James Burke of Johnson & Johnson: The Tylenol Poisonings and Crisis Management

     

ROI_JamesBurke.jpg

I was in high school in 1982 when my uncle, James Burke was CEO of Johnson & Johnson, and the Tylenol poisonings became national news.  Six people died after taking Extra Strength Tylenol that had been laced with cyanide, and most concluded that the world’s most valuable pharmaceutical brand was doomed.  Watching my dad’s brother manage through this crisis – forthrightly and with candor and compassion – left a mark on me and his actions are reviewed and revered in classrooms and business journals to this day. 

What many forget about the Tylenol story is the second round of tragedy just over three years later; the poisoning death of a 23-year old woman named Diane Elsroth.  Having averted disaster once, many assumed that this second episode would be too much for Johnson & Johnson to overcome.  In college at this point I was proud once again was proud to see my Uncle Jim’s leadership on public display. 

While I always followed my uncle's news coverage closely, it wasn’t until my second week at Harvard Business School, in the fall of 1990, that I saw one of his most remarkable performances.  My first-year classmates and I were required to take a two-week course on ethics.  The course featured complex cases where the answers weren’t obvious and the principals' dilemmas were thorny.  In the middle of the case syllabus came “James Burke: A Career in American Business.” 

I knew my uncle would fare well in this story, but still dreaded our classroom session.  This early in the year I didn’t know my classmates well and was nervous about how our professor, Earl Sasser, would handle a case with the subject’s nephew sitting in the classroom.  Thankfully, he didn’t “cold-call” me at the opening, and when it appeared that he wouldn’t single me out at all, I was able to relax and absorb an interesting and inspiring discussion.

The case describes how, after taking over as Johnson & Johnson CEO in 1976, Jim Burke spent much of the next four years re-committing his management team to the company’s credo.*  This document had been created in the 1940’s by the then-chairman General Robert Wood Johnson II and it outlined, in rank order, the company’s responsibilities.  Customers came first -  “doctors, nurses, and patients…mothers and fathers and all others who use our products and services -” then employees and then the community.  Stockholders make the list, but surprisingly – especially for a document written when this one was – they come last.  As the new CEO, when Burke asked managers what they thought of the credo, he received vague, disinterested answers.  Concerned, he initiated a “credo challenge,” visiting employees around the world and telling them that the company had to either re-commit to the credo or “tear it off the wall.”

A few short years after the Johnson & Johnson credo was re-established in the hearts and minds of the company’s leadership, it guided Jim Burke’s handling of the 1982 Tylenol poisonings.  In the HBS case he explains that in the midst of this crisis, whenever he faced a difficult decision, the credo steered him back to addressing customer needs first.  My classmates’ consensus was that Jim Burke’s responses were consistently appropriate.

Wrapping up the discussion of the 1982 Tylenol crisis, Professor Sasser turned the discussion to the dilemma Johnson & Johnson faced in 1986, ground that wasn’t covered in the materials we read the night before.  We learned that while McNeil Consumer Products (Tylenol’s manufacturer and a division of J&J) overhauled Tylenol’s packaging to address safety concerns, they also considered replacing the capsule form of the drug with a newly-created capsule-shaped tablet or “caplet,” which could not be pulled apart and tampered with.  But research showed that consumers preferred the capsules, believing they were more effective than any solid tablet, regardless of shape.  No evidence supported this belief, but Johnson & Johnson was a research-intensive company with a credo placing primary emphasis was on serving customers, and McNeil scientists understood the power of the “placebo effect,” whereby simply believing that capsules were more effective than tablets could actually make them so. 

So it wasn’t until after Diane Elsroth died from taking a poisoned capsule that Johnson & Johnson introduced the new caplets and discontinued capsules. Many praised this decision as yet another forward-thinking safeguard for consumers, but others questioned why this wasn’t done years earlier.  From my college dorm, I had seen my uncle field these questions effectively on national news shows, but I never knew about his most challenging moment until this class.  After explaining the decision to hold back on caplets and describing the death that resulted from a tainted capsule, our professor played a tape of Jim Burke appearing on a local news show in New York.  At one point, one of show’s hosts turned to him dramatically and asked, “The mother of Diane Elsroth, the girl who was killed, said she feels that Johnson & Johnson was three years too late.  What is your response to that?”  Professor Sasser stopped the tape.

 It was a dramatic moment, and then he placed us all in the hot seat.

“OK.  You’re Jim Burke," Sasser said, "you’re on live television in a major market.  How do you respond to this question?”

By this point, my classmates were comfortable with how Johnson & Johnson had managed the crises and responses ran along the lines of, “Our company made radical changes to our product packaging and that this was an isolated case that we’re now responding to with a new caplet,” and, “Well, it’s next to impossible to guard against every kind of action that criminals take against a consumer product like this, but we’re doing the best we can.” 

“OK,” responded Sasser. “Let’s see what Jim Burke said.” 

He pressed play, and up came a close-up of my uncle. “My response is that if I were the mother of Diane Elsroth, I’d say the same thing.  And I’d feel the same thing." Visibly emotional, he continued,  "And with the benefit of hindsight, which is 20-20, I wish we’d never gone back to the market with capsules myself.” 

Sasser stopped the tape and the classroom was silent.  Even in the safety of an academic setting, we didn’t speak with the same candor and compassion that Jim Burke did in the glare of the spotlight.  With his straightforward response, he related to the victim’s mother, included her daughter’s name in his answer, and noted that he would not only say what she was saying, he would also feel what she was feeling.  And while he said that his company didn’t foresee another tragedy when they stuck with capsules, he made it clear that he wished they hadn’t. 

From his eyes and voice, you knew his regret was genuine and painful.  It was a powerful moment for our class, and one that, years earlier, helped solidify his reputation and consumer confidence in the company and products he represented.

 

* Johnson & Johnson Credo

 

Takeaways

In his later years, my uncle would modestly say that his actions were over-rated, that he was simply following the credo, which made his next moves obvious.  It's true that this foundation provided an invaluable guide, but in the more personal instance of the death of Diane Elsroth, it took an extra degree of compassion and personal dignity to respond the way that he did.

After retiring from Johnson & Johnson, in 1989 Jim Burke took his marketing and managerial skills to the Partnership for a Drug-Free America, which he led as chairman for 12 years.  In 2000, he was awarded the Presidential Medal of Freedom by President Clinton.  

 

james-burke-bill-clintonjpg-f77baeda6f29c166.jpg