J&J initiated the recall, the first of its kind, after seven customers died from cyanide poisoning. The company's decisive act — a $100?million decision — coupled with its quick introduction of safety packaging and its transparent handling of the crisis saved Tylenol.
At the time, J&J saw its market share plummet from 35 percent to 7 percent. Analysts and marketing experts forecast the brand's end. But CEO James Burke's adept response, now the subject of Harvard Business School case studies, pushed market share back above 30 percent within a year.
As author Jim Collins noted in an article for Fortune magazine, "The 10 Greatest CEOs of All Time," Burke's defining moment was not his handling of the 1982 crisis. It was actually six years earlier, when he challenged company executives to recommit to J&J's credo, which had been penned 35 years prior by Robert Wood Johnson Jr.
The credo held that J&J's "first responsibility" was to its customers. Sensing that his colleagues' commitment to that mission was halfhearted, Burke pulled 20 executives together and said, "Here's the credo. If we're not going to live by it, let's tear it off the wall." The executives recommitted, and the rest is history.
The Penn State sex-abuse scandal has fundamentally challenged the university's identity and its credo: "Success With Honor." University officials' decision, apparently made in concert with coach Joe Paterno, not to report what they knew of Sandusky's abuse of a young boy to off-campus legal authorities suggests the institution was no different than any other that does whatever it takes to win. The hypocrisy is clear when watching a university promotional video that states, "Penn State … [has] come to represent the honesty, the strength, the love, the pride, and the true spirit of intercollegiate athletics. It is a heavy burden, but it seems so ordinary here that it has become our culture, our heart and soul."
So is "Success With Honor" a bedrock principle or a marketing slogan? In essence, this was the same question J&J's Burke asked years before crisis threatened to consume his company's flagship brand.
For Penn Staters, "Success With Honor" was never about marketing. At athletic contests, we can be heard chanting in unison, "We Are ... Penn State." And, indeed, this message, delivered with a resounding roar at opponents, is the same that we would now deliver to the world. Those involved in the scandal are not Penn State. We did not embrace "Success With Honor" because it served our interests; rather, because it resonated deep within us. It was and is a call to our best selves.
The world will now be watching as the Freeh report puts Penn State officials to the test. Will they, like J&J's Burke, reveal our credo to be true? Will they take the kind of decisive and potentially costly action that will imbue the credo with soul? They could, for example, reach beyond expectations by self-imposing the worst of NCAA sanctions, the so-called death penalty, which bans a school from competing in a sport for a year. They could adopt a code of honor for all employees — including coaches, the president, and even trustees — that imposes real consequences for failure to live up to the code.
If they take bold action, theirs will be the spoils of hard-earned trust and honor. As Burke noted, "When crises occurred that we never could have foreseen, our customers stuck by us in ways we never could have imagined."
Burke's crisis turned out to be his finest hour — a moment that galvanized trust in a company whose lifeblood has been trust. Penn State's crisis also holds such a possibility. By responding decisively, despite the cost, and by acting transparently, Penn State can prove that it is worthy of the honor that it has so long espoused.
Luke Zubrod is a graduate of Pennsylvania State University, Class of 1999. E-mail him at email@example.com.
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