DEVELOPING A GLOBAL MINDSET AT

JOHNSON & JOHNSON

1. What are the potential benefits of Johnson & Johnson’s global platform
strategy and its three-business segment organisational structure?

JOHNSON & JOHNSON as a holding company has reached a stage in its business
where it has become extremely large, consisting of 180 operating companies world wide.
Its initial strategy of decentralisation was and still is effective in achieving control and
company’s targets. However due to its sheer number and distribution of company’s
around the world it was still not optimising its processes and value chain. Due to
favourable changes in international policies concerning trade and transport (shipping
cost) the opportunity for globalisation became evident. The JOHNSON & JOHNSON
global platform strategy takes clear advantage of this situation to rectify possible
inefficiencies in the business.

The three major business segments were already established and have enabled
JOHNSON & Johnson to group the companies according to similar products so that
focus can be placed on each sector independently enabling for adequate control and
effective strategy implementation to be achieved. From this, each segment was then
divided into franchises that concentrated on individual products. This however was still
not sufficient since there needed to be some integration between all these companies.
This integration is finally achieved by the global platform strategy.

The global strategy forms part of the reactive strategy of the company, that is, the
changing environment. This together with the planned strategy forms the integrated
strategy of Johnson and Johnson. This is a positive aspect of J & J since it is responsive
to changes in its environment.

The potential benefits of the global platform strategy are:

 Shared marketing functions within geographic regions
 Consolidated production. This has enabled JOHNSON & Johnson use only one
efficient plant in Italy to produce all shampoo products for the entire European region.
This enables JOHNSON & Johnson make use of their efficient plants and close down
the inefficient ones thus maximising plant capacities and increasing efficiencies. Due
to competitive transport and export duties these products could then be distributed
anywhere in the world.
 Streamlining of product offerings to eliminate duplication costs.
 Standardisation of products within franchises allows the company to make quick
changes to keep pace with global competition.
 Facilitates internal sharing and development
 Embraces the needed changes to develop a global minset.

How might a global strategy yield advantage in the industry?

In order to streamline activities and reduce costs, support functions such as finance,
human resources and information technology are now shared among operating
companies. Thus by going global these functions can be integrated into one control
centre for companies from different countries thus eliminating duplication of resources
and improving process efficiencies. This effectively would reduce the overall overhead
costs of the companies and increase profits. Especially in the pharmaceutical business
high costs are required for developing new drugs. JOHNSON & JOHNSON have
established this and have thus created a centralised research facility. It is now identifying
other potential common functions that can be shared among the other two segments.
This strategy will result in JOHNSON & JOHNSON utilising fewer company resources to
achieve greater outputs.
2. How important is the development of a global mindset to the successful
implementation of Johnson & Johnson’s global platform strategy?

The development of a global mindset is very important to the success of JOHNSON &
JOHNSON global platform strategy. JOHNSON & JOHNSON management must buy into
the global platform strategy and must understand the importance of thinking globally
instead of just concentrating on the strategies of the individual companies.
It is expected that the JOHNSON & JOHNSON management would share responsibilities
with other JOHNSON & JOHNSON managers around the world.

Why is it useful (even necessary) to expose Johnson & Johnson employees to

cultures and markets outside their home country?

One of the factors to keep in mind is that leading cross-boarder culture change initiatives
requires sensitivity to prevailing cross-boarder cultural differences. Also of importance is
discerning how to adapt the case for cultural change to each situation and when diversity
has to be accommodated and when cross-boarder differences can and should be
narrowed. Employees need to expose to the culture that is built around respect for the
worth and dignity of individuals, a strong sense of social responsibility and corporate
citizenship. Also of key awareness is the respect for the environment, decentralisation of
authority and decision making to local country managers (most of whom may be natives
of the country), and heavy reliance on employee empowerment.

3. How important are employee leadership capabilities to Johnson & Johnson’s

success?

Leadership capabilities of the employees play an important role to the success of the
JOHNSON & JOHNSON business and more importantly the strategy implementation.

What are the company’s leadership expectations of its employees?

The company expects upper level managers to have some previous international
experience and some knowledge of the globalisation together with ability to manage
diversity. For lower level managers having a global mindset was not an immediate
necessity but they were expected to pick this up on the job.

JOHNSON & JOHNSON required the managers to develop new skills to support the
integration of the company’s business segments. These skills would consist of partnering
colleagues, sharing responsibility with mangers in other units, cross-border
communication and matrix management.

Managers have five leadership roles to play in pushing good strategy execution:
 Staying on top of what is happening, closely monitoring progress, ferreting out issues
and learning what obstacles lie in the path of good execution.
 Promoting a culture and loyalty that mobilises and energises organisational members
to execute strategy in a competent fashion and perform at a high level.
 Keeping the organisation responsive to changing conditions, alert for new
opportunities with innovative ideas
 Excising ethics leadership and insisting that the company conduct its affairs like a
model corporate citizen
 Pushing corrective actions to improve strategy execution and overall strategy
performance

Do you agree that Johnson & Johnson’s credo and the company’s Standards of
leadership are important to the development of a responsive and innovative
organisation? Explain.

Yes, the JOHNSON & JOHNSON credo and standards of leadership definitely supports
and plays an important role in the propagation and maintaining a responsive and
innovative organisation.

JOHNSON & JOHNSON have identified that a flexible, responsive, innovative internal
environment is critical for the industry where successful product differentiation depends
on out innovating the competition. A key factor of innovation is the generating of fresh
ideas, identifying new opportunities and developing innovative products and services this
is not solely a managerial task but is organisation wide tasks. The credo clears states
that “Employees must feel free to make suggestions and complaints”. The standards of
leadership prescribe that JOHNSON & JOHNSON act and encourages others to be
entrepreneurial, challenges and encourages others to challenge the status quo,
generates and encourages creative ideas and finds new ways to do things better and
faster. These all components that support and promote innovation in the business.

A useful leadership approach that would promote an innovative and responsive

organisation is to place special emphasis on fostering, nourishing and supporting people
who are willing to champion new technologies, new operating practices, better services,
new products and who are eager for the chance to try to turn their ideas into better ways
of operating. This approach is also clearly incorporated into the standard of leadership
and credo.

Innovation and responsiveness require employees who are champions and as a rule the
best champions are persistent, competitive, tenacious, committed and fanatic about their
idea and seeing it through to success. This would call for an environment where
individuals and groups have to be encouraged to be creative and people with maverick
ideas or out-of-the-ordinary proposals have to be tolerated and given room to operate.
The standard of leadership clearly prescribes that JOHNSON & JOHNSON embraces
non-traditional ideas and practices and identifies and champions high potential talent as
a JOHNSON & JOHNSON resource.

To be innovative and a market leader it is also important that management are willing to
take risks and that they are given some flexibility to do this even thought there is a
chance of failure. The JOHNSON & JOHNSON credo also provides for this where it is
indicated that “research must be carried on, innovative programs developed and
mistakes paid for”. The standard of leadership also encourages the seizing of the
advantage of being the first, takes risks and manages them intelligently, fosters
organisational flexibility and creates an environment that encourages risk taking.
4. How does the company develop the leadership capabilities of its employees
and promote a global mindset?

J & J uses mainly on-the-job training to enhance the leadership capabilities of its
managers but it does explore other means like partnering with colleagues, sharing
responsibilities with managers of other units, cross-boarder communication and matrix
management, along with global perspective and international experience.

How does the company’s recruiting process contribute to developing leadership

capabilities necessary to compete globally?

The recruiters make use of the J & J Standard of Leadership as a reference for
assessing potential employees and also evaluated entry level candidates for evidence of
a global orientation. For upper level managers the candidates’ international experience
was assessed together with their understanding of global-mindset, especially cultural
diversity. The recruiters usually actively target candidates who had taken advantage of
educational exchanges outside their home countries with degree programs that are
internationally focused. J & J makes use of international recruiters who sought
candidates for operating companies across the world according to their specific
requirements. This would usually entailed campus visits to identify suitable candidates for
the available jobs.

The leadership development program Europe focused on top MBA students in Europe
who were placed in other European countries. This program required candidates to be
multilingual and mobile and would usually move to others locations until they were
assigned mentors to improve their management skills.
From the Asia Global Managers program candidates selected were further interviewed by
top management and once recruited were trained for nearly 18 months in locations
always outside their home countries.

Its training and development programs?

J & J had sponsored in-company management development programs at universities and

have also developed relationships with several other universities in the United States and
the United Kingdom but they are now focusing on more in-house training. They feel that
this approach enables them to tailor make the programs according to specific business
needs, which will end up being cost effective in the long run.

J & J make use of development programs to enhance the leadership capabilities of the
managers. The executive development program, which was driven by business needs,
uses the method of action learning to induce the global mindset. This consisted of cross-
boarder work groups that met in the field abroad whose purpose was to develop solutions
for specific business issues.

J & J executive conference sessions consisted of selected franchise managers who

formed a group to work to resolve specific business issues within the franchise. This
meeting provided opportunities for managers to interact with other managers from other
countries thus broadening their global perspective and improving communication
channels. Executive committee members actively participate in this conference which is
indicative of their commitment towards the program.
Its work assignments?

J & J have created the “stretch assignments” which is directed towards high potential
managers with intention of offering new challenges and career opportunities and
speeding up the development process. These usually consisted of international
assignments and are based on tasks that the manager had previously completed with
outstanding performance. This was used as a basis for succession planning and focused
on building dynamic leadership.

5. How does Johnson & Johnson ensure that highest ethical standards among its
leaders?

One of the primary attributes to the success of enforcing ethical behaviour of the
employees is the support and dedication that is given by top management. Top
management at JOHNSON & JOHNSON has established a strong corporate culture that
is founded on ethical business principles and moral values as describe in the JOHNSON
& JOHNSON credo. At JOHNSON & JOHNSON top management believes in and
practices the ethical Credo. They lead by example when it comes to ethics. They
consider the Credo to be the “heart and soul” of their leadership and take ownership of
ethics development throughout the company. The human resource strategy on the
employment of new employees, make sure that these new employees share the
JOHNSON & JOHNSON values and then develop the employees based on the
JOHNSON & JOHNSON standards of leadership. This is a key element that is used in
screening out applicants who do not exhibit the compatible ethical and values character
traits. JOHNSON & JOHNSON have also incorporated the statement of values and the
code of ethics into the employee-training program. An example of this is the case based
education program called “Ethics Toolkit” which helps teach the managers about ethical
issues and values regardless of the prevailing cultural norms. JOHNSON & JOHNSON
make it a point to effectively communicate the values and ethics code to all employees
clearly explaining compliance procedures. Thus, JOHNSON & JOHNSON have ensured
that ethical behaviour has been made a fundamental component of their corporate
culture and this is the key component to the success of JOHNSON & JOHNSON
ensuring that the highest ethical standards are followed and maintained by its leaders.

Why is it necessary for a company competing globally to have universal ethics

standards?
It is necessary for a global company to have ethical standards since subsidiaries in
foreign countries can find themselves trapped in ethical dilemmas if bribery and
corruption of public officials are common practices or if suppliers or customers are
accustomed to kickbacks of one kind or the other.
Also, a strong corporate culture that is based on ethical business principles and morals is
a key factor that drives its strategic success.
6. What recommendations would you make to Johnson & Johnson management
to further develop the calibre of leadership within the company’s global
operations?

 Ensure that there are adequate incentives in place and that these are closely linked to
the company’s goals and objectives.
 Management must stay on top of what is happening and closely monitor the progress.
This will help in identifying problem areas in the development of employees thus
leading to a refined development process.
 Management must create a culture that keeps the organisation responsive to
changing conditions.
 To further enforce the ethical behaviour of its employees the company can conduct an
annual audit of each manager’s efforts to uphold ethical standards on the actions
taken by managers to remedy deficient conduct. It could also require all employees to
sign a statement annually certifying that they have complied with the company’ code
of ethics.
 Effective company mangers must try to anticipate changes in customer market
requirements and proactively build new competencies and capabilities accordingly.
 Should incorporate the following management education methods:
 Coaching
 Understudy assignments
 Off-the-job methods
 Sensitivity training
 Team building
 Behavioural-modelling training
 Simulation methods