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warehousing and delivery at the same time the company s own growth rate was beginning its meteoric rise 36 At one time, we had 2,000 Agency stores, Cork said We just kept shrinking the number down And the company couldn t grow because the Agencies were in the markets we wanted to enter; but they were old, small, slow, high-priced, dirty in some cases So we just shut down the whole division 37 What s noteworthy about this tidal wave of divestments is that many of these divisions were actually making money when Walgreens closed or sold them Perhaps most remarkable, however, was Cork s determination to put aside family feelings to do what was best for the company s future An author once observed that when it comes time to edit a piece of literature, all writers have difficulty cutting their favorite lines, even if the limitations of space and scope require it But, she advised, if you want the piece to work, You have to kill off your little darlings Of course, that s easier said than done, especially when it involves components for which employees and customers alike harbor strong affection and when cutting them would require releasing or retraining hundreds or thousands of employees This is why most companies hang on to divisions and products and policies long after their usefulness has worn out, in much the same way we hang on to favorite shirts and old hats long after they ve become embarrassing to everyone but us Not so Walgreens When it came time to make tough decisions on the fate of the food service division, Cork and company were courageously objective in making their assessment even though the food service division brought in a third of company profits for most of the twentieth century and still accounted for $100 million a year in gross revenue well into the 1970s; even though Cork s grandmother started Walgreens food service back in 1910, when she made sandwiches and soups and pies for her son Chuck to deliver to Charles s first store on Cottage Grove; and even though Walgreens counters and booths and tables gave the chain an indelible identity as America s meeting place for generations of families, couples, kids, and even veterans during the war years
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Despite all that, Cork, Canning, and company compared the stores they had to the stores of the future and decided that food service had to go As Jim Collins wrote in the Harvard Business Review in 2001, a good example of iron-willed leadership comes from Charles R Cork Walgreen III, who transformed dowdy Walgreens into a company that outperformed the stock market 16:1 from its transition in 1975 to 2000 After years of dialogue and debate with his executive team about what to do with Walgreens food-service operations, this CEO sensed the team had finally reached a watershed: the company s brightest future lay in convenient drug stores, not in food service Dan Jorndt, who succeeded Walgreen in 1998 as CEO, describes what happened next Cork said at one of our planning committee meetings, Okay, now I am going to draw a line in the sand We are going to be out of the restaurant business completely in five years At the time, we had more than 500 restaurants You could have heard a pin drop He said, I want to let everybody know the clock is ticking Six months later, Jorndt continued, we were at our next planning committee meeting and someone mentioned just in passing that we had only five years to be out of the restaurant business Cork was not a real vociferous fellow He sort of tapped on the table and said, Listen I said you had five years six months ago Now you ve got four and a half years Well, the next day things really clicked into gear for winding down our restaurant business Cork never wavered He never doubted He never second-guessed 38 When asked about the story, Cork recalled his cabinet s response, with a chuckle They were, Whoa! Wake up call 39 Cork can laugh now, but his people weren t laughing then They were rushing back to their offices, getting on the phone, and making it happen They did; when Cork s five-year deadline was reached, Walgreens was officially out of the food business
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