Johnson & Johnson's Tylenol Scare — The Classic Example of Responsible Crisis Management
In 1982, there were incidences of death by cyanide poisoning linked to J&J's most profitable product: Tylenol Caplets. This incident could have been devastating to the company, but its quick action mitigated the damage caused by the crisis.
The crisis began when a couple in Chicago took Tylenol caplets and drooped dead suddenly from cyanide poisoning. Medical examiners found the source of the problem that afternoon, and the media latched onto the story immediately, creating a nationwide panic.
J&J immediately took action, advising customers not to take their product until the mystery had been solved, and demanded drugstores and supermarkets across the country to pull the product immediately.
Management's game plan for recovery was to discover what actually happened, then attempt to contain the damage, and finally to assess whether the product were still commercially viable.
While J&J normally attempted to keep a low media profile, the company fed media outlets with the most accurate and current information, and it was generally accepted that the company was making no attempt to filter or spin the facts that it discovered.
The company lost over $100 million in buying back unused product from retailers and consumers, regardless of whether the product came from the factories that were the source of the contaminated pills.
A month later, surveys indicated that 94% of respondents were aware of the incident and that Tylenol was the brand involved. 87% of them indicated they did not believe the company was to blame, but over half nonetheless said they were unlikely to purchase or use Tylenol in the future.
Among other efforts, J&J rushed forward with new tamper-resistant packaging, practices that have become industry standard afterward. It stopped the manufacture of capsules, going only with tablets (and eventually single-piece caplets). It provided the replacement product to distributors and consumers, effectively replacing the product that was returned, even though their money had already been refunded.
Within a few months, the product made an amazing comeback. The company regained almost all the market share it had lost within one year. The general sentiment among the market is that consumers felt the company hand been honest, sincere, and concerned, and that it could be trusted to be vigilant in the prevention of similar occurrences.
Eventually, it was found that the poisoning was the result of product tampering, but the precise source of the tampering was never discovered.
A Model for Crisis Management
The procedure used by J&J is an excellent model for crisis management:
- Keep communication channels open - this can be difficult to do, in an age where media tends to take sides and sensationalize, and is often more interested in reporting less than the full story, but being tight-lipped can be even more damning
- Take quick corrective action - Especially when the public safety is in jeopardy, taking quick action is a must, regardless of the cost.
- Preserve faith in the brand - Being open an honest, and projecting an image of responsibility and concern does more to preserve the brand in the long term than attempting to deflect, distort, and spin
- Protect public image - Ditto the above for the public image of the firm.
- Aggressively resurrect the brand - To withdraw from the market, slink away, could be perceived as an admission fo guilt. An aggressive reentry assures the public of an all-clear.
Lessons Learned
The death of a customer caused by a product can be the death of a brand, or even a company, but J&J's handling of the incident and resurrection of the brand shows it is not always so.
Its' worth noting that saving a brand often comes at a staggering cost, but given that J&J is a company with annual revenues over $5 billion, spending less than 10% of this amount to preserve the reputation of the company was a worthwhile investment.