Open Innovation Case Study: GlaxoSmithKline's Aquafresh White Trays

Background

Aquafresh White Trays 58 This case details how GlaxoSmithKline (GSK) entered into an open innovation relationship with a small manufacturing company, Oratech LLC, to get into the teeth whitening market with Aquafresh White Trays. In one sense, the partnership seems to be a perfect match, a textbook example of open innovation in action. GSK noted the rapid growth in teeth whitening products and was experienced in product marketing, sales, and distribution.

Also aware of the potential in this category, Oratech had already developed the product, owned the patents, and could handle manufacturing. But the road was not as smooth as expected. The fi rst successful teeth whitening product was P&G’s Crest Whitestrips, launched in 2001, followed by several competitors. While the market showed great interest in these products, there were frequent customer complaints. Most notably, customers found the fi rst few products diffi cult to use, foul-tasting, and messy. This suggested to GSK a market opportunity based on improved customer value. By offering better teeth whitening properties, and at the same time delivering a product that was tastier and easier to use, GSK could capture a share of this market. GSK was already in the oral care business with its Aquafresh toothpaste line; GSK management felt that only a product that offered superior customer value would be worthy of carrying the Aquafresh name.

They also recognized that the most effi cient way to enter this market was with a partner that had the required technology knowhow. Oratech, a small private-label manufacturer, was already making a teeth whitening tray and selling it to dentists and other professionals. They too recognized the growth potential in the consumer market, but needed a partner who owned the requisite marketing skills and brand equity. Oratech identifi ed a small number of potential partners and soon chose GSK due to their marketing and R&D capabilities, in addition to competency in working with regulatory agencies. Some problems arose in the early going, due to differences in corporate culture. Oratech was initially surprised by the complexity of development and regulatory standards, which were second nature to a huge global corporation like GSK. Perhaps more unexpectedly, the new products processes employed by the two fi rms were somewhat different as well, with Oratech’s version of the process being a little simpler and somewhat more streamlined, typical of a smaller manufacturing fi rm.

The partnership went well, taking only about 18 months to get the new product ready for launch. GSK ran into some development challenges, which required that they make some decisions typical of late-phase product development: Do we sacrifi ce quality, or slow down time-to-market? Despite this slight setback, there was really never any doubt at GSK: The commitment to bring the best-quality product to the consumer under the Aquafresh name was the number-one priority. Oratech managers were quite impressed with how seriously this commitment was taken by GSK, who brought in consultants to try to fi x the development problems and not slow down development time too much. Scot Andersen, VP of marketing and sales at Oratech, said that the “level of sophistication with which GSK treats its own brands resulted in an improvement in our own processes.” Aquafresh White Trays were launched in early 2007, beating all sales forecasts and going on to be a top player in the teeth whitener category. Executives from both companies agreed that a key factor leading to this success was open communication throughout the new products process. As it turned out, if one partner ran into a manufacturing problem, the other was able to fi nd a solution. A good cra2904X_ch04_094-129.indd 128 04/02/14 11:08 AM Chapter Four Creativity and the Product Concept 129 example of this was the manufacturing process for the trays themselves.

GSK preferred individual molding of the trays, but knew that this would run up production time and cost; the alternative was to vacuum-form and cut them, which led to imperfections at the edges. With its technical and manufacturing expertise, Oratech fi gured out a way to trim the edges, resulting in a desirable fi nished product. In turn, Oratech was very surprised to see how accessible GSK employees (and even senior management) were throughout the new products process; they were not expecting such a close relationship given GSK’s size. What accounts for the market success of the Aquafresh product? Keep in mind: As large and knowledgeable as GSK is, both P&G and Colgate already had similar products on the market, and both could easily defend themselves against the competitive launch of Aquafresh. More generally, what can be learned from GSK’s perspective, and also from Oratech’s perspective, about making open innovation work?