Purpose Vs Short-Term Profit: CVS’ Lesson for Georgia

Since the Great Recession, the public has given extra scrutiny to business interests and recognized that, left to their own devices, they can give in to temptations to take short cuts to profits that damage their own companies, hurt the economy and many families along the way. Corporate decisions don’t often weigh the public good. Bottom lines and making gains for stakeholders drive decision-making. At least that’s the stereotype. Well, CVS Caremark flipped the script this month with its decision to terminate the sale of tobacco products in its pharmacy stores by this October.

“Ending the sale of cigarettes and tobacco products at CVS/pharmacy is the right thing for us to do for our customers and our company to help people on their path to better health,” said Larry J. Merlo, CVS Caremark’s president and CEO.  “Put simply, the sale of tobacco products is inconsistent with our purpose.”

Inconsistent with our purpose. What a notion! As CVS reviewed its brand and goals to promote health and wellness and ways to best serve its customers, it looked at internal practices to see if they were consistent with CVS’ mission. Selling tobacco products in one area of the store contradicted their mission to treat chronic illness and promote wellness in another part of the store. So they decided to stay true to their healing identity and stop selling tobacco products that cause illness and lead many people to other addictions. Taking cigarettes and other tobacco off the shelves is estimated to cost CVS $2 billion a year in forgone sales. It couldn’t have been an easy decision, but they’ll plan to change their business model and think of other ways to regain that revenue. CVS is betting in the long-term it will be better for its customers, the CVS brand and its role in the health care industry.

Early evidence suggests the CVS strategy is supported by its investors. This week the pharmacy chain reported stronger than expected quarterly profit of 2.5 percent and stuck by the same sales forecast for 2014 as it did before the recent announcement it would end tobacco sales.

The CVS news made me question whether Georgia could learn a lesson about mission alignment from the nation’s No. 2 drug store chain. Georgia aspires to be the No. 1 place to do business, with a strong vibrant economy that supports economic opportunity for all families.  Are we doing things inconsistent with that purpose?

Our goal to provide a quality basic public education for every child can’t be achieved when we don’t provide schools and teachers with the money necessary to do the job. When Georgia cuts spending on technical colleges and universities and makes the HOPE programs harder to qualify for, how will the state reach its goal of adding 250,000 more graduates by 2020? Georgia is moving ahead with the expansion of the Port of Savannah, but a lack of investment in the transportation infrastructure of metro Atlanta will create a bottleneck when semi trucks carrying shipping containers reach the region. We can’t realize nor improve health outcomes in this state when we don’t provide opportunities for citizens to access health care so they can live healthy, productive lives.

Georgia’s public policies and practices are inconsistent with the state’s goals and we need to get them aligned. As CVS recognized, it makes no sense to do something every day that undermines long-term goals.