Inside This Issue - Opinion
CVS Caremark is clearly Ryan’s creation
February 1st, 2010
by David Pinto
Like most successful business executives, Tom Ryan is ambivalent about praise. On the one hand, he’s fully aware of his considerable accomplishments over 16 years as the chief executive officer of CVS and, more to the point, during the first 10 years of the 21st century, a period of achievement that has earned him Chain Drug Review’s designation as Chain Drug Retailer of the Decade.
On the other hand, he is understandably uncomfortable with excessive praise, preferring to bestow credit on the senior executives around him, the managers who run CVS’ various businesses, and beyond that core group, the more than 200,000 store and support people who combine to make CVS work on a daily basis.
Whatever the myriad reasons that CVS has succeeded so dramatically and impressively thus far in this century, however, one fact is beyond dispute: The drug chain would not have succeeded on so grand a scale had Tom Ryan not been heading it.
As a leader and motivational force, Ryan has no equal in chain drug retailing. Indeed, one would have to return to the chain drug industry’s halcyon days of the 1960s, ’70s and ’80s to find leaders of comparative stature, skill, accomplishment and regard. You must recall the days when Stew Turley built Eckerd into a regional retail powerhouse, when Sam Skaggs transformed an intermountain drug chain into one of the nation’s largest food/drug retailers, when Bud Fantle saved Peoples Drug Stores or when Ron Ziegler built NACDS into a significant retail trade association to find the like of Ryan’s accomplishments during the decade that just ended.
Like those leaders, Ryan combines sound business instincts and retailing expertise with a willingness to gamble, an ability to listen, an acute understanding of the impact of his decisions, and a capacity to correctly assess the long-term implications of those decisions.
All of which is not to say that, when it comes to intelligence or sensitivity, Ryan does not have rivals in today’s chain drug industry. Rather, it is his instincts and judgment that have carried him to the top of his profession, along with his ability to rise to the occasion at crucial moments by correctly analyzing situations and making difficult decisions that other, equally capable retail executives would just as soon pass on, and then making those decisions work.
On a deeper level, Ryan’s gift has been to consistently put CVS in a position to make the difficult decisions. Perhaps acquiring Eckerd, Longs or Osco/Sav-on was logical for CVS — but Ryan made those acquisitions inevitable, the logical result of CVS’ strategic, geographical and structural positioning. In the end, CVS’ position in the retail marketplace is what made the drug chain the logical acquirer when acquisition opportunities presented themselves.
Similarly,forming an alliance with MinuteClinic opened the door to the CVS acquisition of MinuteClinic and the resultant growth of immediate care facilities within CVS drug stores. Ryan’s genius was his ability to conceive of that alliance when other retailers might have but did not. Is it necessary to point out that immediate care clinics have become an integral part of the arsenal of America’s largest health care retailers?
Ryan’s decision to merge CVS with Caremark confused some observers and confounded others, while still others insisted — and continue to insist — that it neither offers incremental value to each nor makes the whole greater than the sum of its parts. Perhaps they are right; perhaps not. But the merger nonetheless stunned the chain drug industry as its leaders paused to consider the possibility that Ryan just might have been right in merging CVS with Caremark— and if he is, as he has so often been, he will ultimately put CVS out of the reach of most conventional chain drug retailers.
In the end, this is what leadership is about. It is the kind of bold and imaginative thinking that transformed chain drug retailing from a cottage industry into a major retailing segment, a business led by giants, a business that, in its time, was the darling of U.S. retailing.
Ryan is reminiscent of that generation of leaders. The successes he has engineered at CVS during the past decade are arguably without parallel in the annals of chain drug retailing. Though he was hardly alone in putting CVS into the position it enjoys today — the drug chain has employed, and continues to employ, some of the brightest operators and merchants chain drug retailing has seen — CVS is clearly Tom Ryan’s creation.
Along the way, he has been praised for his perspicacity and justly criticized for what has been perceived as Caremark’s subpar performance of late. But he’s way ahead when his performance is objectively considered — which is why CVS has clearly emerged as America’s premier pharmacy-based health care provider.
One wonders what he plans for an encore in the decade to come.