Okay, so why do I bring up trust at this juncture. Well, I believe that organizational sustainability is about being trusted by your stakeholders…that is, do people trust you will do the right thing; that you will bring forward products and services of value to the community; that you will react appropriately and quickly when you make a mistake; will you keep your brand promises over the long haul; and finally, will can investors, buyers, customers, and employees be “proud” to be associated with the organization.
Now that seems like a big deal, and maybe a lot to ask a company. Most companies think that a good quality product, brought forward at the right price and at the right time should be all that is necessary to sustain growth and markets share. As they say on the televised game JEOPARDY: WRONG ANSWER! From what I have seen, there is a latent expectation that companies will do the right thing, and quickly, to stay in business.
Let me give you a great example. Many of you may not remember, but in 1982, there was a tremendous crisis that took place with Extra-Strength Tylenol®, manufactured and distributed by Tylenol. There was an apparent tampering and contamination with cyanide of several bottles of Tylenol. People died from the contamination. Overnight, Tylenol became a dreaded weapon of death. But what made this a remarkable case is that CEO James Burke immediately recalled and pulled off the shelf all bottles of ES Tylenol in inventories throughout the world, at a cost of $100 million. It also ceased production of all ES Tylenol worldwide. The justification of the action was simple: Burke had referred to the credo written by the Robert Johnson, in 1943, and knew exactly what to do:
“We believe our first responsibility is to doctors, nurses and patients, to mothers, and fathers, and to all others who use our products and services.”
It was painful. They went from 35% market share, to 8% before the year was up. But, they continued to communicate with the public and have regular press conferences. By spring of 1983, they released the new safety bottle…a market standard since then…which had a triple seal. They had regained the public trust, and completely recaptured their market share, and their stock prices exceeded the price when the crisis broke the previous year. In fact, Less than four years later, they had another crisis, and they knew how to react, and the public knew they would react appropriately and quickly. This time, they didn’t lose market share, nor feel a significant loss of value. People “BELIEVED” that Johnson and Johnson would do the right thing. They trusted them. They KNEW that J&J would be trustworthy.
Recently, Dr. Harold Kerzner and I had a conversation about this very subject, which was recorded live on camera. Both of us recounted many incidents in our experience where trust in companies was endangered due to a breach in public trust. It is interesting because we both agree that the issue of ethics and trust, in the face of massive media exposure, is one of the most crucial cornerstones of organizational sustainability. And yet, one of the least discussed subjects, especially in project teams. That just won’t work anymore…when something like the Tylenol scare happens…everyone in the company or associated with the company is watching to see what happens. Act inappropriately, and the company will go under. You can bet on it.
Image credit: inhuman tsar/Flickr