September 25th, 2007
Sharing the Learning Curve
I have only been a part of Johnson & Johnson since the beginning of the year, and so I get questions from my friends and family all the time about what it is like now to be working at Johnson & Johnson, “the baby company.” This question is usually followed by a request for baby lotions, beauty products or Band-Aid Brand adhesive bandages.
It can be a steep learning curve coming into Johnson & Johnson and getting up to speed on its many businesses, but as I learn things I hope to share some of my observations with you. I want to provide a voice on JNJBTW that brings a bit of an “outsider’s” perspective.
Johnson & Johnson is no different than most companies in the fact it faces sizable business challenges every day. For example, as a health care company with a pharmaceuticals business, we have to deal with how to replace significant revenues from drugs that will be going off patent and how to handle unprecedented reimbursement challenges for drugs like erythropoiesis-stimulating agents (speaking of my learning curve…).
There is a healthy curiosity and a natural skepticism in the marketplace about how companies, including Johnson & Johnson, can overcome such challenges. And while that skepticism is understandable and a critical piece of what makes our markets work, I am surprised at how little credit is sometimes given to a company’s track record.
Speaking at the Bear Stearns Healthcare Conference recently, Chairman and CEO Bill Weldon tipped his hat to Johnson & Johnson’s past:
When you look at any point in time, Johnson & Johnson has faced many competitive challenges as well as industry challenges. The test for any business is to find the right path to navigate these challenges, involve stakeholders and achieve sustainable, long-term growth.
A brief look back at Johnson & Johnson history shows how the company has “navigated” the past 120 years, evolving from a small medical products and surgical dressing company in 1886 to what it is today.
— Johnson & Johnson saw globalization as a critical piece of its success early on, opening its first international affiliate in Canada in 1919 and expanding ever since, selling products throughout the world with more than 250 operating companies in 57 countries.
— In the 1950s and 1960s, the company looked to broaden its footprint in health care when it expanded from consumer and medical goods into pharmaceuticals with the acquisition of McNeil Laboratories and Janssen Pharmaceutica.
— In the 1990s, Johnson & Johnson entered the biotech industry with the formation of Ortho Biotech and acquisitions of Centocor, ALZA and others. J&J’s purchase of DePuy in 1998 made it a leading player in orthopaedics and increased its strength in the medical devices arena. And, the company’s most recent acquisition of Pfizer Consumer Healthcare has raised the contributions of consumer goods to the overall business again.
Challenges have occurred in every era, but one of the company’s main operating principles is to manage for the long term — and not to shift course simply to obtain short-term gains from the “whim du jour.” Over the years, the company has pioneered innovations, acquired new technologies and compounds, or devised new strategies to address the times and build long-term success.
Johnson & Johnson’s leadership is fully aware of this history — learning from both its wins and losses.
As Johnson & Johnson founder General Robert Wood Johnson said succinctly in 1963, “Yes. We have made mistakes in the past … [but] in the future we will be right more often.” Consider this: Of the companies named to the first Fortune 500 list in 1955, Johnson & Johnson ranked 159. Only 74 of the original 500 remained on the list as of 2006. And of those 74, Johnson & Johnson ranked 12th.
Past performance does not guarantee future results, but it sure is a comfort.