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J&J Takes a Rupert

by BILL WADDELL

The other day I compared the Rupert Murdoch -'I'm not responsible for the utter disregard for ethics that pervades my company; it's all middle management's fault' - attitude with that of Akio Toyoda who opened up his testimony to Congress by standing up for his employees and taking full, personal responsibility for any problems his company created.

Turns out Rupert was a bush leaguer when it comes to weaseling.

A committee of outside directors from Johnson & Johnson has completed a thorough review and determined that the two year long litany of recalls, forced plant shut-downs due to repeated, gross ignorance of quality, kickbacks and wholesale management ineptitude in virtually every area is not senior management's fault - and it most definitely is not the board's fault.

According to the report:

There was "'an emphasis on production volume' over compliance"

There was "'an adversarial relationship' between some quality-control and production staff."

"At the plant level, there seemed to be a lack of attention to product quality by some non-quality personnel"

People were put in charge "who may not have had sufficient understanding of what was taking place at the plant level."

"J&J installed new manufacturing lines at Fort Washington and a Las Piedras, Puerto Rico, factory, 'increasing the volume and complexity of their operations and distracting' from quality improvements."

"With reduced central oversight and tasked with implementing the Pfizer Healthcare acquisition, some McNeil employees may have lost focus and commitment to maintain quality standards."

"A 2007 restructuring may have exacerbated the situation, cutting staff at J&J’s corporate quality and compliance program by 35 percent."

In summary, (1) they put people in charge of manufacturing who didn't know what was going on in the factories, (2) they created a culture of finance over quality, (3) they mandated headcount cuts that gutted quality control, and (4) they failed to put in place adequate resources to maintain operations and handle the Pfizer acquisition, BUT ...

They are not responsible for the direct results of their decisions because ... "Senior management never issued any directives to the effect that quality should be sacrificed for production."

They ought to ask Rupert to join the board.  He would feel right at home and he might appreciate an opportunity to learn the art of weaseling from the masters.

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5 Responses to "J&J Takes a Rupert"

  • Adam Zak
    25 July 2011 - 3:20 pm

    May I add a short observation? During this whole time period, JNJ was also supposedly pursuing a major Lean implementation. I wonder how well that turned out? Adam Zak

    PS In the spirit of full disclosure, I have, sadly, been a JNJ shareholder during the course of these shenanigans. At least I don’t own any media stocks, that I know of, anyway…

  • Anonymous
    25 July 2011 - 7:36 pm

    I used to be a proud J&J employee from 2005-2009.

    Used to be an employee, used to be proud.

    Adam, I think it’s hard to generalize about J&J and Lean. The company is so decentralized, it seemed that there were different flavors of Lean and varying degrees of adherence to Lean principles. I only worked in one operating company, but it surely didn’t seem like a “Lean culture” to me.

  • Jim Fernandez
    26 July 2011 - 7:35 am

    During the time when J&J was having problems I purchased J&J products. So I believe it’s my fault that the company had so many problems. I ignored various quality problems with their products. And I neglected to notify the company’s quality department.

    I take full responsibility for my carelessness and my poor performance as a consumer.

  • Adam Zak
    5 August 2011 - 2:21 am

    Jim, I must confess to stocking some Tylenol here at the office as well. Consider me guilty of contributory negligence.

  • VC Independent
    1 September 2011 - 9:55 am

    It’s possible that the restructuring itself may have caused some problems and a better job looking over the faults of the company may have been necessary before going through with the restructuring plan previously put in place.