Crisis Management

"The PR industry has an important role to play in helping companies identify and manage risks that could damage their reputation." - Nick Purdom of PR Week

THE TYLENOL CRISIS of 1982

In October of 1982, Tylenol faced a tremendous crisis when 7 people in Chicago were reported dead after taking extra-strength Tylenol capsules.

At the time Tylenol was the leading pain-killer medicine in the United States, and therefore this was a BIG and scary deal and if it wasn’t handled correctly, it could have been Johnson & Johnson’s initial downfall and reputation killer.

It was reported that an unknown suspect(s) put 65 milligrams of deadly cyanide into Tylenol capsules, 10,000 more than what is necessary to kill a human. The tampering occurred once the product reached the shelves. The unknown suspect(s) removed the Tylenol from the shelves, infected it with cyanide and then returned them to the shelves.

In 1982, Tylenol controlled 37 % of its market with revenue of about $1.2 million. Immediately after the cyanide poisonings, its market share was reduced to 7 %.

WHAT DID JOHNSON & JOHNSON DO?...

Reacting to the News

When Johnson and Johnson was faced with the initial situation, the CEO at the time, James Burke, had to make some tough decisions that would severely impact the future of the company. Rather than think in financial terms, however, Burke immediately turned to the company's Credo.

"We believe our first responsibility is to doctors, nurses, and patients, to mothers and fathers and all others who use our products and service."

With this as its inspiration, Johnson & Johnson used the media to promptly begin alerting people of the potential dangers of the product. It dispatched scientists to determine the source of the tampering.

Setting a New Standard

Johnson and Johnson then made a decision that would set a new standard for crises involving product tampering. The company ordered a massive recall of more than 31 million bottles at a cost of more than $100 million. It also temporarily ceased all production of capsules and replaced them with more tamper-resistant caplets. This type of drastic response had never been attempted, which prompted much criticism. However, Johnson and Johnson stood firm behind its decision - and for good reason. The company was able to use the crisis to demonstrate to their customers/stakeholders their commitment to customer safety and to the quality of the Tylenol product. In addition, the company's willingness to be open with the public and communicate with the media helped the company maintain a high level of credibility and customer trust throughout the incident. Burke also maintained a high profile and repeatedly assured the public of the company's commitment to its customers' safety.

2 Thumbs up…

Although Johnson & Johnson knew they were not responsible for the tampering of the product, they assumed responsibility and that is why this crisis turned out so successful. The company reacted immediately, they recalled the product and they also had the CEO constantly involved with updates and news. Those are 3 of the most important and effective ways a company can handle a crisis. Although Johnson & Johnson’s stock fell 7% following the crisis, they were not going to allow these hard times to last. The company aired commercials within days to regain the public's trust, and a month after the recall, the company embarked on an aggressive campaign to rebuild the Tylenol brand and reintroduce the product to the market. In November, it promised to have the product back on the shelves in a new triple-tamper-resistant package by the end of the year; which would be the first of its kind. Johnson & Johnson offered incentives, such as a free replacement of caplets for the capsules and special coupons, to try to maintain its customer base. The company's attempts were successful, and by the following spring, Johnson and Johnson had regained its previous market share.

In this case, I honestly would not have done anything differently. Johnson & Johnson took the crisis head on and succeeded with flying colors. They were able to rebuild their trust with their customers and stakeholders and also become more triumphant in the years to follow. Other companies, when trying to handle a crisis or even come up with a crisis plan should look to the Johnson & Johnson's Tylenol Crisis for advice. The only thing I could say is that if Johnson & Johnson didn't have a crisis plan ready in 1982, I hope they implemented one soon after so that dealing with such an issue/crisis could be even easier next time.

CONGRATULATIONS J&J.... you passed the test =)