October 25, 2012 | Author: PM Hut | Filed under: Leadership
Leadership: The Divergent Tale of Two Leaders
By Timothy F Bednarz
In 1982, James Burke, CEO of Johnson & Johnson was confronted with the news of seven poison related deaths caused by Tylenol capsules laced with cyanide. He looked the facts in the face and immediately understood the gravity of the situation.
Against the vehement opposition from his management team, he decided to go directly to the public. Backed with a $ 50 million product recall, he communicated a strong sense of concern, openness and accountability as he frequently appeared on the major television shows of the time.
This contributed to the restoration of public trust and saved the Tylenol brand. He was strong, bold and decisive and this built trust and confidence. He placed his personal stature and reputation on the line.
His proactive communications brought his message to the public, and by doing so controlled the crisis, expectations and protected his company’s image and reputation.
Fast forward to 2010. Tony Hayward when confronted with the enormity of the Deepwater Horizon oil spill mounted a feeble public response.
Unlike James Burke, he didn’t immediately grasp the severity of the situation. He didn’t go directly to the public, but rather allowed a hostile media and government to filter his message, while they demonized him and politicized the crisis. He lost control, was hostage to events, and was perceived as weak and reactive.
Obviously it was easier for Johnson & Johnson to respond quickly with a total product recall, than it was for BP, which had to overcome extreme technical problems to cap a spill over a mile below the ocean’s surface.
However, Hayward could have taken a proactive position, communicating and educating the public about the challenges, progress and shaping their expectations regarding the capping of the spill and the subsequent clean up.
His response was further complicated by aggressive legal threats being made against BP by the Department of Justice. Rather than openly communicating with the media and public, communications were effectively shut down.
At the same time Hayward was perceived as tone deaf with comments about getting his life back. He appeared disengaged in front of Congress and unconcerned about the plight of the Gulf Coast citizens, while he attended a yacht race in England. Hayward was unaware that his personal stature and reputation were on the line. Whether or not these interpretations are true, perceptions are stronger than reality.
When Hayward was ultimately ousted as BP’s CEO, he complained about being demonized, victimized and vilified. Contrast that with James Burke’s actions, which are hailed as a textbook response to crisis management.
The two different outcomes can be attributed to diverse leadership styles. Burke was deeply influenced by Johnson & Johnson’s corporate credo, which stated that the “first responsibility” was to its customers and then to employees, management, communities, and stockholders. He reacted accordingly.
Hayward placed the crisis into the context of scale. He stated that in relation to the size of the Gulf of Mexico, the spill was relatively small. While that may be a factional response, it displayed a lack of empathy with the people affected by a potentially large environmental disaster.
He appeared indifferent to the pain and suffering experienced by these individuals. It shaped a perception of an uncaring executive motivated by profit. This was reinforced by the Obama administration, which was looking to shift the blame for its poor response. Hayward played into administration’s hands, surrendering control and losing his emotional standing with his key constituencies.
James Burke understood the importance of his emotional standing with all of his key constituencies, because it was ingrained into Johnson & Johnson’s culture. Tony Hayward did not.
Within a 100-day period, he destroyed his emotional bonds and standing with key constituencies. When BP posted a $ 17 billion loss, he lost his emotional standing and support with his board and stockholders. His reaction to the crisis unwittingly destroyed the trust, credibility and validity he needed to lead BP.
The lessons learned from Tony Hayward’s actions and response are quite clear. Leaders must pay close attention to the factors that contribute to their validity and legitimacy. Trust, credibility and a balance of emotional bonds and standing are fragile. They take time to develop, sometimes over the span of one’s career.
However, they can be destroyed, along with one’s reputation in an instant. Hayward placed his reputation and stature on the line, as the face of BP during this crisis. He ignored these lessons at his peril. Both suffered due to his leadership and it will take time to restore them.
For more information on this topic, refer to Great! What Makes Leaders Great: What They Did, How They Did It and What You Can Learn From It by Timothy F. Bednarz (Majorium Business Press, Stevens Point, WI 2011)
Timothy F. Bednarz, Ph.D. is the author of the 125 books included in Pinpoint Skill Development Training Series. He has also authored “Great! What Makes Leaders Great,” which was selected by “Foreword Review Magazine” as one of the top ten career books published in 2011, as well as a finalist in the “2011 Foreword Review Book of the Year Awards.”
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