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PROJECT MANAGEMENT

THE TYLENOL CRISIS


HARSHDEEP SINGH
RICHI BURU TUTI SANDEEP KUMAR

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.

Tylenol Case Study


Background:

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

Chicago hospital received >700 calls in one day


Immediate stories in major magazines and newspapers Over 100,000 separate news stories ran in US papers

Hundreds of hours of national and local TV coverage


>90% of Americans had heard of the Chicago deaths Widest coverage since Kennedy assassination & Viet Nam

Copycat tampering 270 reported incidents (36 true)


J&J stock fell 7 points. Market share dropped from 35% of pain-reliever market to 8%

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.

Johnson & Johnsons Reaction


Immediately, Johnson & Johnson open its doors to the media.

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.

High public profile and repeated reassurance by Burke(CEO)


Working relationship with law enforcement agencies Notification of health professionals nationwide & FDA

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 Re launch (cont.)


An all-out PR/media blitz was launched to ensure the public understood its commitment, including a bold invitation to 60 Minutes to film and investigate their internal strategy sessions in preparation of the new product launch.

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.

What Happened : Round 2


Feb. 6, 1986 A woman in Yonkers, NY died after taking poisoned Tylenol capsules. A hotline, the company set-up after the first incident, received 15,000 phone calls.

Johnson & Johnsons Reaction


CEO Burke held a press conference the very next day Im heartsick. We didnt believe it could happen again, and nobody else did either. Production of Tylenol capsules was halted permanently, costing the company more than $150 million. Johnson & Johnson offered to replace all capsules with new Tylenol caplets, a solid form of medication less tamper-prone. Five-Point Plan
1. Replaced them with tamper-resistant caplets (triple safety seal within 6 months) 2. Incentives: free replacement of caplets for capsules, special coupons ($2.50 off) easily obtained 3. New pricing program: discounts up to 25% 4. New advertising program: national 1 minute commercial, News & talk shows, 5. 2250 sales personnel made new presentations to medical stakeholders

The publics reaction


Just two weeks after the tragedy, President Reagan said, Jim Burke of Johnson & Johnson, you have our deepest appreciation for living up to the highest ideals of corporate responsibility and grace under pressure.
Today, nearly 30 years after the first issue, in virtually every study of corporate reputation, Johnson & Johnson is rated #1.

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

React fast, openly and decisively

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

Behavioral Public Relations Model


Awareness USUALLY ULTIMATE DESIRED BEHAVIOR RARELY

Latent Readiness

OCCASIONALLY

USUALLY

Triggering Events

Intermediate Behavior

Relationship Building

PR & Communication Words

Words are powerful.

Words, and their meanings, are always changing.

Words mean different things to different people.

Three Popular Message Explanations


The CONTENT is the message.
Intent is most important neither the medium nor the communicator is as important as the content itself.

The MEDIUM is the message.


Content is important, but less important (and MUST be influenced) by the medium by which it is being delivered. (Marshall McLuhan)

The PERSON is the message.


The communicator and their charisma and ability to persuade is the most important element.

PR & Communications: Receivers Bias


Stereotypes An influence on both the creators and the consumers
Symbols Powerful triggers of emotion/recognition

Semantics The words we choose have consequences.


Peer Groups Peer pressure is no joke. Media They set the agenda; they filter and shape the news and often dictate what is important.

PR & Communication: Feedback


Does a press release exist if no one writes about it?
Messages can trigger the following effects on receivers: 1. Change Attitudes Hard to achieve, rarely happens. 2. Crystallize Attitudes Push someone over the edge; may influence someone to do something they were already thinking about doing. 3. Create Seed of Doubt Force people to modify or rethink their original opinions. 4. Nothing Changing attitudes and motivating action takes time.

What we learn from The Tylenol Tragedy


The position of Project Manager
The project manager assigned to manage the crisis must be high enough in the organization to possess the authority for the immediate commitment of corporate resources. Approval processes that must follow the chain of command can rob the project manager of valuable time and prolong the crisis.

What we learn from The Tylenol Tragedy


Initial approach
Because of the potential lack of information available at the beginning of the crisis, an abbreviated life-cycle phase approach is often more appropriate to use. This provides at least some initial guidance for crisis management. It is highly unlikely that during crisis management, sufficient time will exist for formal planning, scheduling, and WBS construction.

What we learn from The Tylenol Tragedy


Setting up committees
Based on the seriousness of the crisis, there could be multiple committees with the overseeing or strategy committee made up entirely of senior corporate executives.

What we learn from The Tylenol Tragedy


Effective communication is critical
All communication channels must remain open, free of political intervention, and hopefully based upon trust and honesty.

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.

What we learn from The Tylenol Tragedy


The decision-making

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.

What we learn from The Tylenol Tragedy


The organization culture

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.

Reputation after the crisis


Miami News, after the two tragedies stated, Johnson & Johnson is in business to make money. It has done that very well. But when the going gets tough, the corporation gets human, and that makes it something special in the bloodless business world.
The reason is that Johnson & Johnson effectively portrayed the truth as soon as possible without any communication gap, and handled the crisis from the executive level itself, while sticking to its corporate responsibility credo.

Thank You.