Nathan Denny, Aplus.Net

Embarking on a new product or service should be easy with the resources of an established company at your disposal, right? Not necessarily. If you’re launching a start-up within a bigger company, you’ll have a host of issues to overcome — whether you’re an underling with a product innovation or a manager who’s signed on to pilot something new.

So begins a recent article by Georgia Flight, writing for the BNET Business Network entitled “How They Did It: Seven Intrapreneur Success Stories.” We found it interesting to hear tips on launching a successful start-up within an already established business, and think that many of these lessons also apply to web entrepreneurs.

Ms. Flight reviews case studies from seven highly successful, well-known brand names (Kodak, Toyota, Yahoo, Wal-Mart, Caribou Coffee, iRobot, and Gateway) that decided to start-up sub-companies within their existing structure. Such a gambit seems like it might be an automatic success, but that isn’t always the case.

Selections from the article follow: 

Kodak: It was hardly a secret that Kodak was struggling to transition into the digital age; in mid-2006, the company’s stock was off more than ten bucks a share, while other industry players rushed into the digital space. So industry analysts were doubly surprised early last year when the photo giant announced it was entering the consumer printing market. Though inkjet printers were hardly a revolutionary idea, entering unfamiliar territory represented a major intrapreneurial challenge for the company. …

Instead of focusing on making vastly cheaper printers, [Kodak] tuned into something they knew from their own experiences: People were not printing the majority of their pictures because ink cartridges were so expensive. “We decided to make our ink cartridges 50 percent cheaper than our rivals’,” Pohlman says. “We knew that’s what consumers really wanted. And even though we’re a big company, we entered the market from the position of challengers.”

This underdog posturing created a lot of buzz — customers could suddenly buy $25 ink cartridges from Kodak, a well-known and trusted company, rather than shelling out $60-$80 to buy ink from less familiar manufacturers such as Konica and Elite Image. Analysts and consumers praised the company for bringing prices down to earth. Kodak sold 520,000 printers last year, beating its target of a half-million units, which helped sales in the company’s digital business grow 17 percent in the last quarter of 2007.

Caribou Coffee: With 484 stores in 18 states, Minneapolis-based Caribou Coffee is the United States’ second-largest coffee chain, but its employees can never rest while in the shadow of that other coffee company. That’s why Kathy Hollenhorst, a senior VP of marketing who had helped the company sign licensing deals with General Mills and Kemp’s Ice Cream, started asking: What did Caribou have that Starbucks didn’t? She examined the business — from its corporate philosophy to its retail locations — and decided the key was customer loyalty. …

Implementing a complex system of points and rewards at each of their 484 retail locations made Caribou executives nervous. But Hollenhorst believed in her idea and didn’t back down. ... It took more than a year of presentations and research, but eventually Hollenhorst convinced the company to test her program at a handful of locations. How’d she do it? Instead of repeating the same mantra over and over, Hollenhorst used that time to fine-tune the project and added an element that complements the company’s friendly, Midwestern philosophy of “surprise and delight.” Cash registers use a variable messaging program to prompt random rewards. “It pops a message up on the screen when a person makes a purchase, randomly selecting them for a nice surprise — a bigger drink, a free muffin,” Hollenhorst explains. A company-wide roll-out is slated for late 2008.

Gateway: In 2007, Gateway had long been playing the dangerous business game of catch-up with Dell and HP, and its utilitarian PCs were being unfavorably compared to Apple’s stylish iMac. “If there are $399 notebook computers out there, what direction can the desktop computer go?” asked SVP Gary Elsasser, then an engineering products manager.

His team found that the answer was simple: elegance. Their passionate vision of a redesign gave birth to the Gateway One, a streamlined desktop with a single external wire. But while a radical redesign looks good on paper, actually rebuilding your platform from the ground up can cause major operational headaches. …

Though the company won’t disclose sales figures (Gateway was acquired by Acer, which doesn’t break out sales by individual products), early buzz has been very positive: Tech reviewers at Gizmodo have raved about Gateway One’s “sleek and thoughtful” design and pronounced it “a very positive step forward” for Gateway.

Click here to check out the entire article.

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