Group Number 20
Assignment #1
2004
Winter
The Tylenol® Tragedy:
Encapsulating Perfect Project
Management
Josh Bates
Navin Chari
Michael Lankin
Sarah Milton (Administrator)
Gretel Steinberg
John Stephenson
Daniel Toguri
Ashley Wagner
Section 2:
Work Breakdown Structure
The above figure illustrates the work breakdown structure for group 20,
investigating The Tylenol® Tragedy facing Johnson and Johnson in 1982. The
work breakdown structure is a visual representation summarizing the distribution
of sections required to complete the assignment. Team members worked in pairs
to complete certain sections of the project, which were selected based on
personal interest. Each pair was responsible for dividing the work required for
their section(s) and for their completion by the agreed deadline of February 11,
2004. The sections were compiled by the group administrator and the completed
assignment was circulated to each of the eight group members for editing.
A work package is the lowest level of any one branch in the work
breakdown structure. The work package for Branch 3 will be discussed. Branch
3 was the sole responsibility of Mike and Josh.
These team members were
responsible for the Gantt Chart (3.1) and Teamwork Evaluation (3.2). The Gantt
chart, outlining a timeframe for the entire project, was the sole responsibility of
Mike. The pair worked together on completing the teamwork evaluation section,
which was further divided into two branches; research (3.2.1) and write up based
on the required format (3.2.2). The first stage of teamwork evaulation involved
research (3.2.1) into the Tylenol® tragedy, specifically the management of the
crisis by Johnson and Johnson. Research was further broken down into two
components: contacting Johnson and Johnson to obtain the available media
package (3.2.1.1), and an in-depth literature search (3.2.1.2) on the crisis. The
literature search utilized a wide range of sources including the Internet, journals,
and newspaper clippings. Upon completion of the research stage, the writing
process using the provided guidelines commenced. The guidelines were based
on a chart found in Schermerhorn et al., which provides a method of grading the
effectiveness of a team in completing a project. It is important to note that the
writing stage of the teamwork evaluation (3.2.2) involved much discussion and
debate with regards to assigning scores for the various criteria. The writing
section also included proofreading by Josh and Mike separately, which was then
followed by revisions.
Section 3:
Linear Responsibility Chart
WBS
Item
Work Item
Project Administrator
Sarah
Navin
Mike
Josh
Ashley
Gretel
Dan
John
The linear responsibility chart represents the tabular form of the work breakdown
structure. The designations P and S represent the team member who has
primary or supporting responsibility for a given task.
P
1
1.1
1.2
Organizational Structure
Research
Writing
S
2
2.1
2.2
2.3
2.3.1
2.3.2
2.3.1.1
2.3.1.2
2.3.2.1
Linear Responsibility, Work Breakdown & Introduction
Linear Responsibility Chart
Work Breakdown Structure
Introduction
Research
Writing
Articles & Magazine
Websites
Editing
P
S
P
S
P
S
S
P
P
3
3.1
3.2
3.2.1
3.2.2
3.2.1.1
3.2.1.2
Gantt Chart & Teamwork Evaluation
Gantt Chart
Teamwork Evaluation
Research
Write-Up
Media Package
Literature Survey
4
4.1
4.2
4.1.1
4.1.2
4.2.1
4.2.2
Project Management
Research
Writing
PMBOK
Websites
Success/Failures Identification
Project Management Practices
S
P
P
P
P
S
P
S
S
P
S
P
S
S
P
P
S
P
S
P
P
S
S
S
P
P
P
S
P
P
P S
S P
S
P
S
P
S
P
P
S
P
S
S
Section 4:
Gantt Chart
A Gantt Chart is a scheduling tool used to ensure all activities have been planned for and to illustrate the order of activity
completion, the time estimate of the activities and the overall lifetime of the project. The Gantt chart was a useful tool for
Group 20, since it ensured that all group members were aware of the agreed upon deadlines.
Section 5: Introduction
5.1 Reasons for Entity Selection
Johnson and Johnson, one of the world’s largest personal and healthcare
product manufacturers, was the desired entity to investigate based on their
successful project management practices. Facing the challenge of dealing with a
pharmaceutical crisis, Johnson & Johnson successfully combated the scare and
demonstrated their commitment to their consumers. The crisis occurred in the fall
of 1982 when Extra Strength Tylenol® capsules were spiked with cyanide,
resulting in the death of seven consumers in the Greater Chicago Area. As a
result, Tylenol® sales dropped by 80% virtually overnight, and it lost much of its
market-share1. This historical event, often referred to as the Tylenol® Tragedy,
was selected since it is a prime example of proper project management, often
referred to in crisis management textbooks.
The Tylenol® tragedy illustrated the diverse strengths of Johnson and
Johnson. The Tylenol® brand name was saved due to the quick actions of the
company. This project required extensive resources and precise management of
all project aspects to achieve the project goal: to reclaim Tylenol®’s pre-crisis
market share. One of the most interesting aspects of this crisis was the
magnitude of the project, coupled with the project time scale. First the tampering
was identified, and then Johnson and Johnson worked jointly with the authorities
to communicate the severity of the crisis to the public. Johnson and Johnson
then decided to undertake a nation-wide recall of all Tylenol® capsules.
Following their Credo to the letter, Johnson and Johnson put public safety and
awareness at the forefront of the investigation. Knowing their market share would
fall, and not knowing whether Tylenol® would be able to survive the crisis,
Johnson and Johnson, as well as their subsidiary did not hesitate to begin the
largest recall to date of a pharmaceutical product – 31 million bottles of Tylenol®
and a loss of $100 million (US)2. Finally Extra Strength Tylenol capsules were rereleased with a massive advertising campaign, under a revolutionary triple safety
1
2
Fortune Magazine, November 29, 1982. The Fight To Save Tylenol.
Fortune Magazine, November 29, 1982. The Fight To Save Tylenol.
sealed system3. The decisive thinking of the executive of this world-leading
pharmaceutical company allowed Tylenol to remain as a leader in the analgesic
market.
5.2 Business of Chosen Entity
As stated above, Johnson and Johnson are one of the world’s leading
personal and healthcare product manufacturers, with products ranging from
shampoo to Band-Aids® to contact lenses to baby powder. The product of
interest in this assignment, however, is Extra Strength Tylenol® Capsules, which
are produced by McNeil Consumer and Specialty Pharmaceuticals, a subsidiary
of Johnson and Johnson.
5.3 Strengths and weaknesses of Johnson and Johnson
The major strength of Johnson and Johnson is the company Credo, which
was originally written by General Robert Wood Johnson in 1943. The Credo
states that the customer is the number one priority for the company: “We believe
our first responsibility is to the doctors, nurses and patients, to mothers and
fathers and all others who use our products and services” 4. When the Tylenol®
crisis arose in 1982, it was the Credo that helped the project champions decide
the most appropriate course of action: to restore Tylenol® to its original marketshare via a nation-wide recall coupled with a re-launch5 with tamper-proof
packaging. Although the Credo is the guiding principle of Johnson and Johnson, it
is also a weakness, since it may be blindly applied without considering all
possible courses of action.
Since Johnson and Johnson is a massive multi-national company, with
over two hundred subsidiaries in over fifty-four countries, it extensive resources,
including equipment, personnel and most importantly capital, at its disposal to
properly face and address a crisis of such magnitude. It was the wide-stretching
3
Statement of James E. Burke, Chairman, Board of Directors and CEO Johnson & Johnson. Presented to U.S. Senate
Committee on Labour and Human Resources, Friday February 28, 1986.
4 “Our Credo” 2002 reprinted. Johnson & Johnson
5
Fortune Magazine, November 29, 1982. The Fight To Save Tylenol.
resources of Johnson and Johnson that allowed the project to be completed on
time, and to be successful. Although a large company can help to ensure the
success of a project via a large amount of resources, it can also be a weakness.
Initially, Johnson and Johnson discussed the idea of distancing themselves from
McNeil, forcing their subsidiary to solely take all the media attention and public
blame in order to save the reputation of Johnson and Johnson along with the rest
of its subsidiaries6. This plan was abandoned, based on the Credo, and Johnson
and Johnson used all of its resources to face the crisis.
5.4 Competitors of Chosen Entity
At the time of the crisis in 1982, Tylenol® had thirty-seven percent of the
analgesic market share in the United States. The major competitors to Tylenol®
were Asprin, Anacin, Excedrin and Bufferin7.
5.5 Adopted project management practices
The project management strategy employed by Johnson and Johnson was
to separate the project into several teams to focus on different tasks including one
to deal with the product recall, another with media relations (press releases,
conducting
polls,
marketing
for
re-release),
another
with
Research
&
Development for the new tamper-proof packaging and various other teams to
deal with different authorities. These teams were broken down further into smaller
teams. This strategy was key to the success of overcoming the crisis, as the
scale of the project was so massive, that having one person manage all aspects
would have proven disastrous. Specific aspects of teamwork can be seen in
Table 5.0.
6
7
Fortune Magazine, November 29, 1982. The Fight To Save Tylenol.
The Washington Post October 11, 1982 Tylenol’s Maker Shows How to Respond to Crisis.
Table 5.0: Various aspects of successful teamwork displayed by Johnson and
Johnson during the Tylenol Tragedy.
Uniqueness of
Teamwork
Success or
Failure?
Clear Goals
Accepted by
Stakeholders
Success
Clear
Communication
Success
Mechanisms for
Receiving
Feedback
Success
Maximum Use
of Member
Resources
Success
Flexible
Organization
and Procedures
Success
Reason
A clear credo outlining the responsibility of the
company to maintain the safety of doctors,
nurses, patients, employees, communities
and stockholders, in this order8.
Formation of a strategy groups consisting of
Mr. Burke (CEO) and Mr. Clare (President),
who in turn coordinated all the meetings that
kept everyone involved constantly updated9.
Launch of a free 800 hotline in order to
ensure that consumers could be in contact
with the company and receive constant
developments in the case. Customers were
polled to ensure understanding of the safety
issues concerning the tragedy10.
Coordination of all information between FBI,
police, media, communities, pharmacies, as
well as between their own distribution and
manufacturing plants. This facilitated the
largest recall to date of a pharmaceutical
product11.
Recalled 31 million bottles of Extra Strength
Tylenol capsules and changed the packaging
to a triple safety-sealed system.
“Our Credo” 2002 reprinted. Johnson & Johnson
The Kansas City Times, November 12, 1982. The Tylenol Nightmare: How a Corporate Giant Fought Back
10 Kentucky New Era, February 11, 1986 Big Company Reacts Quickly in Drug Scare
11 Fortune Magazine November 29, 1982 The Fight to Save Tylenol
8
9
Section 6:
Evaluating Teamwork
Table 6.1:
Teamwork evaluation for Johnson and Johnson in 1982 during the Tylenol Tragedy (maximum score = 50)
Criteria #
1
2
3
Criteria
Adequate mechanisms for
getting feedback
Adequate decision making
procedure
Optimal Cohesion
Score
3
5
5
4
Flexible organization and
procedure
1/4
5
Maximum use of member
resources
5
Clear communications
6
7
8
9
10
5
Clear goals accepted by
members
Feelings of interdependence
with authority person
Shared participation in
leadership functions
Acceptance of minority
views and persons
Total
12
5
4
5
3
Score Rationalization
• Meetings twice daily to discuss progress of recovery strategy.12
• Burke (Project Champion) considered all available data and consulted with
FDA, FBI, company lawyers and management before making a decision.
• The “Credo” is a constant guiding principle available to Johnson and Johnson.
• All departments had to come together to achieve the project goal within the
deadline set by the champion.
• (1) Unwillingness to disregard their “Credo”.13
• (4) They were able to quickly reorganize their operational structure and
procedures to meet their goals by the deadlines.
• The recall, destruction and replacement of 31 million bottles nationwide could
not have been done without full utilization of their resources: public relations,
engineering, manufacturing, etc…
• Externally, they opened up immediately to the media to warn the public of the
danger and later to promote the reintroduction and promotion of the product.
Established toll-free customer info line in the 1st week of crisis14.
• Internally the goals were made clear, via meetings conducted twice daily.
• One clear goal from outset was to follow the “Credo”, which manifested itself in
the recall and in the re-launch of the product.
• Employees trusted the management to make the right decisions.
Likewise, management depended on employees to carry out their decisions.
• Leadership shared by J. Burke (CEO) and D. Clare (President)
• Some (FBI, FDA and lawyers) recommended against the recall for fear of
copycat incidents15, but Burke was adamant to uphold the “Credo” since he felt it
was a moral imperative.
41/44
The Kansas City Times, November 12, 1982. The Tylenol Nightmare: How a Corporate Giant Fought Back
Kaplan, T. “The Tylenol Crisis: How Effective Public Relations Saved Johnson and Johnson”. www.personal.psu.edu/users/w/x/wxk116/tylenol/crisis.html. [Available January
10, 2004].
14 “The Tylenol Comeback”. Johnson and Johnson Public Relations pamphlet.
15 Fortune Magazine November 29, 1982 The Fight to Save Tylenol
13
Table 6.2:
Criteria #
1
2
Teamwork evaluation for COMM 244 group 20 (maximum score = 50).
Criteria
Adequate mechanisms for
getting feedback
Adequate decision making
procedure
Score
3
3
Optimal Cohesion
3
4
5
4
Flexible organization and
procedure
Maximum use of member
resources
4
4
Clear communications
6
7
8
9
10
5
Clear goals accepted by
members
Feelings of interdependence
with authority person
Shared participation in
leadership functions
Acceptance of minority
views and persons
4
3
2
3
Total
Score Rationalization
• Bi-weekly meetings for whole group.
• Sub-teams’ contribution are critiqued by other team members.
• Individuals selected which portion of the project they would like to work on,
which was mutually agreed upon by all team members.
• This method promotes personal satisfaction, but does not necessarily ensure
best use of members’ talents.
• We were able to select our team, thus promoting greater cohesion among
members.
• Not all members knew each other previously, and therefore a period of
acclimatization was necessary.
• Each sub-team is responsible for managing itself under the umbrella of
completing their section by internal deadlines.
• The project was divided into tasks, and each sub-team selected one to their
liking.
• The task selected may not have been optimally suited to their skills.
• Frequent e-mails, bi-weekly meetings, and contact with team members through
both common courses and social activities, ensured communication between all
group members.
• The goal to produce a quality project on time is understood and agreed upon
by all.
• Project manager relies on team members to submit their sections by internal
deadline, while the team members rely on the leader to provide the organization
structure to our project.
• The role of leader is undesired by most members and so the willing party got
the role uncontested.
• While no minority views have arisen thus far, in the event of such an
occurrence, they would have been heard and their merits considered.
35
c) This assignment has provided us with new insights into how to assess a team’s strengths and weaknesses, and their
effect on team performance.
Section 7:
Current Organizational Structure of Johnson and Johnson16
William C. Weldon, CEO
Consumer
Business Segment
Other
Autonomous
Operating Units
Pharmaceutical
Business Segment
Medical Devices
Business Segment
McNeil Consumer
and Specialty
Pharmaceuticals
McNeil Consumer
and Specialty
Pharmaceuticals
Group
Operating
Committe
e
Franchise
Management
16
“Business Segments”. http://www.jnj.com/careers/segments.html. [Available 02/02/04].
Common to
all
subsidiaries
Please note that Johnson and Johnson considers its organizational
structure confidential and will not release its detailed structure17. Based on this
lack of knowledge, a rough estimate of the organizational structure has been
presented above, based on the available information.
The organizational structure of Johnson and Johnson is unique; it is a
corporation owning over 200 subsidiaries in 54 countries, each of which is highly
autonomous and accountable for its individual performance. Examples of
Johnson
and
Johnson
subsidiaries
are
DePuy,
Ethicon
Inc,
Janssen
Pharmaceutica Inc., and McNeil Consumer and Specialty Pharmaceuticals.
Each subsidiary is responsible for every aspect of daily operations including
hiring employees, budgeting, production, quality assurance, and performance
tracking. This decentralized structure is based on the fact that Johnson and
Johnson does not micromanage its subsidiaries, rather they are “responsible for
the operations and allocation of the resources of the Company” 18. This
organizational structure has both advantages and disadvantages. The major
advantage is that the autonomy of the subsidiaries requires fewer direct Johnson
and Johnson resources to manage them. The atmosphere in each operating unit
is characteristic of a small company with the ability to adapt and respond easily to
market changes.
Critical decisions can be made quickly since each operating
unit has fewer management layers. This decentralized organizational structure is
very suitable, the main reason being that the subsidiaries are so large and
diversified that managing all of them would be extremely difficult. This structure
also allows the individual autonomous operating unit to become highly
specialized using their expertise to their advantage.
The current chief executive officer of Johnson and Johnson is William C.
Weldon. Under his direction, there are three business segments serving the
consumer, pharmaceutical and medical devices markets.
The consumer
business segment includes a wide range of personal care and hygienic products
“Information for Students”. http://www.jnj.com/contact_us/info_for_students/index.htm. [Available
02/01/04].
17
“Management’s Discussion and Analysis”. http://www.jnj.com/2002AnnualReport/financials/management/index.htm
[Available: 02/01/04].
18
sold to the general public through independent retail outlets worldwide.
These
products include Tylenol and Neutrogena. The pharmaceutical business segment
includes drugs, such as Livostin™, which is an allergy medication, prescribed by
health professionals. The medical devices and diagnostics segment, also known
as the professional segment, includes products, such as disposable contact
lenses and orthopedic devices, used principally by physicians, optometrists and
hospitals.
Each of the subsidiaries in these business segments is overseen by a
Group Operating Committee, providing global leadership for all the franchises by
making investment decisions and selecting primary geographic markets.
Franchise Management is the next level of leadership, which establishes
regional pricing, makes decisions regarding production methods and monitors the
profitability of each franchise.
Section 8:
Current
Situation
Deaths in
Chicago
shown to have
been caused
by the
consumption
of Tylenol
Extra Strength
capsules
10000 times
the amount of
lethal cyanide
was added to
the capsules,
but the extent
(number and
locations) of
the tampering
is unknown
Project Management Aspects
PM Task
Investigation
which requires:
 Determining
how cyanide
was put in pills
 Internal
assessment
 Cooperation
with the
authorities
Public
Announcement
 In order to
inform
consumers
nationwide
regarding
Tylenol Extra
Strength
capsules
 Must be
executed
quickly and
effectively
PMBOK Reference
Project time management is paramount here, because the
investigation needs to been done quickly and effectively,
gathering sound knowledge in order to proceed.
 Activity Definition (p. 65, s. 6.1)
It is important to determine the goals and procedure in
conducting the investigation. The inputs required are: scope
(6.1.1.2), constraints (6.1.1.4), assumptions (6.1.1.5), and
expert judgement (6.1.1.6).
 Activity Duration Estimating (p. 71, s. 6.3)
It must be determined how long the investigation will last, so
full production operations at McNeil can be resumed. The
key inputs here are: resource requirements (6.3.1.4) and
resource capability (6.3.1.5).
 Schedule Development (p. 73, s. 6.4)
Realistic start/finish dates are selected via activity duration
estimates (6.4.1.2), risk management plan (6.4.1.9), and the
tool used is duration compression (6.4.2.2).
Project communications management is important here,
because the correct message must be conveyed to the largest
number of people, using the appropriate media. This will outline
the public’s first impression.
 Communications Planning Inputs (p. 119, s. 10.1.1)
The key considerations here are how much to disclose, the
severity of the crisis, what media to use, and ensuring that the
information will reach all of our consumers. This is to be
achieved by communications requirements and technology,
constraints, and assumptions.
 Communications Planning Tools & Techniques (p. 120, s.
10.1.2)
A stakeholder analysis must be completed so the resolution is
in the best interest of the FDA, shareholders, employees, and
consumers.
 Information Distribution Tools & Techniques (p. 121, s.
10.2.2)
It is important to select the most effective (rapid & nationwide)
information distribution method.
Proposed
Change(s)
Need to
determine
which stores
the bottles
came from
Need to
determine
where (plants)
the capsules
were produced
Reasons for Change
 Isolated incident.
 Proximity of threat.
 Manufacturing
error.
 External tampering.
 Internal tampering.
Work with
FDA, FBI, and
police.
 Consumer
commitment.
 Quick solution.
 FDA is regulatory
body.
 Relationship
between deaths.
Inform public
to stop using
capsules and
not resume
until further
notice.
 Extent of
tampering.
 Prevent an
increase in the
death toll.
Stop
advertising
and
production.
 Consumer safety is
paramount.
 Limit spending on a
potentially deadly
product.
Reward for
killer
 Commitment to
investigation and
integrity of the
product/company.
Current
Situation
Packaging is
not sufficient,
there is an
ongoing
investigation,
and it can’t be
guaranteed
that there will
not be “copycat” attempts.
With current
packaging, the
product’s
integrity
cannot be
guaranteed.
Customer
loyalty has
also come into
question and
stock has
fallen.
PM Task
Extra Strength
Tylenol Capsule
Call Back in order
to:
 Resolve
tampering
incident
 Conduct testing
 Prevent further
consumption
Decision whether
to continue Extra
Strength Tylenol
Capsule
Production
 Would need to
design and
implement new
tamper proof
packaging
PMBOK Reference
Project quality management is needed here to determine
whether a call back is necessary, to what extent, and the
subsequent actions that are required.
 Quality Planning (p. 97, s. 8.1)
Tylenol was in compliance with the industry standards,
although it now appears that these standards were not good
enough, and that the industry needs to improve. The input
analysed here is standards and regulations (8.1.1.4).
Benefit/cost analysis (8.1.2.1) and design of experiments
(8.1.2.4) are the techniques required to decide the extent of
the call back and what should be done when the pills are
returned.
 Quality Assurance (p.101, s. 8.2)
A quality audit (8.2.2.2) must be performed to determine the
percentage of the returned pills.
 Quality Control (p.102, s. 8.3)
Employing inspection (8.3.2.1), statistical sampling (8.3.2.4),
and trend analysis (8.3.2.6), will give insight into the number
and location of tampered capsules / bottles.
Project risk management is used to judge the level of risk we
can afford to accept (morally / financially).
 Risk Identification (p. 131, s. 11.2)
This will be used to determine the level of risk by choosing
whether or not to continue selling capsules, done via risk
management plan (11.2.1.1), documentation reviews
(11.2.2.1) and information gathering techniques (11.2.2.2).
 Qualitative/Quantitative Risk Analysis (p.133/137, s.
11.3/11.4)
The chosen level of risk is being scrutinized using risk
probability and impact (11.3.2.1), expert judgement (11.4.1.6),
interviewing (11.4.2.1), sensitivity analysis (11.4.2.2)
 Risk Response Planning (p.140, s. 11.5)
The worst-case scenarios of every avenue are being
examined using a list of potential responses (11.5.1.7) and
risk mitigation and acceptance (11.5.2.3).
Proposed
Change(s)
Work with
pharmacies,
doctors’
offices, and
hospitals.
Nationwide
call back
Reasons for Change
 Central drop-off
locations.
 Product off shelves
and distribution.
 Consistent with
announcement.
 Limit risk.
 Demonstrate
commitment.
Test
percentage of
pills
Enforce bottle
tracking
Offer trade in
of capsules for
tablets
 Determine breadth
and extent of
poisoning.
 Percent returned
Continue
making
capsules
 Our #1 Product
 Primary alternative
to Aspirin
 Consumer
acceptance
 Consumer safety is
top priority
 Want to be the first
to introduce
tamper-free
packaging,
because new
guidelines are
inevitable.
Design New
packaging
 Maintain Tylenol
usage.
 Consumers don’t
feel cheated.
The handling of the 1982 Tylenol Tragedy by Johnson and Johnson is often referenced in textbooks as an example of proper project
management. As a result, the proposed changes for each project management task facing Johnson and Johnson identified in the table
above, are based on the actions taken by the company. The success of their actions is justified by the reasons for implementing the changes.