Joe Wolk was about 5 years into his 23-year career with Johnson & Johnson when he was encouraged to take a manufacturing operations position at a newly acquired J&J company in Vacaville, California.
One hot July day, Wolk recalls, he and his wife drove up to Vacaville to visit the plant, where he ended up taking a seat across from the newly acquired company’s plant manager.
As one of Vacaville’s initial J&J transplants, the young finance executive sensed that his arrival was being viewed less than enthusiastically.Read More
“Within the first 90 seconds, he says: ‘Hey, you know what? I don’t think we need you out here,’” Wolk remembers, citing those words as the plant manager’s first remarks.
Thus began one of Wolk’s least favorite but—as he explains—most rewarding career experiences.
“The first 4 months in that job were like going to the dentist every day,” says Wolk, who tells us that ultimately the reward from the experience was a lesson in when and how to stand your ground.
The lesson began at a team meeting where Wolk tried to offer the plant’s management some practical advice with regard to how to prepare for an upcoming visit from senior J&J executives.
At the time, Wolk says, the plant was working to address a number manufacturing issues as it tried to determine how best to meet customer demand.
Wolk recalls the plant manager’s response to his advice: “We’d like to meet your wish list, but we don’t have time for this right now.”
Instead of just accepting the manager’s feedback, Wolk reports, he arranged a private meeting with the manager, where he boldly elucidated the items occupying his “wish list.”
“If they come out here next week and we can’t provide certain answers, we’re going to have a mess on our hands,” were among the words that Wolk says that he used to prod the plant manager’s thinking.
In the end, the visiting J&J executives were satisfied with the plant team’s answers, and Wolk’s reputation grew in the plant manager’s eye.
“From this point on, he didn’t take a meeting without including me,” concludes Wolk, who uses the story to underscore how finance executives must be ready to summon the courage of their convictions. –Jack Sweeney
CFOTL: Many finance leaders tell us that the pandemic has in certain ways influenced how they look at business and the role that it plays in all of our lives. Has the pandemic changed how you look at J&J or how you’ll manage the business going forward?
Wolk: Yes. You know, this is a great question in view of how much ambiguity there’s been over the past 18 months. I think about the first quarter for which we were going to report results during the pandemic. Our competitors were pulling guidance, and Alex Gorsky, our CEO, and I would debate on almost a daily basis during the 2 weeks leading up to our earnings announcement whether we should provide guidance or not. There’s was much uncertainty—how could we? We just came to the conclusion that if Johnson & Johnson—the world’s largest healthcare company, which happens to be working on a vaccine—just kind of showed up, shrugged its shoulders, and said, “Damned if we know,” this would not be good not just for Johnson & Johnson stock, but also probably for markets in general.Read More
I don’t know if it was correlation, causation, or just a coincidence, but look at how quickly the markets rebounded and the recoveries happened. It’s critically important to understand your stakeholder value as a company. This could go for individual brands as well. Know what you’re good at. At Johnson & Johnson, we believe that we’re good at being transparent. We went out with guidance. We said, “Here’s what we kind of know, and here’s what we don’t know, with how we’re watching it.” I think that this was well received by the markets—it certainly was by the analysts who cover us, and it became somewhat of a template going forward.
The other thing that I think is critically important is to know who you are. At Johnson & Johnson, we do manage for the long term. Of the two things in which I took particular pride regarding the financial management of the company during 2020, the first was around our dividend policy.
With many financial metrics basically providing nothing but a lot of ambiguity, we did see a number of companies across a number of industries—probably rightfully so—pulling back on dividends and maybe even suspending them. We leaned in and increased ours for the 59th year. We thought that this was important because it’s what investors have come to expect from us. We certainly thought about the large institutions that say, “Hey, you’re part of our portfolio because of the dividend that you pay. But we also thought of all of the retirees who are on fixed incomes, for whom a dividend-paying stock these days in this low-interest-rate environment is pretty meaningful with regard to how they’re going to get through the next month of bills.
The second thing was—and this really focuses on the long term—that we increased our R&D investment by roughly $800 million last year. Again, when people were pulling back, we said, “Boy, there’s a lot of ambiguity, but the one thing that we know for certain is that the long term matters.” How do we fortify the future? How do we capitalize on opportunities and use some of the financial strength that we’ve built up over decades to ensure that the next couple of decades will be as strong, if not stronger, than recently ones? When we think about investments, we certainly want to meet our short-term objectives and expectations, but we’re also thinking well into the second half of this decade and even into the next decade when we contemplate our R&D budget.
I’m not alone in taking pride in these two points where, despite all of the ambiguity, we knew what people expected from Johnson & Johnson, we knew what we expected from ourselves, and we knew what our success template had been in the past—and we doubled down on all of them.
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