The limits of reputation management: a case study of Johnson & Johnson
As someone who helps both individuals and companies with reputation management, I gravitate towards stories that have serious implications for companies, brands, and people. Recently I’ve had my eye on the troubles that megacorp Johnson & Johnson has had in that department, and what kinds of learnings can be extracted from their recent experiences in court.
If you’re unfamiliar with the specific situation, it’s this: late August, a district judge in Cleveland County, Oklahoma ordered Johnson & Johnson to pay a fine of $572 million for its alleged role in the state’s opioid crisis. The court ruled that the company targeted and pressured doctors in order to increase opioid prescription rates, while de-emphasizing the risks of those drugs.
On the heels of the Oklahoma case, a jury in Philadelphia handed down another verdict against the company last month— this time for a staggering $8 billion in punitive damages. This case focused on the antipsychotic drug Risperdal, which has allegedly been linked to abnormal growth of female breast tissue in males.
The dispute originated with plaintiff Nicholas Murray of Maryland, after he took Risperdal and then developed a condition known as gynecomastia. The issue, according to prosecuting attorneys, was that Johnson & Johnson failed to adequately warn of the risks on the drug’s label, as well as conspiring to market the drug for unnecessary usages.
Johnson & Johnson’s attorneys have denied all allegations and categorically announced that these claims against the companies products (and those of its subsidiaries) are baseless. Ultimately it’s for the jury to decide — meaning that those corporate lawyers have their work cut out for them.
What the attorneys can’t do, however, is sway the court of public opinion — and a damaged reputation can be even worse than $8 billion in punitive damages. These events have led me to ponder on the limitations of reputation management, and the extent to which it matters for a company as large as Johnson & Johnson.
For instance, if allegations regarding products like Risperdal, Prolift, and Johnson & Johnson’s baby powder with traces of asbestos are true, then is it reasonable to think the manufacturer producing them could possibly maintain its reputation? After all, we’re talking about effects that include incurable conditions, cancer, and actual death in these cases. At some point, marketing and selling products with side effects that severe has to come back and haunt the company responsible.
On the other hand, if you’re as big as Johnson & Johnson, do you care?
We tend to think of companies like Johnson & Johnson as too big to fail, but precedent does exist. In the last 32 years alone, 20 companies worth $25 billion or more have filed for bankruptcy. Of those, however, only two (Lehman Brothers and Washington Mutual) had more assets than Johnson & Johnson currently does. More importantly, nearly every one of those bankruptcies was due to poor financial decision making — not reputation issues. In fact, many of those companies have successfully reemerged despite serious reputation issues.
We’ve also seen a number of large companies take severe damage to their reputation that didn’t seem to slow them down a bit — companies that have caused us serious inconvenience (Equifax), disregarded our privacy (Facebook), and misrepresented themselves (Wells Fargo).
It all raises some interesting questions. For example:
- At what point does a company or brand become exempt from needing to manage its public reputation, if ever?
- If damage control is needed, what’s the best way to do it when the allegations are so severe?
- Is it best for executives to speak directly to issues, or allow lawyers to speak for them?
I encourage you to leave a comment. What do you think the answers are, and how much do they vary by context?