<<

. 26
( 39 .)



>>

Assessing Chuck Walgreen™s legacy is not a simple matter, due partly to
the sheer span of his tenure. He rose to CEO in 1939 and didn™t step down
until 1971, a 32-year run that included the end of the Depression, World
War II, and the counterrevolution. His entire Walgreens career is much
longer, of course, because he started when he was in grade school, deliver-
ing soups and sandwiches for his mom, and didn™t end until he stepped
down as a board member in 1976, after two World Wars, Korea, Vietnam,
and even Granada. It is highly unlikely that anyone will ever have a
longer leadership association with the company. Just trying to judge his
performance in the context of his times is no small trick, as he captained
the ship through every kind of water, each of which required a different
tack.
Chuck became the company™s second chairman”taking the reins from
the founder, who also happened to be his father”at the tender age of 33.
Considering the sad history of founder™s sons”who rarely are even given
the opportunity to run their father™s companies, and if they do usually be-
come fast failures like Edsel Ford and William (Bill) Hewlett”Chuck
Walgreen™s career has to be considered an unqualified success. He was




TLFeBOOK
164 america™s corner s tore

happy, healthy, and easy to work for throughout his career, and his com-
pany was successful throughout.
Nonetheless, since he followed his father, comparisons are inevitable.
The easiest thing to measure is the expansion rates. Charles Sr. not only
founded the company but grew it to 493 stores. After Charles “Chuck”
Walgreen Jr. took over, the number of stores always hovered in the 400s,
closing 1963, the year Chuck stepped down as president, at 477”a net loss
of 16 stores. Given that it was an era of unprecedented economic growth,
Walgreens™ apparent inertia is surprising.
In fairness, however, the statistics are somewhat misleading. “After the
war, we started closing two little [stores] and replacing them with one
Super Store,” Chuck explained in an interview late in his life. “So the
number of stores doesn™t tell the growth story for that period. Square
footage, employees, and investment were all going up, even though the
number of stores was going down a little.”
He also guided the increase in the number of agency stores to 1,800 na-
tionwide. Further, sales in Walgreens stores more than tripled, from $119
million in 1945 to $367 million in 1963.
But there is little question that Senior and Junior brought different
styles to the job. As one veteran Walgreens executive, who asked to re-
main anonymous, said, “Charles Walgreen Sr. was a hard-charger. Chuck
was not the same kind of hard-charger. He was ethical, honest, pure as the
driven snow, steady as she goes, and he brought self-service to our com-
pany. But you have to remember: In the fifties, [the business environment]
was not competitive. He had his old territory, the guys out East had their
territory, they all went golfing together, everyone was happy. I mean it
wasn™t dog-eat-dog, the way it is today.”
And, yet, Chuck was a man who had the courage to convert the entire
chain to self-service when most of the industry”and his executives”did
not think the idea was going to fly. Said Dan Jorndt:

I never saw this myself, but it™s come down in company history.
Charles Walgreen Jr. was involved in lots of decisions. During board




TLFeBOOK
the pos t war era 165

meetings, someone would be pouring his heart out and he™d listen,
listen, and then just kind of lean back and put his hands behind his
head. At that point, the meeting was over. You could talk for another
two hours, but his mind was made up. So people learned, when he™d
lean back, to wrap up quickly, and say, “All right, now: Can we do
it?” It would either be “yes” or “no,” never “maybe.” The Walgreens
are stubborn people. I mean that very much as a positive; they™re cer-
tain of what they want.”55

Another example of Chuck™s decisiveness: By the mid-1960s, 50 per-
cent of the 300-plus products Walgreens manufactured had been devel-
oped within the preceding five years, including Smoker™s Toothpaste,
Anefrin cold capsules, and a contact lens solution.56
In the final analysis, however, Chuck will likely be remembered more
for the mistakes he didn™t make”errors of excess and ignorance that plague
almost all companies that last longer than a generation”and the goodwill
he generated, inside and outside the company.
Chuck says his role was simply “trying to follow through the way Dad
started: Treat the customer like a guest in your home and your business will
do well. . . . I enjoyed my job. I was very happy. I did smile quite a bit; I do
now. . . . If you™re in a job you don™t like, you aren™t going to do well. But if
you enjoy your work, time doesn™t mean anything because it™s not a job, it™s
just something you™re doing.”57
It is often said that a team™s personality eventually mirrors that of its
coach. It™s fair to say that the same holds true for most companies. Chuck™s
happy, friendly approach to his work spread.
In 1964, Chain Store Weekly asked Chuck™s old college roommate,
“Beno” Borg, how the company had managed to keep all but 19 of its 479
store managers with the company that year. (Most of the 19 stepped down
due to retirement or illness.) “We have a recognition,” he said, “that peo-
ple are more important than things.”58
Perhaps a greater legacy than the introduction of self-service or the el-
evation of the pharmacist™s status will be the recruitment and promotion




TLFeBOOK
166 america™s corner s tore

years ago of the current generation of Walgreens™ leaders. And that™s where
Chuck™s friendly, egoless approach was so important. Recalled Dan Jorndt:

When Mr. Walgreen Jr. was around most of us regular employees, he
was very shy. If you were hired as a Chicago pharmacist”I think
maybe for all of Chicago they were hiring 10 or 12 a year in the early
™60s”you got to meet him. You™d go to Peterson Avenue, and they™d
line you all up. You™d have on your coat and tie, and they™d walk you
down the hall to his office. Whoever had brought you would say,
“This is Charles Walgreen, the chairman of the board.” He™d look up
and say, “Hi, boys””it was all boys then”and you™d say, “Hi, Mr.
Walgreen.” He™d say, “Well, good luck to all of you.” And that was it,
and you™d leave. But it was like an audience with the Pope.59

This helps explain why, in 1963, Chain Store Weekly described
Walgreens™ management team as “untainted with the power politics which
afflicts the executive suites of many large companies. Its members work
harmoniously toward fulfillment of a policy of building on the future on
the solid base of the past.”60
Chuck might not have been the “hard-charger” that his dad was, but
you could leave worse legacies than that.




TLFeBOOK
5
CHAPTER




reinventing the
corporation:
1970“1990




W hen Charles Walgreen III”better known as “Cork””assumed
the office of president in 1969, he was a mere pup of 33; but that
was the same age his dad was when Chuck had become president in 1939.
When Chuck took over, the company faced all the obstacles that came
with the Great Depression and World War II and proved more than strong
enough to surmount them. But by the time Cork rose to the office of pres-
ident, the company™s external problems”inflation, recession, and a gen-
eral malaise in the U.S. business community”were no match for the
long-overlooked internal problems Walgreens labored under. As current
chief executive officer (CEO) David Bernauer says, the great empires of

167




TLFeBOOK
168 america™s corner s tore

Rome, Spain, and England crumbled not because of external attacks, but
because of internal breakdowns. So it is with most business dynasties. It
was Cork™s mission to make sure that didn™t happen to Walgreens.



state of the company

Like almost every other successful U.S. corporation after World War II,
Walgreens diversified its holdings far beyond its flagship business.
Walgreens bought the Sanborns department stores in Mexico and the
Globe chain in Texas and spent a great amount of time, energy, and money
expanding both, not to mention the resources required to start Corky™s,
Robin Hood™s, and Wag™s restaurants and coffee shops.
The Walgreens stores themselves had grown just as diverse, selling all
manner of merchandise in a wide variety of store designs”including those
of the Agency system”which often resulted in sloppy displays, cluttered
aisles, and inefficient inventories. The consistency that had been a hall-
mark of the chain was breaking down due to a lack of focus on the com-
pany™s primary mission: operating great drugstores.
Cork™s salary as president was a paltry $80,000 and it didn™t go up very
much when he became CEO. “But the company wasn™t making any money,”
he said, justifying his low pay. “Gosh, in ™71 or ™72, we only made $8 million
on $800 million in sales.”1 (Compare those figures to the current totals of $1
billion in profits on $35 billion in sales, and you see Cork™s point.) “Cash was
a problem, too,” Marilyn Abbey wrote. “There wasn™t any.”2
Cork knew he would have to face all these issues the day his father re-
tired at age 65. The transition process, at least, was a simple one. As Cork
recalled, his father brought him into his office, said, “There™s my desk, son.
See ya!” and left that day for his boat, Dixonia II, harbored on Lake
Michigan. “And that was it,” Cork said. “He really let me go on my own,
pretty much.”3
Not everyone expressed such carefree confidence in the young man.
“When I became president,” Cork confessed, “a lot of old-timers sold their




TLFeBOOK
reinventing the corporation 169

stock. ˜Oooh! Not him!™”4 (In fact, it was a costly mistake for those who
did sell their stock.)
It has always been easy to underestimate Cork Walgreen”an unas-
suming man who does not rely on the kind of charm or intimidation that
characterize the modern U.S. CEO to make things happen. And under-
estimating him has always been a mistake. But when he first rose to com-
pany president, even Cork had his doubts. “My first thought,” he admits
today, “when I saw that desk, was how little I knew.”5
In the 2001 best seller Good to Great, author Jim Collins and his re-
search team studied 11 companies that had performed an average of seven
times better than the stock market over the past 15 years. The short list in-
cluded such well-known U.S. corporations as Gillette, Pitney Bowes,
Wells Fargo, and the far less known Walgreens. Walgreens qualified by
performing a staggering 16 times better than the market from 1975 to
2000”and five times better than the much-lauded General Electric.
Collins sought to determine the unique set of characteristics that pro-
pelled these 11 companies from average to excellent, teasing out eight
common denominators that even Collins didn™t expect to find. Take his
description of the first tenet: leadership. “We were surprised, shocked re-
ally, to discover the type of leadership required for turning a good company
into a great one,” Collins wrote. “Compared to high-profile leaders with
big personalities who make headlines and become celebrities, the good-to-
great leaders seem to have come from Mars. Self-effacing, quiet, reserved,
even shy”these leaders are a paradoxical blend of personal humility and
professional will. They are more like Lincoln and Socrates than Patton or
Caesar.”6 Collins™s “profile in courage” could double as Cork Walgreen™s
thumbnail profile.
Like his father, Cork did not grow up planning to work for the family
business. “Back in high school, I was going to be a veterinarian,” Cork
said, with his trademark chuckle. “But then I started to love fishing, so
my dad took us sport fishing one day near Miami.” After hopping on the
impressive boat, breathing the salty air, and heading out to the open seas,
Cork decided that he would eschew his plans for a career in veterinary




TLFeBOOK
170 america™s corner s tore

medicine to become a charter boat captain. “So my father said, ˜Why don™t
you work real hard, and then you can be a boat owner and hire your own
captain?™ I said, ˜Oh, you™re right! That sounds like a better idea!™”7
But, like Chuck™s father Charles, Chuck never pressured his son to be-
come a pharmacist. “When Cork was in high school,” Chuck said at his
son™s retirement in 1998 as CEO, “I found out from his chemistry teacher
at parents™ night that my son was planning to attend pharmacy school at
the University of Michigan. I was both surprised and delighted.”8
While still in high school, Cork began his Walgreens career at the
Evanston, Illinois, store as a stock boy. Cork™s first day, the manager treated
him like any other employee, handing him a broomstick to search under
the shelves for long-lost products for 75 cents an hour. Instead of being of-
fended, Cork was pleased. “That wasn™t bad money then,” he said. “I saved
up enough money from that job to buy my first car in 1950, a sort of used
1936 Ford four-door, for $110. I still remember it. The car was beautiful,
sort of a dark green, with a gear shift on the floor and a shade in the back
window you could pull down. Sort of neat for the drive-ins.”9
Though hard-working, Cork also possessed a mischievous streak. Of his
days at the University of Michigan in the late 1950s, he said:

I could have gone either way in the pharmacy school. The story™s still
going around. Our pharmacy class took a tour at Abbott™s lab here in
Chicago. We stayed at the Pick Congress, a great hotel, and we had a
big party. And I set off a cherry bomb in the toilet. Boy, it was a huge
mess. Broke the porcelain and the wooden seat. Had to buy ™em a
whole new toilet. It was not too bad, about $50 bucks”but still not

<<

. 26
( 39 .)



>>