Tuesday, April 19, 2011

Fixing Rep Of A Brand That's Too Big To Fail

Johnson & Johnson's handling of the cyanide-laced Tylenol crisis of 1982 is required reading for every business school marketing and public relations course. A bizarre and terrifying case of sabotage that ended up claiming the lives of seven Chicago residents, the Tylenol murders could have decimated the company. But an effective and compassionate public relations strategy saved J&J, and paved the way for its reputation as a reliable and respected brand. As recently as 2008, Johnson & Johnson topped Barron's list of most-respected companies. In PR circles, this is the stuff of legend.

Fast-forward to 2011, and the company's reputation has become anything but legendary. Over the past two years, Johnson & Johnson has recalled more than 200 million individual products, from over-the-counter meds to surgical sutures and syringes, costing more than $900 million in lost revenue. News that broke this week indicates that J&J has now agreed to pay $70 million to settle civil and criminal complaints of bribing doctors in Europe and paying kickbacks to the Iraqi government to illegally obtained business.

Most distressing is the company's PR response to these ongoing troubles. The same Johnson & Johnson that was so progressively out in front of the 1982 crisis is now paying consultants to buy questionable products from store shelves rather than institute a recall, and is positioning various product problems as isolated incidents related to conditions at the manufacturing plants, not corporate governance. Can consumers continue to trust a company that acts in these ways?

Too Big to Fail?

Yet, for all of its quality control problems and recent PR mishandling, Johnson & Johnson will likely weather this particular storm, and continue to be one of the foremost names in pharma and consumer products. In PR terms, it may be a brand that's simply too big to fail.

Proving itself as a company with its own crisis management creation myth (circa 1982) goes a long way toward explaining its resilience. Good, effective PR is in its DNA, and more importantly, lodged in the consciousness of its loyal consumers. Recent missteps aside, J&J will compose an appropriate response to its consumer-related challenges, and emerge from this string of recalls and product questionability as a company willing to dialogue with the public and address issues transparently. CEO William Weldon's response to the bribery settlement ("We ... have taken full responsibility for these actions") is a baby step in the right direction. The company's March announcement that the FDA will have expanded oversight of three of its subsidiary manufacturing plants is a bigger step.

We've Seen This Before

It's true that a brand that has staked so much on its reputation has much to lose in situations like the one J&J finds itself in. But it's also true that brands as large as J&J -- even ones without a similar PR aura -- are likely to survive such situations in today's public relations environment, particularly in relation to corporate corruption. Siemens, the global engineering conglomerate, paid record fines for bribery in 2008, and yet is still among the world's largest and most recognizable brands. Computer Associates underwent a similar corporate fraud investigation in 2004, and although that company's CEO pleaded guilty to federal charges, the brand itself is as strong as ever. And BP's 2010 Gulf of Mexico nightmare? It's almost as if it never happened.

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