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Nothing is more important than the health and well-being of those we love. That’s why the Johnson & Johnson Family of Companies for more than 125 years has committed itself to caring for people. This commitment—a legacy of our founders and a very real motivating force among our employees—is embodied in Our Credo, which speaks to “our first responsibility” to the doctors, nurses, patients, the mothers and fathers and all who use our products.
The success of our enterprise is built on Our Credo and a unique set of strategic principles. We are broadly based in health care. Our focus is on managing for the long term. We operate under a decentralized management approach. And we do all this through a unique culture that values and fosters the development of our people.
In today’s highly competitive global marketplace, it is also essential that we focus on the critical drivers of our future growth: to create value through innovation, to extend our global reach, with local focus, to execute with excellence in everything we do and to inspire leadership with purpose among the people who carry on the Johnson & Johnson legacy. By caring, one person at a time, we aspire to help billions of people live longer, healthier, happier lives. There is no company better positioned to achieve this aspiration than Johnson & Johnson.
Our Credo is a constant in a time of remarkable change:
health care is one of the greatest social challenges—and opportunities—of our generation. Globally, we operate in a growing $6 trillion health marketplace. Growth is driven in part by demographic trends—anaging population in many developed countries and an expanding middle class in emerging markets—both of which are accelerating demand for health care. Governments need help in managing the rise of chronic diseases among growing populations. Consumers are becoming increasingly empowered in making their own health care decisions. There is increasing demand for preventative care. Yet, challenges abound. Economic growth continues to lag in many parts of the world, and governments are increasingly focused on their costs as they work to reform health care systems. The cost and complexity of bringing meaningful innovations to market remain as significant as ever. Despite these challenges, throughout Johnson & Johnson we are profoundly optimistic about our future, about our competitivenessin this fast-changing, rewarding market, and about our ability to make positive, life-saving and life-improving differences.
Our strategic principles have served our company well for decades. Along with Our Credo, they are the foundation from which we drive growth, and they have enabled us to achieve dramatic advances in health care for our patients and customers.
As a major player in three market segments and with a focus on the full continuum of care—prevention, diagnosis and treatment —Johnson & Johnson competes in fully one-third of the global health care marketplace. Our breadth helps drive consistent performance and enables us to pursue growth opportunities—including in some of the fastest growing segments of health care —wherever they arise. It allows us to respond to purchasing trendswith governments and large customers. Perhaps more important, it allows us to think about patient care holistically, drawing on insights from multiple perspectives in a disease category. In the end, being broadly based allows us to stay true to Our Credo in the face of an ever-evolving health care environment.
At Johnson & Johnson, our focus is on managing for the long term—building the long-term equity of our brands, building sustainable customer loyalty and building shareholder value over time. As a result, 70% of our sales are from products that are #1 or #2 in global market share. Key to this long term approach is disciplined portfolio management—maintaining focus on specific therapeutic areas and building a critical mass of innovation in those areas. Indeed, we invested $7.5 billion in R&D in 2011 and have one of the strongest new product portfolios in the industry. Approximately two-thirds of our growth over the past 10 years has come from organic growth tied to innovation, with the balance coming from licensing, partnerships and acquisitions.
Our decentralized management approach is based on our belief that our leaders—those closest to patients and customers—are in the best position to understand and address their needs. This philosophy has been critical to our global expansion. Our R&D centers in emerging markets develop products based on local insights and patient needs—often starting with one of our powerful global brands. We’re expanding our product offerings to meet the unique needs of the growing middle-class and emerging markets in high-growth countries.
Our people and values are the common thread behind Our Credo, our strategic principles and our growth drivers. Johnson & Johnson people are engaged, caring and committed. The unique Johnson & Johnson culture and the values are inspired by our company’s Credo. They are complimented by extensive efforts to cultivate and develop the talents of our people. At Johnson & Johnson, we are committed to attracting, developing and retaining the very best talent—talent that fosters our aspiration and growth.
Within the context of Our Credo and strategic principles, there are specific areas of focus for Johnson & Johnson that will help ensure our robust growth and prosperity for the future.
Innovation at Johnson & Johnson means products, but it also means solutions. Innovation is a core component of our business success: one quarter of Johnson & Johnson’s global revenue comes from products introduced within the past five years. Meaningful innovation derives from the insight and spirit of our employees, and their ability to anticipate and understand the needs of our patients and customers and what they value. That impacts both what we do, and how we do it. So, while Johnson & Johnson will remain a leader in Research & Development, we are increasingly focused on being innovative in how we bring products to market, the kinds of partnerships we develop and how we operate our business. At Johnson & Johnson, innovation is everyone’s responsibility.
Johnson & Johnson is truly a global company, managing facilities in some 60 countries, and selling products in about 200. We touch more than one billion people around the world every day, but helping the next billion people might not be so easy. In the developing world, income levels, while growing rapidly, are lower. Unmet health care needs abound. Demand for health care in these markets is growing three or four times faster than developed markets. While we are headquartered in the U.S., our mindset is global—we’re focused on new products, new technologies and new business models that truly connect with the way our customers live. Already, 55% of Johnson & Johnson’s business comes from outside the United States; and that proportion continues to grow. In this new world, our focus is on expanding our presence to help more people and delivering health care in a sustainable way.
Nowhere is the need for excellence in execution more critical than in health care. Strategy is only as good as the ability to execute flawlessly—focusing and setting priorities; doing the right thing, not just getting it done; meeting milestones; delivering on commitments. Excellence in execution starts with quality, a top priority at Johnson & Johnson and one embodied in Our Credo by a commitment that “everything we do must be of high quality.” It must permeate everything we do, from operational procedures, to the actions of each employee. Our strategies, business plans, organizational structures and everyday decisions recognize the need to focus resolutely, then execute with excellence.
Our Credo and aspiration drive us to create innovations that significantly impact human health and well-being. They ground our roles as professionals in a larger purpose, and put significant responsibility on each of us as leaders. Johnson & Johnson fosters great leadership through strong talent development programs, offering leadership opportunities around the world. This is where our commercial interests and sense of social responsibility intersect. Everything we do—expanding globally to serve more people, increasing access to our products, fostering innovation in our labs and commercial workplaces and building sustainability into our products and operations—is designed to serve a greater good. In the end, it is this commitment that attracts and motivates our people and differentiates us in the market.
The pursuit of our Growth Drivers is guided by the Leadership Imperatives: Connect, Shape, Lead and Deliver. They are proof that we recognize that how we achieve results is as important as the results themselves. We expect leaders to develop deep insights into the needs of our stakeholders, to drive innovation and advance health care globally by anticipating and shaping change in our industry, to create an environment where leadership and talent development are top priorities and to deliver results by inspiring and mobilizing people and teams.
We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services. In meeting their needs everything we do must be of high quality. We must constantly strive to reduce our costs in order to maintain reasonable prices. Customers' orders must be serviced promptly and accurately. Our suppliers and distributors must have an opportunity to make a fair profit.
We are responsible to our employees, the men and women who work with us throughout the world. Everyone must be considered as an individual. We must respect their dignity and recognize their merit. They must have a sense of security in their jobs. Compensation must be fair and adequate, and working conditions clean, orderly and safe. We must be mindful of ways to help our employees fulfill their family responsibilities. Employees must feel free to make suggestions and complaints. There must be equal opportunity for employment, development and advancement for those qualified. We must provide competent management, and their actions must be just and ethical.
We are responsible to the communities in which we live and work and to the world community as well. We must be good citizens — support good works and charities and bear our fair share of taxes. We must encourage civic improvements and better health and education. We must maintain in good order the property we are privileged to use, protecting the environment and natural resources.
Our final responsibility is to our stockholders. Business must make a sound profit. We must experiment with new ideas. Research must be carried on, innovative programs developed and mistakes paid for. New equipment must be purchased, new facilities provided and new products launched. Reserves must be created to provide for adverse times. When we operate according to these principles, the stockholders should realize a fair return.
