Shelving your pride

Resilience in the face of crisis means shelving your pride.

No one is immune to catastrophe, especially people in charge of companies that are doing well. Increasing success and sales numbers mean taking on more risk. No matter how careful you are, something unpleasant is bound to happen. And regardless of whether it’s a mistake you made or an act of God, as the company founder, you’re going to have to deal with the fallout.

In 1981, Tylenol accounted for nearly 20 percent of the profits of its parent company Johnson & Johnson. Both brands were thriving. But then, in 1982, someone in Chicago tampered with Tylenol bottles, ultimately poisoning seven people with cyanide.

It was an absolute disaster for Johnson & Johnson. Tylenol sales plummeted. But what happened next was a masterwork in crisis response, one that continues to be taught in business schools today.

Back in the early 1980s, no product aside from cars had ever been recalled in the United States. The FDA and FBI were both against the idea when Johnson & Johnson CEO James Burke floated it. But Burke humbly recognized his responsibility to the people who trusted Johnson & Johnson with their health. He knew that their trust was all that mattered. So he made the decision to recall every Tylenol capsule on every shelf in America – over 31 million bottles. What’s more, the product would relaunch with new tamper-proof packaging. The whole recall cost upwards of $100 million.

But Burke’s decisive, transparent action was priceless. Within two months, Johnson & Johnson’s stock price had returned to its pre-crisis high. By the end of 1983, Tylenol had recaptured nearly all of the pain-reliever market.

Good leadership can save a business when catastrophe strikes. But what happens if the leaders are in disarray?

Remember Method founders Eric Ryan and Adam Lowry from blink 2? The ones with the shared office, bickering over their daily ramen? If you thought that sounded a lot like a marriage, well, Eric himself said it first. After Eric and Adam launched a new product line in 2008 that failed to take off, the partners took it out on each other. Eric says they were at each other’s throats – for a few years! The partnership was in serious jeopardy.

But they were more committed to their broader purpose than they were to their petty feud. In the end, with patience and sensitivity, they made it through the rough patch, and sold Method in 2012 for an undisclosed sum.