Johnson & Johnson

Building resource capabilities and organizin g the work effort; managing the internal. Organization to promote better strategy execution; corporate culture and leadership - keys to effective strategy execution.

Questions 1: What are the potential benefits of Johnson & Johnson’s global platform strategy and its three-business segment organisational structure? How might a global strategy yield advantage in the industry?

There are several benefits of Johnson & Johnson’s global platform strategy and its three-business segment organizational structure. The overall goal is to decrease costs and increase revenues in order to maximize shareholder value. This is obtained by the following features:

- capitalize on the core competencies
- utilization of fewer company recourses
- shared marketing functions within geographic regions
- consolidated production (e.g. production of all shampoo products for the European market just in one plant in Italy)
- streamlining of product offerings (e.g. reduction of 75 different shampoo formulas for babies to only a few)
- elimination of cost duplication
- standardization of products
- quick adoption of changes possible
- keep pace with global competition
- use of changes in the economic macrosystem, e.g. reduction of trade barriers and shipping costs, unification of regional markets
- maximimum use of plant capacity
- increasing efficiency in e.g. R&D, production and marketing
- creation of new business opportunities
- cross-segment benefits
- use of up-to date management tools, like new ways of communication.

If the business wants to compete in the market with cost leadership strategy, the reduction of costs is a matter of success or bankruptcy. The benefits discussed above help to lower costs in order to gain a competitive advantage. For differentiation strategy, decreasing costs allow the addition of new features to increase the value of the product for the customer.

The global strategy is also a challenge, to develop not only new products, but it also demands interior changes of the business. The problem will be, to implement these changes within the corporation. The speed and quality at which it is realized, is of crucial importance. Top management did see the need for a global mind-set, which demands a local realization of global strategy. Communication is one of the core problems to be solved quickly. J&J is good at making, marketing and selling goods, as presented profits data prove, but the new global strategy will help to improve even better.

Question 2: How important is the development of a global mindset to the successful implementation of Johnson & Johnson’s global platform strategy? Why is it necessary to expose Johnson & Johnson employees to cultures and markets outside their home country?

The development of a global mind-set is of crucial importance to the business. As J&J compete more and more globally, the strategy changed and consequently, these new tasks have to be implemented into the business. Each corporation can only be as good as its employees. By implementing the platform strategy, interdependence among the workforce increases. People need to understand foreign habits and customs, in order to communicate properly, as well as they need to understand the needs of customers in different areas. For example, one might not market products with women displayed on the cover, who do not wear “appropriate” clothing in Islamic countries.

Company personnel in different parts of the world often insist on being treated as distinctive individuals or groups, which makes leadership a heavy task. However, cultural differences have to be obeyed as far as necessary, not as far as possible. Situations are different and so are the actions to be taken.

Another important fact is that strategies do not implement itself, but are implemented by the workforce. If they do not care or oppose these implementation plans, there is no proper way doing this. In order to avoid these problems, J&J recruits worldwide. They did put different programs into action to choose the best-fit managers.

There are several more reasons, why a global mindset implementation and the exposure of J&J employees is of crucial importance:

- to have the possibilities, to build an organization that has the competencies, capabilities, and recourse strengths for carrying out the strategy successfully - to budget in a way, that opens up new options for getting better positions in competition in the global market - to build strategy-supportive policies and procedures - to add value to the value chain - to reach “best practice” status - to be able, to compare managerial performance and to “hire or fire” (proper human resource management) according to evaluated issues - to create a supportive work environment - to get a proper corporate culture.

The ideal manager in the business thinks globally, but acts locally. In order to achieve that goal, J&J is very active in recruiting people all over the world and sends them for longer periods into different countries.

Question 3: How important is leadership to Johnson & Johnson’s success? What are the company’s leadership expectations of its employees? Why are Johnson’s Credo and the company’s Standards of Leadership important to the development of a responsive and innovative organisation. Explain.

Leadership is crucial to each business in the world. Without leadership, business is like a boat without a captain. It will soon or later titanic.

Leadership is the first instance in the corporation, to make the global mindset in the heads of the employees become reality. The CEO is in charge of implementation processes, like budget allocation, and screening of results. Furthermore, leadership hat to put a strong team together in order to realize the global acting strategy. The CEO is also often a motivating person, who personalises the ethics of the business. Furthermore, he/she is in charge of change in strategy if necessary or change in goals. Leadership is an important part of the corporate culture. He/she sets the vision of an enterprise.

Leadership expects from its employees:

- share responsibilities with other J&J managers - labour mobility, internationally - obey business’s credo and values - focus on customers and marketplaces in order to create values - to be innovative - to act interdependently with its partners - to master complexity - to be good at organizational and people development - international experience - knowledge of cultural diversity - global oriented - cross-border communication - matrix management abilities - lifelong learning

The credo and standards of leadership are of importance, because they set standards for customers image on the business. It is part of public relations. On the other hand, it is the guideline for employees, how to make business in different countries. Consequently, it is considered the “heart and soul” of a company.

According to these standards, new employees are selected. The workforce is developed around these values.

These issues are a good means, to differ J&J from the competitive businesses and makes it somewhat special and one people talk about. Impressive is the engagement on the local level.

Question 4:How does the company develop the leadership capabilities of its employees and promote a global mindset?

Leadership capabilities are developed by providing 60 specific behaviours that contribute to business results. These behaviours are subdivided into the following categories:

- customer/marketplace focus - innovation - interdependent partnering - masters complexity - organizational and people development.

These leadership capabilities have to be brought up to date constantly and are the core features, the manager has to focus on. By acting according to the content in these categories, a global mindset is developed.

Furthermore, leadership capacities, as discussed in the previous section, is developed by the values and the credo.

Additionally, recruiting policies consider people from all over the world, not only US- Americans. These people work together in special groups, in order to improve cross- border communication and to learn about foreign customs and behaviour. 18-month training in countries other that the home country are included in the training program.

How does the company’s recruiting process contribute to developing leadership capabilities necessary to compete globally? its training and development programs? its work assignments?

By employing people all over the world, leadership capabilities within the business are developed. These high potentials are recruited not only internationally, but also from the best schools only.

The standards of leadership are the guideline for the recruiting process. The “right” questions are to be asked according to these standards and the fit company- applicant can be observed almost immediately. The assessments include questions on international experience as well as on cultural diversity. Entry-level candidates have to have a global orientation. People with out of home-country education, are of interest for J&J. Furthermore, J&J just recruits from the best MBA-schools. Once having done the first step, candidates are asked by the top management. If accepted by the business, they are send abroad for an 18-months training. During the training, employees have to do broad, multidisciplinary assignments in order to find the right fit for the young professional. After having this program, many or stationed back in their home countries, because experience proved that this is the place, where results are best.

J&J also installed several training and development programs, in order to develop the capabilities to implement the global strategy. This includes:

- partnering with colleagues - sharing responsibilities - cross-border communication - matrix management. - develop broad global perspective.

Furthermore, J&J offers formal training programs, like in-company management development and in-house formal training programs. Additionally, the business offers ethic training. The provide an Ethic Toolkit in order to teach the employees to lean how to uphold the companies values regardless of prevailing cultural norms. Another program to develop leadership is the so-called “Stretch Assignments”. It should help to expand managerial skills and open up new challenges and career opportunities in order to build dynamic leadership.

Last but not least, J&J offers global coordination and development programs, which is to have managers to learn managerial skills through action learning. Cross-border work groups work three weeks on a project, providing suggestions how to handle the problems at the end of the time. It is also useful to networking and improving communication skills.

Question 5: How does Johnson & Johnson ensure the highest ethical standards among its leaders? Why is it necessary for a company competing globally to have universal ethics standards?

Ethical standards are linked to the standards of leadership. It says in the credo values: “Behave with honesty and integrity”. Consequently, ethical standards are solid guidelines. Furthermore, J&J´s training organization developed a case-based education program, called “Ethic Toolkit”. This program teaches employees how to behave in the spirit of the company. It helps, to handle front-line situations, teaches how to make decisions under consideration of ethics and helps to find help in case of an ethic grey area.

It is necessary to have an universal ethic standards, to build a strong corporate identity. It motivates the employees to be part of a whole system all over the world. It provides customers all over the world with the knowledge, that they find the same partners all over, without severe differences. Overall, it makes the business more reliable and helps to strengthen the brand name. It is an important driving force for making good business and ensures long-term success.

Question 6: What recommendations would you make to Johnson & Johnson management to further develop the calibre of leadership within the company’s global operations?

1. I would recommend not to reduce expatriate use as it happened from the 1980s on. J&J has to weight the costs reduced on the one hand and the benefits gained on the other. It is not clever, to reduce compensation packages, because less and less good managers are attracted to apply. Who wants the second row?
2. Career development programs should be expanded. It is cheaper to train an employee who already has got some knowledge about the business, than starting off with a new employee.
3. First priority, however, in on the need of able managers, because proficient strategy execution depends heavily on competent personnel.
4. By concentrating on fewer product lines and using the global platform, costs are saved and core competencies and competitive capabilities are build. J&J should further keep an eye on that.
5. Top management still has to focus on the structuring the organization and work-effort.
6. Keep on using a variance of practices to develop the knowledge base and build intellectual capital.
7. While implementing the new strategy, management should also expand strategy supportive policies.
8. I would suggest further working on managers evaluation systems, in order to get the best “assets” (workforce) into the company.
9. Survey new ways of training in order to improve the program.
10. Survey the need of different ranks within a business, its functions and disciplines between different regions. Motivation might increase and productivity as well.
11. Mangers need to be able and willing for change and constant learning. This fact should play a more important role.
12. Collaborative efforts should be expanded, as well as communications. The use of advanced technologies, like the internet, is of crucial importance.
13. Management constantly has to work on building a corporate culture. The working environment has to be strategy-supportive.
14. Management should use tools like benchmarking, in order to gain new skills to reach “best of practice” performance.
15. Important are the efforts for constant improvement of business and involvement and empowerment of the workforce. Management should enforce this.
16. Check the reward and compensation system and where necessary improve it.