As co-founder and co-CEO of my own startup, I’ve gained a bigger appreciation for business people that make unpopular but good decisions.
I have to make those kinds of decisions myself every single day. It’s never easy, and a part of me always wonders whether I made the right choice.
That being said, I truly believe brilliant leaders should always take action, even if they’re not 100% sure of the outcome. Inaction can often lead to even bigger problems.
As an example, these three CEOs showed off their leadership chops and saved their companies by making unpopular decisions.
James E. Burke & Tylenol tampering
In 1982, contaminated Tylenol capsules resulted in 7 deaths, including that of a 12-year-old girl.
In September of the same year, someone tampered with the packaging and laced the medicine with cyanide in Chicago.
A month later in California, Tylenol was laced with a different poison, strychnine.
Four years later, another woman died from cyanide poisoning in extra-strength Tylenol.
These chilling incidents seriously undermined the safety of Johnson & Johnson’s products.
But former CEO James E. Burke’s response actually earned him a Presidential Medal of Freedom from President Bill Clinton in 2000.
Instead of hiding from the negative press or shifting blame, Burke got in front of the crisesby:
- Recalling all Tylenol sold in October 1982
- Offering coupons to reimburse customers
- Stopping all advertising for Tylenol after the incidents
- Spreading awareness of the issue to doctors’ offices, hospitals, and trade groups
- Pushing for the development of the tamper-proof packaging we use today
- Discontinuing capsules after 1986 for ensured safety
When asked about the recall, Burke said that he listened and was sympathetic. “I was still very concerned that this was not the right solution, either from the point of view of the public or from the point of view of my company’s business,” he said.
Many considered the recall an overreaction until 75 cyanide-laced capsules were found.
Johnson & Johnson suffered immediate losses of at least $100 million and a 7% drop in stock price. But they quickly recovered and regained 30% of the market. Thirty years later, Johnson & Johnson remain a trusted brand in households everywhere.
Anne Mulcahy & Xerox’s cloud of bankruptcy
When Anne Mulcahy became CEO and chairperson of Xerox in 2001, she was getting on a sinking ship with all the odds stacked against her.
Mulcahy replaced an ousted CEO who only lasted 13 months on the job, and Xerox was teetering on the edge of bankruptcy.
Yet Mulcahy was able to transform Xerox by:
- Cutting annual costs and letting go of 22,000 employees
- Investing in research and development of new products and services
- Grooming new leaders prepared for the modern, hyper-competitive market
And, despite her critics, it worked. In 2000, Xerox lost $273 million. In 2001, when Mulcahy was hired, it had over $17 billion in debt. Yet by 2003 it had $91 million in profits.
Mulcahy is known for her direct management style. She spent the first 90 days on the job flying to various offices and listening to anyone who had a perspective on what was wrong with the company.
Instead of investing overseas to compete in markets where Xerox was losing, she cut those markets off completely. And instead of focusing on their most profitable products, she pivoted towards developing new technology.
Mulcahy’s abrupt ascent to leadership taught her the value of a long-term succession plan. The conversation about who would be her successor took place her first year as CEO.
By grooming candidates with the potential to lead the company early, she was able to give her successor, Ursula Burns, space and opportunity to prove herself. While she was CEO, Mulcahy gave Burns increasing amounts of responsibility. In 2009, Ursula Burns’ transition into the role was seamless, and she managed to keep the ship afloat during her tenure.
David Neeleman & JetBlue’s customer relations disaster
Everyone knows that customers are the lifeblood of any company.
But sometimes even the best companies mess up.
In February 2007, JetBlue dropped the customer relations ball.
Fortunately, the sincere and passionate apology of David Neeleman, former CEO and co-founder of JetBlue, may have saved the company.
A week of ice storms and freezing temperature on the east coast in February 2007 canceled many airlines’ flights, but only JetBlue had to stop their operations.
In total, 130,000 JetBlue passengers were severely inconvenienced and underserved. Some passengers were even stranded in planes on tarmacs for as long as 11 hours. It was utter chaos.
Other airlines smoothly dealt with the storm, so why did JetBlue fail so badly? Because they:
- Made decisions based on potential profit and not on customer comfort
- Unlike other airlines that canceled flights, JetBlue decided to wait out the storm to save money.
- Grew too quickly and failed to build up the infrastructure to deal with emergencies
- JetBlue lacked proper communications systems, which left pilots and flight attendants in the dark, and had an undersized reservation system.
- Stretched their employees thin to keep costs low
- Many employees weren’t trained to deal with weather emergencies.
Neeleman immediately took ownership of the disaster and apologized everywhere he could, including YouTube. He drafted a customer bill of rights to hold JetBlue financially accountable to their passengers.
He was still fired, but JetBlue was largely forgiven because of David’s accountability.
JetBlue has bounced back since their 2007 troubles and rank highly with customers. They proved to everyone that they were willing to work to regain trust. In 2012, JetBlue also had the lowest rates of canceled flights. Most recently in 2015, they ranked first in customer satisfactionamong passenger airlines.
Good leaders make hard choices
These three CEOs understood the importance of accountability and good long-term vision. They understood that customers are more likely to respect and forgive companies that apologize for their mistakes and take clear steps to rebuild trust
Ultimately, they were willing to do something unpopular in the short term because they knew that, in the long run, it would be the right thing for their company. I think all business leaders (myself included) can learn a lot from them.
SEE ALSO: 7 ways to earn extra income when you have a full-time job
Join the conversation about this story »
NOW WATCH: How to know if you have what it takes to be a CEO