Walgreens' Disciplined Integration of Technology

Key Insight

Walgreens adopted a deliberate 'crawl, walk, run' strategy in response to the Internet frenzy, choosing to pause, reflect, and apply its 'brains' rather than reacting impulsively. Executives engaged in intense internal dialogue to align Internet integration with its core Hedgehog Concept, considering how the Internet would connect to its 'convenience concept,' enhance 'cash flow per customer visit,' and leverage its unique strengths. They embraced the Stockdale Paradox, maintaining faith in prevailing as a great company while confronting the 'brutal facts of reality about the Internet.'

Initially (crawl), Walgreens experimented with a website. Then (walk), it found ways to directly link the Internet to its sophisticated inventory and distribution model, and ultimately, its convenience concept. This included allowing online prescription refills with local drive-through pickup or home delivery, reflecting a calm, deliberate pursuit of understanding and measured steps forward without hype or bravado. This approach was built on a history of pioneering technology, such as the Intercom system in the late 1970s, a $400 million investment (including $100 million for its own satellite system) that electronically linked all stores, enabling customers to refill prescriptions at any Walgreens nationwide, decades ahead of its industry.

Finally (run), Walgreens launched a sophisticated Internet site, comparable in ease of use and reliability to Amazon.com. Within a year of the Forbes article, Walgreens successfully harnessed the Internet to accelerate its momentum, nearly doubling its stock price from its 1999 low. Its chief information officer, a registered pharmacist, exemplified that its Hedgehog Concept drove technology use, rather than technology dictating strategy. Walgreens also pioneered scanners, robotics, and computerized inventory control, consistently using technology as a tool to accelerate momentum after achieving breakthroughs, directly linking it to its core concept of convenient drugstores increasing profit per customer visit.