Organizational Reliability & Resilience 1

Organizational Reliability & Resilience: Johnson & Johnson Report

The Baby Powder Cancer Case

In this case, about 22 women filed a lawsuit against Johnson & Johnson, claiming that

asbestos in its talcum-based powder products triggered their ovarian cancer. The women accused

J&J of failing to warn them and other consumers about the cancer risks related to the powder

products. Women and families also provided evidence of how decades-long use of J&J’s talc-

based baby powder and other related products triggered their diseases. In particular, the

complainants alleged that J&J ignored that its talc-based products had been contaminated with

asbestos since the early 1970s when they were first introduced into the American and Canadian

markets (Tiffany & Roni 2020, p. 2). In its verdict, the Circuit Court of the City of St. Louis

directed the company to pay about $550 million in compensatory damages and another $4.14

billion in punitive damages (Tiffany & Roni 2020, p. 2). The jury’s decision was based on the

testimonies of different experts provided by the company and the complainants. Consequently,

Johnson & Johnson withdrew the talc-based baby powder products from sale in the United States

and Canada in 2020 to prevent further backlash.

According to the New York Times article, the lawsuit claims that the company has spent

over 40 years concealing evidence of asbestos in some of its talc-based products (Tiffany & Roni

2020, p. 2). According to the plaintiffs, J&J’s failure to make such products with warning labels

was a failure. J&J failed to prevent, detect, or effectively respond to the problem in its initial

stages (Tiffany & Roni 2020, p. 4). The company probably thought that it could continue

concealing the evidence and generally operate without significant business disruptions. A similar

2013 talc trial in the Federal District Court in South Dakota also found J&J negligent but failed

to award compensatory damages to the plaintiffs.

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The Underlying Causes

Talc is a soft mineral used across industries because of its astringent properties. For

instance, J&J’s talc-based baby powder was developed to treat nappy rash and other related

personal hygiene applications. However, the company failed to detect and ignored the asbestos in

the talc deposits. According to Slomovitz et al. (2021), asbestos can cause or trigger cancer if its

fibres enter the body system. The body cannot break down or eliminate the asbestos fibres

because they tend to stick within sensitive issues around the patients’ lungs or abdomen

(Slomovitz et al. 2021). Besides, asbestos fibres can trigger irritation and inflammation,

damaging body cells and DNA. The damaged DNA can cause genetic changes, leading to

abnormal cell growth and cancer. J&J failed to disclose any of this information to the consumers

about the presence of asbestos in its talc-based baby powder products.

Moreover, according to the regulators in the United States, the talc-based baby powder

contained carcinogenic chrysotile fibres (a type of asbestos). The finding was a major blow to the

company that was already experiencing a significant drop in sales. Despite the overwhelming

evidence against J&J’s talc-based baby powder, the company continued to vigorously deny the

allegations terming them as misinformation about the product’s safety. The organization relied

on the cohort study by O’Brien et al. (2020) that found no statistically significant increase in the

risk of ovarian cancer with its talc-based baby powder. The company’s management also cited its

rigorous testing standards to defend the safety of the cosmetic talc. However, the complainants

accused the company of using flawed testing methods that could not correctly detect the asbestos

fibres in its talc-based products. The defensive approaches to the allegations did little to prevent

the verdict requiring the company to pay about $4.7 billion in the talc-based baby powder case.

Overall, J&J failed to act with due diligence by ignoring the previous talc cases that were mainly
 Organizational Reliability & Resilience 3

overturned on technical legal grounds.

Recommendations to the Organization’s Board of Directors

What the Company Might Have Done

Johnson & Johnson should have developed organizational resilience and reliability.

According to Annarelli and Nonino (2016), organizational resilience and reliability refers to a

company’s ability to anticipate, prepare for, respond, and effectively adapt to the incremental

transformations or sudden disruptions to endure and flourish. Annarelli and Nonino (2016)

believe that strategic awareness and efficient operational management of a company’s internal

and external shocks can strengthen organizational resilience. Organizational resilience is about

continuously anticipating and adjusting to the deep, secular trends that could permanently impair

the operational efficiency of earning power of a company’s core business (Hamel & Välikangas

2003). Hamel and Välikangas (2003) also believe that organizational resilience entails

developing the capacity to change before an issue becomes desperately apparent to the public.

For instance, J&J could have changed its operational model after the initial lawsuits against its

talc-based baby powder products instead of concealing substantial evidence to the consumers and

regulatory agencies such as the FDA (Torabi, Giahi, & Sahebjamnia 2016). The initial lawsuits

could have been constant reminders to explore alternative options to talcum, which was being

associated with asbestos, a cancer-causing agent.

According to Bhamra, Dani, and Burnard (2011), organizational resilience would have

allowed J&J to be more prepared by adopting preventive measures to minimize threats or reduce

the impact of such legal ramifications. For instance, after the first legal challenges against its

talc-based baby powder products, J&J had the time and resources to conduct verified and

independent research involving different stakeholders, including the plaintiffs. The company
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could have also involved other regulatory agencies such as the Food and Drug Administration

and the American Cancer Society in the evidence-based studies. Transparent and verifiable

information about the relationship between talc, asbestos, and ovarian cancer could have helped

J&J limit this case’s legal and moral consequences (Muurlink et al. 2012). The ability to manage

such legal disruptions and unexpected events would have helped J&J maximize the speed of

recovery from the setbacks or even become more valuable in the industry (Annarelli & Nonino,

2016). Besides, J&J could have considered out-of-court settlements with the plaintiffs and

assured them of the company’s commitment to phase out the talc-based baby powder products.

While such settlements would have been a confirmation of guilt on the company’s part, the

company would have settled fundamental questions and reduced the punitive, compensatory

damages awarded by the courts.

Finally, according to Denyer (2017), J&J should have battled complacency. For instance,

the management should have invited sceptical outsiders to conduct independent studies on the

relationship between asbestos, talcum, and ovarian cancer, particularly after the initial lawsuits

and complaints from the consumers. By cultivating nightmare scenarios or “what if” situations,

Denyer (2017) believes that J&J could have established appropriate and evidence-based

responses to the problems.

What the Company Should Do

J&J’s primary focus should be on returning to normal conditions after the disruptive

events caused by the Circuit Court’s decision to award $ 550 million in compensatory damages

and another $ 4.14 billion in punitive damages to the plaintiffs (Kutsch, Hall, & Turner 2015).

Undeniably, the company will struggle to regain consumer trust and shareholder confidence.

J&J’s management should approach the situation with due diligence to this case’s emotional and
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physical impacts on the existing and targeted consumers. Consequently, the company should

develop the capability to adapt effectively to disturbing events by deploying effective and

adequate responses to minimize the threats (Kutsch, Hall, & Turner 2015). According to Weick

and Sutcliffe (2011), resilience will enable J&J to adjust, adapt, and retain its basic functionality

after the legal failures. For instance, the company should respond by admitting liability and

assuring the stakeholders of its commitment to correct the injustices. It should refrain from

defending its products or appealing the judgment because such decisions will attract more

lawsuits and public debates about the safety of most of its products. Instead, J&J should involve

experts to explain its position while promising to conduct more extensive studies. Besides, the

company’s decision to phase out the talc-based baby powder products from the American and

Canadian markets is appropriate because it will significantly reduce public pressure and negative

media coverage.

Correspondingly, Johnson & Johnson should become more resilient in the future to help

avoid similar problems. According to Sheffi and Rice Jr. (2005), J&J should build a resilient

enterprise by reducing its vulnerability or the likelihood of potential disruptions in its operational

efficiency. Finally, J&J should strive toward becoming a high-reliability organization. In

particular, the company should prioritize reliability and become more sensitive to possible

threats (Roberts & Bea 2001). As a high-reliability organization, J&J can create complete

pictures of the possible adverse events and formulate appropriate evidence-based strategies

(Weick & Roberts 1993). For instance, the company should track even small failures, resist

oversimplification of its operational processes, remain sensitive to operation, and maintain its

capabilities (Leveson et al. 2009). J&J should also de-stigmatize failure and encourage factual

and transparent reporting. To avoid widespread lawsuits, it should also consider phasing out the
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talc-based baby powder products from the global markets.

Minimizing the Impact on the Organization

If similar problems occur in the future, Johnson & Johnson should implement different

strategies to minimize the impact on its local and global business network and sustainability.

According to Studer (2009), the company should adopt organizational transparency in the future.

Organizational transparency will enable J&J to share vital information regarding its operations

with stakeholders such as consumers to create clarity, trust, and accountability. According to

Studer (2009), the first step toward organizational transparency is ensuring senior leadership

understands the goals and plans. According to Vargo and Seville (2011), leadership is a crucial

characteristic of a resilient organization. The successful implementation of J&J’s crisis response

plan grounded in the reality of the situation will depend on the leadership team. The executive

should relentlessly communicate the issues to the middle managers and other employees, helping

them understand the big-picture issues and their implications (Kutsch, Hall, & Turner 2015). The

managers should also understand the legal and financial impacts of the issue, including possible

lapses in sales and productivity. Most importantly, J&J management should prepare the senior

and middle-level managers to respond to tough questions from the media, consumers, and

shareholders (Studer, 2009). Vargo and Seville (2011) also believe that resilient leadership can

elicit a sense of hope among the stakeholders, establish and recreate an inspiring vision, and play

an important public relations role. Anticipating tough questions about talc-based powder

products and other related disruptions will enable the managers to formulate the right keywords,

appropriate wording, and evidence-based responses (Leveson et al. 2009). The company should

discourage the managers from lying to the public and the stakeholders about the problem (Elliott,

Swartz, & Herbane 2010). Lies and concealing evidence will further affect consumers’ trust and
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confidence in the company.

Overall, reliability and resilience will support J&J’s organizational sustainability.

According to Denyer (2017), organizational resilience will allow the company to monitor and

comply, notice, and respond, and improve and exploit appropriate opportunities. The company

should also imagine and create potentially disruptive scenarios to help formulate effective

responses that can balance and manage such future disruptions and tension. According to Sheffi

and Rice Jr (2005), J&J should build resilience by increasing flexibility. This means that it

should continuously anticipate and adjust to the changes and potential disruptions.

In summary, the Circuit Court of the City of St. Louis verdict should receive the attention

of the J&J board. The company should consider including adverse product warnings on the

labels to warn the consumers about cancer risks. Most important, J&J should consider pulling its

talc-based products from the global markets to prevent further legal backlash and health-related

complications. It can also fund independent research and investigations to ascertain further the

connections between asbestos, talc, and ovarian cancer.

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