Many people could not believe it when, in 1982, Johnson & Johnson’s then CEO, James Burke, ordered that all of the company’s Tylenol products be immediately removed from all retail stores throughout the United States after a few poisonings occurred in Chicago. Several people had ingested Tylenol capsules and died. Burke’s decision was wholly consistent with J&J’s values. How so?
In his article, “The Age of Consumer Capitalism,” that appeared in the January/February (2009) issue of Harvard Business Review, Roger Martin explains that J&J has “the corporate world’s most eloquent statement of purpose — its ‘credo,’ which hasn’t changed since J&J’s legendary chairman Robert Wood Johnson created it in 1943,” 39 years before a person or persons tampered with Tylenol capsules and inserted poison. Here is the statement in abbreviated form:
“We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services…We are responsible to our employees, the men and women who work with us throughout the world…We are responsible to the communities in which we live and work and to the world community as well…Our final responsibility is to our stockholders…When we operate according to these principles, the stockholders should realize a fair return.”
It is worth noting that Burke ordered the recall voluntarily; the government had not demanded it. At that time, Tylenol sales represented about 20% of the company’s profits. Nonetheless, it was the right thing to do. Whenever Burke was praised, he patiently but firmly explained that his company’s values required the decision and he merely executed it.
According to Martin, “The credo bluntly spells out the pecking order: Customers come first, and shareholders last. However, J&J has confidence that when customer satisfaction is at the top of the list, shareholders will do just fine.”
Martin is the dean of the Rotman School of Management at the University of Toronto. His most recently published books are The Opposable Mind and The Design of Business, both published by Harvard Business Press.