• by Thom Forbes  @tforbes, September 14, 2012

Beleaguered by recalls, loss of consumer trust and, reportedly, sagging morale, Johnson & Johnson has named an outsider, Sandra (Sandi) E. Peterson, 52, to be the group worldwide chairwoman of its consumer health unit and a member of the company’s executive committee. She will have responsibility for the consumer group of companies, information technology and the global supply chain starting Dec. 1.

Erik Gordon, who teaches business at the University of Michigan, tells the New York Times’s Katie Thomas that it’s a “smart move” to bring “some fresh air in the executive suite,” pointing out that morale is suffering “from a decade-long culture of valuing profits over quality.” Gordon elaborates: “Bringing somebody from the outside in who was not part of that culture and who did not earn her promotions by going along with that is a good thing,” Gordon says. 

“Sandi Peterson is an experienced global leader known for her strategic thinking and proven track record in growing businesses,” says Alex Gorsky, who became CEO of J&J in April, in a statement. “She brings 25 years of experience to her new role, which will draw on her expertise in building fully integrated global businesses, and focusing on growth.”

People “familiar with Gorsky's thinking” tell the Wall Street Journal’s Jonathan D. Rockoff and Joann S. Lublin that “he believes J&J could benefit from an outsider's perspective, and the hire shows the premium he puts on fixing the consumer and supply chain issues once and for all.”

They’ve evidently got the right woman for the job. 

“Peterson is known as something of a corporate fixer, starting with her work at McKinsey & Co. advising companies like Mercedes-Benz on how to reverse sales lost to Japanese automakers, Rockoff and Lublin report. She has also worked at Medco, Nabisco, Whirlpool and, most recently, at Bayer AG, where she “was credited with breathing new life into medicines like its namesake aspirin and reviving a diabetes unit that makes blood-sugar monitoring devices.” 

At present, Peterson is based in Germany as head of Bayer CropScience, where she will remain through Nov. 30, and was not available for interviews yesterday. She will be based at Johnson & Johnson's headquarters in New Brunswick, N.J.

Peterson has experience in sales, marketing, research and development, supply chain, and "creating global platforms," company spokeswoman Carol Goodrich tells the Philadelphia Inquirer’s Linda Loyd. "Additionally, she can leverage her IT and supply-chain background to address the critical current needs in our consumer business."

In an interview with Leaders magazine published in 2011, J&J chairman and former CEO William C. Weldon was asked at the top, “What is it about the culture of Johnson & Johnson that has made it such a success….” Echoing the sentiments of the company’s credo, written by longtime chairman Robert Wood Johnson in 1943, he replied: “The thing that always stands out to me is the people at Johnson & Johnson. They have always been committed to service of patients and people who use our products.

Weldon explains that the credo, written when the company was going public, “lays out the four responsibilities that we have: first, to the people who use our products; second, to our employees; third, to the communities in which we live and work, so social responsibility, as we all know it today; and fourth, to our shareholders who should get a fair return.”

But critics have charged that J&J management has been putting the interests of its fourth constituency above the others in recent years.

A Bloomberg Businessweek article by Alex Nussbaum, David Voreacos and Greg Farrell in March 2011, detailed quality control issues at J&J. In that story, the University of Michigan's Gordon says: “This is a real American tragedy. They really have blown one of the great brands.”

Weldon was adamant, however, that the company had not lost its way. “‘I can tell you factually that we will never put a dollar ahead of a patient,’ he says, jabbing his finger in the air, his voice losing its typically measured tone,” Bloomberg Businessweek reported.

Merriam & Associates, a boutique-branding agency led by Lisa Merriam and based in New York City, noted in a January 2011 blog posting that the J&J brand had lost 27% of its value, according to a Grant Thornton report that had been completed before some additional recalls, including Rolaids. 

“Restoring share of market and brand reputation will take plenty of money and even more time,” Merriam wrote. “Of course, nothing can be done until the first step in brand repair can be taken, and that is: fix the problem -- something that month after month of recalls, plant shutdowns and management shakeups haven’t been able to address.”

One trusts that the brand that “so long has stood for trust” is attempting to do just that with the appointment of Peterson.