Outerwall Inc (OUTR)’s Culture of Innovation

The Motley Fool is on the road in Seattle! Recently we visited Coinstar — now officially renamed Outerwall Inc (NASDAQ:OUTR) — to speak with CFO-turned-CEO Scott Di Valerio about the 22-year-old company’s well-known coin-cashing machines, as well as its more recent acquisition of Redbox, and future initiatives to expand into other aspects of the automated retail market.

In this video segment, Scott describes Coinstar’s innovation and openness to new ideas, balanced with the structure and discipline to evaluate trial programs and prototypes realistically and know when it’s time to move on. The full version of the interview can be watched here.

A full transcript follows the video.

Eric Bleeker: Great. First generation of the company Coinstar, second Redbox, and really beginning a third one right now. You talked about making low bets across the business. How would you establish what you want to put manpower behind, versus when you’re going to move on beyond an idea?

As we know, one thing that can concern shareholders a lot of the time is companies chasing some too far. How are you going to establish the discipline for the right moves to make?

Scott Di Valerio: Right. Well, we are very structured in how we make investments in our new business innovations, and what the metrics are that are required for them to continue, for us to continue, to invest. We do kind of run them on a survivalist basis.

There are key metrics that each of the businesses that we decide to move forward with are on. They have to hit them on a monthly/quarterly basis. If they’re not hitting those metrics, we make some tough decisions. We’re looking for alternative solutions for our Orango business, which was our used/refurbished electronics business. We shut down Chirp about two years ago.

Again, it’s around being very structured. Once a business isn’t doing, consistently, what it needs to do, we turn it off and move on to others. We have a team that really does focus on bringing new businesses to marketplace. We set up card tables and test them out, and then begin to figure out how that business might work if it’s successful.

We have enough to keep churning those through, so we don’t need to hang on one that that might not be doing what it needs to.

Bleeker: Got you. I guess that would lead into, from a leadership perspective — and I know you’re new on the job here — but how would you foster that kind of culture, where people are always looking for new ideas?