James Burke has secured his position as one of the most courageous CEOs by the way he responded to the crisis that hit Johnson & Johnson in 1982. Before the crisis, J&J’s biggest brand was the pain-killer Tylenol with over one hundred million users and accounting for 19% of J&J’s revenues.
That year, seven people in Chicago died after someone had, for reasons unknown, tampered with Tylenol bottles and replaced the capsules with cyanide. A public outcry followed and J&J was in major trouble.
As such, the company’s first move was to alert the public to stop taking Tylenol until the investigation was over. J&J then deployed a hotline that consumers could call and also conducted an immediate product recall that resulted in the disposing of 31 million bottles and a loss of 100 million dollars.
Although J&J understood that they were not responsible for the deaths, they took accountability all the same. With this act, J&J secured its position in the minds of the people as a trustworthy company.
Eventually, Tylenol was re-introduced to the market in a triple-sealed, tamper-proof packaging and eventually, tamper-resistant caplets. By 1983, Tylenol’s market share had risen to 35% thanks to Burke’s speedy response, effective PR, and, most of all, their emphasis on putting people first.
Many people called the way Burke persevered through the crisis courageous. Why?
Because even though he knew they were not responsible for the deaths, he took accountability all the same. They spent a lot of money and efforts to alert the public to stop taking Tylenol and deployed a hotline and conducted an immediate product recall.
Do you think the situation could have been handled differently?
I don’t think so. This is the best way for handling the situation, I think. To move fast and conduct all of the things what we can do is the best way to handling the such a difficult situation, I think.
What are the most important things to consider when handling a crisis?
First of all, considering about saving the human being’s life and health. And same time, pouring all of the efforts to handling a crisis. After that, prioritizing the things and dealing with them one by one.
Can you think of any other companies that faced crisis? Did they overcome the problem?
In 1984, confectionery makers Glico and Morinaga were threatened by someone telling them to put a confectionery mixed with potassium in a stores. At the same time the criminal kidnapped the CEO of Glico and threatened. The two companies stock rates were down drastically and they faced bankruptcy crisis. But they made double coating package and prevent mixture poisoned products, the situations turned well and went back as usual.
Two and a half years ago, our airport suffered tremendous damage from Typhoon Jebi. Our airport sank in the sea and airport operation was stopped. We struggled for restarting normal operation, finally we went back to normal operation after two weeks. Almost all staffs had been working first two days day and night, after that we continued a lot of efforts while taking turns.
Nice to see you, Ko! Today we talked about how the former CEO of J&J overcame seemingly insurmountable odds to successfully turn around a terrible event in their company’s history. Thank you again for sharing your thoughts about this, see you next lesson!