This is probably one of the most classic cases in modern crisis management history.
Why do I say so?
This case has helped Johnson & Johnson won this top PR Award in America. And it was regarded as the Icon of Best PR Practices of that year. Let me put it in this way. When the crisis broke out, 94% of their customers swear that they would never buy this product again. But just one year later, not only did they come back; they came back perfectly by winning back 86% of their business.
Sounds like a miracle, right?
This case is called the Tylenol Crisis.
What is Tylenol?
This is the Tylenol you might know. A very commonly used painkiller and cold cure, especially back in those days in America. It is the medicine you can find in every pharmacy around your neighborhood. It is the medicine that you always prepared in your house. More than that, as you can find through these figures. Tylenol is also a very crucial product for its mother company.
So think about it. What would happen to the public and the company, if a medicine of such kind ever comes to a problem?
Yes, the public would be panic. And the company would suffer great loss.
So what was the crisis?
In 1982, Chicago, a mad man, someone who is insane, injected Cyanide in to Tylenol capsules. He packed it up, put it back on the shelf, and they were sold to everywhere. As you can imagine, people started to die. Firstly it was seven. Then it spreads to all over the country. The number grew to 250. People started to be very panic.
And J&J, although did nothing wrong, had to come to the front stage and explain to everyone, why this trustworthy medicine suddenly started killing people.
Is this a Crisis? Yes, I think so.
The company lost 100 million US dollars. And the reputation was ruined. So here is the question. Who are the stakeholders in this crisis?
Yes, I agree. The public and the media definitely are. Other sides I can think of are the FDA, Food & Drug Administration, namely the government side, and the distributors, too.
So how did Johnson & Johnson manage to turn this crisis into an opportunity during the whole process?
Let’s take a look at this timeline.
Things broke out in September 29th, in Chicago. 3 people died all of a sudden. All of them took the poisoned Tylenol Capsule, produced by the McNeil Company in Fort Washington. This is a factory of JJ. And they belonged to the same batch, MC2800. “Batch” here means a group of medicine that was produced together.
This is the CEO of JJ, James Burk, really the key factor and the hero in this crisis. But he didn’t know about it until one of his journalist friend call him and said,” Hey Mr. Burke you know what? Your company has a big problem. ” Burke now realized this is probably the biggest crisis in the company’s history. So the first thing he did was to call the head of McNeil and figure out: Is this really our fault? Or is it someone else’s. Neilson then promised: “This is definitely not our fault. Yes we do have Cyanide in our factory, but those are in the laboratory. There is no way to pollute the drugs we produce.” So they immediately inform the public.
The next thing Burke did, was giving all his current work to someone else, and formed a 7-member group to concentrate in this issue. He gave them a strategic guideline. First, "How do we protect the people?" and second "How do we save this product?" Notice here, ladies and gentleman, “public interest” was put above the ‘product’. Under this guideline, they immediately alerted the consumers across the country through media: DO NOT use any type of Tylenol Product until we figure out what happened.
They quickly responded to the media. In the afternoon, they set up a free hotline. Within 10 days, they answered more than 100 thousand phones, 2500 among them were from the media. They’ve also made tons of briefings to the relative stakeholders. And this many telegraphs were sent to hospitals, doctors and distributors for telling them not using Tylenol currently. This transparent and earnest attitude immediately won good reaction from the public. People start to think, “Johnson & Johnson is also a victim in this tragedy. They didn’t do anything wrong, but has to be responsible for this. More than that, they are trying to protect us.”
J&J then started to recall. This is the first voluntarily recall in US history. It was not enforced by the government, but by the company itself. Firstly they recalled this batch of medicines. But suddenly, people found another batch of Tylenol also have a problem. So they recalled them as well. Then Burke and Clare, the two heads to JJ starts to think, “The situation is getting worse. We probably need to start a national recall before it’s too late.” So they fly to Washington to talk with the heads of FBI and FDA. But they say, “Wait a second gentleman, you are overreact. It’s approaching the Halloween. We don’t want to scare the public.” So Burk was kind of stuck in a dilemma. He cannot disobey the government. Neither did he want to risk the public safety. But shortly after, People in California, the west coast died of polluted Tylenol. It means the poison had really spread to all over the country. Then, FDA and FBI had agreed to start this national recall.
So they started it. And the company lost 0.1 Billion US dollars in it. With the help of FDA, JJ examined 8 million Tylenol capsules they recalled one by one, and found 75 of them were polluted with cyanide.
In October 8, JJ replaced all the capsules with pills, because pills cannot be polluted. But people still don’t understand the difference. They thought Tylenols are all dangerous. So the market share and the stock value kept falling to the bottom. But Burke was there encouraging his employees, “Public are now sympathized with us. It’s not the end of the day. We can win back the market. ”
Now that the police caught the suspect, and people understand JJ was innocent, the company finally got the chance to start their recovery. But even though FDA comes out to testify for JJ, people still don’t trust them. I mean, they were thinking, how u can guarantee tragedies won’t happen again. So Burke founded the Tylenol Strategy Committee.
Three major things they have done. Firstly is the triple security sealed packaging. This is to assure the poisoning will never have the chance to happen. They conducted 4 new commercials to promote this new packaging. And they push out a discount Coupon, meaning you can exchange your old Tylenol with new ones. They handed out 4000 of them.
One year later, they perfectly came back, and regained the market shares they have.
So let’s think about it. During the whole process, when was the Pre-Crisis Phase, when was the Crisis Response Phase, and When was the Post-crisis phase?
Yes, the parting-lines are on Sep.29 and Oct.11.
I will analysis the strategies JJ use in the first two phases.
The pre-crisis phase. I have to say that Johnson and Johnson don’t have anything like Crisis Prevention System or Crisis Management system. Why is that? Before Tylenol, there was basically no such thing as modern crisis management. So their preparation was not on possible crisis, but on the Johnson’s credo.
Johnson’s credo was created by the founder of this company Robert Johnson, and perfected by Burke. It is the company value that is used to educate every employee. The very first sentence said that they have to be responsible to the consumers. They have to put public health above all.
In some way, Johnson’s credo is the blueprint and guideline of the Tylenol crisis strategies. It helped allocate the core communication objects, and communication principles when unexpected crisis happened. It has become a value that shared by employees, so basically when things happened there weren’t many conflicts within the company. Employees were even willing to voluntarily stay there to answer the hotlines.
The Crisis Respond Phase. In this period of time, with Burke’s strong leadership, four strategies were used.
The most important one among all is the forgiveness and sympathy strategy. We’ve already been very familiar with the attribution theory. Forgiveness strategy is even a step further. JJ managed to image itself as a victim, too. Public was feeling like, “They didn’t do anything wrong. But they were brave enough to take the responsibility. They lost so much money in this crisis. But they still put our health and interest first. ”
Two concrete methods that were used in this strategy are remediation and rectification. Remediation means when bad things happened, you have to stop it. Rectification, then, is how you can improve and prevent bad things from happening in the future. JJ offers families counseling and financial assistance as forms of compensation. Then they used the new packaging and random inspection procedure to make the public believe same tragedy won’t happen again. They can still trust them.
Following is the leveraging strategy. It means draw help from somewhere else and borrow others’ power. In this case, JJ positively worked with FDA and FBI. Clearly, they couldn’t successfully do the investigation and nationwide recall with their help.
Thirdly, Preemptive strike Strategy, meaning they strike first to gain the initiative. They offer the first hand information very quickly and worked closely with the media. Burke himself was on 60 minutes show, as well as some other very famous American talk shows, to explain to the public what has happened. Plus, they made warning video and put it in NY metro stations around the clock.
The last one was the “3T” Principle, Meaning when they dealing with the media, they deal with it initiatively, comprehensively and transparently.