimately, investors — many other companies don't react to negative consumer groundswells as quickly as Intuit did. Some companies (read: Microsoft (MSFT)) and entire industries (read: the entertainment sector) are busily building so-called digital rights management technology into products to stop consumer piracy. But DRM, like a souffl´┐Ż, is incredibly hard to get right, and many of these companies are designing their DRM strategies to address the extreme upper reaches of the piracy bell curve.

Let's hope they keep up the good work, and aren't back on Businesspundit in the future under the "Bad Business" heading.