I’m Barry Chandler co-founder and
principal at Storyforge in today’s video we’re gonna talk about why CVS
stopped selling cigarettes and why that matters for your business so in 2014 CVS
Caremark as it was known then changed its name to CVS health and one of the
first things they did in conjunction with its name change was they took
cigarettes out of all 7700 CVS pharmacies all around the country they
even did this a month ahead of their own schedule in doing so they took away two
billion dollars of revenue from the top line of CVS and Wall Street responded
not very well at the time they wanted to know what is the CEO doing
taking away top-line revenue like that but there was a deeper strategy as to
why CVS stopped selling cigarettes so when the CEO Larry Merlo was hired one
of the first things he did was to try and figure out why the CVS exists what
is the purpose of the organization what are we really in the business of and so
he assembled a team of his executives and they undertook this project they
undertook this initiative to deep to really articulate the purpose of CVS and
what they what they found at the end of their their work was a articulation of
what they stood for what they believed what they believed their stakeholders
wanted and needed the gap they saw in the world the problem that needs to be
needed to be fulfilled but they also saw this long-term view this down term
strategy for the organization they were taking this longer term view than just
quarter to quarter earnings in coming up with this purpose statement because they
knew it would be the purpose for the next 10 20 years of the organization so
back in 2014 I have it here in my screen I can pull it up when they change their
name CVS put a big announcement on the front of their website and I said we’re
now called CVS health our name has changed but our purpose remains the same
helping people on their path to better health so the CEO and the entire
organization started to use this purpose as a guidepost and as a
filter for thinking so one of the first things
they recognized was that the fact that they sold cigarettes was a direct
contradiction to helping people on the path to health after all can we really be
killing them with cancer and on one hand then inviting them into a clinic on the
other and so the CEO and the leadership team saw it as an increasing
contradiction and one that they couldn’t ignore now they still sell candy and they
still sell other things but cigarettes to them was the biggest contradiction so what
they did was they took cigarettes out of all the stores because they said we are
now a health company we’re not just a pharmacy we’re gonna help you get
healthier so taking the cigarettes away was the first step they knew it was
going to affect top-line revenue they knew it might affect the share price and
they knew it might affect short-term goals for the organization but that’s
not what they were there for they were there to deliver long-term returns for
their shareholders shareholders meet the needs of their stakeholders so that they
can be profitable in a sustainable way and they were banking on the fact that
people need health care and will align themselves with an organization that
helps them become healthier far longer and in far more meaningful way than
those that simply sells them cigarettes in a transaction so taking cigarettes
away was not the only thing they did over the past couple of years they’ve
done a couple of other big initiatives number one is they’ve reduced access to
opioids in a meaningful way and they’ve also introduced more walk-in clinics to
their stores than they ever had before because they believe they are a health
company so I saw the CEO being interviewed recently on television and
he was asked what’s next for CVS he said well we we will be doing a lot more in
the stores and he said he said but every single thing we do will be so that our
customers can be healthier fitter live better lives their purpose is the
guideposts for everything and why that’s important to you why removing cigarettes
from a store is important to your business is that if CVS a 170 billion
dollar company can put a stake in the ground and say we stand for this
therefore we will decide to remove everything that no longer lines with
this what’s preventing you as a business owner from doing exactly the same
articulate a meaningful purpose for your organization one that meets the
needs of all of your stakeholders including your shareholders
but first meets the needs of your stakeholders and then remove aspects of
your business that no longer aligned you’ll find the focus the innovation
that comes out of that will be liberating will be freeing will be will
be enormously powerful for your organization because now you can focus
on just fulfilling that purpose not just chasing the bottom-line purpose before
profit it doesn’t work the other way