Issue: How will the Tylenol recalls affect the brand in the long term?
Commentary by: David Vinjamuri

The facts of Johnson & Johnson’s struggles this year with manufacturing quality are bleak and well known.  As ABC News reports, the company this week issued its eighth product recall in the past year.  Both the media and regulators have scrutinized J&J’s manufacturing practices and J&J Consumer Group WorldWide Chairman Colleen Goggins has testified before Congress.

Johnson & Johnson is celebrated for its handling of the 1982 Tylenol Tampering Case – which incidentally resulted in a recall of 30 million bottles of Tylenol, less than half the number affected by the current string of recalls.   In that case, Johnson & Johnson took responsibility for the contamination (even though the tampering was a criminal act by a saboteur), recalled all of its Tylenol products nationally and didn’t return to the shelf until they could ensure that the tampering would not happen again.  Instead of disappearing entirely -  as many commentators expected – Tylenol increased both its dollar and unit share in subsequent years.  The brand gained consumer trust by managing a difficult situation well.

Unfortunately, the current string of recalls reveals a very different pattern – and a different underlying company culture.  The salient features of the current crisis:

1. An escalating string of recalls – J & J recalls piecemeal and is forced to repeat the process seven times
2. Denial and a Blame Game – instead of assuming full responsibility, J&J tries to shift blame to suppliers
3. A Toyota-esque 2-year escalation – The complaints of “musty odor” originated in 2008.  The problem was not solved by 2010.

McNeil’s reaction to the contamination suggests that the Tylenol brand has lost touch with its ethos (enshrined in the Johnson & Johnson credo).  Putting customers first before corporate profits would have dictated a very different response to this crisis.  And ironically, placing the consumer first would also have better preserved corporate profits by protecting the brand.

Instead, Johnson & Johnson reenacted the Kübler-Ross model of grief:

1. Denial – “This can’t be my problem!” – J&J receive complaints of a musty odor coming from its products, calls them flukes (more below)
2. Anger -  “Why Me? It’s not fair!” -  J&J blames supplier of wood palates and a chemical called tribromoanisole
3. Bargaining – “I’ll do anything for a few more years!” – After complaints increase, J&J issues a massive recall – but not a full recall. The FDA criticizes J&J.
4. Depression – “I’m so sad, why bother with anything?” -  Colleen Goggins apologizes to consumers in front of a Congressional subcommittee.
5. Acceptance – “I can’t fight it, I may as well prepare for it” – Six senior McNeil employees are fired, the company gets outside help to fix its manufacturing process.

Tylenol and Johnson & Johnson as a whole may rise again.  Indeed, the stock price of J&J (hovering around $60/share at the time of this writing) is only down 6.6% from the end of 2009 – less than the decline of its peer group.  But the trust in the relationship with the consumer has been broken.  Consumers aren’t fools.  They know when they’re being stonewalled.  They can also tell when a brand has forgotten its core values.  Brand managers at great companies visit the factories where their products are produced.  They pay attention to the small details.  Visiting a Band-Aid plant in the 1990′s in Sherman, Texas, a visitor would be happy to have a picnic on the floor and apologetic for any stray crumbs left behind on the pristine surface.   Not so last year at the Fort Washington, Pennsylvania plant of McNeil, where FDA inspectors found “visible dirt in the plant.”

Will Tylenol rise again?  Difficult to say.  But it is clear that Johnson & Johnson needs to change more that the manufacturing process to rebuild the brand.

[Full Disclosure] The author worked for Johnson & Johnson as a brand manager and new products director from 1993-1998 and worked with McNeil manufacturing personnel on several brand launches. He worked under Colleen Goggins at Personal Products Company for part of this time.