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diversification frenzy this time around. When everyone was diversifying in
the 1980s and 1990s, we were consolidating. And then came the acquisi-
tion frenzy, when all the drugstores were buying up other drugstores. Rite
Aid was buying up everybody, CVS was buying up everybody, Eckerd was
buying up everybody.”6
After dabbling in the dual practices of diversification and acquisitions
for decades, Walgreens cured itself once and for all in the 1980s. Some ob-
servers might say that the last straw was the lukewarm results the company
experienced after it gobbled up other stores, including Rennebohm™s
65-year-old chain in Wisconsin, Kroger™s 21 SuperX™s in Houston, and
MediMart™s 66 outlets in New England, which had been previously un-
charted waters for Walgreens.
Of this trio, MediMart makes the best case study. Purchased in 1986,
when Walgreens had some 1,000 stores, one analyst said, “It appears to be
a perfect fit.”
Recalled Cork Walgreen, “It worked out fine, but it was rough going in
the beginning. “We got a lot of inventory we didn™t need, we initiated an
immediate and massive remodeling plan, and we lost quite a few MediMart
people. Our stores were run differently from what [the former MediMart
employees] were used to, and it was difficult [for them] to learn all our sys-
tems and management philosophy.” Cork then provided a convenient ex-
ample. “Before the acquisition, MediMart top management would call
their store managers and say, ˜I™m coming today.™ So the managers would
be set, with coffee and doughnuts waiting. But we Walgreens people would




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poised to pounce 199

just show up, unannounced, because that™s how you get the real condition
of the store. I used to call my visits ˜parachute drops.™”7
(Cork™s approach harkens back to his grandfather™s technique of mak-
ing surprise visits, admonishing clerks who greeted him loudly by name
during unscheduled visits to please keep his identity a secret, or else
the entire purpose of the trip would be defeated. What worked then still
works today.)
Walgreens finally concluded that it no longer made any sense to buy
someone else™s stores and spend all the time, money, and managerial talent
to contort the building and its inhabitants to fit the Walgreens mold. They
ultimately decided it was far better”and faster and cheaper, in the long
run”to start from scratch.
“We said, ˜We™re not buying anybody,™” Jorndt stated. “Why would we
buy old real estate? Why would we buy 20- and 30-year-old strip-center lo-
cations? We march to our own drummer now.”8
The third mistake Walgreens didn™t make, Jorndt added,

Was getting “caught up in the whole dot-com craze. Boy, in this very
boardroom, we have some very powerful directors, and they said,
“You guys are going to miss the boat!” But one thing our people are
good at is getting out a pencil. Remember the deep discount drug
stores”Phar-More, Drug Emporium, others”that all got into the
dot-com craze? Well, our people would pencil it out, and they™d get
down to the bottom line, and they said, “These guys are losing
money!” And all our folks who hadn™t penciled it out said, “They
can™t be! They™re opening stores, they™re expanding!” But the num-
bers guys said, “Trust us: It doesn™t pencil out.”9

The pencil people were vindicated when the pure dot-com converts
suffered losses while Walgreens sailed on by, setting company record after
company record each year.
According to Collins, that Walgreens stoic confidence precluded
falling for such fads is typical of the good-to-great companies.




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200 america™s corner s tore

They weren™t driven by fear of what they didn™t understand. They
weren™t driven by fear of looking like a chump. They weren™t driven
by fear of watching others hit it big while they didn™t. They weren™t
driven by the fear of being hammered by the competition.
No, [they] are motivated by a deep creative urge and inner compul-
sion for sheer unadulterated excellence for its own sake.
Never was there a better example of this difference than during the
technology bubble of the late 1990s, which happened to take place
right smack in the middle of the research on Good to Great. It served
as an almost perfect stage to watch the difference between great and
good play itself out, as the great ones responded like Walgreens”
with calm equanimity and quiet deliberate steps forward”while the
mediocre ones lurched about in fearful, frantic reaction.10

Jorndt summed it all up by saying:

Well, acquisitions didn™t pencil out for us, diversification didn™t pen-
cil out for us, and the dot-coms didn™t pencil out for us, either. We
had competitors who spent $30 [million] to $50 million to buy dot-
com companies; and, you watch, they™re going to have to write it off
as a big loss sooner or later, because they™re not getting any return on
that. We said, You know what? We™ll develop our own. If we go and
spend even $15 million on a dot-com, there are a lot of other things
we can™t do. It™s just not worth it.11

Walgreens also avoided the more garish temptations that other corpo-
rations succumbed to during the excessive 1990s, including preening (and
ultimately pratfalling) for the press, indulging CEOs beyond all reason,
and creating artificial corporate cultures to mask woeful deficiencies in
truly fundamental values.
“I started going to Wall Street in 1982,” Jorndt said, “and it just seemed to
me, the more the company is trying to tout itself, over the long term, the
more the words ring hollow. If you™re doing the job, it™ll sell itself. You don™t




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poised to pounce 201

need to talk about it. We don™t ever spend any time trying to sell ourselves.
We don™t tout it. Just do your job, and they™ll know.” When asked if the
Walgreens way would work if the company were based amid the flashy,
celebrity CEO culture of Manhattan, Jorndt replied, “I don™t think it would.
We™re not highfliers, we™re lowfliers. The expression I use is, ˜We™re plain,
and we™re proud of it™”because we are plain, and we are proud of it!”12
Walgreens™ low-flying ways contrasted mightily with all the buzz created
by the 1990s™ countless highfliers, many of whom ultimately fell down to
earth, often quite hard. The examples of gluttony are far too numerous to
cover here, but a brief crash course of the decade™s worst elements is in-
structive for contrast. From 1990 to 2000, average CEO pay rose 571 per-
cent, while the average worker pay rose 37 percent during the same
decade.13 The CEOs of 23 large corporations under investigation by the
Securities and Exchange Commission (SEC), the Department of Justice,
and other agencies for accounting irregularities earned 70 percent more
than the average CEO, for a total of $1.4 billion between just 1999 and
2001. Meanwhile, the stock of those 23 companies lost over $500 bil-
lion”representing a 73 percent drop”as they laid off over 160,000 em-
ployees, which equals the entire Walgreens workforce.14
During a decade that gave us Tyco™s Dennis Kozlowski™s purchase of
seven mansions, worth between $2.3 million and $18 million;15 ImClone™s
Sam Waksal™s shameless courting of celebrities like Mariel Hemingway,
Harvey Weinstein, and Mick Jagger;16 and Kmart CEO Charles Conway™s
$23 million salary for two years while his company filed for bankruptcy,
sending 22,000 employees home (all while the Kmart board was busy for-
giving a $5 million “loan” to Conway);17 Walgreens gave the press virtu-
ally nothing to chew on. No celebrity CEOs, but no scandals, either.
Jorndt still lives in the same modest home in Northbrook, Illinois, that
he bought when he moved back to run the Chicago region in 1975. He
still has the same friends”mostly current and former Walgreens store
managers”and he made, at his peak in 2002, less than $2 million in base
salary and bonuses.
The stunning lack of egos in the Deerfield headquarters also precludes




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202 america™s corner s tore

the company from having to fall for such traps. When considering the cul-
ture of compensation excess just past, Jorndt is characteristically direct: “It
just makes you sick. In plain English, you want to throw up.”18

Over time, very rich companies that make lots of money tend to build
thicker carpets, more airplanes, more perks, and fancy apartments
into their budget, because they have so much, they don™t know where
to spend it!
We™ve never had that problem, [Jorndt said with a chuckle].
We™ve always needed more money to grow our company, and certainly
that includes the last 20 or 30 years.
We™ve kept it pretty low-key here. But you™ve got to be moderately
competitive [with salaries], because you don™t want good people leav-
ing. But the bottom line is, the last vice president we lost was in
1984, and he left for a bigger and better job. Well, it turned out it
wasn™t bigger, or better. But we haven™t lost anyone at the officer level
in 18 years.
There™s so much growth and opportunity in this company today.
It™s the old saw: If you™re working real hard and achieving and being
recognized for it, why would you go somewhere else? I can tell you,
we™ve had people offered two and three times what they™re making
here, but they almost never go. The head hunters get tired of calling
after a while, and they stop. Starting with our district managers on
up, they get calls all the time”here™s a bigger job, here™s a better job,
here™s more money”but they stay!
So it tells me, you need enough money to be able to look in the
mirror and say, “I get compensated fairly for what I do.” But when you
start getting the apartments in New York and the corporate jets . . .
well, if those things are real important to you, you probably won™t
make it here, because those things are not very important to anybody
else here. Bass tend to swim with bass, trout tend to swim with trout.
The right kind of people seem to be attracted to us.19




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poised to pounce 203

That would certainly include Cork, Canning, and Jorndt, three highly
talented executives who could have made a big splash at another com-
pany but chose lower pay and much lower profiles to stay at Walgreens.
They might not have too much in common with other corporate leaders
around the country, but they do with the leaders of the other 10 “good-
to-great” companies described in Jim Collins™s book, Good to Great.
The leaders of the 11 good-to-great companies, Collins wrote, “are some
of the most remarkable CEOs of the century, given that only 11 compa-
nies from the Fortune 500 met the exacting standards for entry into this
study. Yet, despite their remarkable results, almost no one ever remarked
about them!”20
Collins research team discovered that these 11 good-to-great compa-
nies received roughly half as much press coverage as did their less impres-
sive competitors. “Furthermore,” he wrote, “we rarely found articles that
focused on the good-to-great CEOs.”21 In fact, there is a paucity of infor-
mation on the company outside of trade publications. The national media
pays Walgreens almost no heed”which Walgreens much prefers”and
even the Chicago media (including academic journals and historical
books) rarely mention the company or its leaders.
This, in an era where you can™t visit a newsstand and not see former GE
CEO Jack Welch™s face, for this success or that scandal. “In over two-thirds
of the comparison cases,” added Collins, the first national researcher to in-
vestigate the company thoroughly, “we noted the presence of a gargantuan
personal ego that contributed to the demise or continued mediocrity of
the company.”22
Jorndt believes Walgreens is fortunate to be in the retail business,
which he feels is more likely to attract hard-working, energetic, and largely
ego-free workers than other industries can. “If you want to get rich quick,
you™re probably not going to go into retailing in the first place,” Jorndt
said. “You either like retailing or you don™t. People who™ve been at it all
day can tell you, it™s very tiring, very enervating. We™re always on it.
There™s no rest in retailing. People who are in it and like it, stay in it and




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204 america™s corner s tore

do well in it. This company sort of weeds out people early on, and the peo-
ple who stay, they catch the fever.”23
Another trend that grates Jorndt is the tendency of nascent, high-tech
companies to contemplate their navels over their “corporate culture.”
“Every dot-com starts out by saying, ˜What™s our corporate culture?™
Well, you don™t have one! You can™t just adopt one, or manufacture one.
This culture here is real, and it goes back a long long way. It™s something
solid, something tangible.”24
In Jorndt™s view, the depth of a company™s culture depends not only on
the longevity of the business itself, but also on the people who work there.
Jorndt observed:

Once you get to the store manager level, [Jorndt said,] we have virtu-
ally no turnover. People stay. It really helps that the top 30 people all
grew up in the company and have been around a while. They know
the culture. They™ve lived it, they™ve soaked it up. So it™s pretty easy
for them to pass it on.
The word family is bandied about too often when people talk
about companies, but I think it really applies here. Everybody doesn™t
like everybody here, but almost everybody likes almost everyone.
It™s okay to disagree, and we disagree plenty, but everyone respects
everyone. . . .
If you work hard, and perform, you™ll get recognized. Everyone™s
got a report card, and you have to treat people right. In the old days,
maybe we could say, “Well, John may be an S.O.B., but look at his
numbers!” Not anymore. In the old days, you could manage that
way”do it or regret it”all by fiat. But as the world changed, we
changed, too. Now, you™ve got to do two simple things: Be a high per-
former and be nice to people.25

It™s worth noting that Jorndt rose to the highest post by doing just that:
performing well and being nice. Bill Shank, former head of Walgreens™




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poised to pounce 205

legal department, explained Jorndt™s appeal with one simple example:
“When you call Dan Jorndt,” Shank said, “he says, ˜This is Dan Jorndt.

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