Johnson and Johnson's McNeil Labs Tarnishes its Reputation

Johnson & Johnson has been my poster-child for a company with a solid reputation. Since 1982 when it managed itself out of the Tylenol crisis by using its Credo as a guide to doing the right thing, J&J has been my top pick for reputation leader. It lived by its values. Until now.

We are now learning that McNeil Labs, a J&J subsidiary based in Ft. Washington, PA, just outside of Philadelphia, has been under investigation for some time by the FDA for safety violations. Following complaints by customers, McNeil withdrew its consumer products. It has been disclosed that Children's Liquid Tylenol was improperly mixed at the manufacturing level and that kids could have receive more Tylenol than is legally and medically indicated.

Why did it take customers to bring McNeil to action? Why did the FDA not take stronger action sooner?

The second question is the interesting one. J&J has built such a deep reservoir of goodwill and trust over the years that almost no one who knew the company believed that it would do knowingly and willingly do anything wrong. The FDA probably thought that it was following a bad lead--J&J could not be knowingly violating safety regulations. But, it seems that they might have been. Even the stock market continued to vote for J&J. Despite the news, its stock increased in value.

The first question is the shocking one. The fact that McNeil did not alert customers, those who according to its Credo are their #1 responsibility, is absolutely shocking. J&J has let everyone down.

I spoke recently with an employee of J&J who expressed shock and disbelief that the company would not live up to the standards that it had always maintained. The calls to J&J are coming in at a rate of 3,000 per hour and the Internet contacts are just as heavy. All employees are being asked to pitch in to help "man" the phones to answer questions.

One can only wonder what has happened to J&J. Has the company joined those who have cut costs so deep that it has now impacted its ability to function at the level it once did? Has the economy made J&J less focused on the values that made it great and distinct from other healthcare companies in the first place?

As a great fan of J&J, I am thoroughly disappointed. I hope we will learn what went wrong and that we also will see the real J&J emerge. I fear, however, that the company that lived by its Credo in 1982 no longer has the same culture.