CVS removed tobacco from all stores in 2014, costing billions in short-term revenue but earning customer loyalty and boosting employee pride. Wall Street initially punished the stock, yet the move proved that purpose-driven decisions can pay off long-term, unlike competitors Walgreens and Boots who kept selling cigarettes while also offering smoking-cessation aids.
Chapters
A company that's truly purpose-driven, the decisions that they make will be consistent with that purpose. I'll give you an example. There's a big chain of pharmacies, chemists in the US called CVS. A lot of you probably know it. And they would have meetings with doctors and hospitals because they have partnerships. And at some point at the end of all of these meetings, there was this uncomfortable moment when one of the doctors in the meeting would ask the question, don't you sell cigarettes in your shops? And here they have a purpose statement that says, we care about the health of our customers, that's why we're in business. And so they went back to the drawing board and they said, you know, if we really care about our purpose, we should remove cigarettes from our shops. And they did. They pulled cigarettes and they— this was billions of dollars worth of revenues, not millions, billions. They literally just axed them. And Wall Street went nuts. How can you do this? All that business is going to go somewhere else, etc., etc. Turned out the business didn't go other places. What ended up happening was the customers were grateful and they bought more of other things and they chose to go to CVS. Yes, their stock plummeted for a short period only because Wall Street punished them. It came back. And as important as the customers liking favor, the employees were really proud to work for a company that actually did what it said. Now you look at their competition, you know, Walgreens and Boots, they have the same purpose statement and yet they didn't make the same decision. You know, they would— and when questioned by the press, they would say, well, we sell smoking cessation products, you know, which is like selling donuts and diet books right next to each other. You know, one's instant gratification, the other one requires work, you buy the donut. So you can easily tell when a company truly obeys its purpose if you look at the decisions that they make. They should be consistent.
