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the next step was to expand the number of stores. Having soured on
the idea of growth through acquisitions, under Jorndt, Walgreens




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212 america™s corner s tore

launched an unprecedented building program”and a very specific one, at
that. Instead of buying old buildings or leasing mall spaces and the like,
Walgreens stuck to a crystal-clear plan of creating nothing but brand-new,
freestanding stores with lots of free parking on busy street corners”ideally,
“Main and Main.”
By doing so, in less than a decade, Walgreens established the kind of
immediately identifiable, almost iconic presence on thousands of street
corners nationwide that only a few companies like McDonald™s once
enjoyed, with a clean, crisp, consistent appearance that tells you be-
fore you even pull up that you™re about to enjoy a high-quality shopping
experience.
A good example of Walgreens™ commitment to these basic principles
occurred when Walgreens bought a chunk of land in Seattle just a block
from the site Charles Walgreen Sr. almost leased while on his honeymoon
in 1902. A hundred years later, Walgreens opened a new store there. As
Jorndt stated in Walgreens: Celebrating 100 Years, “A good corner, we like
to say, is a good corner. . . . Every corner we build on [today], we™re there
because we want to be there.”38
In other words, when it came to opening new stores, Walgreens would
accept no more leftovers, no secondhand stores, and no makeshift com-
promises”just good, new stores on good, central corners.
Walgreens took this basic strategy to extremes that must have seemed
crazy to the competition, but it worked amazingly well for Walgreens. The
cognescenti would go so far as to close a profitable store in a good loca-
tion”sometimes paying $1 million to get out of the lease”just to move a
half block away to a busy corner. When Walgreens gets serious about an
idea, they get serious.
“Store by store, block by block, city by city, region by region,” Collins
wrote, “Walgreens became more and more of a hedgehog with this incred-
ibly simple idea.”39
Walgreens took another big step for customer convenience when it
opened a freestanding store in Indianapolis with a drive-thru pharmacy
and a one-hour photo lab”the nation™s first such store”in 1992. Today,




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over 70 percent of Walgreens offer those services, and the number
rises every day. Truth be told, the drive-thru service and one-hour photo
labs add a lot of work and complication to each store™s operation,
but Walgreens™ philosophy trumps any complaints: If it can be shown
that a new feature will increase customer convenience, they™ll do it. Dan
Jorndt observed,

Our company is now 103 years old, but we™ve opened 3,400 of our
3,800 stores in the past 10 years. Now, how can that be? Well, along
with moving to freestanding stores, we relocated all our strip centers
and all our downtown stores to new sites. So, just the net in the past
10 years is more like 2,000 new stores, but we™ve also relocated 1,400.
So here™s a 103-year-old company, where 80 percent of our stores are
less than 10 years old. I don™t think there™s a retail company any-
where that can say, “Gee, we™re going on 103 years, and our average
store is 5 years old!” But that took a tremendous amount of discipline
and a certain amount of guts to say, “We™re going to do that. We™re
going to generate cash and put it back in the company.” And we™ve
been reinvesting about a billion [dollars] a year into new stores.
You™ve probably heard it a hundred times around these halls, and
if you haven™t you probably will: “We believe in crawl, walk, run.”
Crawl, figure out what™s going on, and once we get it figured out, start
walking, and once you get that right, you go like hell!
The best example of that is one-hour photo finishing. We started
one-hour photo finishing in 1984, and we tweaked it and tested it
and marketed it, and we kept fooling around with that until about
1995 or 1996. All that was crawl, crawl, crawl. We couldn™t get it fig-
ured out, but we didn™t give up. We knew there was something there.
Finally, in the mid 1990s, a-ha! We got it. We figured out we™ve
gotta have the right price, we™ve gotta have well-trained technicians,
we™ve gotta have the right equipment. We finally got the whole ball
of wax right. And then, conservative me, we had a meeting, and we
say, “All right, we™ve got this thing figured out: We™re going right




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from crawl to run. Because we™ve been studying this for 10 years!” We
laid out a plan that was going to cost us $50 million and take four
years to train 20,000 people, remodel”at the time”about 1,600
stores, and get all this new equipment. I mean, it was like the
Normandy invasion, and I thought that was a high goal.
Then I went out to visit the stores for a month or so. When I got
back, Glenn Kraiss, who was our head guy in the stores then, but is
now retired, said, “Dan, I don™t want you to be mad at me, but while
you were gone, I had a little meeting with that group to start plan-
ning this rollout for one-hour photo finishing.” I said, “Good!” And
he said, “Well, I kind of shocked them, because I opened the meeting
by saying, ˜Look, we™re not going to have this meeting. We™re going
to have this meeting in a week. I want everyone to go back for a
week and figure out how we can roll this out in one year instead of
four.™” I said, “I™m proud of you, Glenn. How™d your next meeting
go?” And he said, “We™re going to do it.” Well, to be honest, I
thought they might be crazy, but it took us about a year and three
months. He was right!
So here™s an example, where this great guy, Glenn Kraiss, who was
closer to the stores than I was, who says Jorndt thinks he™s aggressive
with four years”well, watch this! And I wasn™t involved at all. He
had the meeting, he challenged them, they came back in a week with
everything they were going to need to do: real estate, planning, train-
ing, photo people. They said [Jorndt slaps the table], “We™re on
board!” And we did it. Boom! One year!
It gets back to the leader believing it can be done. I think if those
people would have came back and said “It™ll take a year and a half, or
two years,” Glenn might have bought it. But they didn™t. They came
back and said, “You want a year? We think we can do it.”
Well, do you think any of those folks who were a part of that
amazing success story were talking to head hunters for that year?
[Jorndt can™t help chuckling at the thought.] And when everyone™s
ready to check out, I think we all want to look back and say, “Did




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poised to pounce 215

I make a difference here? Did I raise a good family? Did I contrib-
ute to the community? Did I contribute to the country? Did I con-
tribute to the church? Did I make just a little difference?” I think
everyone would go to their maker happy if they made just a little
difference. When you can look back and say, “Hey, I was part of
that team that rolled out one-hour photo in one year, at Walgreens,
the number-one one-hour photo retailer in the world! In a year! I
was part of that!” That lifts people up, and I think it keeps their
heads up!40

Jorndt™s enthusiasm was contagious and moved mountains. In 1990,
Walgreens filled 100 million prescriptions, the ninth straight year of 20
percent jumps, and maintained double-digit leaps throughout the decade.
And, just two years after Jorndt stunned his audience by announcing
Walgreens would have 3,000 stores open by the year 2000, “everyone got
on board [and] we blew past it with a hundred stores to spare.”
The new expansion, however, depended largely on entering new mar-
kets and setting up the nationwide distribution systems and infrastructure
needed to make them work. In fact, Walgreens discovered that the more
densely its stores covered a new city or an older established market, the
cheaper it would be for them to operate them all”thus increasing profit
per customer. Diving into new markets, head first”not backing off”
proved to be the key to making the incredible expansion work. It was dur-
ing the Cork Era that Walgreens truly had become a nationwide chain for
the first time.
“Then,” Jorndt said, fully pumped up, “we said we™d have 6,000 stores
by 2010, and there was just a little gasp. You™ll see!”41



passing the torch

When Cork Walgreen stepped down as CEO in 1998 and chairman in
1999, he could look back on a company that had grown from $1 billion in




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sales when he took over to $13 billion when he retired. “I just sort of got in
there and started working,” he said modestly.42
When asked how he felt about passing the torch, he replied not with
some sentiment about the emotions involved, but with his characteristic
unsentimental perspective. “Well, I sure hope the company keeps doing
well,” he said, “because 99 percent of what I own is Walgreen stock. I™m
not very diversified, I can tell you that!”43
In 1998, Jorndt replaced Cork as CEO, too. Jorndt decided to retire as
CEO in early 2002 and as chairman in 2003, leaving the company in the
best shape of its long history. David Bernauer became president in 1999
and CEO in 2002.
When Jorndt looked back on his run, just months before he left the
company, he couldn™t remember any particular “low-lights,” just occa-
sional frustrations.

I was so mad one time I kicked this fire plug, and I almost broke my
foot. There™s always aggravation. If you™re never aggravated, the
chances are you really don™t have your head up and you™re not trying
very hard. You™re going to have disappointments. You don™t hit every
ball out of the park. You strike out some of the time.
But it™s like going to the dentist: All you remember is the nice
smile, you don™t remember the pain. If you™re in retail, a lot of nights
you go home and bang your head. A lot of things can go wrong”and
they do. But after 39 years, all I remember is the nice smiles.
The high points for me, really, have just been the people I™ve
worked with. They™re in my heart and in my head. It™s irreplaceable
what that has meant to me, these Walgreen people.44

Though such a successful CEO at another company would probably
hang on or wait for a golden parachute, Jorndt made it a point to leave qui-
etly, while still on top”a move he firmly believes is in the best interest of
the company.




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poised to pounce 217

Companies need a certain amount of turnover to keep fresh blood in
the higher ranks, fresh perspectives. And that™s why I™m stepping
down when I am. I™m still pretty young, I™m in good health, and I
have lots of energy”but it™s time. I said years ago this is when I was
going to step down, and I am. If you stick around too long, people are
afraid to come to you with bad news, with disagreements.45

Jorndt harbored typically strong views on who should succeed him.

When Home Depot, the number-two company in retail, has to go
outside their company to get their CEO, that™s a problem. When
Albertson™s”at number five”has to go outside, that™s a problem.
Something™s wrong if companies that big can™t find someone in their
own ranks good enough to do that job.
That™s never been our problem at Walgreens. Our problem is just
the opposite”man, are we deep!”because everyone comes up
through the company.46

Another company executive, who asked to be anonymous, underscored
the wisdom of promoting even the company™s top leaders from within. “A
lot of companies™ employees and executives come from outside,” she said,
“so they have to take the ˜Our Company 101™ course when they sign on.
Because we have plenty of good people already here to promote, we don™t
have to do that here.”47


hello, my name is dave

Because Walgreens had so many viable candidates, it wasn™t hard to find
one who satisfied all the criteria for the top job: a pharmacist by training,
a Walgreens “lifer” who had done most of the company™s jobs on the way
up, and an executive more devoted to Walgreens™ humble values than to
Wall Street™s glitz and glitter.




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As Jorndt observed, retail attracts a certain kind of person; and the man
they settled on, David Bernauer, not only fit all of Walgreens™ criteria, but
had caught the retail bug early. His father managed a JC Penney in
Wadena, Minnesota, where David worked for a few summers before
switching over to an independent pharmacist. He recalled,

The drugstore did quite well, but even at that age I could already see
all the inefficiencies and all the things [the pharmacist] was missing.
His newspaper ads were very poorly done compared to what JC
Penney was doing. He had good people; he didn™t have to hire very
often, but when he did, his process was inept. And there were some
inventory control systems Penney had in place that he couldn™t nec-
essarily replicate in his small store but he could learn from, like
bringing in more new items and being more current with his stock.
Just some business basics, really. I figured I had to go someplace else
to learn.48

In the summer of 1966, after his junior year in the college of pharmacy
at North Dakota State University (NDSU), Bernauer interned at
Walgreens in West Allis, Wisconsin. “My objective was to get into
pharmacy; I liked retail, and I thought I wanted to own my own store,” he

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