Headlines read differently when you’re on the inside. And the house is burning.
In April 2003, emerging from my Executive MBA at NYU and just beginning my work with PwC, I was brought into the wreckage. Schering‑Plough and its subsidiaries had been embroiled in criminal and civil cases over drug pricing and marketing practices. The FDA had slapped the company with a sweeping consent decree, sharply restricting operations at key manufacturing sites in New Jersey and Puerto Rico. The company was staring at hundreds of millions in remediation costs and would ultimately pay more than $400 million in additional civil and criminal settlements over the next few years.
The financial damage was severe. The organizational damage was catastrophic.
In September 2002, CEO Richard Kogan was accused in shareholder lawsuits of selectively signaling a weaker earnings outlook to key investors while the broader market still held inflated expectations.
The stock collapsed 17 percent in a single day, from $21.32 to $17.64 per share.
Then it got worse. Employees didn’t need financial news to understand what had happened. They lived it. In after-work conversations—at wine bars in Kenilworth and offices worldwide—the refrain was relentless: criminal investigations, regulatory penalties, operational shutdowns. And now their retirement savings were evaporating too.
Into this wreckage walked Fred Hassan, a turnaround executive known for fixing broken companies. The board brought him in as Chairman and CEO in April 2003. Few CEOs muster that quickly. Hassan held a global town hall three days after his arrival.
That speed mattered. But what he did in that room mattered more.
Taking Control of the Narrative
When Hassan arrived, the organization faced a kaleidoscope of crises depending on which stakeholder group you asked. Criminal cases against a key sales subsidiary. $435 million in settlements. Shareholder losses. FDA manufacturing violations. A billion-dollar remediation bill. The imminent patent expiration of Claritin, the company’s flagship product.
In a crisis, employees expect two things: truth and direction. Hassan delivered both, but he did something more sophisticated. He established control of the narrative itself.
He laid out what he called the Schering‑Plough Action Agenda—a five‑phase transformation plan he expected to take six to eight years. Stabilize. Repair. Turnaround. Build the base. Break out.
This was textbook crisis leadership: communicate quickly, establish a clear vision, project confidence in the path forward. But Hassan understood something that most executives miss. A sound strategy fails if the people living it don’t believe in the story you’re telling about it. To many shareholders, he looked like a leader with a plan. But 55,000 employees—the ones with the most to lose—faced a different question: Why should I believe this time will be different?
That’s where narrative governance enters. Not the strategy. The narrative about the strategy.
The Perception Gap That Breaks Organizations
When Hassan arrived, the organization faced a kaleidoscope of crises depending on which stakeholder group you asked. Criminal cases against a key sales subsidiary. $435 million in settlements. Shareholder losses. FDA manufacturing violations. A billion-dollar remediation bill. The imminent patent expiration of Claritin, the company’s flagship product.
In a crisis, employees expect two things: truth and direction. Hassan delivered both, but he did something more sophisticated. He established control of the narrative itself.
He laid out what he called the Schering‑Plough Action Agenda—a five‑phase transformation plan he expected to take six to eight years. Stabilize. Repair. Turnaround. Build the base. Break out.
This was textbook crisis leadership: communicate quickly, establish a clear vision, project confidence in the path forward. But Hassan understood something that most executives miss. A sound strategy fails if the people living it don’t believe in the story you’re telling about it. To many shareholders, he looked like a leader with a plan. But 55,000 employees—the ones with the most to lose—faced a different question: Why should I believe this time will be different?
That’s where narrative governance enters. Not the strategy. The narrative about the strategy.
The Psychology of Organizational Resistance
How Hassan’s Narrative Actually Worked
What Hassan did in his first months reveals a principle echoed in research on large‑scale change, including work by Boston Consulting Group: the narrative must be governed before it goes public.
His Action Agenda became the coherent story people across the organization could use to make sense of what was happening. It gained traction in part because it spoke directly to three dimensions of organizational resistance.
Direct Communication of the Challenge
Hassan didn’t hide from the problems. He named them. He structured them. He laid out five phases with specific objectives: stabilize the company, repair the damage, turn it around, build the base, break out. By naming specific phases with specific milestones, Hassan gave employees something their brains needed: comprehensibility. A timeline. Measurable progress.
This helped counter the pull of learned helplessness. It suggested that action could produce results.
Organizational psychology research (Rehman et al., 2021) shows that perceptions of organizational justice, perceived organizational support, and leader–member exchange work together to shape employees’ readiness for—and resistance to—change.
Hassan’s appointment spoke to all three. The board pointed to his turnaround track record (a signal of fairness and competence). His experience suggested the company could survive and even recover (support). And his willingness to hold a global town hall within three days of arrival—to engage directly rather than hide behind press releases—signaled genuine member exchange.
Hassan didn’t ask employees to trust him in the abstract. He showed up.
A Pathway to Individual Value
Here’s where most leaders stumble. They announce a transformation. Then they wonder why people don’t engage.
Hassan understood that people don’t engage with organizations. They engage with roles that matter. So the Action Agenda emphasized that recovery would hinge on specific capabilities: world‑class manufacturing compliance, ethical sales practices, and innovative product development.
People with those capabilities became visibly more valuable to the organization’s survival. The insidious victim complex that infects troubled teams faced a counter-narrative. People could start to see themselves not as trapped in wreckage, but as part of an emerging solution.
That’s the narrative shift that moves mountains.
The Transformation Unfolds
Over the next six-plus years, Schering-Plough pursued the Action Agenda with systematic discipline.
Manufacturing compliance strengthened. Regulatory relationships improved. New products launched: Nasonex, Remicade, Temodar gained market share. OTC Claritin continued generating revenue intense generic and private‑label competition. Month after month, the company issued press release after press release—on approvals, launches, and results—as evidence accumulated that it was on a genuine path to redemption.
By 2005, Hassan was crediting the turnaround’s success.
During his tenure, Schering-Plough stock rose 62 percent while competitor stocks declined 21 percent. Commentators even coined a term for what Hassan had accomplished: the ‘Fred Factor.’”
Not his strategy. His approach to crisis leadership and organizational recovery.
That term should have been “The Narrative Factor.” But no one calls it that.
What I’m Asking You
In your own organization or experience, have you witnessed a crisis where the narrative was clear and employees responded with genuine alignment and resilience? Or have you seen the opposite—a sound strategy that failed because employees never actually believed in it?
What made the difference? What shifted?
Rehman, N., Mahmood, A., Ibtasam, M., Murtaza, S. A., Iqbal, N., & Molnár, E. (2021). The psychology of resistance to change: The antidotal effect of organizational justice, support and leader–member exchange. Frontiers in Psychology, 12, 678952. https://doi.org/10.3389/fpsyg.2021.678952
Kahneman, D., & Tversky, A. (1979). Prospect theory: An analysis of decision under risk. Econometrica, 47(2), 263–291.
Gartner. (2022). Enterprise change fatigue research (as summarized in):
Huy, Q. N., & Shipilov, A. (2023, May). Employees are losing patience with change initiatives. Harvard Business Review. https://hbr.org/2023/05/employees-are-losing-patience-with-change-initiatives
McKinsey & Company. (2023). The State of Organizations 2023 and related research on decision‑making and organizational alignment. (Used for general evidence of perception gaps between executives and employees on strategic decision quality, not for a single precise statistic.)
Schering‑Plough Corporation. (2003–2009). Annual Reports and Form 10‑K / 10‑K/A filings. Retrieved via company investor‑relations archives and the U.S. Securities and Exchange Commission’s EDGAR system. (These filings document the FDA consent decree, remediation efforts and costs, legal proceedings involving Schering‑Plough and its subsidiaries, and management’s description of the company’s turnaround agenda.)
U.S. Securities and Exchange Commission. (2003). In the matter of Schering‑Plough Corporation and Richard J. Kogan, Administrative Proceeding File No. 3‑11249 (Regulation FD proceeding); and SEC v. Schering‑Plough Corporation, Litigation Release No. 18330 (September 9, 2003). These actions address selective disclosure of material information and related securities‑law issues.