When you allow circumstances to define you, you lose the ability to respond objectively – and effectively – to a crisis. Linda Henman offers two contrasting examples of crisis management in practice: Merck missed the mark, but Tylenol triumphed.
While we were writing The Merger Mindset, my co-author, Dr. Constance Dierickx, identified a new genre of people: the chronically aggrieved. These people find themselves in an uninterrupted state of outrage. Constantly distressed and maltreated — at least in their own minds — they complain about the inconsequential and strive to let others know of their disappointments and persecutions. They can exist in this state of angst because they take things personally and wear their victimization like a red badge of courage.
The chronically aggrieved are a subset of narcissists. People representing this species consider themselves the center of the universe and suffer when others fail to see them as such.
Those who refuse to let circumstances define them, however, respond better both to the day-to-day annoyances of life and to the disruptions an M&A deal can cause. In a crisis, they can literally save the day. They land the crippled plane, save the patient, lead the troops to victory and make the pivotal calls in organizations. Instead of letting righteous indignation determine their behavior, they put aside their personal reactions, face reality and handle the crisis.
They understand that they must recognize the crisis, get everyone else to acknowledge it and respond to its early warning signals. They don’t deny the urgency or severity of the adversity; they don’t blame people, external events or the elusive “they” that seem to contribute to most of the world’s mischief. If they played a role in creating the crisis, they admit that, too.
Pharmaceutical giant Merck offers a perfect example of doing the opposite. Despite evidence that the painkiller Vioxx contributed to heart attacks, the senior leaders at Merck decided to continue marketing the product while the company sponsored its own research. In 2004, Merck CEO Ray Gilmartin pulled the drug from the market, but the damage had been done. Vioxx had been linked to 27,000 heart attacks. In 2007, Merck announced a $5 billion settlement and ended the crisis, but not before the disaster had claimed lives, dollars and public good will.
Contrast Merck’s experience with the Tylenol crisis of 1982, in which seven people died in the Chicago area after taking pain-relief capsules that had been laced with potassium cyanide. Because the tampered bottles came from different factories and the seven deaths had all occurred in the Chicago area, investigators ruled out the possibility of sabotage during production. Almost immediately, investigators concluded that the culprit had entered various supermarkets and drugstores over a period of weeks, pilfered packages of Extra-Strength Tylenol from the shelves, adulterated their contents and then replaced the bottles. Yet senior leaders at Johnson & Johnson knew they had to do whatever it took to protect their clients, so they went above and beyond what they probably would have had to do legally.
Johnson & Johnson distributed warnings to hospitals and distributors, halted Tylenol production and ceased advertising. The leaders issued a nationwide recall of Tylenol products, with an estimated $100 million value, and offered to exchange all Tylenol capsules with solid tablets.
Although the decisions to react as they did cost Johnson and Johnson investors in the short run, they’ve had little to complain about since then. If you had invested $1,000 in Johnson & Johnson shares on September 28, 1982, just before the first Tylenol episode, by 2002, you would have $22,062, after four stock splits. The company has paid out increasing dividends for almost four decades since.
The chronically aggrieved have probably destroyed more organizations than incompetence ever could. A sudden catastrophe like 9/11 was impossible to ignore, but the ones brewing in most organizations probably aren’t. In fact, a future calamity might present itself in this moment as an annoyance, an inconvenience or a benign problem. The lion’s share of facing reality, therefore, involves perceiving the emergency before it becomes one. Bad news never gets better with age. It all starts with the leaders. They acknowledge the present or emerging crisis and guide the organization to face reality instead of mourning the loss of idealism.