One Decision That Clearly Shows Just What Leadership Looks Like

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Feb 18, 2014

It is “inconsistent with our purpose.”

And with that, the ball dropped. CVS President and CEO Larry J. Merlo used that phrase to make an announcement that rocked the health care and business community.

He said:

The significant action we’re taking today by removing tobacco products from our retail shelves further distinguishes us in how we are serving our patients, clients and health-care providers and better positions us for continued growth in the evolving health care marketplace.”

What does leadership look like?

As a non-smoker, I applaud this decision — not from the smoking angle, but more from a leadership prospective.

CVS will go down in history as the first company to not want to associate with a product that undeniably has severe consequence for people who use it. To drop a significant amount of your business because it did not align with your organizational purpose is real leadership.

But for CVS, the move will be costly. The drugstore chain estimates it will forego $2 billion in annual revenue as a result.

Here in Saudi Arabia, pharmacies have never been allowed to sell cigarettes. It is against the law. I found this fascinating because the Middle East is a smoker’s paradise; it seems like everyone smokes and it appears to be no big deal. Even the airports have “smoking rooms.”

There is no one formula for leading

If you Google “leadership” on Amazon you will get over a 100,000 hits of all the “latest and the greatest. But with those four words, CVS’ Merlo showed  what leadership is about.

True leadership is much more than some slogan or a few paragraphs in a book. You don’t become a leader with some formula that you have pulled from any of those business books. A leader might lead through official authority and power, yet just as often, great leaders lead through inspiration and persuasion.

The leadership principle behind this action was to boldly step out and make an organizational decision that yes, we will forgo revenue, but this product is NOT what we are about.

He single-handedly changed a dynamic in the health care field. I am sure his competitors are sitting there wondering, “What do we do?” Regardless of what they do, CVS will now be known as the first to actually pull the trigger.

It will become increasingly difficult for other pharmacies not to follow. They are now the game changers of the health care industry. Everyone else will now be making a “me too” decision.

Mission/Values realignment

This watershed moment effectively rebranded or realigned with their mission statement. This was a huge win for a company that was trying to position itself as a health and wellness company. What I found fascinating is that in looking at the CVS mission/values page, this decision aligns perfectly.

This statement however long ago created basically states that this is the type of pharmacy they want to be known as — “We’re a pharmacy innovation company and every day we’re working to make health care better”

One of the byproducts of bold leadership is that everyone is watching. Sure, Wall Street reacted negatively, but for a legion of consumers, they have found a new outlet to shop for their health care needs.

In the long run, this was strategic home run, both for their customers and the employee base. Their employees will proudly state that “I work for CVS.” Proud as parents are of their kids, each employee now is surely proud to wear the CVS logo on their sleeves.

Plus, prospective employees will be excited about the possibility of working for a true health care company that puts their mission before short-term profit. This is a huge engagement moment within the walls of every CVS pharmacy.

Brand realignment

At some point, companies must come to the realization that they need to rebrand. Much of  the time it is taken in the direction of changing a logo. And while a brand is so much more than a company’s logo, the statement outweighs any so-called structured employer branding.

I could not even fathom a conference room of “branding experts” strategizing how to reinvigorate a brand and coming up with this CVS solution, because in those four little words, CVS shouted from the mountaintop who they are and how they want to be seen.

As leaders, we have to decide what we want to be when we grow up. It is said that character is defined by what we do when no one is looking, but leadership is what we do when everyone is looking.

Way to go CVS!!

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