Recalls 101: What We Can Learn from the Tylenol Crisis

We’ve heard a lot about recalls in recent weeks. The most famous recall of all happened 27 years ago. In September 1982, seven people died from taking cyanide-laced Extra-Strength Tylenol, Johnson and Johnson’s best-selling product. J&J didn’t dither and immediately recalled 31 million bottles from store shelves, offering replacement products in a safer tablet form, free of charge. Two months later, the company reinstated the product with tamper-proof packaging, and a year later, it had 30 percent of the $1.2 billion analgesic market, down only 7 percent from its share before the poisoning—that market had represented 17 percent of the company’s income in 1981. (For more information, see Judith Rehak’s article “Tylenol made a hero out of Johnson and Johnson: The recall that started them all,” published in the New York Times on March 23, 2002.) And while the stock stumbled, only two months after the recall it recovered its 52-week high.

It was unprecedented. A voluntary recall? J&J was feted in the press as a hero and as “Exhibit A” on doing it right in every crisis management, product liability and PR class anyone has taken since. 

It wasn’t the fact of the recall itself, but the timing. J&J acted immediately upon the first reports. And it did something proactive to prevent the same event from occurring again, even though it wasn’t the company’s fault in the first place.

This follows two major rules of crisis management that are particularly important to mitigate the risk of future lawsuits and damages.

First, telling all the bad news yourself. The drip, drip, drip of bad facts is never good. Getting out all the facts as soon as you know them is critical and adds to the company’s trustworthiness. It can also mitigate any future negligent claims because getting out the bad news means you are trying to forewarn people of the risks.

Second, creating good facts can counteract the bad. In the Tylenol case, the company quickly created “tamper-proof” packaging to prevent such incidents in the future. The fact that the company cared so much about product safety that it went the extra mile to create new safeguards also had a “halo” effect. Customers perceived this fact to mean that if the company was this serious about safety in this area, then it must have strict controls in others.
 

From McDermott Will & Emery's Legal Crisis Strategies Blog - found at http://www.legalcrisisstrategies.com