Career
J&J announced that Richard B. Sellars would step down as CEO as of November 1, 1976, and be replaced by Burke. As CEO, Burke is credited for the growth of Johnson & Johnson to its current size and prominence, but he is perhaps best known for his crisis management in 1982, when it was found that Tylenol capsules had been poisoned with cyanide.
According to a Fortune article, Burke's "defining moment" actually came six years earlier when he challenged his fellow executives to either recommit to the company credo or "tear it off the wall."
Penned by J&J scion and legendary chairman General Robert Wood Johnson II in the 1940s, the credo proclaimed that J&J's "first responsibility" was to its customers and then to employees, management, communities, and stockholders-in that order.
By the mid-1970s, however, Burke was troubled by a sense that the credo had lost its influence in the organization. "When I asked people what they thought of it, I got vague answers," he says. But during a series of "challenge" meetings he arranged, executives debated the credo in the context of the company's history and mission. "It became clear that our value system had been vital to our ability to outperform the competition for nearly one hundred years," Burke recalls. "Whenever we cared for the customer in a profound-and spiritual-way, profits were never a problem."
The Tylenol crisis could have been a death blow to the brand and, potentially, the company itself, continues Burke. "Innocent people were killed. Industry analysts and advertising experts told us that Tylenol was finished."
As several HBS case studies point out, Tylenol was the country's best-selling over-the-counter pain reliever at the time of the poisonings, with 35 percent of the market-more than the next three brands combined. Yet within a year of the crisis, thanks to decisions by Burke and his team to recall millions of bottles and replace them in a matter of weeks with pioneering tamper-resistant packaging while keeping the media and public well informed, the product had regained 85 percent of its market share. By the mid-1980s, Tylenol had rebounded completely. The customer confidence and goodwill Johnson & Johnson had built up also enabled it to overcome another poisoning incident in 1986-an event that resulted in the replacement of capsules with caplets.
Following his retirement, he was appointed the second chairman of the national nonprofit organization Partnership for a Drug-Free America (PDFA), formed by a consortium of advertising professionals who ran a research-based media campaign to discourage teenage use of illegal drugs such as marijuana. Burke was honored for his public service advertising work by then US president Bill Clinton, who awarded him the Presidential Medal of Freedom, the highest civilian award in the United States. Fortune magazine named him as one of the ten greatest CEOs of all time and he has a membership in the National Business Hall of Fame.
He also received the Bower Award for Business Leadership in 1990.
Read more about this topic: James E. Burke
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