Credibility: Plans, Actions, Results

“Walgreen Co. thrived for decades by opening stores faster than its competitors -- a new location pops up every 16 hours -- and by pushing out more prescriptions per year than any other chain.

“But facing pressure from rivals, a weak economy and cracks in the health system, Walgreen is changing its time-tested formula. Instead of simply bottling pills, it is refashioning itself into a broad health-care provider…

“In the last few years, Walgreen has begun making bolder moves. It has dropped its longtime aversion to acquisitions and snapped up specialty pharmacies that are experts in infertility, cancer, AIDS and other conditions that are expensive to treat. It is opening pharmacies in hospitals and assisted-living facilities. Last year, it quadrupled the number of pharmacists certified to give flu shots and other immunizations.

“Investors, though, aren't sure it is taking the right approach. In October, Walgreen reported its first quarterly earnings decline in nearly a decade, hurt by lower generic-drug reimbursements, and higher store and advertising expenses. Investors were rattled by the rare wobble from Walgreen's normally steady business. Since then, its stock price has dropped nearly 22%.

“‘It hasn't had the consistency over the last year,’ says Mark Miller, a William Blair & Co. retail analyst. ‘It's rebuilding credibility.’ …

“While Walgreen shares have fallen, CVS Caremark shares have risen 17% in the last 52 weeks. Last year was the first time since 2002 that Walgreen shares posted an annual decline.

“Walgreen's share price has recovered some ground since the beginning of the year. But drugstores' profits are currently under pressure...

“‘What folks are missing is that multiple strategies are able to win in such a big area,’ Gregory Wasson, Walgreen's president, said in an interview. ‘It's easy to see something big and tangible. CVS has had its shareholders gain value. Ours is a winning strategy. People may not have realized the value yet.’ …

“‘The real opportunity is to begin to connect the dots,’ says Mr. Wasson.

(“How Walgreen Changed Its Prescription for Growth.” Amy Merrick. Wall Street Journal: March 19, 2008. pg. B.1)

CHANGE IS COSTLY, risky, threatening -- and vital. Buy-in comes slowly as plans are announced, gradually as actions unfold, and then perhaps as results are interpreted and framed.

Seeing afar what others cannot yet perceive is indeed a rare gift, yet its value may only lie in your ability to open the eyes of your market.