DEVELOPING A GLOBAL MINDSET ATJOHNSON & JOHNSON

1. What are the potential benefits of Johnson & Johnson’s global platform strategy and its three-business segment organisational structure?

JOHNSON & JOHNSON as a holding company has reached a stage in its business where it has become extremely large, consisting of 180 operating companies world wide. Its initial strategy of decentralisation was and still is effective in achieving control and company’s targets. However due to its sheer number and distribution of company’s around the world it was still not optimising its processes and value chain. Due to favourable changes in international policies concerning trade and transport (shipping cost) the opportunity for globalisation became evident. The JOHNSON & JOHNSON global platform strategy takes clear advantage of this situation to rectify possible inefficiencies in the business.

The three major business segments were already established and have enabled JOHNSON & Johnson to group the companies according to similar products so that focus can be placed on each sector independently enabling for adequate control and effective strategy implementation to be achieved. From this, each segment was then divided into franchises that concentrated on individual products. This however was still not sufficient since there needed to be some integration between all these companies. This integration is finally achieved by the global platform strategy.

The global strategy forms part of the reactive strategy of the company, that is, the changing environment. This together with the planned strategy forms the integrated strategy of Johnson and Johnson. This is a positive aspect of J & J since it is responsive to changes in its environment.

The potential benefits of the global platform strategy are: Shared marketing functions within geographic regions Consolidated production. This has enabled JOHNSON & Johnson use only one

efficient plant in Italy to produce all shampoo products for the entire European region. This enables JOHNSON & Johnson make use of their efficient plants and close down the inefficient ones thus maximising plant capacities and increasing efficiencies. Due to competitive transport and export duties these products could then be distributed anywhere in the world.

Streamlining of product offerings to eliminate duplication costs. Standardisation of products within franchises allows the company to make quick

changes to keep pace with global competition. Facilitates internal sharing and development Embraces the needed changes to develop a global minset.

How might a global strategy yield advantage in the industry?

In order to streamline activities and reduce costs, support functions such as finance, human resources and information technology are now shared among operating companies. Thus by going global these functions can be integrated into one control centre for companies from different countries thus eliminating duplication of resources and improving process efficiencies. This effectively would reduce the overall overhead costs of the companies and increase profits. Especially in the pharmaceutical business

high costs are required for developing new drugs. JOHNSON & JOHNSON have established this and have thus created a centralised research facility. It is now identifying other potential common functions that can be shared among the other two segments. This strategy will result in JOHNSON & JOHNSON utilising fewer company resources to achieve greater outputs.

2. How important is the development of a global mindset to the successful implementation of Johnson & Johnson’s global platform strategy?

The development of a global mindset is very important to the success of JOHNSON & JOHNSON global platform strategy. JOHNSON & JOHNSON management must buy into the global platform strategy and must understand the importance of thinking globally instead of just concentrating on the strategies of the individual companies.It is expected that the JOHNSON & JOHNSON management would share responsibilities with other JOHNSON & JOHNSON managers around the world.

Why is it useful (even necessary) to expose Johnson & Johnson employees to cultures and markets outside their home country?

One of the factors to keep in mind is that leading cross-boarder culture change initiatives requires sensitivity to prevailing cross-boarder cultural differences. Also of importance is discerning how to adapt the case for cultural change to each situation and when diversity has to be accommodated and when cross-boarder differences can and should be narrowed. Employees need to expose to the culture that is built around respect for the worth and dignity of individuals, a strong sense of social responsibility and corporate citizenship. Also of key awareness is the respect for the environment, decentralisation of authority and decision making to local country managers (most of whom may be natives of the country), and heavy reliance on employee empowerment.

3. How important are employee leadership capabilities to Johnson & Johnson’s success?

Leadership capabilities of the employees play an important role to the success of the JOHNSON & JOHNSON business and more importantly the strategy implementation.

What are the company’s leadership expectations of its employees?

The company expects upper level managers to have some previous international experience and some knowledge of the globalisation together with ability to manage diversity. For lower level managers having a global mindset was not an immediate necessity but they were expected to pick this up on the job.

JOHNSON & JOHNSON required the managers to develop new skills to support the integration of the company’s business segments. These skills would consist of partnering colleagues, sharing responsibility with mangers in other units, cross-border communication and matrix management.

Managers have five leadership roles to play in pushing good strategy execution: Staying on top of what is happening, closely monitoring progress, ferreting out issues

and learning what obstacles lie in the path of good execution. Promoting a culture and loyalty that mobilises and energises organisational members

to execute strategy in a competent fashion and perform at a high level.

Keeping the organisation responsive to changing conditions, alert for new opportunities with innovative ideas

Excising ethics leadership and insisting that the company conduct its affairs like a model corporate citizen

Pushing corrective actions to improve strategy execution and overall strategy performance

Do you agree that Johnson & Johnson’s credo and the company’s Standards of leadership are important to the development of a responsive and innovative organisation? Explain.

Yes, the JOHNSON & JOHNSON credo and standards of leadership definitely supports and plays an important role in the propagation and maintaining a responsive and innovative organisation. JOHNSON & JOHNSON have identified that a flexible, responsive, innovative internal environment is critical for the industry where successful product differentiation depends on out innovating the competition. A key factor of innovation is the generating of fresh ideas, identifying new opportunities and developing innovative products and services this is not solely a managerial task but is organisation wide tasks. The credo clears states that “Employees must feel free to make suggestions and complaints”. The standards of leadership prescribe that JOHNSON & JOHNSON act and encourages others to be entrepreneurial, challenges and encourages others to challenge the status quo, generates and encourages creative ideas and finds new ways to do things better and faster. These all components that support and promote innovation in the business.

A useful leadership approach that would promote an innovative and responsive organisation is to place special emphasis on fostering, nourishing and supporting people who are willing to champion new technologies, new operating practices, better services, new products and who are eager for the chance to try to turn their ideas into better ways of operating. This approach is also clearly incorporated into the standard of leadership and credo.

Innovation and responsiveness require employees who are champions and as a rule the best champions are persistent, competitive, tenacious, committed and fanatic about their idea and seeing it through to success. This would call for an environment where individuals and groups have to be encouraged to be creative and people with maverick ideas or out-of-the-ordinary proposals have to be tolerated and given room to operate. The standard of leadership clearly prescribes that JOHNSON & JOHNSON embraces non-traditional ideas and practices and identifies and champions high potential talent as a JOHNSON & JOHNSON resource.

To be innovative and a market leader it is also important that management are willing to take risks and that they are given some flexibility to do this even thought there is a chance of failure. The JOHNSON & JOHNSON credo also provides for this where it is indicated that “research must be carried on, innovative programs developed and mistakes paid for”. The standard of leadership also encourages the seizing of the advantage of being the first, takes risks and manages them intelligently, fosters organisational flexibility and creates an environment that encourages risk taking.

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

J & J uses mainly on-the-job training to enhance the leadership capabilities of its managers but it does explore other means like partnering with colleagues, sharing responsibilities with managers of other units, cross-boarder communication and matrix management, along with global perspective and international experience.

How does the company’s recruiting process contribute to developing leadership capabilities necessary to compete globally?

The recruiters make use of the J & J Standard of Leadership as a reference for assessing potential employees and also evaluated entry level candidates for evidence of a global orientation. For upper level managers the candidates’ international experience was assessed together with their understanding of global-mindset, especially cultural diversity. The recruiters usually actively target candidates who had taken advantage of educational exchanges outside their home countries with degree programs that are internationally focused. J & J makes use of international recruiters who sought candidates for operating companies across the world according to their specific requirements. This would usually entailed campus visits to identify suitable candidates for the available jobs.

The leadership development program Europe focused on top MBA students in Europe who were placed in other European countries. This program required candidates to be multilingual and mobile and would usually move to others locations until they were assigned mentors to improve their management skills. From the Asia Global Managers program candidates selected were further interviewed by top management and once recruited were trained for nearly 18 months in locations always outside their home countries.

Its training and development programs?

J & J had sponsored in-company management development programs at universities and have also developed relationships with several other universities in the United States and the United Kingdom but they are now focusing on more in-house training. They feel that this approach enables them to tailor make the programs according to specific business needs, which will end up being cost effective in the long run.

J & J make use of development programs to enhance the leadership capabilities of the managers. The executive development program, which was driven by business needs, uses the method of action learning to induce the global mindset. This consisted of cross-boarder work groups that met in the field abroad whose purpose was to develop solutions for specific business issues.

J & J executive conference sessions consisted of selected franchise managers who formed a group to work to resolve specific business issues within the franchise. This meeting provided opportunities for managers to interact with other managers from other countries thus broadening their global perspective and improving communication channels. Executive committee members actively participate in this conference which is indicative of their commitment towards the program.

Its work assignments?

J & J have created the “stretch assignments” which is directed towards high potential managers with intention of offering new challenges and career opportunities and speeding up the development process. These usually consisted of international assignments and are based on tasks that the manager had previously completed with outstanding performance. This was used as a basis for succession planning and focused on building dynamic leadership.

5. How does Johnson & Johnson ensure that highest ethical standards among its leaders?

One of the primary attributes to the success of enforcing ethical behaviour of the employees is the support and dedication that is given by top management. Top management at JOHNSON & JOHNSON has established a strong corporate culture that is founded on ethical business principles and moral values as describe in the JOHNSON & JOHNSON credo. At JOHNSON & JOHNSON top management believes in and practices the ethical Credo. They lead by example when it comes to ethics. They consider the Credo to be the “heart and soul” of their leadership and take ownership of ethics development throughout the company. The human resource strategy on the employment of new employees, make sure that these new employees share the JOHNSON & JOHNSON values and then develop the employees based on the JOHNSON & JOHNSON standards of leadership. This is a key element that is used in screening out applicants who do not exhibit the compatible ethical and values character traits. JOHNSON & JOHNSON have also incorporated the statement of values and the code of ethics into the employee-training program. An example of this is the case based education program called “Ethics Toolkit” which helps teach the managers about ethical issues and values regardless of the prevailing cultural norms. JOHNSON & JOHNSON make it a point to effectively communicate the values and ethics code to all employees clearly explaining compliance procedures. Thus, JOHNSON & JOHNSON have ensured that ethical behaviour has been made a fundamental component of their corporate culture and this is the key component to the success of JOHNSON & JOHNSON ensuring that the highest ethical standards are followed and maintained by its leaders.

Why is it necessary for a company competing globally to have universal ethics standards?It is necessary for a global company to have ethical standards since subsidiaries in foreign countries can find themselves trapped in ethical dilemmas if bribery and corruption of public officials are common practices or if suppliers or customers are accustomed to kickbacks of one kind or the other.Also, a strong corporate culture that is based on ethical business principles and morals is a key factor that drives its strategic success.

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

Ensure that there are adequate incentives in place and that these are closely linked to the company’s goals and objectives.

Management must stay on top of what is happening and closely monitor the progress. This will help in identifying problem areas in the development of employees thus leading to a refined development process.

Management must create a culture that keeps the organisation responsive to changing conditions.

To further enforce the ethical behaviour of its employees the company can conduct an annual audit of each manager’s efforts to uphold ethical standards on the actions taken by managers to remedy deficient conduct. It could also require all employees to sign a statement annually certifying that they have complied with the company’ code of ethics.

Effective company mangers must try to anticipate changes in customer market requirements and proactively build new competencies and capabilities accordingly.

Should incorporate the following management education methods: Coaching Understudy assignments Off-the-job methods Sensitivity training Team building Behavioural-modelling training Simulation methods