The Random Thought Generator (RTG)

When developing a company’s business strategy, prevailing thinking would have the executive team focus on their core competencies and products, then optimize the go-to-market strategy around specific target market segments that align most strongly to their product offering.  This is the classic Inside-Out approach to running a business.  OK, sounds reasonable.  What is wrong with that, you ask?

Well, in many cases, this approach works fine. In fact, the vast majority of companies use precisely this technique, especially startups, which must ensure a laser-like focus of their scarce resources to get their company off the ground. However, this Inside-Out view of selecting target customers can sometimes lead to major missed opportunities. Let’s look at a specific example. 

In 2004, a high tech startup called YottaMark launched to produce tracking labels to help authenticate electronic goods and pharmaceuticals, in order to combat counterfeits.  The company developed an innovative labeling system and focused their outreach on their two target market segments, with fairly good results. However, sales did not really take off until 2007, when forces outside the company changed everything. 

In late 2006, there was an outbreak of food-borne illness caused by E. coli bacteria found in uncooked spinach in 26 U.S states. In an effort to stave off catastrophic losses, several of California’s largest spinach producers began a search for ways to reliably code and track their produce. Finding no available off-the-shelf solutions, one of the spinach producers stumbled upon YottaMark’s anti-counterfeit coding system and urged the startup to adapt its technology to agriculture. It would have been easy for YottaMark executives to remain true to their original strategy and stay focused on their core electronics and pharmaceuticals markets; after all, they knew nothing about the agricultural market. Instead they responded to the Outside-In need and repurposed their system to address one of the largest agricultural disasters in recent history.

The results? In 2007, YottaMark successfully raised an additional $10M in seed funding, and sales from the new agricultural coding product has since dwarfed the original raison d’être of the company, accounting now for over 70% of total revenues. In the words of YottaMark co-founder, Elliot Grant, “This [new use of the software] was a perfect application we had never thought of.”

Now that’s what I call Outside-In thinking!