In 1982, the company most people knew for their Band-Aids and baby shampoo was headed by James Burke, a man who climbed to the CEO job based on his exceptional marketing skills, not his knowledge of medicine or pharmacology. Relatively few people knew that J&J owned the company that made the very popular pain?reliever?- Tylenol. In fact, it was Mr. Burke who championed making Tylenol an over-the-counter?costumer?product which had about 35% of the pain-reliever market when people who took the pills started dying.
On Sept. 29, 1982, two people ?living in Chicago died of cyanide poisoning. It was a huge case as?one of them a 12-year-old girl and the common link between the deaths was that they both had taken Tylenol.
The Food and Drug Administration acted quickly as did Burke?s Johnson & Johnson who owned McNeil Consumer Products, producers of the medicine. Burke ordered the immediate recall of ?93,000 bottles of the pills which came from the lot implicated in the deaths.
From the outset, the response, personally directed by Mr. Burke demonstrated a level of accountability, transparency and candor that is still taught in business schools as a model of trust-building?integrity.
Within a few hours of the learning of the first deaths, J&J set up toll-free numbers manned by company employees. It also stopped all Tylenol advertising and?sent 450,000 telex messages to doctors? offices, hospitals and trade groups.
Unfortunately, this was just the beginning of what would turn out to be a corporate crisis of historical significance.
In the next four ?days, five more people died of cyanide poisoning. ?Hope that the problem was confined to the Chicago area evaporated when a bottle of Tylenol laced with a different poison, strychnine, was found in California.
No one knew whether this was the work of the same person who poisoned the pills used in Chicago or a copycat poisoner.
Burke and his team met with both the FBI and FDA and suggested that all 31 million bottles of Tylenol capsules on American store shelves be removed. It would have been, by far, the largest recall in history and it?s been?http://www.jnj.com/connect/about-jnj/jnj-credo/
This decision cost the company $100 million dollars as it not only destroyed all 32 million bottles but it kept the drug off the shelves un ?til it developed the first ?tamper-resistant bottles (setting a new standard for the industry).
Burke, with the sort of candor rare in top executives, later admitted that he didn?t really know how much his?decision?would cost and that he was glad he didn?t know?because?the huge price tag might have made it harder to do what he thought was right.
He also said he didn?t know whether Tylenol which had to re-enter a very competitive market would ever regain its market share,
In fact, the right thing turned out to be the smart thing as Tylenol did regain its market share within a year and Johnson & Johnson?benefited?from an unrivaled reputation.
Even today, I doubt whether there is a business ethics class in America that does not discuss the Tylenol case as an exemplary model of corporate responsibility.
J&J?s credo is literally carved in a huge block of stone in the company?s new jersey headquarters and metaphorically Jim Burke?s reputation as one of the great business leaders of all time (in 2000 he was awarded the presidential Medal of Freedom and in 2003 Fortune Magazine named him one of history?s 10 greatest CEOs).
Jim Burke died September 28, 2012 just a few weeks shy of the 30th anniversary of his momentous?decisions.
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