J&J's Three Mile Moment

Now is a Three Mile moment for Johnson & Johnson. Sixty people have died. The FDA is on its case. Its greatest success story of 2003 is on the ropes. And shares in J&J have rebounded slightly from their lowest point in over a year. Sure it may be the "world's largest and most diversified health care company" consisting of pseudo-latinate corporations such as Ethicon, Centocor and Cordis among others, but in the end of the day Johnson & Johnson most powerful perceptual position is less about biotech and more about its role as protector of the "mother-baby" bond. General Robert Wood Johnson intuitively understood this and drafted J&J's famous Credo to insulate J&J's unique focus from the fuzzying effects of multinational delusions of grandeur. The credo has been revised over the years, but the principals remain intact. The credo provided a gameplan to then Chairman Charles E. Burke during the Tylenol Scare nearly twenty years ago. Today's Chairman & CEO of J&J, William C. Weldon is the newest keeper of the credo and he is faced with an issue that may be even more dangerous to the long-term viability of the company than that faced by Burke. Arguably his most valuable constitency (physicians) has been given reason to doubt J&J. We believe that Weldon missed an opportunity live the credo and pre-empt the FDA report by taking the bad news public himself. What could have been framed as the responsible actions of a confident company, has been characterized in the press as just another example of the careless profiteering so common among "big companies". Weldon's next move will be just as critical. Will he make a public mea culpa and take the defective stents from the market (as any responsble mother would do and his credo demands) or will he be influenced by his financial stakeholders (Wall Street) and follow in the footsteps of Coke and another great brand killing moment of late? Only time will tell. We hope that he lets the credo be his guide.