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Introduction
Johnson & Johnson formed by Robert Wood Johnson, James Wood & Edward Mead Johnson in 1886, is an American multinational pharmaceutical, medical devices and consumer packaged goods manufacturing corporation.
The corporation includes 250 subsidiary companies with operations in over 57 countries and products sold in over 175 countries.
In the mid 1950s Tylenol became a much needed and popular substitute for aspirin for such conditions as flu and chicken pox, since aspirin was related to Reyes Syndrome (liver degeneration, brain edema) Large market: 100 million users, 19% of corporation profits,, 37% market share of painkillers, outselling other top analgesics combined J&J was one of the Best 100 companies to work for. Tylenol became a product trusted by physicians and families alike At the time, Tylenol held 35% of the $1 billion market and Johnson & Johnson had not been nor ever had to be a very high-profile company. CEO James Burke had never appeared on TV or done interviews.
What Happened ?
Sept. 10, 1982 Johnson & Johnson management learned that its premiere product(Tylenol), Extra-Strength Tylenol, had been used to kill three people. An unknown criminal replaced Tylenol Extra-Strength capsules with cyanide-laced capsules, resealed the packages, and deposited them on the stores in the Chicago area. Tylenol capsules were loaded with 65 milligrams of cyanide, 10,000 more than what is necessary to kill a human. And over the next few days, three more people died from swallowing Tylenol capsules loaded with cyanide.
Widespread Fear
Police drove through streets with loudspeaker warnings
The stakeholders
Johnson & Johnsons decision would have directly affected:
The consumers: Greatest stakeholders, since their lives were at the line. The stockholders: Financial interest for investors relying on income from J & Js shares. Lending institutions: Impaired revenue system could lead to reduction of funds and increase of interest rate charge. Government: Primary concern, public safety. Management: Protecting the image of the company. Employment: Same as management, but also to some extent, possible loss of income or unemployment.
Even though the company was confident that the poisonings had not occurred at any of its plants, they recalled 93,000 bottles associated with the Chicago murders. And they communicated warnings to doctors, hospitals, distributors and suspended all advertising.
However, the FBI was worried about copycat poisonings; and after one occurred in California five days later, Johnson & Johnson did not hesitate and willingly recalled all Extra-Strength Tylenol 31 million bottles at a loss of more than $100 million.
Johnson & Johnson resumed limited advertising, but with a focused message promising to exchange capsules for tablets and continued aggressive grassroots PR through letters to the trade and statements to the media.
Johnson & Johnson went on to offer a $100,000 reward for the killer(s).
Reaction continued
Immediate alert to consumers not to use any type Tylenol product or resume use until extent determined
Live TV satellite feed of press conferences; media exposure via 60 Minutes, etc.
800# Hotline for customers (30,000 calls in Oct-Nov) Strict production, different lot $, & crisis only in Chicago indicated post-production tampering Withdrew bottles from Chicago area; ordered recall of >31 million bottles nationally at a cost of >$100 million (against FDA & FBI) It temporarily ceased all production of capsules.
The outcome
The Publics Reaction
Johnson & Johnson commissioned a survey which found 87% of Tylenol users did not blame the company, but 61% still said they were not likely to buy Tylenol capsules in the future.
The Relaunch
The company shocked the business and marketing communities by planning an aggressive relaunch of the product in a new triple-safety-sealed, tamper-resistant package.
The Result
Mike Wallace said that although Wall Street had written off the company, it was now, hedging its bets because of Johnson & Johnsons stunning campaign of facts, money, the media, and truth. By early 1983, Tylenol had recaptured 95% of its prior market share and company morale was higher than ever.
Strategies
Forgiveness: Win forgiveness from stakeholders and create acceptance for the crisis Sympathy: Portray organization as unfair victim of attack by outside persons; willing to accept losses
Remediation: Offer compensation for victims and families (counseling & financial assistance)
Rectification: Take action to reduce recurrence (triple sealed & increased random inspection) Effective leadership: Clear, visible, consistent rolemodeled message from beginning by CEO
Strong family-oriented culture, we care about our employees Open and current communication with employees; 4 video programs on the unfolding process Emphasizing plant workers were innocent CEO speech in a week to employees, Were coming back (wearing buttons) Idle employees given tasks to keep involved & reduce rumoring and boredom Indications of market recovery bolster spirits Congruence and consistency in demonstrating the Credo
Learning
J&J showed that they were not willing to risk public safety even at excessive cost J&J could be trusted all the way to the top they lived their Credo & having a functional credo worked J&J set a new standard for protection thereby requiring competitors to expensively follow suit J&J was viewed as a co-victim of the crime Stakeholder involvement and relationships is essential One must anticipate and prepared for crises; expect the unexpected Cynicism: Be aware that 75% of people dont believe companies take responsibility for crises or tell the truth No matter what you do in the beginning, in the end you will have to tell the truth
Report your own bad news dont wait for reporters to root it out
Speak with one voice Gather facts and disseminate from one info center Be accessible to the media so they wont go to other sources Target communications to those most affected by the crisis, and can affect the media If you cant discuss something, explain why Provide evidence for your statements Record events via video and documents so you can later present your side of the story
Latent Readiness
OCCASIONALLY
USUALLY
Triggering Events
Intermediate Behavior
Relationship Building
Failing to do this could result in "burning bridges" with information sources such that repairs cannot be made prior to the closure of the crisis.
The project manager assigned to the project must possess strong communication skills and foster a culture of trust with all of the stakeholders.
Some sort of structured decision-making process should be in place during crisis management.
Whatever process is used should be readily understood and acceptable to all parties involved in the crisis. Corporate credos or corporate standard practice manuals can make the decision-making process easier.
Project management works exceptionally well when the organization has a cooperative culture.
Decision-making is rapid and full organizational support exists. Employees make decisions in the best interest of the company (and consumers) rather than their own self-interest.
Thank You.