JOHNSON

AND JOHNSON (A): PHILOSOPHY AND CULTURE

GROUP-03



1. James Burke is quoted, “Our culture is really it.” What is the culture of Johnson and
Johnson?

The culture at Johnson and Johnson was characterized by a decentralized organization
with an adherence to the principles embodied in the Credo and the emphasis of
managing the business for long term. At J&J, people were provided with an
opportunity to grow by giving them more responsibilities. Mutual respect within
individuals and teams was a characteristic of the organizational climate and that was
evident from the process of decision making where everyone was free to put his/her
point forward and once the decision had been finalized, everybody was expected to
deliver his/her best performance to make the decision work.

A strong culture formed the backbone of the systems and processes at the company
where all employees were aware of the guidelines in the Credo which provided a
framework for all decision making process. The employees adhered to the Credo and
reflected the same in their behavior, attitude and decision making process.

This strong culture was majorly responsible for the success of J&J as a decentralized
organization where autonomy was preserved for the new acquisitions and decision
making was pushed down the vertical hierarchy. This led to an atmosphere which
cultivated innovations and creativity and autonomous businesses could organize
around a given market need and a given set of customers.
The company believed in Decentralization=Creativity=Productivity.

Robert Johnson understood the merits of a free enterprise and thus led J&J to become
such a company. He also had strong views on the responsibilities of his company
towards its stakeholders namely its customers, employees, community and
shareholders which were reflected in Credo which governed the decision making
process and also provided employees with a moral compass to take better decisions.

2. How did Johnson and Johnson develop such a “strong” culture?

Robert Wood Johnson who was the chairman of the company from 1938 to 1963 is
generally credited to be the person most responsible in shaping the company’s
philosophy and culture. It is his vision which saw decentralization as correct form of
organizational design which led Johnson and Johnson foster an environment of
learning, innovation, creativity and high productivity. He also had strong convictions
about the responsibilities of J&J towards its stakeholders namely its customers,
employees, community and shareholders which were reflected in Credo which
governed the decision making process at J&J.

 Decentralization provided the opportunity for various units to remain autonomous
and take decisions in accordance to their decided mission to serve the market needs
and customers. J&J’s focus on learning and innovation led to handling of more
responsibilities by a person which advanced his career much more than it would be
possible at any other company.

Credo, which was the framework followed by all employees in decision making was
also majorly responsible for shaping a strong culture at J&J. The Credo was placed in
every manager’s cabin to constantly remind them the message Credo imparted as well
to guide them in making decisions. This helped them remain committed to the goals
of the company as well as its responsibilities to various stakeholders. The Credo has
been majorly responsible for the success of Johnson and Johnson as a decentralized
organization and its operation as a free enterprise. The Credo has also been
responsible to preserve the family like atmosphere in the face of rapid growth and
expansion.

3. How do you assess the role of “Credo” in shaping a strong culture at J&J?

The Credo forms the basis of J&J cultural system. The framework stated in the Credo
establishes the entire structure of the J&J decision-making process. The document
clearly defines responsibilities of the company towards its customers, employees,
community and finally its shareholders. In addition to the four hierarchies of
responsibilities, the Credo also espoused other values, which work as additional
guidelines to inspire the employees’ decisions. Through the Credo, the top management
could implement their idea of an ideal culture they want for the company, using it as
the underlying and unifying philosophy guiding all important decisions. In summary
the Credo served the following roles:

1. Formalized views on public and social responsibility by Robert Wood Johnson.

2. Underscored company’s responsibilities to its customers, employees, communities
and stockholders.
3. Underlying and unifying philosophy guiding all important decisions.
4. Responsibilities towards employees was exemplified in “Live for Life” program,
aimed at making the employees the healthiest in the world.
5. Another example was presented during the Tylenol crisis where the company
portrayed its willingness to do what is right regardless of cost.
6. Credo embodied the ethical principles which the employees at the company adhered
to passionately.

The Credo was placed in every manager’s cabin to constantly remind them the
message Credo imparted as well to guide them in making decisions. This helped them
remain committed to the goals of the company as well as its responsibilities to various
stakeholders.

The Credo has been majorly responsible for the success of Johnson and Johnson as a
decentralized organization and its operation as a free enterprise and not as a large,
ponderous ineffective organization. The Credo has also been responsible to preserve
the family like atmosphere in the face of rapid growth and expansion.
4. What is the organizing logic of Johnson and Johnson?

Johnson and Johnson, an assemblage of 150 companies, can be considered as a group
of small, autonomous, wholly owned subsidiaries. The key organizational units were
these companies at Business Level and an Executive Committee at the Corporate Level.
The organizing structure was as follows:
1. Autonomy was preserved for the new acquisitions done.
2. New independent units were spun off from existing organizations when they were
ready to respond to new market opportunities on their own. This was done to keep
the mission of the original company intact and let the newly spun off company
pursue the peripheral opportunity.
3. J&J had a philosophy to organize each business around a given market need and a
given set of customers.
4. Each company had a well-defined mission and it submitted periodic financial
reports and dividends.
5. Among 150 companies, 20 to 25 were ‘source’ companies which were leaders in
developing products and markets that were the basis for formation of new
companies.
6. Each company had a group chairman who reported to a member of the executive
committee and was responsible for an assigned group of operating units.
7. 11 members of the Executive Committee consisted of the CEO, President, VP for
Finance and Administration.
a. EC had two main issues to handle: resolving conflicts among business level
units and identifying new avenues to discover new opportunities for
growth.
b. These functions of the EC led the operating units become more efficient
and effective in handling their day to day activities and achieve their
mission.
8. J&J had corporate staff groups for central staff support functions like HR, Finance,
Legal, Science and Tech, and MIS. Their roles were planned keeping in mind that
they do not hamper the organizational structure.

The above structure was used to leverage the benefits of decentralization which in
turn promoted innovation, creativity and thus productivity. The relationship between
the operating units and executive committee was crafted such that there is utmost
synergy in their functioning. Strategic Planning, HR, Compensation Systems were the
support system to these units and the EC.

5. How culture is aligned with other aspects of design elements?

The design elements include Formalization, Specialization, Hierarchy of Authority and
Centralization. These form the Structural Dimensions of an organization. Culture is a
part of the Contingency Factors which also include Environment, Size, Technology,
Goals and Strategy.

Culture is the underlying set of key values, beliefs, understandings and norms shared
by employees. These underlying values and norms may pertain to ethical behavior,
commitment to employees, efficiency or customer service. It provide the glue to hold
the environment together. Culture is unwritten but it can be observed in its stories,
slogans, ceremonies, dress and office layout.

1. Culture is an integral design element in an organization.
2. Culture integrates members of the organization.
3. Culture helps the organization to adapt to the external environment.
4. Culture should reinforce the strategy and structure that the organization needs to
be successful in its environment.
5. A focused change in the underlying cultural values and norms is required to be
able to achieve a new way of thinking.
6. Culture define people’s core values and establishes way of thinking and doing
things. Changing the culture of a workplace can be a challenging task.