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breath,” Cork said.49




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reinventing the corporation 191

It worked. By the early 1980s, every store in the chain was hooked up
to the Intercom system, connecting every store™s pharmacy records to the
central system and the central system to every store.
“Intercom is clearly one of the biggest things we™ve done,” Jorndt said.
“With Intercom, we™ve got one central record of everyone™s information,
and I believe we™re still the only retailer who has that. You can walk into
any Walgreens anywhere, and if you can remember your name, we can get
your records. Only the U.S. government sends more data through satel-
lites than we do. That was a great thing that we did for our customers.”50
“It was miles ahead of the other drug stores,” said Bill Shank. “That
gave us a great advantage, and still does.”51
Walgreens pressed its advantage when it launched Intercom™s $150
million successor, Intercom Plus, in 1998, which expanded Intercom™s
original capability by organizing each store™s workflow, allowing the
pharmacist to focus less on his or her inventory and more on consulting
with clients.
Once again, Walgreens™ high-stakes gamble paid off.



vindication

The most important work Walgreens™ management did during the Cork
Era”including instilling discipline, cleaning up the stores, eliminating
extraneous businesses, and creating the Intercom system”was done qui-
etly with little publicity. You would be hard-pressed to find Walgreens™
name in business books until the 1990s. But the groundwork laid in the
1970s started drawing attention in the 1980s.
Walgreens started knocking off milestone after milestone: its 500
millionth prescription in 1980; the first drugstore chain to top $2 billion
in 1981; ranking first in sales, earnings, and market penetration among
drugstores in 1983; opening Walgreens™ 1,000th store in 1984 (with
Illinois Governor Jim Thompson and Cary Grant doing the honors); and
breaking $3 billion in sales in 1985”just four years after topping $2




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192 america™s corner s tore

billion. By the middle 1980s, word had gotten out on the Walgreens secret.
In 1985, Dun™s Business Month named Walgreens one of the nation™s five
best-managed companies, and the Wall Street Transcript crowned Walgreen
and Canning the country™s best retail drug chain executives, the first of
seven times they™d receive it that decade.52
“They worked so well together,” Bill Shank said, “and the results reflect
the fact that both of them know the drugstore business inside and out.”53
“Watching those two work together was like watching FDR and
Patton,” Jorndt added. “They put together an outstanding management
team, the equal of any team in retailing, and supported them for an amaz-
ing 20-year run.”54




TLFeBOOK
6
CHAPTER




poised to
pounce:
1990“future




“this is dan jorndt, how
may i help you?”


W algreens hit the last decade of the twentieth century”its tenth
decade”at full speed. It could boast 1,564 stores, 48,500 em-
ployees, 100 million prescriptions, $6.05 billion in gross revenue, and $175
million in profits. Instead of becoming complacent, however, Walgreens
set its course for the best decade of its now 103-year history.
That it occurred on the heels of Fred Canning™s departure makes it all


193




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194 america™s corner s tore

the more impressive. When Canning stepped down in 1990 after a 12-year
run as president, few thought such a dynamic, demanding, and ambitious
leader could be replaced; and they may well have been right. It would be
hard to overstate Canning™s importance to Walgreens™ rise in the 1970s,
1980s, and even the 1990s, after he had left the company set up for con-
tinued success.
When you look back over Walgreens™ long history, it™s easy to see that
there have always been very talented people in the front offices, but it™s the
combination of soft and hard skills at the very top that have sparked the
company™s greatest eras. Charles Sr. seemed to embody both sides him-
self”his engaging, warm personality coupled with his iron will and un-
equaled ambition. Chuck and Justin Dart seem to have the combination
covered between them; but when Dart™s ego became too much to deal
with, Chuck lost a vital element of intensity in the front office.
Cork reestablished the formula when he promoted Fred Canning, and
the combination might have been the most successful in Walgreens™ his-
tory. Fred Canning had all the energy, talent, and charisma of Justin Dart,
but without the overwhelming personal ambition that negated many of
Dart™s virtues. Dart would have been happy to see Chuck and the family
pushed aside for his own benefit, while Canning was the most loyal soldier
Cork could have ever wished for. The man Cork picked to replace
Canning was just as talented, and just as loyal.
But the challenges facing Canning™s successor in 1990 were very differ-
ent from the ones Canning confronted when he became president in 1978.
The next Walgreens president would not have to bring discipline, order,
and confidence to a sagging company. Cork, Canning, and crew had al-
ready seen to all that. The turnaround had been completed. No, the sev-
enth Walgreens president would have to bring determination, to avoid the
pitfalls of self-satisfaction; imagination, to take advantage of Walgreens™
new place in the world; and a killer instinct, to make tough decisions with
a single-minded focus.
The Walgreens board, led by Cork, decided Dan Jorndt was that man.
This one decision alone, wrote Jim Collins, in his best seller, Good to




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poised to pounce 195

Great”in which he described how the 11 best Fortune 500 stock per-
formers over the past 25 years did it”has separated Walgreens from such
competitors as the Eckerd Company (acquired by JC Penney in 1997).
“The contrast between Jack Eckerd and Cork Walgreen is striking,”
Collins wrote. “Whereas Jack Eckerd had a genius for picking the right
stores to buy, Cork Walgreen had a genius for picking the right people to
hire,” a comment that covers leaders from Fred Canning to Dave
Bernauer. “Whereas Jack Eckerd failed utterly at the single most important
decision facing any executive”the selection of a successor”Cork
Walgreen developed multiple outstanding candidates and selected a
superstar successor,” that successor being, of course, Dan Jorndt, who
followed Cork as president in 1990 and as chief executive officer (CEO)
in 1998.1
In a tradition dating back to Charles Sr., in choosing Jorndt, the board
had promoted a Walgreens lifer who worked his way up from the stores to
the front office. “I can tell ya,” Jorndt said, “I knew I wanted to work for
Walgreens from the time I was 18 years old.”2
He took a few turns to get there, however, and a few more to become
the company president. Jorndt worked for his neighborhood drugstore”
an independent outfit named Losby™s Drug”on the north side of
Chicago”as a delivery boy and, thanks to his mother, who worked the
overtime shift at the hospital down the street, got a second job in the phar-
macy there. That hospital store just happened to be run by a retired
Walgreens man, “who told Walgreens stories night and day,” Jorndt said.
“So I had little bugs about Walgreens in my head.”
In 1959, Jorndt enrolled in pharmacology at Drake University in Des
Moines, Iowa. (You might have noticed that a Harvard degree does not
impress many in the halls of headquarters; they™re more concerned with
what you™ve done than where you went.) He intended to return to take
over the hospital pharmacy after graduation. “The deal was set when
I was a freshman in college,” he said. “I™d get an apartment back in
Chicago and three meals a day in the cafeteria. That was going to be my
job, my life.”




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196 america™s corner s tore

Recalled Dan Jorndt, in the middle of my freshman year,

They loaded a bunch of us on a bus and took us on a field trip to go
see a Walgreens store in Des Moines. It was run by this guy named
Wayne Wait, who wore white short-sleeved shirts and a bow-tie”so
clean cut, he squeaked.
He took us over to the grill of this big Walgreens. He talked to us
about what a good company this was”how you can get ahead at
Walgreens, how you can have a nice life at Walgreens, raise a family,
have the profit sharing. And when he got done, it was like I was hit
with lightning. I knew I wanted to work for Walgreens. I went home
and told the guy back at the hospital, “I™m going to work here
through college, but then I™m going to work for Walgreens.”3

Jorndt worked briefly for another chain in California before starting his
Walgreens career in 1963. The young pharmacist quickly advanced from
assistant manager to store manager to district manager to regional vice
president”a rapid climb that required leading his family on a whiplash-in-
ducing journey from Chicago™s North Side to Milwaukee, back to
Chicago™s west suburbs, out to Albuquerque, and back to Chicago yet
again, for the last time, in 1975. The most interesting stop, Jorndt said, was
the one in the middle of it all: Albuquerque.
“When they asked if I wanted to go to New Mexico, I said, ˜Are you
crazy?™ Well, they said, we™re losing money, and we need some help. So we
moved to Albuquerque. I had a nice four-bedroom ranch for just $190 a
month. We loved it! We were there almost five years, and it became a very
good district.” So good, in fact, that when Jorndt™s district rose from one of
the worst to first in the company in both sales and profit, the company
asked him to return to headquarters to give a little speech on how they
did it. “That™s to remind you,” he said, “that performance gets recognized
at Walgreens.”
Likewise, when Jorndt was promoted to Chicago regional vice presi-
dent, the flagship region ranked last and was still falling fast. Yet seven
years later, Jorndt had pushed it to the top in sales and profit.




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poised to pounce 197

Walgreens recognized Jorndt™s outstanding performance many times on
his journey”the Walgreens “report card” system guarantees that everyone
short of the “cabinet level” receives a detailed, quantified evaluation every
year”until finally Cork Walgreen made him an offer he literally couldn™t
refuse. As Jorndt remembered it, in 1989,

Cork called me and said “I™ve seen your work, I™ve seen your r©sum©.
You should be the treasurer.” I said, “Mr. Walgreen, I™m flattered, but
I™ll never take a job that doesn™t have a report card.” And that job
didn™t. So he said, “All right. I™ll talk to you later.”
Then he calls me in his office the following Monday, and that was
a very big deal. It was like seeing God. He asked me, “Have you
thought of my offer?” I said, “I have, but if it™s all the same to you, sir,
I™ll be content to run the Chicago region.”
Then he says, “Okay, now listen to me. You are going to be the
treasurer.” And I said, “Yes, sir!”4


After an eight-year stint as treasurer, in 1990, Walgreens named
Jorndt president of the company”ushering in the company™s most excit-
ing era.



plain and proud of it: the anti-enron

When Jorndt settled into the same position Cork Walgreen had first oc-
cupied 22 years earlier, Jorndt looked out on a company that was dramati-
cally different from the one that Cork had seen when he first sat there.
“I™d say Cork and Fred [Canning] did four major things for Walgreens,”
Jorndt said. “They cleaned up the company, they started the big consoli-
dation”getting rid of everything we didn™t need”they got our balance
sheet straightened out, and they made us very profitable again. They set
the stage so that in the nineties we could really grow! And we™ve built
on that.”5




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198 america™s corner s tore

Walgreens has enjoyed some wonderful runs in its century-long history,
but arguably one of its best eras was the Jorndt Epoch (1990“2002). That
success seems to have depended as much on the bold decisions the
company made as on the dumb mistakes it didn™t”mistakes that virtually
every other U.S. company, it seems, was only too willing to entertain.
“We have an expression,” Jorndt explained, holding his index finger up
in the manner of a Greek orator. “˜We™re not looking for the silver bullet,
the answer to all our prayers.™ The best three examples: diversification, ac-
quisition, and dot-coms.” He elaborated: “We didn™t get caught up in the

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