Case of Roger Caracapp; Pacake Deals For Estee Lauder and Companies
Chandana Nambiar
cn6503@g.rit.edu
Executive Summary: The case throws light on an opportunity of open innovation, which a small firm has to
offer to Roger Caracappa for packaging of products at Estee lauder and company. In the beauty and cosmetic
industry, maximum cost is on advertising and packaging. The Innovation offers Estee Lauder saving of 4-5
million every year on 60 million units, if it were accepted by Lauder’s key brands like Clinique, bobbi brown
etc. Company places high value on Quality of their products, Innovation and cost savings (which is important
in the competitive environment). Their existing supplier has maintained quality of packaging and reliable
delivery and developed strong relationships with brand executives throughout the Estee lauder companies.
Companies annual spending on R&D is 1.44%, which is the high average. Roger Caracappa is a great
negotiator and wanted to challenge the existing status quo, by saving money without compromising on
quality. Whether choose open innovation to reduce cost and increase profitability at the risk of the existing
profitability and status quo of the company is the real challenge to make a choice.
1) What makes the cosmetic industry unique among all manufacturing sectors?
The language of cosmetics is a blend of technology and creativity. This increases the scope for open innovation;
they look for external ideas to bring into the company and use the already existing patents. Since their Margins
are on the lower side they maximize by using innovative and cost effective methods for logistics and packaging
2) What is the fundamental dilemma in this case?
The fundamental dilemma is whether to take up the risk of opting for open innovation i.e. the offer made by the
potential French firm that patented packaging innovation. The company pays high value to innovation and cost
saving, but opting for this option would either save company 4-5 millions in a year, or it would lead to a loss of
huge market share, if the new packaging affected the status quo of the company.
3) How does understanding open innovation inform the analysis of this case
Estee lauder is trying to expand the market for external use of innovation, by constantly trying to provide better
product which comes from low cost and higher quality, there by giving an experience to their customers.
Companies, which adapt to open innovation, open doors to provide the best experience to the consumers, as
consumers don’t just buy products because they are available, they buy it for their utility.
4) What do you recommend as a course of action here (Pros/Cons of options 1,2 and 3)?
1Acquiring patent/ licensing – Pros: if the quality is meets the corporate standards it can be incorporated,
this will reduce cost, increase profits, open innovation / cons- if the quality is not met there could be
potential loss of customers and brand image
2Working with existing supplier: pros– no compromise of quality, proved successful in the past/ cons; No