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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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What we learn from The TylenolTragedy
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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What we learn from The TylenolTragedy
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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What we learn from The TylenolTragedy
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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What we learn from The TylenolTragedy
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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What we learn from The TylenolTragedy
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.