The CVS Story
by Reid Holmes
Purpose is a verb. Who knew? CVS did.
More than a decade ago, CVS faced a $1.5 billion question.
I was lucky enough the other day to hear the story of how CVS decided to eliminate selling cigarettes straight from the person who forced the issue with the company, Laura Stone.
Laura Stone, the consultant who helped guide CVS through that reckoning, remembers the moment vividly. The entire leadership team was in the room: the head of marketing, retail, pharmacy, operations — even the soon-to-be CEO, Larry Merlo. They had just articulated a new company purpose: to improve the health of the customer.
“I didn’t think it was very impressive,” Laura told me. “But for them, it was enormous. Because for the first time, they were aligning every part of the company around a shared idea of better health.”
Then came what she calls the paradox process. It’s the uncomfortable work of holding your stated purpose up to the mirror and asking, What tensions or contradictions does this expose?
That’s when Laura said the words that changed the company’s history:
“If I let you out of this room without talking about tobacco, you’ll have mud on your face. You’ll be seen as hypocrites.”
Silence.
No one had dared say it. Not one executive had brought up cigarettes. Even though those pesky smokes were the elephant in the room, a $1.5 billion line item on the P&L.
But that moment, that tension between purpose and profit, was the birth of one of the boldest business, and brand decisions in modern history: CVS would stop selling tobacco products entirely.
Laura urged Larry to set up a “skunkworks” team, a small, secret task force to explore what it would take. She warned him:
“If you come second to market, it’s nothing. If you come first, it’s historic.”
And it was.
When CVS announced its decision, Wall Street winced. The company’s stock dipped. But then came the wave of gratitude, from President Obama, the U.S. Secretary of Health and Human Services, the American Cancer Society, and others.
Within five years, that $1.5B of revenue was replaced. Ten years later, CVS’s top-line revenue had doubled.
What changed wasn’t just their product mix. It was their moral authority.
Because brands earn meaning when they do something their audience didn’t expect, but can see was kinda inevitable and is, in the end, greatly appreciated.
That’s the paradox at the heart of all meaningful branding: the courage to act against short-term profit in service of long-term truth. (And growth.)
When CVS removed cigarettes, it didn’t just improve its brand image; it gave employees something to be proud of, customers something to believe in, and competitors something to think about.
It also rewired the marketing industry’s understanding of “purpose.” Purpose isn’t the paragraph on your website. It’s not saying what you believe. It’s not lip service. It’s the decision you’re willing to take that proves you mean it.
That’s why when CVS said to the world they’re about better health, they were walking the talk. The world had evidence to believe it because CVS gave up a $1.5 billion revenue stream to prove it.
Branding begins with words. But belief come from deeds. Deeds earn appreciation for the effect they have on the world. It’s a long game that pays off better than the “cowardice of quarterly conversion.” (Yes, I made that up. What do we think?)
In an era where every company claims to “care,” doing something brave that actually proves that you do is the biggest message you could ever send. And more companies need to do it.
This story is republished with permission from Reid Holmes.
www.reidholmes.com