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.