Neeraj Goyal - “Johnson and Johnson Talcum Powder”
If I were an executive at Johnson & Johnson, and was told that the firm’s talcum powder products were possibly increasing the incidence of ovarian cancer, I would immediately issue a recall of the product and divert my financial resources to figure out whether or not this accusation was true. If it is found that the talcum powder products were indeed causing cancer, I would hold the group and executives responsible and convene a special committee to investigate the causes of the crisis. The reason for this aggressive action is that even though talcum powder based products are staples of Johnson & Johnson, the company’s brand is worth much more than the immediate revenue stream of those line of products (as an executive at the firm, I would have detailed financial information on each of the products to justify such a decision).
While pursuing research at Harvard, I authored a case with Senior Associate Dean Lynn Paine, and Dr. Suraj Srinivasan on a massive cyberattack on Target in 2013. In this case, the hackers walked away with personally identifying data on over 110 million U.S. consumers including names, addresses, credit and debit card information, and other information. The hackers then started using this information to directly withdraw money from individuals’ bank accounts, and charging purchases to the stolen credit and debit cards. This even started severely impacting people’s credit scores – with the devastation being reflected in higher interest rates on any mortgage, student, or other loans, affecting the victims for the rest of their lives. The hackers even stole money from a single mother of four children who could no longer pay rent. The response of Target’s management in this case was considered to be severely lacking and obtuse. The firm simply issued a press release, announced a ‘discount’ to bring back customers who no longer wanted to shop there, and other cosmetic solutions such as a free credit monitoring service. The board of directors was sued by Target’s shareholders for causing a loss in the firm’s brand and stock price, and the firm was further sued by payment processors (a consortium including firms like Visa and Mastercard), customers, banks, and other business partners. In addition, there were a series of public Congressional inquirie, and management was forced out (the CEO Gregg Steinhafel was let go). Our research found that if Target had made a concerted effort to protect its point of sale systems ex ante, and once they were attacked, if they had responded with more vigor and showed customers that in fact Target was among an increasing pool of corporate victims being targeted by hackers, the firm might have saved its management and the loss in brand value.
Based on our work, finding out that talcum powder (a product that has been in use for generations), may cause ovarian cancer is no joke. If it turns out scientifically, that it is in fact true that talcum powder products were causing cancer, there will be numerous law suits, a serious erosion of stock price to the point where the company may not survive, and potential lawsuits alleging criminal action.
In this case, the company would do well to make a concerted effort to understand numerous questions. If the product does cause cancer, why did it go un-reported for years? Was there a change in the product’s manufacturing that is suddenly making the powder cause cancer, and if so, what manufacturing errors caused it, and which management team allowed this to go undetected (knowing that a sudden switch in ingredients could allow the firm to blame a few actors and save the overall entity by purging them). Could this in any way be a result of customers misusing the product? Finally, where does this lie compared to other products known to cause cancer – cigarettes, asbestos, etc. – and what were the outcomes in those cases.
I believe scientifically figuring out whether talcum powder products cause cancer would take some time. Products such as cigarettes have been associated with lung cancer, but cigarette manufacturers have managed to survive successfully for decades. I would convene my research and development teams, reputed scientists, and legal teams to map out how long would it potentially take until the firm and its products are either found guilty of causing cancer, or not. Johnson & Johnson will need to have both – an immediate, short term response, and a longer term plan.
Immediately, in the short term, I would remove the talcum powders causing cancer, and get a statement in the public record attesting to Johnson & Johnson’s commitment to maintaining the health and wellbeing of all customers and noncustomers alike. I would develop a community response team, and set up a hotline to provide answers to those customers that need help and guidance. Many customers would want to know what are signs that a patient is developing cancer? I would partner with major healthcare providers and set up a special fund to support cancer screening and mental health support for customers who feel they have been impacted by the product’s use. I would hire a public relations firm and use social media, the newswire, and other communications to highlight the efforts being made by Johnson & Johnson to address this crisis.
Over the long term, as management starts getting answers as to their product’s culpability, I would start replacing those in charge, all the way to the board of directors level (depending on the corporate charter, certain board members may have a duty to manage risk and safety standards). Those responsible need to be held accountable. I would remove all uses of the cancer causing ingredients, and develop a campaign to explain how Johnson & Johnson was undertaking a massive shift in manufacturing and corporate policies to make sure this could never be the case again. Finally, I would set up an industry-wide association to make sure other companies are aware of what went wrong at Johnson & Johnson, and how they could be equipped to catch potentially disastrous health crisis.