1.11 (V) 01.08 - How Must We Act to Ensure Success (2)
Ultimately, what the leadership of Johnson & Johnson did is they pulled every single bottle of Tylenol off the shelf. They recalled every single bottle. Was it free? No, it cost the north of one hundred million U.S. dollars. But that's a stockholder concern. Their first priority was to the people who use the product, thus resulting to recall the product or pull the product of the shelf. The financial implication, the stock price dropped over 17% in one week. Earnings estimates dropped 35% immediately. Wall Street certainly was penalizing the company. Their market share in the category dropped from 37% to 4% in as little as one week. Again, the financial implications were enormous. And for a company, a public company, that is responsible to its shareholders, this was a pretty risky move some might say. But if you have the credo if you have a very clear understanding of how do we have to act? What are the values that we have to act on in order for our company to be successful? And in the case of Johnson & Johnson and not to say that their credo is right for every organization. But in there case, they had articulated for themselves their values and their priorities that were gonna guide choices. And these were the choices they were making. Now remember, the second priority in that credo is to the employees of Johnson & Johnson. If you take that big of a financial hit due to this crisis many companies would respond by laying off employees who come from that organization. Johnson & Johnson saw it as their responsibility to keep all of those title and all employees. So they redeployed them to other product lines and so on, until they figured out what actually happened. Ultimately once Tylenol, the business was back up and running, they deployed those employees back to the Tylenol business. They ultimately, relaunched Tylenol. With what we now know today as that tamper-proof packaging, the seal that is at the top of any pill bottle. So ultimately, this crisis turned into an innovation, that we now all benefit from. Interestingly, they continued with their first priority being the customer, which is providing the customer a coupon for essentially free Tylenol, or free Johnson & Johnson products. And they did all of that within a 10 week period. But again, without this credo what choices would they make? It could go many different directions. In this case, they had very clear guidelines about in this time of crisis how are we gonna act in order to be successful? And that in many ways is attributed back to that clear statement of values in the credo. Let me share with you one more example and then I'll have you reflect on your values your teams values and how those serve as a guideline for choices and behavior. Here's a statement from a company that we all know today. We believe that we're on the face of the Earth to make great products and that's not changing. We are constantly focusing on innovating. We believe in the simple not the complex. But now pay attention to the next words. We believe that we need to own and control the primary technologies behind the products that we make, and participate only in markets where we can make a significant contribution. That is a value statement. That is a statement about how we must act. We must make tough choices in order to be successful. One tough choice is we're gonna own and control the technologies behind our products. Another tough choice is we're only going to engage in markets where we know that we can make a significant contribution. But again, this provides a set of guidelines, guide post for making tough choices. We believe in saying no to thousands of projects so that we can really focus on the few that are truly important. As my friend Adam Grant once said to me, you have to say no to many things, so you can say yes to the things that really matter in life. And this organization is embracing that value. As part of its company's vision. Ultimately, this company is one that we've talked about already in this course, Apple. And in this case, this is Tim Cook's articulation of the values that are embedded in this company. So we have our three questions. Why do we do what we do? What does success look like? And how must we act, to ensure success? I'd like to pause now and have you reflect on this third question. Have you clearly articulated for your team the values that are gonna shape and guide the choices that people make and the behaviors that they engage in. Take a few minutes on your own and write down what you see as the values and have you clearly articulated those.
