Robert Wood Johnson II Was A Drug Titan Ahead Of His Time

The son of a wealthy, self-made man dallies at a prestigious prep school and must repeat his junior year. He graduates somehow, starts college, quits and drifts from one low-level job to another.

Sound like symptoms for a case of affluenza? Far from it.

It was the unorthodox self-education of an unusual business titan, Robert Wood Johnson II, who built Johnson & Johnson (JNJ) into an international pharmaceutical giant and among the world’s most-admired companies.

“He had a tremendous ability his whole life to generate really innovative ideas,” Margaret Gurowitz, chief historian for Johnson & Johnson, told IBD. “He started as a mill hand sweeping the floors, and he learned the business from the ground up.”

Johnson (1893-1968) made something of his birth to privilege via his work ethic and attitude toward those who worked for him. He did indeed take a pass on college, but only for an education that mattered more to him.

He worked in Johnson & Johnson manufacturing plants, moving from one job to another as soon as he learned all he could, earning the respect of co-workers and supervisors along the way.

Years later, when he got his shot to the run the company, he was a practical visionary, who:

Championed decentralized management long before it was standard practice.

Designed manufacturing facilities to be efficient, attractive and pleasant places to work.

Provided extensive employee benefits and good working conditions.

Fought for a higher national minimum wage, following his practice of paying above-average wages.

His Father’s Footsteps

There’s no question Johnson came by his talent naturally. His father boasted his own story of innovation and success.

Trained as an apothecary, Robert Wood I and his two brothers founded a medical manufacturing business in 1886 in New Brunswick, N.J. — Johnson & Johnson. They manufactured surgical dressings with antibacterial carbolic acid, a vast improvement over competitors’ products.

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Being the oldest son, Robert Wood II was expected to follow his father into the family business and eventually run it. Robert Sr. even took Bobby to business meetings as a teen.

He started work at 16, and for his first years he pursued his unorthodox self-education of working many lower-level jobs. He joined the board of directors at 21 and was running his own factory at 22.

He was aided in his rise because company leaders knew he would inherit the largest share of voting stock in the firm at age 25. But he proved himself at each step.

Staggering, Then Rebounding

Young Robert proved he could recover from a misstep. Enjoying drinking with his friends, he even showed up at work drunk once. His father had died unexpectedly in 1910, and Johnson’s uncle James took over as president of the firm. He threatened to sell the company if Johnson II kept up his carousing.

“Bobby immediately changed his ways,” wrote Lawrence Foster in “Robert Wood Johnson: The Gentleman Rebel.” “Convinced that he had grown up, the board of directors made him one of its members on April 15, 1914. The youthful Bobby had become a sober and serious Robert Johnson II.”

He may have been sober and serious, but he still had a restless drive that would define his life. In his late 20s, he convinced the board to move Johnson & Johnson into international markets over his uncle’s objections.

Previously, the company sold products internationally but had no facilities overseas.

“He was committed to establishing locally managed operating units around the world,” Gurowitz said. “He knew those units could understand and deal with local challenges far better than a centralized company.”

At 26, Johnson served as mayor of Highland Park, N.J., where he lived at the time. One incident from his time in office illustrates the drive he brought to every endeavor.

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While hosting a formal dinner at his home, a local woman called complaining no one had picked up her garbage. So the mayor — in formal attire — drove to her house, collected her trash, took it to the dump and returned to his party.

Uncle James served as president for 22 years, but for his last 12 years, his health was so precarious that leadership of Johnson & Johnson rested in a committee called the “board of control.”

By virtue of the stock he owned and his performance on the job, Johnson was the heir apparent, but the board of control advanced him slowly. It wanted him to mature.

Ride To The Top

Johnson finally joined the board of control in 1927. He was just 33. The board promoted him to vice president and general manager in 1930 and to president following his uncle’s retirement in 1932.

Johnson was a champion of workers’ rights and of women’s rights in particular. He continued his father’s practice of offering medical care, educational programs, plants with lounges and employee recreation activities.

He pioneered building factories on a smaller scale and with appealing design outside and in.

“He felt very strongly factories can be beautiful,” Gurowtiz said. “He believed Johnson & Johnson facilities should be an asset to the community.”

A National Stage

In the Great Depression, Johnson paid workers more than mandated by the National Recovery Administration.

During World War II, President Franklin Roosevelt commissioned him as a colonel in the Army and named him head of Smaller War Plants Corp., created so that smaller firms could get government contracts.

Fighting the bureaucracy so frustrated Johnson, he left the position even after FDR advanced him to the rank of brigadier general to increase his clout. Afterward, he was always known as Gen. Johnson.

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Back at the company he loved, he continued international expansion, acquired other firms and product lines, and created what is now called the Johnson & Johnson Family of Cos. Today, 250 companies in 60 countries fall into three divisions — consumer health care, medical devices and pharmaceuticals.

According to the J&J, it is the world’s fifth-largest pharmaceutical firm and sixth-largest consumer health company — with sales of $70 billion in 2015 and a stock that has rocketed 1,000% since 1994.

The Legacy

Johnson served as chairman of the board until his retirement in 1963, but he remained chairman of the company’s finance committee until his death at age 74.

Northwestern University’s school for hospital administration was the first of its kind in the country and was founded by Johnson. He developed the concept of hospitals organizing by clinical department — a standard practice now.

Among his most lasting creations was the $9.2 billion Robert Wood Johnson Foundation, funded with his $400 million estate.

Johnson married three times, to Elizabeth Ross, Margaret Shea — with whom he had children Robert III and Sheila — and finally to Evelyne Vernon.

During the Great Depression, in addition to paying workers a higher-than-required minimum wage, Johnson kept them working. He cut hours, reduced workweeks, took any steps to keep his people employed. Nationally, unemployment reached almost 25%. The number of people laid off at Johnson & Johnson? Zero.

 

Johnson’s Keys

Raised in privilege, he passed on college, started at Johnson & Johnson sweeping floors, expanded it into an international giant and never forgot to take care of his workers.

Overcame: Youthful wayward behavior.

Lesson: Take care of your employees, and they will deliver value to your shareholders.

“Why be difficult when, with a little more effort, you can be impossible?”

 

View more information: https://www.investors.com/news/management/leaders-and-success/robert-wood-johnson-ii-was-a-drug-titan-ahead-of-his-time/

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