In 1982, Tylenol, the popular over-the-counter (OTC) painkiller, faced an unprecedented challenge — seven people died after consuming their extra-strength capsules. The response from the leadership team at Johnson & Johnson, the brand’s parent company, and their ensuing actions not only saved the brand, but to this day serve as a blueprint for handling a crisis effectively.
Dealing with a crisis doesn’t always require reinventing the wheel. Sometimes the best answers can be found in history. Quickly after the news of the Tylenol deaths broke, it was discovered that the bottles were laced with potassium cyanide — a colorless and highly toxic compound usually used in gold mining and electroplating.
Upon a thorough investigation, it was concluded that they were contaminated after they had left the factory. In other words, someone had done it on purpose. Shortly thereafter, Tylenol’s market share dropped from 37% to 7%. The brand was done. Or so people thought.
Leading With Integrity
The dire outlooks for the brand could have become a reality had the leadership team at Johnson & Johnson not taken swift and decisive action. Then-chairman James Burke decided to do something not many people would have done. Instead of recalling only the bottles in the Chicago area where the murders took place, Johnson & Johnson recalled all Tylenol bottles across the country.
This, alongside the free replacement bottles they offered to existing customers, cost the business $100 million.
Ironically, swallowing this massive loss was the one thing that actually saved Tylenol. Johnson & Johnson not only removed all bottles of their OTC painkillers, but actively cooperated with the Chicago Police Department and the FBI to find the culprit behind the murders. The company also quickly started working with the Food and Drug Administration to come up with tamper-proof foil to prevent future catastrophes.
The result was nothing short of astounding. Less than a year after suffering huge losses and practically losing the public’s confidence overnight, Tylenol once again owned 30% of the analgesic market.
MORE FOR YOU
Turning a Crisis Into an Opportunity
We’ve been told that the challenges we face are simply opportunities to grow. You would be forgiven, though, if you could not see how a $100 million loss could be turned around.
Immediately after the murders, the company got to work on new packaging, and its safety seal became the industry standard. Nowadays, the FDA has mandated tamper-resistant packaging for almost all OTC medications. Likewise, Johnson & Johnson worked on a new form for administering its drugs — the caplet. This new tablet looked like a capsule, but was coated in gelatine and much more difficult to tamper with than the traditional capsule.
These actions helped the business regain the public’s trust and became the best possible PR it could have hoped for. Forty years on and Johnson & Johnson is one of the leading players in the pharmaceutical industry while Tylenol is still the drug of choice for pain relief.
So what can business leaders learn from a crisis that happened almost half a century ago?
Take Decisive Action, Then Iterate
Making any business decision, let alone one that can cost you millions of dollars, is a tough call. However, inaction can sometimes be far more costly.
In the Tylenol case, all eyes were on the leadership team and how they would respond. They could have taken their time and recalled only the bottles from the Chicago area. That may have appeased the public and would have been a much cheaper move. However, they knew the brand wouldn’t survive another incident if murders appeared in other parts of the nation. (In fact, there were hundreds of copycat attacks involving Tylenol and other OTC medications though none were as deadly.)
By making the difficult call to recall all bottles across the U.S., they removed any risk of future incidents and showed consumers that the brand put people’s wellbeing first.
Another thing that stands out in this case is how far the team went to demonstrate their commitment to people’s safety. They did everything they could to resolve the case and put that chapter behind them.
That is to say that if a company mired in crisis only does what’s expected of them, nobody is impressed. While meeting expectations is admirable, standing out as a business leader means going the extra mile and giving people more than they expect.
Take the Long View
Finally, if a business is under fire, its leaders may be tempted to patch things up as quickly as possible. Acting fast doesn’t always mean taking a short-term view of the problem. Johnson & Johnson weren’t responsible for the poisonings, so they could have taken little action and nobody would have held them accountable. No one was ever arrested for the murders but the company could have condemned the unknown perpetrator and acted in the Chicago area alone.
Instead, they took the long view and knew that if they wanted Tylenol on the shelves in 10 years’ time, they needed to demonstrate an ironclad commitment to people’s safety. Two months after the incidents, Johnson & Johnson stocks had fully recovered, and they have continued on a steady upward curve ever since.
The brand had been saved.
Choosing How to Respond
While incidents similar to the Tylenol’s murders are hard to imagine in today’s highly regulated pharmaceutical industry, brands are constantly battling their own forms of crisis. Whether it’s a flopped product, unfavorable market conditions, or simply fierce competition, business leaders face challenges every single day. While leaders don’t have control over these challenges, they do have control over how they respond. Just as Tylenol discovered, that can make all the difference.