Almost all leading members of his career is facing a serious decision. Some can be “bet the company” kind of decisions.
probably the most famous case that comes to mind was a Johnson and Johnson Tylenol recall in 1982. At that time, Tylenol accounted for 17 percent of net earnings of the company and the cost of the recall, it was estimated that more than $ 100 million, respectively. The shares fell from its peak, when the recall was announced. Market share of Tylenol painkiller in the market fell from 37 percent to 7%. Decided to time management J & J to recall, were the only deaths in the Chicago area and there was no evidence of a national problem, or that the problem was in the manufacture and distribution.
But under the direction of Johnson & Johnson Chairman James Burke, the company has a recall decision.marketing experts predicted that Tylenol would never predicts its market share and analysts that the company never recovered. Well, the experts were wrong. Within two months after the recall, the share price had recovered, and a $ 1000 investment in J & J was the day the recall announced, would be worth about $ 22,000 today. Market share rose again to 30 percent over the same period of two months.
I recently read about a similar incident, but less known for Medtronic, the world’s largest medical device manufacturers. Two months after his appointment as Chief Executive Bill Hawkins was with the data, the latest model of an implantable defibrillator were able to experience are suggested, face a higher rate of failure of the son of lead. Statistical analysis of data suggested that the difference is not “statistically significant”.The FDA has not evaluated the data of a recall was necessary on the basis of available information.
But Hawkins was concerned that the trend suggested a problem. As the new CEO, he faces a tough decision. When he took the product off the market, he saw that there are huge financial losses and loss of market share. even though it does not make the decision that the information later, the suspect confirms that there is a problem, then the company’s reputation could be permanently damaged.
On 14 October 2007
, Medtronic announced publicly that they pulled the product from the market. One might expect, the shares of the market share of the company immediately plummeted and took a hit. In addition, a number of lawsuits have been filed. After two years, the share price has recovered completely and the market share has stabilized. It will be years before all the trial work their way through the courts. Design changes to the defibrillator now also an audible alarm to make the patient from a malfunctioning alarm wire.
I look at these two cases, and I’m sure there are other by a number of common themes that these companies make a difficult decision but just drove ahead. The first is that leaders understand that the mission and purpose was more than just making money. In both cases, it was likely would be “cheaper”, recalling the short term and take the consequences. These leaders must understand that the reason they were in business for the purpose was to improve people’s lives. The integrity and reputation of the company exceeded all financial implications in the short term, even as great as it was. Organizations that truly values-driven to make the tough decisions regardless of the financial consequences.
The second common thread in these two examples is that there is decisive action. I’m sure the key leader in any situation is much input, but ultimately it came down to act quickly if the facts were known. In both cases could have been taken more time to gather more data and facts. In my commitment to leadership development, when we talk about the decision, I always ask the question: “What is the best time to make a decision?” Some may say at once, while others say after you have all the facts. My answer is to make the decision when it needs to be done.
Both Johnson & Johnson and Medtronic have been prepared for this event. They had plans to deal with government regulators and the media. Both used their positive reputation of the company to get to their advantage to communicate with the media. They need information kits containing all the information media. They established contacts with key stakeholders before the public announcement.
The day of the announcement they prepared to meet Wall Street analysts were. In both cases, the entire company was committed to limit the damage through active engagement with all stakeholders: customers, suppliers, employees, government agencies, press, analysts, community leaders and so on. They had a well orchestrated plan, a decision to turn this potentially disastrous in the long run would be a positive for society.
I hope that you will never
a decision as difficult as this will make the faces. But there will be some tough decisions.
1: When faced with a difficult decision. Let your conscious values and leadership, not Dollars and Sense. This is true leadership.
Determination to the second act. A delay to make a difficult decision, it is not easy, and the negative consequences of a delay can do the right thing worse than the original decision.
3rd Have a plan in place to deal with major players in the case of a serious decision that affects face. Positive relationships with the media, government and community leaders that you use in case they are needed.
fourth Expect all those responsible for the company to be involved in damage control. Learn flows through the organization. In the absence of information that people are themselves.