Spotlight on Strategy: Johnson & Johnson


As part of our ongoing series highlighting smart strategic stories from companies all over the world, this week our Spotlight on Strategy highlights Johnson & Johnson.

This year celebrates the 10th anniversary of the iPhone, but even one of technology’s biggest innovations pales in comparison to the 131 years of business this year marks for Johnson & Johnson. The multinational company offers more than one lesson for current leaders. With 250+ subsidiary companies, and products sold in more than 175 countries, Johnson & Johnson has come a long way from pioneering the first commercial first-aid kit.

Founded in in 1886, Johnson & Johnson has maintained their guiding credo since 1943. In the company’s own words, the credo challenges them “to put the needs and well-being of the people we serve first.” Nearly 40 years later, this credo would be truly put to the test. In 1982, several people died in the Chicago area after taking cyanide-laced capsules of Extra-Strength Tylenol, the drugmaker’s best-selling product. CEO James Burke pulled the painkiller off every shelf across the nation and set forth on a campaign to inform the public and reissue the painkiller with innovative, new tamper-resistant packaging. All in all, it cost Johnson & Johnson in excess of $100 million.

In an exemplary case of crisis management, Burke was admired for his decision to pull the product, especially in a decade where recalls were essentially unheard of. He maintained forthrightness with the media and control of the situation. Experts predicted the Tylenol brand would never recover, but a year later its share of the $1.2 billion analgesic market, which had dropped to 7 percent from 37 percent, had recovered to 30 percent.

There are many takeaways from the “Chicago Tylenol murders,” indeed it is a case study in crisis management, leadership, marketing, public relations and more. However, there is a broader lesson too.

That lesson is “Do the Right Thing.” Many would note that it is logical for a company manufacturing health-related products to focus on the well-being of others. However, It’s another situation to imagine a guiding credo would extend to costing your company millions and possibly one of its best-selling products. While the Johnson & Johnson credo is an easy fit for them, it’s also entirely applicable to others as well.

Doing the right thing isn’t always easy and the outcome can’t always be predicted. By addressing the issue head on and immediately, searching for a solution rather than a place to lay blame, Johnson & Johnson was able to strategically recover. In any industry, the ability to maintain control by sticking to your core beliefs is valuable. As Johnson & Johnson proves, sometimes the greatest decision for the future of your business may seem counterintuitive.