Damage Control (Revised & Updated). Eric Dezenhall
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Burke was interviewed by CBS’s 60 Minutes in an uncharacteristically laudatory segment for the confrontational news program. Tylenol sales swiftly bounced back to near precrisis levels even though the killer was never found. Given the damage the murders could have done to the brand, this result was—and remains—extraordinary.
There is much to learn from Johnson & Johnson’s crisis management, but blindly worshipping at this altar may be little more than an exercise in self-delusion for companies that find themselves in the crosshairs of an anxious public, a hostile media, and regulators under extraordinary pressure to make an example of bad industrial actors.
A QUESTION OF PROVENANCE
The tampering almost surely was the work of a psychopathic killer external to J&J. That the origin of the wicked act was not J&J was the key variable setting the foundation for its recovery. A company attacked by a criminal will be forgiven far more quickly than one accused of being the criminal. J&J’s actions were admirable but logical. People were killed, so the company pulled the product from stores and encouraged consumers to throw it away.
The Tylenol case falls into a category we call a sniper-fire crisis—one that is caused by an outside force, like a deranged killer. Nobody’s rooting for the sniper. Consumers intuitively understand that the executives of J&J didn’t convene in an underground bunker to hatch a plan to harm consumers. The public might be willing to believe that a company is capable of negligence or penny-pinching irresponsibility, but in J&J’s case the crimes were simply too horrific for rational people to believe that a corporation that had staked its reputation on consumer goodwill for almost a century would want something like this to happen.
As with any compelling story, the public demands instant archetypes, especially villains and victims. People process their intuition using a very specific template, one that factors in the cornerstone of Western legal and social ethics: intent. In the Tylenol case, J&J was, in addition to those who lost their lives, immediately—and instinctively—perceived as a victim, not the perpetrator of the crime.
The corporate scandals that dominate today’s news are mostly of a different strain: The company’s very character is on trial—for making faulty products or betraying the public trust. The company is the villain in this scenario. While it was inconceivable that J&J would knowingly harm its consumers, the recent spate of product liability and financial malfeasance scandals are all intuitively plausible.
Ford and Firestone were accused of knowingly manufacturing dangerous trucks and tires. Merck and Pfizer had to answer hard questions about the potentially deadly side effects as well as the efficacy of their arthritis drugs Vioxx and Celebrex, respectively. WorldCom, Tyco, Arthur Andersen, Enron, HealthSouth, and Adelphia instantly became cultural emblems of corruption as prosecutors accused company leaders of scheming to enrich themselves at the expense of others.
Character-driven crises like these—the opposite of a sniper-fire crisis—do not lend themselves to textbook solutions because they affect the economy, culture, and political landscape rather than just a discrete, if unfortunate, segment of the population. Evaporated pension funds make Americans’ wrath toward scandal figures so virulent that public relations rescues are not options. The public doesn’t just want answers; it wants vengeance. The facts of character-driven cases are not as relevant as what the cases come to symbolize in the public psyche.
Accounting giant Arthur Andersen took admirable steps to prevent extinction, such as forming a blue-ribbon panel with even bluer-chip names to examine what went wrong, but principals still were convicted (later overturned) of obstructing justice, and the firm went bankrupt. In 1989, Perrier, at the time the leading importer of bottled water in the U.S. market, adopted the Tylenol-inspired model of the instant recall when the chemical benzene was found in its product. It was commonly believed that benzene was a by-product of the manufacturing process or occurred naturally at the source from which Perrier water was derived. Regardless, the brand never fully recovered, and is not even among the top bottled waters in the United States today.
CRISIS MYTHOLOGY
The Tylenol affair ushered in a new wrinkle in crisis management: Proselytizing how well the company has handled the crisis itself. In a quasicomical twist, PR consultants with peripheral (if any) attachment to the case began sharing “their” insights in business forums, repeating the central myth of the “instant” recall. J&J’s brilliant crisis management became unchallenged dogma.
Touting one’s legitimate success is no sin, and, in fact, is a valuable service when public welfare is concerned, but not everybody bought the spin on the spin. Perhaps the most prominent skeptic was Jack O’Dwyer, whose newsletter has been chronicling the public relations industry for nearly forty years. Despite repeated assertions in business school textbooks and PR seminars that J&J “instantly” recalled Tylenol capsules, it actually took eight days “after the first deaths were announced and after another Tylenol poisoning was discovered in California,” O’Dwyer wrote in his January 2000 newsletter.
In reality, it was retailers like CVS and Walgreen’s that ceased stocking Tylenol capsules one day after the first death was reported on September 30, 1982. J&J’s recall was announced on October 7, a time gap which, in the current age of 24-hour news coverage, would have been disastrous.
According to O’Dwyer, when questioned about the possible presence of cyanide in its facilities, J&J initially denied there was any stored in its manufacturing system. A day later, the company did admit that cyanide was stored in one facility for testing purposes. During the course of the investigation, this cyanide was ruled out as a possible source for internal contamination.
SAVING GRACE
A key factor that contributed to Tylenol’s recovery was the introduction, within weeks of the murders, of tamper-evident packaging, which just happened to be in the J&J pipeline. This action—something the public could see and feel—convinced anxious consumers, regulators, and the media that J&J was doing something big to address the safety issue. The packaging itself was merchandized to the public through a huge advertising campaign, which defused anxiety about the tampering.
In 1986, however, a woman was killed in New York by a cyanide-laced Tylenol capsule, and more tampered capsules were pulled from the shelves in nearby stores. This incident begged a fundamental question: Was Tylenol’s problem with the packaging or with the construction of the product itself? Capsules can be pulled apart, used as receptacles for foreign material, and then discreetly resealed.
Shortly after the 1986 New York murder, former J&J chairman Burke conceded that he regretted his decision not to abandon the capsule in 1982 when he’d had the chance. This admission (which probably didn’t please J&J’s attorneys) gives another glimpse into the thinking of the kind of leadership that solves problems. Burke didn’t spin or word his reflection in legalese; he simply answered, “Yes, indeed I am,” when asked if he was sorry for reintroducing the capsule format.
J&J is deservedly praised for having the triple-sealed packaging in its pipeline in 1982, but it was not a panacea. Nor is it reasonable to expect that every company under attack will have a handy new technology in its hip pocket.
OTHER VARIABLES IN J&J’S FAVOR
The first harsh lesson of crisis management is that not all clients are created equal. Some, like Johnson & Johnson, have intrinsic advantages. J&J had a long history of manufacturing popular products, especially those associated with children—“soft” items like No More Tears baby shampoo and baby powder. To be sure, J&J has done much to reinforce this image, but some companies are inherently at a disadvantage by virtue of the products they make. An oil, chemical, firearms, alcohol, or tobacco company in a crisis cannot expect to tap public affection. The objective for “villain”