Monday, October 8, 2012
THE LEADERSHIP VALUES AND PRACTICES OF JIM BURKE
James Edward Burke, better known as “Jim” to all at Johnson & Johnson, died on Friday, 28 September, at the age of 87. Jim served as Chairman and Chief Executive Officer at J&J from 1976 - 1989. He is deservedly credited with successfully leading the company through the Tylenol crises of 1982 and 1986, and building the trust that brand and company earned, and enjoyed for many years.
Jim was a leader, not on the basis of his position in the company, but on how he managed his life and inspired others within J&J to act responsibly in addressing the needs of the public. It is the actions he took that define what it means to be a great leader. Jim Burke was a great leader. Hopefully, the values and practices that guided his leadership, shared in this article, will inspire each and every one of us to be great too in serving others with integrity and courage.
If you think of him just as another power-hungry, greedy, out-of-touch with the public CEO it is probably because you didn’t know Jim and/or aren’t aware of his reputation, which we hope to remedy by sharing may the recognition he received from notable people and organizations, outside of J&J:
- Jim received the Bower Award for Business Leadership in 1990.
- He was chosen for membership in the National Business Hall of Fame.
- Former President Bill Clinton awarded Jim Burke with the Presidential Medal of Freedom, the nation’s highest civilian award for contributions to the country. His award was based both on his leadership in the Partnership for a Drug-Free America, a not-for-profit group he chaired from 1985 – 2005, and his work in the Tylenol crisis.
- In 2003 Fortune named Jim Burke “one of the ten greatest CEOs of all time.”
What brought Jim this recognition? Today, in this age of corporate hubris, many executives position themselves to receive recognition that they don’t deserve. Did Jim deserve his recognition? He deserved the aforementioned and more based upon “defining actions.”
- Our Credo - Jim elevated the company’s Credo (Our Credo), which was originally crafted by Robert Wood Johnson, a member of J&J’s founding family, by achieving the commitment of its people to unyielding standards for moral and ethical behavior in serving the public good. The Credo (click here) was written to guide the actions of the company and its people. But Jim was dismayed that many people within the company weren’t acting consistent with it. Some viewed it as a “public relations gimmick.” Jim felt it represented the soul of the company, the company’s responsibility to society and ethical management in establishing the sacred trust with all the constituencies it served. And, if J&J managers couldn’t live by it then they should “rip-it off the walls, otherwise it is a (mere) pretension.” So, he held meetings with J&J leadership throughout the world to challenge the Credo, and their assumptions of business management. As a result, they adapted and committed themselves to “Our Credo” to reflect the highly responsible values that would provide direction to everyone in the company, in good and bad times.
- Tylenol Crisis – In the Fall of 1982 disaster struck the Tylenol Brand. In Arlington Heights and Elk Grove Village, just outside of Chicago, several people were poisoned from cyanide-laced Extra Strength Tylenol capsules in what may have been one of the first cases of product tampering (or terrorism) cases. Despite the huge financial burden to the company, Jim took action to have ALL Tylenol capsules removed throughout the U.S., not just Chicagoland or the state of Illinois, and destroyed. He stated what was undoubtedly his heartfelt belief that the financial loss of the company did not compare with the loss suffered by the families and friends of those who were poisoned. Contrary to the advice of counsel, who were concerned with the company’s obligations, Jim appeared publicly through broadscale media, permitted the press to sit-in on company meetings dealing with the management of the situation, and made himself available, day and night, to calls from the heads of network media. When a manager proposed that Tylenol should begin advertising to reassure the public of product safety he called it a “non-sequitor.” He felt that to reassure consumers and preserve the public trust Tylenol must introduce Tamper Resistant Packaging for all its capsule products to afford the best protection against tampering. Tylenol introduced TRP with three barriers to tampering: 1) glued flaps to the outer cardboard box housing the container; 2) a red seal over the container cap; and 3) once the cap was screwed-off, a aluminum seal over the top of the container, which posed the final barrier to its contents. Moreover, he refused to pass along the increased cost of the packaging to consumers, but absorbed it, because in his view it was the right thing to do.
Jim was credited, and lauded, for managing the Tylenol crisis. However, unlike many of the CEOs of today, he downplayed his role and, instead, credited his actions to being guided by that same Credo he worked years earlier to institutionalize. In reality, Jim’s values were one and the same with those expressed in “Our Credo.”
The Values of Jim Burke
The values of Jim Burke are no different that the values for responsible leadership. They may sound simple. They may sound easy. But they are not so simple and easy when they may prove costly and damaging to the company, and one’s career. Here are a few of the values we inferred from his talks and actions:
- It is okay to challenge sacred cows regardless of wither they come, be it your corporation, community, government or, even, church.
- Invite leaders, and give them the opportunity, to challenge their own beliefs.
- Organizations are no different than individuals in their responsibilities to the public good.
- Businesses need not only think about profit but should also address some of the larger issues of society.
- A company should be guided by a set of shared values that has the commitment of everyone.
- If you violate the public good they will rebel against you.
- Let’s not stand for hypocrisy. Let’s not ignore practices that are inconsistent with beliefs.
- Do what is morally and ethically correct, and best for the business to meet needs of society to do what is decent.
- Commit to what is correct and decent.
- Listen to your intuition about what is correct.
- Serve the public first!
- While the Credo is a most powerful tool, people need to understand it, feel it, in their hearts and minds for it to translate to effective action.
- Relationships are built on “trust.” It’s no different between individuals, like family members, or organizations with the public and, even, its employees. Once you lose trust then the relationship is gone.
- To engender trust we must behave ethically in serving others.
- Set standards for behavior and do not tolerate anything that violates those standards.
- Our Credo (document) liberates creativity.
- We need to take care of ALL constituencies.
- People are the asset that makes it happen.
- Do it better than everyone else.
It’s not enough to mouth these values, or laud them, for they are nothing without living them. We believe Jim Burke lived them.
While I (Richard Czerniawski) was a young Product Director at Johnson & Johnson I had the privilege of pitching Mr. Burke and Mr. Clare (Dave Clare, the president) on the acquisition of the REACH Toothbrush from DuPont. Present were my Group Product Director, Director of Brand Management and General Manger. It was clear that I was to be the “Pilot in Command.” I was responsible for making the pitch and directing all the action (which was pretty heady stuff). The GM asked where I would want each of them to sit. I directed them around a rectangular boardroom table, leaving two spots for Messrs. Burke and Clare. (My mangers marveled how crafty I was.)
When the two senior most managers in the corporation entered the room they ignored my direction and sat where they wanted. (Hmmm, not quite off to the start I envisioned.) Following an opening statement from the GM I launched into my thoroughly prepared and rehearsed presentation only to be repeatedly interrupted with rapid-fire staccato questions by Jim (mostly) and Dave (at this point they are now even more like “Mr. Burke” and “Mr. Clare,” if you know what I mean). The questions were not just questions. They were challenges. “How will consumers translate the product features into superior oral care? How will the consumer experience a difference with this toothbrush? How do you explain results from a blind, concept-free, in-home use test that showed consumers preferred Oral-B to REACH, 60% to 40%?” I answered all of their questions with the confidence and conviction of a true marketer (if you know what I mean).
At one point the GM jumped in with the comment that we believed so strongly in this acquisition that he was willing to finance it by cutting marketing support funds from other brands within our division. (Aha, our trump card! That should seal it.) But Mr. Burke stated he was not satisfied with the division’s profits so he would take those monies the GM was offering to use for the REACH acquisition and its marketing, and deal with the acquisition as a separate matter. (Now who are the really crafty ones?)
The climax came when Mr. Burke called the toothbrush category a “whore’s market.” (He had a feisty personality.) He went on to explain that the company had experience in the toothbrush market many years earlier (Tek Toothbrushes), and had pulled-out because of aggressive price discounting and the inability to make a favorable profit to sustain the business. At the time of my pitch toothbrushes were selling 8 – 10 for $1.00. (Yes, that’s correct!) We were going to sell REACH Toothbrush to consumers for $1.19, the same price as Oral-B, the professionally marketed and recommended toothbrush. (My heart sank with the prospects of losing the acquisition and the opportunity to redefine the category, and helping consumers better fight cavities.)
As the meeting was breaking-up, Jim walked-up to me and put his arm around my shoulders. He congratulated me on my presentation(?), and told me he thought I had a “hell of a product” here. He stated that he had always had problems with his gums and started using REACH when we sent some to him some months earlier. He went on to explain that on a recent dental check-up his dentist asked Jim what he was doing for his gums. Was Jim flossing? His gums looked so healthy. Jim replied that the only difference was he was using the REACH Toothbrushes we sent to him. (Jim conducted personal marketing research. He was a marketer.)
About one-hour after the meeting broke-up, my Director of Product Management came into my office and shared with me that we had received approval to acquire the rights for the REACH Toothbrush. Mr. Burke had told our GM that it was on the conviction of, and his confidence in, the Product Director (humble me) that he was going to “allow the division to make its own mistakes.”
One final note: the first 3-months (sell-in) of shipments fell well beyond forecast. The Company Group Chairman at the time walked (unbeknownst to any of us) across the street to Jim Burke’s office to tell him that he was going to pull the plug on marketing the REACH Toothbrush. Jim inquired if we had yet received Nielsen data on actual sales movement to consumers. The CGC replied we had not. Jim told him to wait until we received Nielsen information. When the Nielsen information came-in it revealed that the REACH Toothbrush was the number-1 selling toothbrush in the U.S., despite double-digit out-of-stocks at retail. The initial shortfall in sales was due to our sales force selling it in to the retail trade like J&J Band-Aid Brand of Adhesive Bandages, by the dozens, as opposed to grosses. This was soon remedied and REACH Toothbrush sales sky rocketed to strain manufacturing capacity, pay out its acquisition and marketing costs, and return a profit in its first year of marketing. Jim Burke was a very wise marketer and businessman.
BOATS & HELICOPTERS:
Turn inspiration into action. Here are some actions, inspired from Jim Burke’s leadership, for your consideration:
1. Articulate your values and be guided by them – How do you want to be viewed? What’s important to you as a marketer? Manager? Human being? What leaders do you admire? What values do you share with them and/or aspire to? Get these down on paper just like Jim Burke did with Our Credo. Keep these values front and center. Challenge them. Then, live by them.
2. Challenge your beliefs and practices – List your beliefs (values) on one side of a page and on the other list your practices (actions). Are your practices (or those of your organization or brand) consistent with stated beliefs? If not, one is incorrect. It could be that your practices are incorrect. Or it could be that what you say you believe is not a true value. A true value is one in which you are committed to following and achieving. If the belief is not a true value change it! Don’t live a life of pretense.
3. Do what is correct and decent – On Saturday I attended a Notre Dame tailgate party. There I met a former center for the football team. He related to me that the previous evening Lou Holtz gave a talk to his former football players. He said winning was not “everything.” What is everything are the decisions we make in each stage of our lives. He was urging his former players to make decisions that are correct and decent. As Jim Burke put it, if we don’t do what is correct and decent the public will rebel. Importantly, how can we live with ourselves if we are not doing what is correct and decent in serving the public?
4. Serve the public first and do it better than everyone else – This is the nature of our role as marketers. We need to serve our customers better than our competition. And, don’t hold back. Get beyond meeting needs. Find ways to anticipate and delight your customers.
5. Take care of all constituencies – What are your constituencies? While they may vary by industry many marketers share some of the same constituencies. Among them are: customers (or consumers), trade (retail) or professional groups, gatekeepers, stockholders, regulatory authorities, etc. If we don’t take care of all our constituencies the business will not be in harmony. When we have a lack of harmony we have problems.
6. Keep the trust – Jim felt at the heart of all relationships was trust. Behind trust is honesty. Please don’t use “corporate-speak.” No one talks in corporate-speak but less than honest people who hide behind words that are intended to obfuscate the situation. If you make a mistake admit it. Take responsibility for it. And, as Jim Burke might have said it, “damn it, fix it!” And, you fix it by doing right by the injured parties. By the way, trust is not just something that we keep with the world outside of our organization. It is critically important to maintain the trust among everyone in the organization too. If we cannot keep their trust they will work only for a paycheck, no more. Great organizations on not built upon a paycheck.
7. Set high standards and stick to them – “Winners” set standards for themselves, high standards. And, they work to maintain their standards and achieve lofty goals. Once achieved, winners set new, even higher standards. They don’t tolerate anything but their very best performance. They expect that of themselves and everyone on their team. The “also-rans” don’t stick to their standards and goals. When they don’t meet their goals they compromise further on their standards by lowering them. This creates a vicious cycle of decline. Growth or decline? Decide what you are going to create.
Jim Burke was a winner! He made his organization and everyone in it a winner too through his inspiring and courageous leadership. He was also a most decent human being. While we will miss him we are thankful for the many memories of his leadership, and lessons he taught us, on what it takes to be a great leader. Thanks Jim and R.I.P.
Richard Czerniawski and Mike Maloney
We still have a couple of spots available for the upcoming
OPEN POWER POSITIONING program in Evanston, Illinois
at the Hotel Orrington on October 30 & 31st.
Please call Lori Vandervoort at 800-255-9831 (620-431-0780)
if you're interested in attending.
© 2003 Brand Development Network (BDN) International. All rights reserved.