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based on performance; treat your employees like family; and, most impor-
tant, treat every customer “like a guest in your home,” as he said.
From the beginning, Walgreens combined these basic values with a sur-
prisingly bold sense of adventure that prompted the company to invent
the milk shake, expand the lunch counter, introduce self-service, and
launch an unprecedented expansion program it is riding to this day.
Walgreens™ chief executive officers have gambled the company™s future
more than once; and so far, their calculated risks have paid off enormously.
Walgreens™ formula, if it can be called that, has survived depressions, re-
cessions, boom times, and wars, while countless business trends”and the
superficial, often unethical companies that trumpeted them”have come
and gone, falling by the wayside, wave after wave. Walgreens prides itself
even today on being a “boring company.” But when you compare it to
once-proud concerns like Kmart who™ve lost their way and to the Enrons
of the world who™ve taken thousands of innocent employees and investors
down with them, you gain a renewed appreciation for the Walgreens Way.
This book tells the story of how it started and why it has thrived.

JOHN U. BACON
Ann Arbor, Michigan
March 2004




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acknowledgments




W hen I set out to research and write this book about America™s
greatest drugstore chain, I quickly realized I faced more obsta-
cles than the average author might have. This is primarily a business book
and secondly a historical work, subjects that I enjoy and understand. But
it™s also a biography of a pharmacy, something I knew little about. To put it
bluntly, I didn™t know my mortar from my pestle.
Enter Dr. Ara Paul, Dean Emeritus of the University of Michigan
Pharmacy School. He was as patient teaching me about his favorite sub-
ject as he was educating thousands of students over his long career.
Because he is also a trusted friend of three generations of Walgreens, two of
whom graduated from Michigan™s College of Pharmacy, Dean Paul also
served as my ambassador to this very private but friendly family. Without
his help, I don™t think I would have had the opportunity to talk with either

xiii




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xiv acknowledgments

Charles Jr. (“Chuck”) or Charles III (“Cork”), both of whom were affable,
insightful, and vital to the production of this book.
Although this is not an “authorized” history sponsored by the company,
the people from Walgreens were gracious and helpful, particularly current
CEO Dave Bernauer, retired CEO Dan Jorndt, archivist Donna Lindgren,
divisional vice president of corporate communications Laurie Meyer, man-
ager of media relations Michael Polzin, and former general counsel Bill
Shank. (In classic Walgreens™ style, they™ve asked me to list them in al-
phabetical order.)
I™ve done my best to report as objectively as possible on Walgreens, but
I can™t deny I admire the company very much”a view shared by virtually
every reporter and researcher who has studied the company over its 103-
year history. One of the company traits I admire most”its institutional
aversion to publicity, even as less deserving companies do flips to grab
the headline”made it difficult to find enough primary sources to create a
comprehensive account of Walgreens™ triumphs and tribulations. I had to
rely more than I anticipated on three internal publications”Myrtle Wal-
green™s Never a Dull Day, Herman and Rick Kogan™s Pharmacist to the
Nation, and Marilyn Abbey™s Walgreens: Celebrating 100 Years, for access to
old interviews, company newsletters, and newspaper and magazine arti-
cles. Walgreen Company graciously provided permission to quote from all
three books, as did James Collins from his groundbreaking best seller Good
to Great.
Outside the company, the staffs of the American Institute for the
History of Pharmacy in Madison, Wisconsin, the Chicago Historical
Society, and the graduate and pharmacy libraries of the University of
Michigan directed me to more good material than I thought existed on
this subject. Financial advisor Brian Weisman patiently walked me
through the LIFO-FIFO accounting systems and did it again when I de-
cided to overhaul the section. Pete Uher, currently enrolled in the
Michigan MBA program, was as efficient as he was tireless in finding all
manner of information on the economic history of our nation, Walgreens,
its competitors, and the retail industry itself by digging through countless




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acknowledgments xv

books, articles, and Internet web sites and then helping me boil it all down
to its essence.
I owe my greatest debt to Debra Englander, my editor at John Wiley &
Sons, who not only conceived the idea for this book but also asked me to
write it and provided exceptional guidance and patience throughout. Her
assistant, Greg Friedman, handled endless issues, large and small, with
grace and good humor. Production editor Mary Daniello, production man-
ager Jamie Temple, and copyeditor Judy Cardanha all performed with con-
summate skill under serious deadline pressure, for which I am grateful. My
agent, Carol Mann, is one of the best in the business and one of the most
responsive, too; and she proved to be both throughout this process.
Most of all, though, I want to thank Walgreens itself. Not only is it a
very good company, but for almost two years, it was, for me, very good
company.
J. U. B.




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1
CHAPTER




from humble
beginnings




the apple and the tree


T here was little about Charles Walgreen™s childhood that would have
led you to believe he would become a success story, let alone a mul-
timillionaire who would transform an entire industry. Walgreen never
seemed cut out for the pharmacy business”and there was no shortage of
pharmacy owners ready to tell him this. They might have been right.
Charles never longed to become a pharmacist or a businessman (as con-
firmed by his checkered career bouncing around at least a half dozen stores
in his twenties). But his fastidious attention to detail, coupled with his
1




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2 america™s corner s tore

engaging personality, commitment to customer service, and surprising
willingness to defy conventional wisdom on how to run his business,
proved to be an unusually potent combination”a combination to which
his son and his grandson have adhered, even as the industry did several
flip-flops over the decades.
But the fact is Walgreen was a solid but uninspired student and a posi-
tively desultory employee. Another twist: Walgreen did not descend from
a line of Walgreens but was the first Walgreen born, by name, a Walgreen.
Because Swedes traditionally took the first name of their fathers for their
last names (adding the familiar “son” as a suffix, as in Johannson), military
units suffered endless confusion with so many people sharing the same sur-
name. In the 1780s, Charles™s great-great-great-grandfather, Sven
Olofsson, adopted the surname “Wahlgren” during his military service, a
family fact passed down over the generations. When Walgreen™s father,
Carl Magnus Olofsson, arrived in America, he decided”for reasons lost to
us now”to change the family name to Walgreen. (The original name
would resurface years later when Charles Walgreen decided to give his
company™s “Pure Norwegian Cod Liver Oil” the fictitious family moniker,
“Olafsen™s.”)1
Carl Magnus Olofsson grew up in Bola, Morlunda, Sweden, in a solidly
middle-class family. Nonetheless, Olofsson decided to leave home for the
New World in 1859, changing his name to Carl Walgreen when he ar-
rived. He started a family with Anna Louise Cronland, but after bearing
two children, she died from complications in childbirth. In 1871 Wal-
green married the former Ellen Olson, who grew up in a small town north
of Stockholm. Although Olson™s family lived comfortably there, her fa-
ther, like Olofsson, decided the future lay in America. So he led his wife
and nine children on an arduous four-week trip across the Atlantic to
find out if he was right. Since the family never returned, we can safely
conclude their father™s belief in America™s future was vindicated. Ellen
raised Walgreen™s first two children and two more of their own, including
Charles, who was born on October 9, 1873.
Walgreen grew up on a farm near Rio, Illinois, 14 miles north of




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from humble beginnings 3

Galesburg”in other words, in the middle of nowhere. But it made for a
safe, contented childhood. When Charles first met his future wife, Myrtle
Norton, as she recounted in her autobiography, Never a Dull Day, he told
her that he had had “a happy home”; and all signs suggest it was true.
Walgreen™s parents were typical Swedes”stoic, with an understated
sweetness. They spoke Swedish at home”a language Charles spoke and
wrote his entire life”“but never in anger,” he said. His father was firm but
fair, unquestionably the family patriarch. He might have admired his
adopted country™s democratic form of government, but he made no pre-
tense of practicing it at home. What Carl said, went. Carl™s authoritarian
streak”hardly uncommon for the era”might explain why Charles so
often bristled years later when taking orders as a store employee.
In the 1870s, the entire “educational system” of Rio, Illinois, consisted
of a one-room schoolhouse. But for at least one year, it was lead by a spe-
cial teacher named Maggie Phillips. Walgreen never forgot her. And as a
result, Walgreens™ employees never did either. Every day, Miss Phillips
would write an inspirational quotation on the blackboard and have the
students memorize the phrase.
Her methods worked. Some five decades later, during the Great
Depression, Walgreen shared one of Miss Phillips™s quotes with his thou-
sands of employees through the company newsletter, The Pepper Pod.

True worth is in being, not seeming,
In doing each day that goes by
Some little good”not in dreaming
Of great things to do
By and by.2

It is safe to say that Walgreen, and the vast majority of his employees,
took those words to heart. The company has been characterized by an al-
most religious devotion to substance over style, to this day.
Miss Phillips™s tutelage aside, however, Walgreen™s father believed his
son would need a bigger, better school system to reach his full potential;




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4 america™s corner s tore

and he felt he found one 60 miles northeast in Dixon, Illinois. Walgreen™s
older half brother Edwin was attending classes there at the five-year-old
Northern Illinois Normal School and told his father, “This was the place.”
When the Walgreens moved there in 1887, Dixon still had muddy roads
and wooden sidewalks, but its location on the Rock River guaranteed con-
tinued growth. Established in 1830 when John Dixon set up a ferry service
there, the spot became known as “Fort Dixon” during the Black Hawk War
of 1832, which started when Chief Black Hawk roused the local
Potowotami and Winnebago tribes to take back the land. The war drew
hundreds of Union troops, including a host of future famous Americans,
among them Jefferson Davis and Abraham Lincoln”the presidents in-
volved in the Civil War. The outnumbered and overpowered tribesmen
stood little chance; and after just a few months of fighting, they were
forced to surrender. “The Rock River was a beautiful country,” Chief Black
Hawk said. “I loved it and I fought for it. It is now yours. Keep it as we
did.”3 (Chicagoans honored the warrior a century later when they named
their NHL hockey team the Blackhawks.)
The Black Hawk War literally put the tiny settlement of Dixon on the
map and, having introduced the soldiers from around the country to the
area, served to spread the word about the area™s appeal. Lincoln returned
to Dixon™s Nachusa Hotel, where he had boarded during the war, for busi-
ness trips and campaign stops decades later. (A century later, another U.S.
president, Ronald Reagan, grew up in Dixon, serving as a lifeguard on the
Rock River and as a caddy for Charles Walgreen Sr. on the Dixon Country
Club golf course, which Charles Sr. saved from bankruptcy in the 1930s by
purchasing 100 memberships. Like Lincoln, Reagan returned as an hon-
ored guest while campaigning for president, staying at the Walgreen fam-
ily™s Hazelwood estate.)
Dixon looked pretty good to Carl Walgreen, so he sold his two farms in
Rio to set up a real estate office in downtown Dixon in 1887, when
Charles was 14. The community might not have been much by today™s
standards, but it must have been exhilarating to young Charles, moving




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from humble beginnings 5

from miniscule Rio to Dixon, a town with 5,000 people, electric lights,
and even, in a few prosperous businesses and homes, telephones, “the lazy
man™s friend,” in the words of the Dixon Evening Telegraph.
Dixon also had what Carl Walgreen most wanted: a good high school
for his son, with a planned, new, state-of-the-art building. Charles did well

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