project mgmt- morality n ethics

8/13/2019 project mgmt- morality n ethics

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PROJECTMANAGEMENT

THE TYLENOLCRISIS

HARSHDEEP SINGH

RICHI BURU TUTI

SANDEEP KUMAR


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Introduction

Johnson & Johnson formed by RobertWood Johnson, James Wood & EdwardMead Johnson in 1886, is an Americanmultinational pharmaceutical, medicaldevices and consumer packaged goodsmanufacturing corporation.

The corporation includes 250 subsidiarycompanies with operations in over 57countries and products sold in over 175countries.


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Tylenol Case Study

Background:

In the mid 1950s Tylenol became a much needed and popular substitutefor aspirin for such conditions as flu and chicken pox, since aspirin wasrelated to Reyes Syndrome (liver degeneration, brain edema)

Large market: 100 million users, 19% of corporation profits,, 37% marketshare 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 beennor ever had to bea very high-profile company.CEO James Burke had never appeared on TV or done interviews.


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What Happened ?

Sept. 10, 1982Johnson & Johnson management learned that itspremiere product(Tylenol), Extra-Strength Tylenol, had been usedto kill three people.

An unknown criminal replaced Tylenol Extra-Strength capsuleswith cyanide-laced capsules, resealed the packages, anddeposited 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 fromswallowing Tylenol capsules loaded with cyanide.


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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 tampering270 reported incidents (36 true)

J&J stock fell 7 points.

Market share dropped from 35% of pain-reliever market to 8%


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The stakeholders

Johnson & Johnsons decision would havedirectly affected: The consumers: Greatest stakeholders, since their

lives were at the line.

The stockholders: Financial interest for investorsrelying on income from J & Js shares.

Lending institutions: Impaired revenue systemcould lead to reduction of funds and increase ofinterest rate charge.

Government: Primary concern, public safety.

Management: Protecting the image of thecompany.

Employment: Same as management, but also tosome extent, possible loss of income orunemployment.


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Johnson & Johnsons Reaction

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

Even though the company was confident that the poisonings had not occurred atany 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 inCalifornia five days later, Johnson & Johnson did not hesitate and willingly recalledall Extra-Strength Tylenol31 million bottlesat a loss of more than $100 million.

Johnson & Johnson resumed limited advertising, but with a focused messagepromising to exchange capsules for tablets and continued aggressive grassroots PRthrough letters to the trade and statements to the media.

Johnson & Johnson went on to offer a $100,000 reward for the killer(s).


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Reaction continued

Immediate alert to consumers not to use any type Tylenol product or resume use untilextent 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-productiontampering

Withdrew bottles from Chicago area; ordered recall of >31 million bottles nationally ata 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


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The outcome

The Publics Reaction

Johnson & Johnson commissioned a survey which found 87% ofTylenol 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 communitiesby planning an aggressive relaunch of the product in a newtriple-safety-sealed, tamper-resistant package.


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The Re launch (cont.)

An all-out PR/media blitz was launched to ensure the publicunderstood its commitment, including a bold invitation to 60Minutes 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 thecompany, it was now, hedging its bets because of Johnson &Johnsons stunning campaign of facts, money, the media, andtruth.

By early 1983, Tylenol had recaptured 95% of its prior market shareand company morale was higher than ever.


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What Happened : Round 2

Feb. 6, 1986A woman in Yonkers, NY died aftertaking poisoned Tylenol capsules.

A hotline, the company set-up after the first incident,received 15,000 phone calls.


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Johnson & Johnsons Reaction

CEO Burke held a press conference the very next dayImheartsick. We didnt believe it could happen again, and nobodyelse did either.

Production of Tylenol capsules was halted permanently, costing thecompany more than $150 million.

Johnson & Johnson offered to replace all capsules with new Tylenolcaplets, a solid form of medication less tamper-prone.

Five-Point Plan1. 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


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The publics reaction

Just two weeks after the tragedy, PresidentReagan said, Jim Burke of Johnson &Johnson, you have our deepestappreciation for living up to the highestideals of corporate responsibility and graceunder pressure.

Today, nearly 30 years after the first issue, invirtually every study of corporate

reputation, Johnson & Johnson is rated #1.


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Strategies

Forgiveness:Win forgiveness from stakeholders andcreate acceptance for the crisis

Sympathy: Portray organization as unfair victim ofattack by outside persons; willing to accept losses

Remediation: Offer compensation for victims andfamilies (counseling & financial assistance)

Rectification: Take action to reduce recurrence (triplesealed & increased random inspection)

Effective leadership: Clear, visible, consistent role-modeled message from beginning by CEO


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Strong family-oriented culture, we care about ouremployees

Open and current communication with employees; 4video programs on the unfolding process

Emphasizing plant workers were innocent

CEO speech in a week to employees, Were comingback (wearing buttons)

Idle employees given tasks to keep involved & reduce

rumoring and boredom Indications of market recovery bolster spirits

Congruence and consistency in demonstrating theCredo


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Learning

J&J showed that they were not willing to risk public safety even atexcessive cost

J&J could be trusted all the way to the topthey lived their Credo &having a functional credo worked

J&J set a new standard for protection thereby requiring competitors toexpensively 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 takeresponsibility for crises or tell the truth

No matter what you do in the beginning, in the end you will have to

tell the truth


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React fast, openly and decisively

Report your own bad newsdont 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 affectthe 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 sideof the story


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Behavioral Public Relations Model

Awareness

Latent

Readiness

Triggering

Events

Intermediate

Behavior

Relationship

Building

ULTIMATEDESIRED

BEHAVIOR

R RELY

OCC SION LLY

USU LLY

USU LLY


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PR & CommunicationWords

Words are

powerful.

Words mean

differentthings todifferentpeople.

Words, and

theirmeanings,are alwayschanging.


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Three Popular MessageExplanations

The CONTENT is the message.

Intent is most importantneither the mediumnor the communicator is as important as thecontent itself.

The MEDIUM is the message.

Content is important, but less important (andMUST be influenced) by the medium by whichit is being delivered. (Marshall McLuhan)

The PERSON is the message.

The communicatorand their charisma andability to persuadeis the most importantelement.


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PR & Communications:Receivers Bias

StereotypesAn influence on both the creators andthe consumers

SymbolsPowerful triggers of emotion/recognition SemanticsThe words we choose have

consequences.

Peer GroupsPeer pressure is no joke.

MediaThey set the agenda; they filter and shapethe news and often dictate what is important.


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PR & Communication: Feedback

Does a press release exist if no one writes about it?

Messages can trigger the following effects on

receivers:1. Change AttitudesHard to achieve, rarely

happens.2. Crystallize AttitudesPush someone over the

edge; may influence someone to do somethingthey were already thinking about doing.

3. Create Seed of DoubtForce people to modify orrethink their original opinions.

4. NothingChanging attitudes and motivating

action takes time.


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What we learn from The TylenolTragedy

The position of Project Manager

The project manager assigned to manage the crisismust be high enough in the organization to possess

the authority for the immediate commitment ofcorporate resources.

Approval processes that must follow the chain ofcommand can rob the project manager of valuable

time and prolong the crisis.


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Initial approach

Because of the potential lack of informationavailable at the beginning of the crisis, an

abbreviated life-cycle phase approach is oftenmore appropriate to use.

This provides at least some initial guidance for crisismanagement.

It is highly unlikely that during crisis management,sufficient time will exist for formal planning,scheduling, and WBS construction.


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Setting up committees

Based on the seriousness of the crisis, there could bemultiple committees with the overseeing or strategy

committee made up entirely of senior corporateexecutives.


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Effective communication is critical

All communication channels must remain open, free ofpolitical intervention, and hopefully based upon trust

and honesty.

Failing to do this could result in "burning bridges" withinformation sources such that repairs cannot be madeprior to the closure of the crisis.

The project manager assigned to the project mustpossess strong communication skills and foster aculture of trust with all of the stakeholders.


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The decision-making

Some sort of structured decision-making processshould be in place during crisis management.

Whatever process is used should be readilyunderstood and acceptable to all parties involved inthe crisis.

Corporate credos or corporate standard practice

manuals can make the decision-making processeasier.


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The organization culture

Project management works exceptionally well whenthe organization has a cooperative culture.

Decision-making is rapid and full organizationalsupport exists.

Employees make decisions in the best interest of thecompany (and consumers) rather than their own

self-interest.


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Reputation after the crisis

Miami News, after the two tragedies stated,Johnson & Johnson is in business to make money. Ithas done that very well. But when the going getstough, the corporation gets human, and that

makes it something special in the bloodless businessworld.

The reason is that Johnson & Johnson effectivelyportrayed the truth as soon as possible without any

communication gap, and handled the crisis fromthe executive level itself, while sticking to itscorporate responsibility credo.


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Thank You.

project mgmt- morality n ethics

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