Tylenol weathers scandal by committing to values
- By Francisco Szekely and Zahir Dossa
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E-mail Shanghai Daily, October 13, 2015
The heads of the FBI and the US Food and Drug Administration considered J&J's reaction to be an over-reaction. James Burke, the chairman and CEO, disagreed.
At the time, Tylenol controlled 35 percent of the market for over-the-counter pain relief medicine — more than the combined market share of the next three biggest brands.
Industry analysts and marketing experts were convinced the "Chicago Tylenol murders" were the end for Tylenol and J&J as a whole. James Burke, however, knew that a company or brand is much more significant than short-term profitability.
While it is Burke's historic decision of 1982 he is remembered for, many pundits focus on an event six years prior. In a heated argument with other executives around the same time he became CEO, Burke told them to either recommit to the company's mission or "tear it off the wall."
Prioritizing communities
Developed in 1943 by General Robert Wood Johnson II, son of the founder and first chairman Robert Wood Johnson, the credo or mission for J&J begins as follows: "We believe our first responsibility is to the doctors, nurses, and patients, to mothers and fathers and all others who use our products and services. In meeting their needs, everything we do must be of high quality." The mission goes on to prioritize, in order, J&J's employees, "the communities in which they live and work and to the world community as well," and finally to stockholders who "should realize a fair return."
It is the adherence to this mission that inspired Burke to make the most significant corporate recall of the time, costing Tylenol US$100 million at the outset alone.
Through its various efforts, J&J paid an enormous amount to protect the well-being of its customers — the primary stakeholder as emphasized in its mission.
Burke continued to run J&J until his retirement in 1989. After leaving J&J, Burke launched the Partnership for a Drug-Free America, the largest public service campaign in history against illegal drug use by teens. President Clinton later commended Burke's work with the PDFA by bestowing upon him the United States' highest civilian honor: the Presidential Medal of Freedom.
Francisco Szekely is Sandoz Family Professor of leadership and sustainability and Director of the IMD Global Center for Sustainability Leadership (CSL). Zahir Dossa is a postdoctoral fellow at the CSL.
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