December 19, 2019 • 40 mins
This episode Bob sits down with Norm de Greve, the Chief Marketing Officer of CVS, to learn how having a Dutch father gave him a unique perspective as a marketer; why being from Rhode Island gives CVS such a unique identity, and the bold steps the brand took to stop selling tobacco products. Plus, we hear why Norm thinks podcasts are such a great way to reach employees and strengthen the culture!
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Speaker 1 (00:01):
You're listening to Math and Magic, a production I Heart Radio.
It's really hard to say you're committed to health as
a retailer and sell something that kills half a million
people a year. In the year after we got out
of tobacco, sales of cigarettes across all retailers went down
(00:22):
one percent. It's a hundred million fewer packs cigarettes sold.
I lost my father to lung cancer when I was seven.
I have a seven year old. To this day, I
always think about how old is my son now. I
didn't have my father, I'm gonna be here for him.
So now I think about a hundred million fewer packs
of cigarettes sold, and how many more fathers and mothers
(00:46):
will be there for their kids. Hi am Bob Pitman.
Welcome to this episode of Math and Magic, Stories from
the front tiers of marketing. On this podcast, we explore
the intersection of data and creativity, the spark that changes businesses. Today,
(01:08):
we have someone who is an expert at creating that spark,
Norm to Grab the CMO of CVS. He's a first
(01:29):
generation American, not only a great and innovative marketer, but
an overall smart guy. NBA with honors from University of
Chicago Booth School of Business, Compily real Estate Advisors, investment
manager Mercer And He was president of Boston Detroit Digitas
before he made the jump to CVS. He combines business,
marketing and creative skills with success in all the components
(01:52):
and all together. Norm welcome, Thanks, thanks for having me.
We're gonna explore it all, but first we want to
get to do Norm and sixty seconds. Don't think too long.
Give us your quick answer. Alright, Norm? Do you prefer
sunrise or sunset? Sunrise? American football or European football, American
Instagram or Twitter, Instagram, spring or fall? Spring, call or text, text,
(02:15):
skiing or snowboarding, skiing, chocolate or vanilla chocolate, Cats or dogs, dogs,
Rhode Island or New York. I can get me in
trouble with New York. It's about to get harder. Smartest
person you know, Neo de grasse Tyson is the smartest
person I've met. David Kenny, CEO of Nielsen, would be
the smartest person I know. First job, Lifeguard, Favorite TV
(02:37):
show right now, Jack Ryan, All time favorite TV commercial,
When God Made a Farmer? Favorite city Chicago, Last vacation, Bahamas,
historical idol it's Obama historical, historical enough, favorite sport, baseball,
favorite food, Indonesian. What did you want to be when
you were growing up? An architect, a physicist, business person,
(03:01):
a doctor, and a none of those you're working at CVS.
That's getting glows. What's the perfect day look like for you?
Up early, lots of time to get done the things
that are important to me, and of the day, time
with the kids and family. If you could have one superpower,
what would it be to make wishes come true? All right,
let's jump into it. One of the biggest transitions in
(03:23):
American business the shift of CVS from a local drug
store to a multifaceted healthcare company. You joined about the
time CBS boldly stepped up to help as their core differentiator,
and in the process delivered in authenticity that most companies
could just dream about. CBS stop selling tobacco products in
two thousand and fourteen, at a loss I understand of
(03:44):
about two billion dollars in annual revenue. That's got to
be one of the most daring steps I can think of.
No matter how right it is, I'm not sure I
could have ever brought myself to do something like that.
How did that happen If you go back to the
history of CVS that started as a drug store, then
they rolled up drug stores across the country. They got
to a point in the mid two thousands in which
it was really a decision of what's the next step.
(04:06):
Who are we There's not that many more drug stores
left to be rolled up, and what's our next stage
of growth. That's when the company really committed to the
idea of health. When you commit to that idea, you
very quickly say there's an inconsistency in our commitment, which
is that we're selling a product that is the number
one cause of preventable death in America, and so you say, well,
(04:27):
we shouldn't be in that product. But there's a problem
when you make two billion dollars a year off that
product and wall streets pretty unforgiving. The idea had been
around for a while. The question was when and how so,
here was the gamble, get out of tobacco, lose two
billion dollars in the retail side, and by demonstrating our
(04:49):
commitment to the health of members and employees of other companies,
we would grow the B two B side of our
business even more so. We'd sell a fewer ten dollar
packs of cigarettes and get more ten million dollar contracts
on the bat B side. And it worked. If you
look at when we got out of tobacco in two
thousand fourteen, the revenues of CVS were somewhere in the
hundred and thirty billion range. We went from fortune thirteen
(05:11):
of fortune seven and two years. So what was the
reaction of employees. Did they get it immediately? Well, this
gets to a really interesting point about purpose and why
have a purpose and what is purpose really mean? Because
we did three things at this time. We got out
of tobacco. We changed the company's name. At the time
it was called CVS Care Marks. We changed it to
(05:31):
CVS Health, which is much more indicative about who we
are and where we wanted to go. And we codified
the purpose of the company that why this company exists,
which is to help people on their path to better health.
When all three of those things happened in two thousand fourteen,
we saw the single largest rise in the engagement scores
of our employees in the history of the company. I
(05:53):
think that there are two reasons for that. The first
was getting out of tobacco, really demonstrating taking a acrifice
to do the right thing, and that just makes all
of your employees proud. And the second is we moved
from an idea of a vision, you know, help people
achieve their best health outcomes, to a purpose which was
to help people on their path to better health. There's
(06:14):
a very big difference in this too. The first one
is really about us and what we want to achieve.
The second is about what you do for others. It's
actually quite simple. There's so much nobleness in helping people
and everyone can relate to it. So everybody in the
company could relate to the purpose. If you're in a store,
you know how to do that. If you're a merchant,
you know how to do that. If you're the CEO,
you know how to do that. These things all came
(06:35):
together and they drove incredible engagement in the employee population,
which I'm convinced had a significant impact on our growth.
What about Wall Street, There was a lot of worry
about what Wall Streets reaction would be. In fact, Kramer
had a piece that said, you've just reduced your cash flow.
That means your stock is worth less. Interestingly enough, the
(06:57):
stock went up. It went up immediately. Yeah, So why
did that happen. The thinking is that everybody can connect
to tobacco. Everybody has a story of someone in their
family or a friend who was affected by this thing.
They can feel it and there's a human truth in it.
And so when we got out of it and demonstrated
our commitment not to be in that, they connected that
(07:18):
and they almost wanted us to succeed. Larry Merla was
the CEO at the time, and while everybody was on board,
that must have been a very restless night for him.
I can only imagine what did Big Tobacco say. It
was the reaction there, They didn't say much. I mean,
what can they say. They're on the wrong side of
a lot of issues, and so they were just quiet
about it. In your agencies, the agencies, they're generally filled
(07:40):
with young people who are thrilled for these sorts of moves.
More recently, we said to our agencies, we won't work
with any agency that works with big tobacco. To work
with us, you have to sign a commitment saying you
won't work for big tobacco because we don't want to
be part of that, or subsidizing a company that's also
doing that. They all came along every single one of them.
This was just the beginning of the ongoing major transformation.
(08:02):
I really want to dig into it more. But before
we do that, I want to get back to you,
and we want to talk a little bit about what
shaped you. Your parents immigrated from the Netherlands before you
were born and dued. Why did they come to the US. Well,
my father's family was escaping the war World War two,
got the last boat out of Portugal. My father's family
all went back, but he stayed and made a life here,
and my mother came on her own. My mother met
(08:25):
him here. I mean, they came here with no connections whatsoever.
And it's the American dream. I mean, they just made
it all happen. It's really incredible. Do you think being
first generation American, especially with your parents escaping something, had
an impact on you. When you grow up with parents
that are not from the US, I think you always,
(08:45):
to some extent feel like an outsider. You don't have
the intuition for the norms or the customs, and so
it makes you quite an observer of people and quite
a listener, honestly, and so that's really helped me succeed
on my job today. I can observe in meetings what's happening.
I can observe customers and what they think. I'm curious
to hear what their perspectives are. That's one piece, maybe
(09:07):
another pieces. You've gotta make it. You know, the story
of America. The biggest motivators from many people are fear
and greed, and I think I probably had both. Where
did you grow up the Berkshire's We moved to Scotland
for four years, in North Carolina for a few years,
so we spent some time in the South, and then
New Jersey went off to boarding school. I know, you
(09:27):
see these cultural differences between the Dutch and the Americans,
in spite of the fact that much of early America
was influenced by the Dutch. What did you consciously feel
about those two cultures or was the Dutch culture sort
of eradicated. Dutch culture is very tolerant, that's certainly in me.
It's very pragmatic, that's certainly me. It's very direct, which
(09:49):
is probably in me as well. I've been told, but
my parents, in classic Dutch fashion, we're like, we're here
in America, this is where we are, and we're moving on.
So as I understand that you graduated high school from
a Quaker school. I did. The Quakers also have a
very clear philosophy and culture. Was that an influence on YouTube?
You know? Actually, my freshman or of high school, I
(10:10):
went to a military academy. I'm probably the only kid
in America who wanted to go to a military academy,
but I did, and my parents were crazy enough to
let me do it. And I quickly realized that wasn't
a good idea. I didn't align with who I was.
So I went from a military academy to the pacifist Quakers.
That's your choice as well my choice as well. That
had a huge impact on me. It probably fed a
(10:31):
bit of my you can call it liberal side, but
certainly a side of how do you help others and
how do you feel an obligation to do more in
the world than just to earn money. You know, the
Quakers they believe everybody is equal. So as a high
school student, this is marvelous, right, because you call your
teachers by their first name, you're totally rebelling and everybody's
your equal. When you get older than you also realized
(10:52):
that everybody's equal, that people younger than you are also equal, right,
and so you have to treat everybody the same way.
If you think about this concept of outsider. You were
talking about the outsider, his first generation American outsider in
terms of being at the Quaker school and everybody's equal.
Has that continued for you? I mean, do you sort
of still think of yourself as that outsider conditioned by
(11:13):
that of your youth? In some ways, it's fueled my
desire to never be satisfied with where I am, to
always keep striving, and I don't feel like I've ever
achieved what I want to achieve. You know, you're the outsider.
Maybe it's an insecurity that moves you along. So you
chose a military academy, you chose a Quaker school, and
then you chose Ithaca College. Why what's the continuation there?
(11:35):
What's the thread? Well, I'd like to give you an
intellectual story about the truth. This was the first place
I got into and I was I hated doing the
applications and I was done. You went to Ethca College.
What was your original career expectation. This is the moment
where I thought about physics, This is the moment where
I thought about architecture. My father is a scientist, and
I grew up with that, and I loved the idea
(11:56):
of curiosity and understand the world, and to me that
was what physics was. And I also love the idea
of design and bring physics and design together, which to
me was architecture. And then I settled in an economics
mostly because it was a way of understanding the business world,
the same idea of systems thinking. I think at that
point I was thinking, how do I have a career
(12:17):
which will help me get ahead in the world, and
that seemed like the easiest. Looking at you and your career,
you were an investment advisor in real estate in Boston.
He went to a spin off of the main Capital
Corporate Decisions, and then six years later you entered business school,
the Booth School of Business at the University of Chicago.
You already had a career. Why did you sort of
stop the career and say I need to get an
(12:39):
MBA curiosity? I think the finest world is great for
many people. I didn't have the passion for it. I
felt like it was an Excel spreadsheet and I could
make Excel spreet. It's really well at that time, but
it all depended on what numbers you put into the cells,
and I didn't feel equipped to really decide, well, what
are the assumptions that we're making, And I'm not trying
(12:59):
to be critical. I looked around them like, I don't
know that anybody here has really been really trained on
how to understand that. And so to me, business school
was a way of starting to think broad or to
understand the assumptions that you're making about why this thing
will succeed or not succeed, which is really all the
spreadsheet is doing. The Booth school at the university very
quant very mathematic, I mean, very serious academics. Did you
(13:24):
specifically choose that as opposed to the case study schools
that were much more sort of marketing driven. I did
because it was also the most flexible curriculum. While it
is known for finance and quant I didn't have to
take those courses, and I didn't really want to because
I'd spent so much time doing that. You came out
of graduate school and you jumped into management consulting at Mercer.
(13:46):
Why there and what was your dream of going into
that direction from where you have been? The why I
did it was because I couldn't choose any other specific industry.
So it was kind of a way to postpone making
a decision, and I thought I'd learned something. I did
that for just about two years. Looking back on it now,
I highly recommend it for so many people because it
(14:06):
gives you the audacity to believe that you can solve
any problem, and a way of communicating in paper and
in presentation standing up that is valuable for the rest
of your life. In fact, the skills that I use
now as a CMO of you know, Fortune five company,
or at least fifty percent the skills I gained a
management consulting. David Solomon, who's the CEO of Goldman Sacks,
(14:29):
was on and he was talking about the skills that
he values the most he got at Hamilton's College, which
was learning how to write in public speaking. To the
point that you've made, which is the power of storytelling.
You can communicate facts, but if you don't communicate facts
in a story, you're not half as effective, right And so,
who did you work on and Mercer, was there anything
that grabbed your attention? I did something in the trucking
(14:50):
industry or very that's interesting. In the air compressor industry,
not so exciting. I did some stuff worth the Internet
companies as well. That's stuff with direct marketing companies. But
what happened there was, this is early two thousand's, we
were helping all these companies have Internet strategies because they
all wanted to participate in this, and I thought I'd
(15:10):
like to have an Internet company. I actually left there
and started a venture got venture backing with a colleague
there and learned a lot in that experience. Was one
year from formation to funding, to staffing to selling to
the bio going bankrupt. What was the company? It was
called Green's Ebers. It was purchasing solutions in the construction industry.
Was that after that you joined Digitas? Yeah, and you
(15:31):
came into Digitas to head up strategy media analytics. How
big was Digitas then was in the hundreds, let's say
six hundreds or so. It was kind of mostly Boston,
New York. Digital advertising was still in its infancy. I
was at a O Well then and I think the
whole industry was about four or five billion dollars then.
Being a Digitas at that time, what do you think
(15:53):
digital advertising was and what was it going to be?
Let's just start with what I thought marketing was when
I was at Corporate Decisions or c d I, the
whole company was premised on customer driven growth strategies. Identify
the customers, know what their needs are, and build a
business that can make money by satisfying those needs better
than anyone else. And that has forever for my idea
(16:13):
of what marketing is, it is customer driven growth strategies.
And so at the time, David Kenny was the CEO,
and his idea was to bring management, consulting and advertising together,
to bring that strategic, rigorous thinking with the annuity revenue
of advertising together. The digital space brought the magic of
targeting or maybe the math of targeting from direct marketing
(16:37):
and the magic of creative that was not available in
any real direct marketing options at that time. And so
the idea was, if you bring them together, it can
be even more effective and connect with people in a
different way and have interconnectivity, interaction and communication, which is
you know what we've seen happen, and we were also
driving quantification of results. Originally, this is just the bolt on,
(16:57):
and then I'll have this agency to do my digital
What was the big breakthrough that took digital advertising into
the mainstream. A O L was the first biggest one
that really drove consumer behavior at scales. So if you
wanted to reach a certain segment of consumers, you could
reach them in a significant way and have impact on
your piano. Google and Search had to be there, and
(17:18):
then it kind of multiplied from there. You can see
the car companies with all the Kelly Blue Buck and
those sorts of sites, and so there's a lot of
money there the companies that were later to the game,
where the companies that were less direct response oriented. Just
hold on a second, because we've got so much more
to talk about. We'll be back after a quick break.
(17:40):
Welcome back the math and magic. We're here with the grab.
So by two thousand and fourteen, you've worked your way
up to being the president of Boston and Detroit for Digitas.
Sounds like your career was going smashingly. Well, why did
you leave to be the CMO of CBS. So at
the time, I was running Boston and Detroit for Digitas,
and I was running all of publicist for Bank of America,
(18:00):
and so I started to see all the different possibilities
in marketing and had really enjoyed working with the Bank
across all that stuff. But the real reason is, if
you go back to when I had my startup, I
actually never got that excitement out of my body. I
liked having the ability to build something. I started looking
at CVS and I met the people running it. I
(18:23):
found a company that was actually unlike any other that
I've seen in my professional services career. Big scale, very
low ego, very humble, never satisfied, always driving ahead. It
kind of has I'd say the scale of Goliath in
the heart of David. Tell me a little bit about
the company. It's interesting a company this size is in
(18:44):
Rhode Island, not exactly where you expect to find a
company this size. Is that part of the attitude and
the culture of the company, Yeah, I'd say that's true.
I'd say more so, though, the attitude of the company
comes from pharmacists and pharmacies, and so pharmacistists are very
caring people, very eye level. If you look across the
(19:05):
sixty five thousand pharmacies in America, not just CVS, but
all of them, it's a grand story of humanity. I mean,
these are just wonderful people in local communities all around
the country, helping other people. Be a little bit better
every day in the way. They're just kind of very
hands on community organizers, and so there's that attitude that
came into it. And then pharmacies, the retail business, keeps
you humble. There's such a close connection between your actions
(19:27):
and the results that there's no in between of pontificating.
I had two uncles who are pharmacists, both owned pharmacies.
Everybody hung out in those pharmacies that were in the
same little town in Mississippi, and they were sort of
across the square. If you go in there, just everybody
was there and hey, how are you catching up? What
is the roots of that? Where did that come from?
There's two pieces. One is they're just really a part
(19:49):
of the community, and they're kind of a safe, accessible
part of the community. Even today, when you go into
a pharmacy, you don't feel judge, You just feel fine, right,
it's safe and it's accessible. They second part is there's
a sense of discovery of new things that could make
you better, and so people kind of like that idea too.
You know, it's interesting there's a large group of high
(20:09):
school kids that are going into pharmacies like CVS all
the time because it's in their neighborhood. It's a place
for discovery and the prices aren't too high, and so
it's kind of happening still. You know what's happening with
the older generation. Actually the younger too, but let's just
talk about the older the epidemic of loneliness. So what
you see is a lot of older people come into
(20:30):
the pharmacy every day to speak to the pharmacist. It's
their human connection. That's an interesting point. So I want
to jump into the history book kind of transformation of CBS.
This is one of the more amazing stories I've seen
as a marketer. Take us back a little bit to
the beginning to I know, it was a spin out
in nine became CBS, so I think it was originally
consumer value store. What was the initial thought of CBS
(20:53):
and how did it get here? It started as a
convenience store, a community store of value. You know, you
see those around today. You see him in the Dollar
Store in other places. There's different era, different sort of idea,
but you know that kind of concept. And then pharmacies
were added because it was a way to pull people
into the store. Right. In fact, we've changed the logo since.
But if you look at CVS slash pharmacy, it was
(21:15):
you know, there's a pharmacy in the building. It wasn't
one logo was like CVS and a pharmacy are here,
and in fact, a little interesting piece of history for you,
it was called Custumer Value Stores. They were like, we
can save a lot more money if we just call
it CVS on all those signs, and so that was
literally the decision. I know, before two thousand and ten
(21:35):
the company had that debate about getting rid of tobacco products.
When they finally did it, it made a huge statement
about this is a health brand. Was there this year
two years of nervousness about this emphatically No, you know,
wall streets expectations were managed. But what really happened inside
the company was sustained high levels of engaged want to
(22:00):
deliver on the purpose. It was a meaningful difference in
the culture. And if you look at what's happened in
the five years since that, there has been a constant
stream of other initiatives put out there that deliver on
the purpose. The stock takes off, employees are engaged, your
(22:22):
business does well, you make big jumps. Why didn't everybody
copy you? Why are you standing alone in this? It's
a good question. So from a business standpoint, why haven't
they copied us? Nobody else had the same set of
assets that we had, so they couldn't make money in
different revenue streams that we made money. And so that
you know that's a reality. Some of them do need
to copy us, and you're seeing some of it happen today.
(22:45):
But I'd say on the tobacco front, it's really hard
to say you're committed to health as a retailer and
sell something that kills half a million people a year.
You make this big move, you put the message out,
what do the consumers say? So if you ask consumers,
there's two things that you see pop up. One is
ra ra fantastic. The second is don't tell me what
to do? Are they there's a little more rara? But
(23:10):
I think people they want to make their own choices
and they don't want somebody say I've chosen for you.
And I think you'd see that in virtually every sacrificial,
purpose driven move that affects consumers. But the people who
were really committed to that idea left others state and
more of come. I think there was a one percent
reduction in cigarette smoking in the states in which you
(23:31):
had stores. So this is a phenomenal thing. This is
something that makes me really proud. I make a lot
of people really proud. So in the states in which
we had a significant presence, in the year after we
got out of tobacco, sales of cigarettes across all retailers
in those states went down one percent. It's a hundred
(23:52):
million fewer packs cigarettes sold. I lost my father to
lung cancer when I was seven. You're a little too
young at seven to really know all the impacts of that,
but I have a seven year old time I did.
To this day. I always think about how old is
my son now. I didn't have my father, I'm going
to be here for him. So now I think about
(24:14):
a hundred million fewer packs of cigarettes sold, and how
many more fathers and mothers will be there for their kids.
Did some of it come from not only you're not
selling it, but come from you changed the idea of
smoking in those states, from your advertising and from the
statement you have made. Do you think people suddenly said,
you know, if it's that bad, I'm gonna stop. It
(24:35):
was the shot heard around the world. My brother lives
in New Zealand. He heard about this, everybody heard about it.
I mean, it's like one of those moments. You know,
here's the thing about health in America. Small percentage changes
can have enormous impacts. And so you don't need everybody
to stop one hundred million fewer packs of cigarettes. You
did this commitment and this marketing of both product and
(24:57):
your traditional marketing. It was probably the most the line
of almost any effort I've seen. The idea of health
was that something that was being worked simultaneously the product
side as well as the marketing side. Yes, it was
first and foremost on the product side and then on
the marketing side. How do you get out of tobacco
because we said one day we'll be out this specific day,
(25:19):
eight thousand stores. How do you get a system of
people to make sure that eight thousand stores not one
of them has one pack of cigarettes in on a
certain day. How It's an amazing feat of operational excellence.
Everybody knew what to do. There were processes and procedures.
Everybody had to send pictures back of their store so
that every store was cataloged as not having them, because
(25:41):
we were afraid somebody would find a pack and say
you said you're out and here's a pack of cigarettes.
And what was the big lesson in that for marketers
that any marketer listening today could take that, What would
they do with it? How would they apply it? If
you're going to demonstrate your purpose, do it in a
way that people notice. That's an important thing, because otherwise
it just has no impact. Then I'd say, really, think
(26:04):
about where your consumers are and what they already know
is right, and deliver on that and they'll reward you
for it. You can see dissonance in so many areas.
It's because consumers have moved on, but the way a
business makes profit and operates doesn't move that fast, and
so it creates dissonance. And so if you deliver on
something for consumers, they will reward you for it. So
(26:27):
you've moved on. You've got long lived skin. You removed
any sunscreen with lust n SPF fifteen in your stores
a few years ago. You began removing beauty products with
harmful chemicals and additives. You were the first big retailer
to stop selling products with artificial trans fat. You eliminated
digitally altered images of models as part of your beauty
market campaign. Tell us more about that. There's a couple
(26:49):
of things. They're one is all of these ideas came
from below, they didn't come from the top. And it
gets to my point about engagement. Maybe it gets to
a point about making sure your demonstration or purpose is
big enough, because it's also got to matter to your employees.
So what happened was everybody wanted to participate in this idea.
(27:10):
They wanted to participate in our purpose. They wanted to
show their commitment to it. Those ideas that you just
mentioned showed up from desperate people across the company. And
then we're raised up and the people who do this
own the p and l's for these things too, and
so they're finding ways that they can deliver on the
purpose and drive the business. You've got medical clinics, diabetes
(27:31):
care centers, you keep inventing more and more ways to
make the health brand. And then of course the Etna
insurance acquisition of seventy billion dollars. Where do you draw
the line or do you draw the line? I think
it's important for people to realize that our stores are
less than half our revenue. Because when you say CVS,
people think about the stores. They see, which is great.
(27:52):
But we do have over a thousand clinics and we
have a big home and fusion therapy business. We serviced
a lot of nerve homes with all the pharmacy that
they need. We have a company called care Mark, which
is the card you take to the pharmacists and recently
now of course Etna, and there's a bunch of companies
in between. And so what you have to do is say,
(28:13):
what are the pieces that you need to deliver on
your purpose in a unique way, and that how do
you assemble those pieces? Our purpose is helping people on
their path to better health. So what we're trying to
do is create the most consumer centric healthcare company. The
healthcare system we have today was really orchestrated with hospitals
(28:37):
and academics and physicians at the core. Consumers revolve around
all of that. That's been great, there's a lot of expertise,
we've had major breakthroughs, but the lack of convenience for
a lot of consumers hurts their engagement. It gets back
to the same idea of small percentage movements can have
a huge impact. And so our view is if we
can build a healthcare company with people at the heart
(29:00):
of it and really deliver on their need for convenience
and engage them in new ways in concert of this
whole system. So not an exclusion of the system. We
think we can move engagement, improve outcomes, lower costs, which
is good for everyone. The YETNA piece gave us two things.
One was data because an insurance company knows the most
about your health. They see all your claims, and it
(29:22):
gave us an ability to share in the risk and
sharing the upside. So if you lower costs and prove outcomes,
as a pharmacy, you're not going to participate in that,
but as insurance company you can. You've made all these changes,
how long does it take for that to begin to
show up in the perception of the brand with the consumer.
When I think about consumers, I think mostly they don't
care about us. They're just living their life, you know,
(29:44):
and you cannot get too ecocentric about this stuff. And
so when the perception is going to change for them
is when there's something meaningfully different for them to do
or to engage in, or some benefit. The first time
it happens, they'll say, oh, that was nice. But if
you put that into the weight at average it hasn't
done a whole lot. It will have to be multiple
times before they really believe you. I think if you
(30:05):
look at brands today, which is a pretty fundamental difference
from brands in the past, they're built seventy on experience
and on the story. One without the other is inefficient.
If you just do the experience but you don't pull
it together for people, you're really asking them to do
too much. But if you just do the story, you're
missing seventy the equation. And so you've really got to
(30:28):
do something useful for consumers over a consistent period of
time and help pull the story together for them, and
then it will change. I think it takes a long
time years. Let's jump a little bit to culture and you,
as a manager and a marketer, you talked about this
mission driven culture at CBS anything that wasn't expected. We
talked about purpose a lot related to will it help
(30:51):
you sell more products. The big surprise is how much
it's helped in recruiting. How much people want to be
part of that. They want to be part of something
that is making a difference in the world. They want
to participate in that at all levels. At all levels,
you've got is a two hundred employees. Now, how do
(31:12):
you market your mission internally? I mean, you've got this
fantastic story now, but as you just talked about marketing,
they're not going to learn it themselves. Somebody's got to
help them. How do you do it? It's gotta be
and everything you do. So if you go to our
website or you do anything to learn about CBS, you
are going to see the purpose right away, and you're
going to hear about the actions that we're taking about
our desire to have a meaningful difference and impact in
(31:35):
the world. Then when you come in from the first day,
we've restructured everything. The onboarding is that way. All of
our executive meanings are that way. You hear about this
again and again and again, and it comes into the culture,
and then those people when they're talking to others, they
use the same words. It is really amazing to me
in some ways what a brand for a company was
(31:57):
to consumers in a way a purpose is to employees
and recruiting. You know, I could go work lots of places,
but this one feels a little different and a little
better because it's got that purpose. I could buy lots
of things but this one feels a little different and
better because it's got a brand. Do you do an
internal telecast, podcast, town hall meeting? What are your techniques
to get it out? Yeah, So the challenge that we
have is the dispersion of our employees. We have ten
(32:19):
thousand locations. You know, Disney is an amazing company, but
they have two locations, and so what they can do
in two locations is just fundamentally different than what we
can do. Intend that we have a hundred and fifty
eight locations than we thought we had a lot, I'm
suddenly feeling very small, and so you appreciate the problem
of how do you get everybody to think the same
way and be on the same page. We've done podcasting
to all the employee base, We've done video blogs. We
(32:42):
are changing everything in our store so that seat of
the standard communications that come down they are quite dry.
They'll pick up a device at the moment they come in,
and that device will be preloaded with stuff that's more
site sound and motion for them to understand what we're
all about. And then there's the kind of the standard
big town halls and stuff like that. General Stan McCrystal
came in to talk to us. At one point he
ran Jaysak in the Middle East with special forces, but
(33:05):
he was talking about how they were structured in a
very hierarchical way, exactly the way you should be to
win a war traditionally, and they were fighting an army
that was structured in a very dispersed sort of way,
and they had to change everything they did. And I
still remember that because that's exactly what we are. Were
so dispersed, so you can't really operate in a hierarchical
way if you want them to change. And this is
(33:26):
where again you get back to purpose. You have to
know the why, and they have to know the why,
and then you have to trust their judgment to make
the right decisions in each of those locations. So you
are both a skilled manager and a talented marketing professional.
What do you do when you're marketing professional views clash
with the views of your other really talented marketing professionals
(33:48):
in your organization. I kind of have a belief that
everybody has a valid point, and so I want to
understand their points first. It's actually a little bit mercenary, honestly,
because I want to know if my point can be
even better. But then it's how do you engage someone
to bring them along. All companies are just organisms of people.
If you can't connect with them in a certain way,
you're not going to be as effective. Big transformation. We've
(34:11):
been talking about what kind of marketer can handle a
transformation like that? What skill sets do you need to have?
One is a very high tolerance for ambiguity. And I
don't just mean, oh what are we about. I mean
when things change, everyone's roles change, and so all of
a sudden, roles are overlapping everywhere. If you need real
(34:33):
clarity on what you own and you want to be
in control of everything, it's just not gonna work. You
have to have a really high to ledge for ambiguity.
You have to really remember what you're trying to solve,
because you can easily get pushed down rabbit holes. And
in some ways, I think it's been to the benefit
of creativity is having goals because it takes all the
noise out, like we're gonna achieve this goal, whether to
get a certain amount of sales or a certain amount
(34:54):
of people engaged in something, and that drives creativity. It
keeps everyone focused on that. Let's just focus on that.
Forget who's in which group or whatever. I have this
idea I call home room and classroom. You could all
be in different home rooms, but we're in this classroom today,
and so today we're gonna do this thing. Let me
jump to a big macro issue. You started Digitas, You
(35:16):
were sort of there when it began as an offshoot.
Today digital's got more money than TV, but you know,
TV has been really the bedrocket marketing for as long
as I've been alive. How are you to just actually,
I think what's happening. People are realizing that the mediums
like radio and TV are much more effective than they
got credit for. In the last few years. The idea
(35:39):
of broad reach is coming back in some ways. I
think we got distracted by the potential of targeting and
data and digital, and we tried to make everything like that,
and we got really smart, but we just weren't reaching
enough people to have impact or effect. Then there's the
emotional connectivity that both radio and TV have that most
(36:00):
other channels don't have. And so what I actually have
seen happen in the CMO community is a movement back
from being enamored so much with digital. The big question
is how do we reach all of our buyers in
a frequent enough way, And you need digital to help
with the reach, but you need to have those channels
in there to achieve your goals. Have actually been in
(36:21):
all three of those. And when we came along at
a well and I had to go pitch somebody, what
are we we talked about TV is sort of America's hobby,
radio's America's friend, and digital was what connects it with
that Alignments still going on is to who does what
and what's the perfect mix because it's not one or
the other. Yeah, we've generally found that we need the
full mix to be as effective as possible. And we've
(36:43):
tried it without and digital only. It just doesn't have
the impact you need to have. What advice would you
give a marketer who's just starting their career. Curiosity, entrepreneurialism.
Stick with those two things and they will take you
a long way. Think about the consumer, so of course
that's important, but you've got to drive growth. Be an entrepreneur.
Have curiosity constantly to find how you're going to drive growth.
(37:07):
Find new channels, find new techniques, find new customer sets.
Just keep going. Let's keep going on the advice. If
you could give advice to the college senior from where
you are today, what would the advice be. Creativity is
going to serve you well for the rest of your life,
and it's generally taught out of you in school. Said
don't let it happen. You need to be facile in
(37:31):
the thinking of code so that you can understand the tools.
Code is the new canvas. And then I'd say be
kind to yourself. So we wrap up every episode with
the grades of marketing and we give them a big
shout out. Who's the greatest math person analytical marketer that
you know or no of? Amazon has done an amazing
(37:52):
job from being a publisher and the media business that
they have built through analytics and the data they have
that is an estounding success. There's a billions of dollar
business for them that wasn't there a few years ago.
Who's the greatest magician right now? I actually don't know
the person's name, but remever running marketing at Nike. I
(38:12):
have to just give them so much credit for the
moves that they made recently. I did not think that
they would succeed, and I think that they saw more
than I saw about their business and they took the
risks and wow did they headed out of the park.
That was pure connection, Norm a great chat. Thank you, awesome,
(38:35):
Thanks so much. There are a few things I picked
up in my conversation with Norm. One, consulting work teaches
you to think big and communicate effectively, as in Norm's case.
These skills are invaluable to make it to the top
of your field. Two changes in just one company can
(38:56):
have a huge impact overall. The ripple effect of Seas
dropping cigarettes was a one percent drop in overall tobacco
sales in their states, So instead of merely sending the
consumer elsewhere for a purchase, their move led to less
smoking and better health. Three. When your company changes its focus,
everyone's roles changed to as Norm puts it, having a
(39:18):
high tolerance for ambiguity will help you and your team
weather the storm. Thanks for listening. I'm Bob Pittman. That's
it for today's episode. Thanks so much for listening to
Math and Magic, a production of I Heart Radio. This
show is hosted by Bob Pittman. Special thanks to Sue
Schillinger for booking and wrangling our wonderful talent, which is
(39:41):
no small feat. Nikki Eatre for pulling research bill plaques,
and Michael Asar for their recording help, our editor Ryan Murdoch,
and of course Gayl Raoul, Eric Angel, Noel Mango and
everyone who helped bring this show to your ears. Until
next time,
You're listening to Math and Magic, a production I Heart Radio.
It's really hard to say you're committed to health as
a retailer and sell something that kills half a million
people a year. In the year after we got out
of tobacco, sales of cigarettes across all retailers went down
(00:22):
one percent. It's a hundred million fewer packs cigarettes sold.
I lost my father to lung cancer when I was seven.
I have a seven year old. To this day, I
always think about how old is my son now. I
didn't have my father, I'm gonna be here for him.
So now I think about a hundred million fewer packs
of cigarettes sold, and how many more fathers and mothers
(00:46):
will be there for their kids. Hi am Bob Pitman.
Welcome to this episode of Math and Magic, Stories from
the front tiers of marketing. On this podcast, we explore
the intersection of data and creativity, the spark that changes businesses. Today,
(01:08):
we have someone who is an expert at creating that spark,
Norm to Grab the CMO of CVS. He's a first
(01:29):
generation American, not only a great and innovative marketer, but
an overall smart guy. NBA with honors from University of
Chicago Booth School of Business, Compily real Estate Advisors, investment
manager Mercer And He was president of Boston Detroit Digitas
before he made the jump to CVS. He combines business,
marketing and creative skills with success in all the components
(01:52):
and all together. Norm welcome, Thanks, thanks for having me.
We're gonna explore it all, but first we want to
get to do Norm and sixty seconds. Don't think too long.
Give us your quick answer. Alright, Norm? Do you prefer
sunrise or sunset? Sunrise? American football or European football, American
Instagram or Twitter, Instagram, spring or fall? Spring, call or text, text,
(02:15):
skiing or snowboarding, skiing, chocolate or vanilla chocolate, Cats or dogs, dogs,
Rhode Island or New York. I can get me in
trouble with New York. It's about to get harder. Smartest
person you know, Neo de grasse Tyson is the smartest
person I've met. David Kenny, CEO of Nielsen, would be
the smartest person I know. First job, Lifeguard, Favorite TV
(02:37):
show right now, Jack Ryan, All time favorite TV commercial,
When God Made a Farmer? Favorite city Chicago, Last vacation, Bahamas,
historical idol it's Obama historical, historical enough, favorite sport, baseball,
favorite food, Indonesian. What did you want to be when
you were growing up? An architect, a physicist, business person,
(03:01):
a doctor, and a none of those you're working at CVS.
That's getting glows. What's the perfect day look like for you?
Up early, lots of time to get done the things
that are important to me, and of the day, time
with the kids and family. If you could have one superpower,
what would it be to make wishes come true? All right,
let's jump into it. One of the biggest transitions in
(03:23):
American business the shift of CVS from a local drug
store to a multifaceted healthcare company. You joined about the
time CBS boldly stepped up to help as their core differentiator,
and in the process delivered in authenticity that most companies
could just dream about. CBS stop selling tobacco products in
two thousand and fourteen, at a loss I understand of
(03:44):
about two billion dollars in annual revenue. That's got to
be one of the most daring steps I can think of.
No matter how right it is, I'm not sure I
could have ever brought myself to do something like that.
How did that happen If you go back to the
history of CVS that started as a drug store, then
they rolled up drug stores across the country. They got
to a point in the mid two thousands in which
it was really a decision of what's the next step.
(04:06):
Who are we There's not that many more drug stores
left to be rolled up, and what's our next stage
of growth. That's when the company really committed to the
idea of health. When you commit to that idea, you
very quickly say there's an inconsistency in our commitment, which
is that we're selling a product that is the number
one cause of preventable death in America, and so you say, well,
(04:27):
we shouldn't be in that product. But there's a problem
when you make two billion dollars a year off that
product and wall streets pretty unforgiving. The idea had been
around for a while. The question was when and how so,
here was the gamble, get out of tobacco, lose two
billion dollars in the retail side, and by demonstrating our
(04:49):
commitment to the health of members and employees of other companies,
we would grow the B two B side of our
business even more so. We'd sell a fewer ten dollar
packs of cigarettes and get more ten million dollar contracts
on the bat B side. And it worked. If you
look at when we got out of tobacco in two
thousand fourteen, the revenues of CVS were somewhere in the
hundred and thirty billion range. We went from fortune thirteen
(05:11):
of fortune seven and two years. So what was the
reaction of employees. Did they get it immediately? Well, this
gets to a really interesting point about purpose and why
have a purpose and what is purpose really mean? Because
we did three things at this time. We got out
of tobacco. We changed the company's name. At the time
it was called CVS Care Marks. We changed it to
(05:31):
CVS Health, which is much more indicative about who we
are and where we wanted to go. And we codified
the purpose of the company that why this company exists,
which is to help people on their path to better health.
When all three of those things happened in two thousand fourteen,
we saw the single largest rise in the engagement scores
of our employees in the history of the company. I
(05:53):
think that there are two reasons for that. The first
was getting out of tobacco, really demonstrating taking a acrifice
to do the right thing, and that just makes all
of your employees proud. And the second is we moved
from an idea of a vision, you know, help people
achieve their best health outcomes, to a purpose which was
to help people on their path to better health. There's
(06:14):
a very big difference in this too. The first one
is really about us and what we want to achieve.
The second is about what you do for others. It's
actually quite simple. There's so much nobleness in helping people
and everyone can relate to it. So everybody in the
company could relate to the purpose. If you're in a store,
you know how to do that. If you're a merchant,
you know how to do that. If you're the CEO,
you know how to do that. These things all came
(06:35):
together and they drove incredible engagement in the employee population,
which I'm convinced had a significant impact on our growth.
What about Wall Street, There was a lot of worry
about what Wall Streets reaction would be. In fact, Kramer
had a piece that said, you've just reduced your cash flow.
That means your stock is worth less. Interestingly enough, the
(06:57):
stock went up. It went up immediately. Yeah, So why
did that happen. The thinking is that everybody can connect
to tobacco. Everybody has a story of someone in their
family or a friend who was affected by this thing.
They can feel it and there's a human truth in it.
And so when we got out of it and demonstrated
our commitment not to be in that, they connected that
(07:18):
and they almost wanted us to succeed. Larry Merla was
the CEO at the time, and while everybody was on board,
that must have been a very restless night for him.
I can only imagine what did Big Tobacco say. It
was the reaction there, They didn't say much. I mean,
what can they say. They're on the wrong side of
a lot of issues, and so they were just quiet
about it. In your agencies, the agencies, they're generally filled
(07:40):
with young people who are thrilled for these sorts of moves.
More recently, we said to our agencies, we won't work
with any agency that works with big tobacco. To work
with us, you have to sign a commitment saying you
won't work for big tobacco because we don't want to
be part of that, or subsidizing a company that's also
doing that. They all came along every single one of them.
This was just the beginning of the ongoing major transformation.
(08:02):
I really want to dig into it more. But before
we do that, I want to get back to you,
and we want to talk a little bit about what
shaped you. Your parents immigrated from the Netherlands before you
were born and dued. Why did they come to the US. Well,
my father's family was escaping the war World War two,
got the last boat out of Portugal. My father's family
all went back, but he stayed and made a life here,
and my mother came on her own. My mother met
(08:25):
him here. I mean, they came here with no connections whatsoever.
And it's the American dream. I mean, they just made
it all happen. It's really incredible. Do you think being
first generation American, especially with your parents escaping something, had
an impact on you. When you grow up with parents
that are not from the US, I think you always,
(08:45):
to some extent feel like an outsider. You don't have
the intuition for the norms or the customs, and so
it makes you quite an observer of people and quite
a listener, honestly, and so that's really helped me succeed
on my job today. I can observe in meetings what's happening.
I can observe customers and what they think. I'm curious
to hear what their perspectives are. That's one piece, maybe
(09:07):
another pieces. You've gotta make it. You know, the story
of America. The biggest motivators from many people are fear
and greed, and I think I probably had both. Where
did you grow up the Berkshire's We moved to Scotland
for four years, in North Carolina for a few years,
so we spent some time in the South, and then
New Jersey went off to boarding school. I know, you
(09:27):
see these cultural differences between the Dutch and the Americans,
in spite of the fact that much of early America
was influenced by the Dutch. What did you consciously feel
about those two cultures or was the Dutch culture sort
of eradicated. Dutch culture is very tolerant, that's certainly in me.
It's very pragmatic, that's certainly me. It's very direct, which
(09:49):
is probably in me as well. I've been told, but
my parents, in classic Dutch fashion, we're like, we're here
in America, this is where we are, and we're moving on.
So as I understand that you graduated high school from
a Quaker school. I did. The Quakers also have a
very clear philosophy and culture. Was that an influence on YouTube?
You know? Actually, my freshman or of high school, I
(10:10):
went to a military academy. I'm probably the only kid
in America who wanted to go to a military academy,
but I did, and my parents were crazy enough to
let me do it. And I quickly realized that wasn't
a good idea. I didn't align with who I was.
So I went from a military academy to the pacifist Quakers.
That's your choice as well my choice as well. That
had a huge impact on me. It probably fed a
(10:31):
bit of my you can call it liberal side, but
certainly a side of how do you help others and
how do you feel an obligation to do more in
the world than just to earn money. You know, the
Quakers they believe everybody is equal. So as a high
school student, this is marvelous, right, because you call your
teachers by their first name, you're totally rebelling and everybody's
your equal. When you get older than you also realized
(10:52):
that everybody's equal, that people younger than you are also equal, right,
and so you have to treat everybody the same way.
If you think about this concept of outsider. You were
talking about the outsider, his first generation American outsider in
terms of being at the Quaker school and everybody's equal.
Has that continued for you? I mean, do you sort
of still think of yourself as that outsider conditioned by
(11:13):
that of your youth? In some ways, it's fueled my
desire to never be satisfied with where I am, to
always keep striving, and I don't feel like I've ever
achieved what I want to achieve. You know, you're the outsider.
Maybe it's an insecurity that moves you along. So you
chose a military academy, you chose a Quaker school, and
then you chose Ithaca College. Why what's the continuation there?
(11:35):
What's the thread? Well, I'd like to give you an
intellectual story about the truth. This was the first place
I got into and I was I hated doing the
applications and I was done. You went to Ethca College.
What was your original career expectation. This is the moment
where I thought about physics, This is the moment where
I thought about architecture. My father is a scientist, and
I grew up with that, and I loved the idea
(11:56):
of curiosity and understand the world, and to me that
was what physics was. And I also love the idea
of design and bring physics and design together, which to
me was architecture. And then I settled in an economics
mostly because it was a way of understanding the business world,
the same idea of systems thinking. I think at that
point I was thinking, how do I have a career
(12:17):
which will help me get ahead in the world, and
that seemed like the easiest. Looking at you and your career,
you were an investment advisor in real estate in Boston.
He went to a spin off of the main Capital
Corporate Decisions, and then six years later you entered business school,
the Booth School of Business at the University of Chicago.
You already had a career. Why did you sort of
stop the career and say I need to get an
(12:39):
MBA curiosity? I think the finest world is great for
many people. I didn't have the passion for it. I
felt like it was an Excel spreadsheet and I could
make Excel spreet. It's really well at that time, but
it all depended on what numbers you put into the cells,
and I didn't feel equipped to really decide, well, what
are the assumptions that we're making, And I'm not trying
(12:59):
to be critical. I looked around them like, I don't
know that anybody here has really been really trained on
how to understand that. And so to me, business school
was a way of starting to think broad or to
understand the assumptions that you're making about why this thing
will succeed or not succeed, which is really all the
spreadsheet is doing. The Booth school at the university very
quant very mathematic, I mean, very serious academics. Did you
(13:24):
specifically choose that as opposed to the case study schools
that were much more sort of marketing driven. I did
because it was also the most flexible curriculum. While it
is known for finance and quant I didn't have to
take those courses, and I didn't really want to because
I'd spent so much time doing that. You came out
of graduate school and you jumped into management consulting at Mercer.
(13:46):
Why there and what was your dream of going into
that direction from where you have been? The why I
did it was because I couldn't choose any other specific industry.
So it was kind of a way to postpone making
a decision, and I thought I'd learned something. I did
that for just about two years. Looking back on it now,
I highly recommend it for so many people because it
(14:06):
gives you the audacity to believe that you can solve
any problem, and a way of communicating in paper and
in presentation standing up that is valuable for the rest
of your life. In fact, the skills that I use
now as a CMO of you know, Fortune five company,
or at least fifty percent the skills I gained a
management consulting. David Solomon, who's the CEO of Goldman Sacks,
(14:29):
was on and he was talking about the skills that
he values the most he got at Hamilton's College, which
was learning how to write in public speaking. To the
point that you've made, which is the power of storytelling.
You can communicate facts, but if you don't communicate facts
in a story, you're not half as effective, right And so,
who did you work on and Mercer, was there anything
that grabbed your attention? I did something in the trucking
(14:50):
industry or very that's interesting. In the air compressor industry,
not so exciting. I did some stuff worth the Internet
companies as well. That's stuff with direct marketing companies. But
what happened there was, this is early two thousand's, we
were helping all these companies have Internet strategies because they
all wanted to participate in this, and I thought I'd
(15:10):
like to have an Internet company. I actually left there
and started a venture got venture backing with a colleague
there and learned a lot in that experience. Was one
year from formation to funding, to staffing to selling to
the bio going bankrupt. What was the company? It was
called Green's Ebers. It was purchasing solutions in the construction industry.
Was that after that you joined Digitas? Yeah, and you
(15:31):
came into Digitas to head up strategy media analytics. How
big was Digitas then was in the hundreds, let's say
six hundreds or so. It was kind of mostly Boston,
New York. Digital advertising was still in its infancy. I
was at a O Well then and I think the
whole industry was about four or five billion dollars then.
Being a Digitas at that time, what do you think
(15:53):
digital advertising was and what was it going to be?
Let's just start with what I thought marketing was when
I was at Corporate Decisions or c d I, the
whole company was premised on customer driven growth strategies. Identify
the customers, know what their needs are, and build a
business that can make money by satisfying those needs better
than anyone else. And that has forever for my idea
(16:13):
of what marketing is, it is customer driven growth strategies.
And so at the time, David Kenny was the CEO,
and his idea was to bring management, consulting and advertising together,
to bring that strategic, rigorous thinking with the annuity revenue
of advertising together. The digital space brought the magic of
targeting or maybe the math of targeting from direct marketing
(16:37):
and the magic of creative that was not available in
any real direct marketing options at that time. And so
the idea was, if you bring them together, it can
be even more effective and connect with people in a
different way and have interconnectivity, interaction and communication, which is
you know what we've seen happen, and we were also
driving quantification of results. Originally, this is just the bolt on,
(16:57):
and then I'll have this agency to do my digital
What was the big breakthrough that took digital advertising into
the mainstream. A O L was the first biggest one
that really drove consumer behavior at scales. So if you
wanted to reach a certain segment of consumers, you could
reach them in a significant way and have impact on
your piano. Google and Search had to be there, and
(17:18):
then it kind of multiplied from there. You can see
the car companies with all the Kelly Blue Buck and
those sorts of sites, and so there's a lot of
money there the companies that were later to the game,
where the companies that were less direct response oriented. Just
hold on a second, because we've got so much more
to talk about. We'll be back after a quick break.
(17:40):
Welcome back the math and magic. We're here with the grab.
So by two thousand and fourteen, you've worked your way
up to being the president of Boston and Detroit for Digitas.
Sounds like your career was going smashingly. Well, why did
you leave to be the CMO of CBS. So at
the time, I was running Boston and Detroit for Digitas,
and I was running all of publicist for Bank of America,
(18:00):
and so I started to see all the different possibilities
in marketing and had really enjoyed working with the Bank
across all that stuff. But the real reason is, if
you go back to when I had my startup, I
actually never got that excitement out of my body. I
liked having the ability to build something. I started looking
at CVS and I met the people running it. I
(18:23):
found a company that was actually unlike any other that
I've seen in my professional services career. Big scale, very
low ego, very humble, never satisfied, always driving ahead. It
kind of has I'd say the scale of Goliath in
the heart of David. Tell me a little bit about
the company. It's interesting a company this size is in
(18:44):
Rhode Island, not exactly where you expect to find a
company this size. Is that part of the attitude and
the culture of the company, Yeah, I'd say that's true.
I'd say more so, though, the attitude of the company
comes from pharmacists and pharmacies, and so pharmacistists are very
caring people, very eye level. If you look across the
(19:05):
sixty five thousand pharmacies in America, not just CVS, but
all of them, it's a grand story of humanity. I mean,
these are just wonderful people in local communities all around
the country, helping other people. Be a little bit better
every day in the way. They're just kind of very
hands on community organizers, and so there's that attitude that
came into it. And then pharmacies, the retail business, keeps
you humble. There's such a close connection between your actions
(19:27):
and the results that there's no in between of pontificating.
I had two uncles who are pharmacists, both owned pharmacies.
Everybody hung out in those pharmacies that were in the
same little town in Mississippi, and they were sort of
across the square. If you go in there, just everybody
was there and hey, how are you catching up? What
is the roots of that? Where did that come from?
There's two pieces. One is they're just really a part
(19:49):
of the community, and they're kind of a safe, accessible
part of the community. Even today, when you go into
a pharmacy, you don't feel judge, You just feel fine, right,
it's safe and it's accessible. They second part is there's
a sense of discovery of new things that could make
you better, and so people kind of like that idea too.
You know, it's interesting there's a large group of high
(20:09):
school kids that are going into pharmacies like CVS all
the time because it's in their neighborhood. It's a place
for discovery and the prices aren't too high, and so
it's kind of happening still. You know what's happening with
the older generation. Actually the younger too, but let's just
talk about the older the epidemic of loneliness. So what
you see is a lot of older people come into
(20:30):
the pharmacy every day to speak to the pharmacist. It's
their human connection. That's an interesting point. So I want
to jump into the history book kind of transformation of CBS.
This is one of the more amazing stories I've seen
as a marketer. Take us back a little bit to
the beginning to I know, it was a spin out
in nine became CBS, so I think it was originally
consumer value store. What was the initial thought of CBS
(20:53):
and how did it get here? It started as a
convenience store, a community store of value. You know, you
see those around today. You see him in the Dollar
Store in other places. There's different era, different sort of idea,
but you know that kind of concept. And then pharmacies
were added because it was a way to pull people
into the store. Right. In fact, we've changed the logo since.
But if you look at CVS slash pharmacy, it was
(21:15):
you know, there's a pharmacy in the building. It wasn't
one logo was like CVS and a pharmacy are here,
and in fact, a little interesting piece of history for you,
it was called Custumer Value Stores. They were like, we
can save a lot more money if we just call
it CVS on all those signs, and so that was
literally the decision. I know, before two thousand and ten
(21:35):
the company had that debate about getting rid of tobacco products.
When they finally did it, it made a huge statement
about this is a health brand. Was there this year
two years of nervousness about this emphatically No, you know,
wall streets expectations were managed. But what really happened inside
the company was sustained high levels of engaged want to
(22:00):
deliver on the purpose. It was a meaningful difference in
the culture. And if you look at what's happened in
the five years since that, there has been a constant
stream of other initiatives put out there that deliver on
the purpose. The stock takes off, employees are engaged, your
(22:22):
business does well, you make big jumps. Why didn't everybody
copy you? Why are you standing alone in this? It's
a good question. So from a business standpoint, why haven't
they copied us? Nobody else had the same set of
assets that we had, so they couldn't make money in
different revenue streams that we made money. And so that
you know that's a reality. Some of them do need
to copy us, and you're seeing some of it happen today.
(22:45):
But I'd say on the tobacco front, it's really hard
to say you're committed to health as a retailer and
sell something that kills half a million people a year.
You make this big move, you put the message out,
what do the consumers say? So if you ask consumers,
there's two things that you see pop up. One is
ra ra fantastic. The second is don't tell me what
to do? Are they there's a little more rara? But
(23:10):
I think people they want to make their own choices
and they don't want somebody say I've chosen for you.
And I think you'd see that in virtually every sacrificial,
purpose driven move that affects consumers. But the people who
were really committed to that idea left others state and
more of come. I think there was a one percent
reduction in cigarette smoking in the states in which you
(23:31):
had stores. So this is a phenomenal thing. This is
something that makes me really proud. I make a lot
of people really proud. So in the states in which
we had a significant presence, in the year after we
got out of tobacco, sales of cigarettes across all retailers
in those states went down one percent. It's a hundred
(23:52):
million fewer packs cigarettes sold. I lost my father to
lung cancer when I was seven. You're a little too
young at seven to really know all the impacts of that,
but I have a seven year old time I did.
To this day. I always think about how old is
my son now. I didn't have my father, I'm going
to be here for him. So now I think about
(24:14):
a hundred million fewer packs of cigarettes sold, and how
many more fathers and mothers will be there for their kids.
Did some of it come from not only you're not
selling it, but come from you changed the idea of
smoking in those states, from your advertising and from the
statement you have made. Do you think people suddenly said,
you know, if it's that bad, I'm gonna stop. It
(24:35):
was the shot heard around the world. My brother lives
in New Zealand. He heard about this, everybody heard about it.
I mean, it's like one of those moments. You know,
here's the thing about health in America. Small percentage changes
can have enormous impacts. And so you don't need everybody
to stop one hundred million fewer packs of cigarettes. You
did this commitment and this marketing of both product and
(24:57):
your traditional marketing. It was probably the most the line
of almost any effort I've seen. The idea of health
was that something that was being worked simultaneously the product
side as well as the marketing side. Yes, it was
first and foremost on the product side and then on
the marketing side. How do you get out of tobacco
because we said one day we'll be out this specific day,
(25:19):
eight thousand stores. How do you get a system of
people to make sure that eight thousand stores not one
of them has one pack of cigarettes in on a
certain day. How It's an amazing feat of operational excellence.
Everybody knew what to do. There were processes and procedures.
Everybody had to send pictures back of their store so
that every store was cataloged as not having them, because
(25:41):
we were afraid somebody would find a pack and say
you said you're out and here's a pack of cigarettes.
And what was the big lesson in that for marketers
that any marketer listening today could take that, What would
they do with it? How would they apply it? If
you're going to demonstrate your purpose, do it in a
way that people notice. That's an important thing, because otherwise
it just has no impact. Then I'd say, really, think
(26:04):
about where your consumers are and what they already know
is right, and deliver on that and they'll reward you
for it. You can see dissonance in so many areas.
It's because consumers have moved on, but the way a
business makes profit and operates doesn't move that fast, and
so it creates dissonance. And so if you deliver on
something for consumers, they will reward you for it. So
(26:27):
you've moved on. You've got long lived skin. You removed
any sunscreen with lust n SPF fifteen in your stores
a few years ago. You began removing beauty products with
harmful chemicals and additives. You were the first big retailer
to stop selling products with artificial trans fat. You eliminated
digitally altered images of models as part of your beauty
market campaign. Tell us more about that. There's a couple
(26:49):
of things. They're one is all of these ideas came
from below, they didn't come from the top. And it
gets to my point about engagement. Maybe it gets to
a point about making sure your demonstration or purpose is
big enough, because it's also got to matter to your employees.
So what happened was everybody wanted to participate in this idea.
(27:10):
They wanted to participate in our purpose. They wanted to
show their commitment to it. Those ideas that you just
mentioned showed up from desperate people across the company. And
then we're raised up and the people who do this
own the p and l's for these things too, and
so they're finding ways that they can deliver on the
purpose and drive the business. You've got medical clinics, diabetes
(27:31):
care centers, you keep inventing more and more ways to
make the health brand. And then of course the Etna
insurance acquisition of seventy billion dollars. Where do you draw
the line or do you draw the line? I think
it's important for people to realize that our stores are
less than half our revenue. Because when you say CVS,
people think about the stores. They see, which is great.
(27:52):
But we do have over a thousand clinics and we
have a big home and fusion therapy business. We serviced
a lot of nerve homes with all the pharmacy that
they need. We have a company called care Mark, which
is the card you take to the pharmacists and recently
now of course Etna, and there's a bunch of companies
in between. And so what you have to do is say,
(28:13):
what are the pieces that you need to deliver on
your purpose in a unique way, and that how do
you assemble those pieces? Our purpose is helping people on
their path to better health. So what we're trying to
do is create the most consumer centric healthcare company. The
healthcare system we have today was really orchestrated with hospitals
(28:37):
and academics and physicians at the core. Consumers revolve around
all of that. That's been great, there's a lot of expertise,
we've had major breakthroughs, but the lack of convenience for
a lot of consumers hurts their engagement. It gets back
to the same idea of small percentage movements can have
a huge impact. And so our view is if we
can build a healthcare company with people at the heart
(29:00):
of it and really deliver on their need for convenience
and engage them in new ways in concert of this
whole system. So not an exclusion of the system. We
think we can move engagement, improve outcomes, lower costs, which
is good for everyone. The YETNA piece gave us two things.
One was data because an insurance company knows the most
about your health. They see all your claims, and it
(29:22):
gave us an ability to share in the risk and
sharing the upside. So if you lower costs and prove outcomes,
as a pharmacy, you're not going to participate in that,
but as insurance company you can. You've made all these changes,
how long does it take for that to begin to
show up in the perception of the brand with the consumer.
When I think about consumers, I think mostly they don't
care about us. They're just living their life, you know,
(29:44):
and you cannot get too ecocentric about this stuff. And
so when the perception is going to change for them
is when there's something meaningfully different for them to do
or to engage in, or some benefit. The first time
it happens, they'll say, oh, that was nice. But if
you put that into the weight at average it hasn't
done a whole lot. It will have to be multiple
times before they really believe you. I think if you
(30:05):
look at brands today, which is a pretty fundamental difference
from brands in the past, they're built seventy on experience
and on the story. One without the other is inefficient.
If you just do the experience but you don't pull
it together for people, you're really asking them to do
too much. But if you just do the story, you're
missing seventy the equation. And so you've really got to
(30:28):
do something useful for consumers over a consistent period of
time and help pull the story together for them, and
then it will change. I think it takes a long
time years. Let's jump a little bit to culture and you,
as a manager and a marketer, you talked about this
mission driven culture at CBS anything that wasn't expected. We
talked about purpose a lot related to will it help
(30:51):
you sell more products. The big surprise is how much
it's helped in recruiting. How much people want to be
part of that. They want to be part of something
that is making a difference in the world. They want
to participate in that at all levels. At all levels,
you've got is a two hundred employees. Now, how do
(31:12):
you market your mission internally? I mean, you've got this
fantastic story now, but as you just talked about marketing,
they're not going to learn it themselves. Somebody's got to
help them. How do you do it? It's gotta be
and everything you do. So if you go to our
website or you do anything to learn about CBS, you
are going to see the purpose right away, and you're
going to hear about the actions that we're taking about
our desire to have a meaningful difference and impact in
(31:35):
the world. Then when you come in from the first day,
we've restructured everything. The onboarding is that way. All of
our executive meanings are that way. You hear about this
again and again and again, and it comes into the culture,
and then those people when they're talking to others, they
use the same words. It is really amazing to me
in some ways what a brand for a company was
(31:57):
to consumers in a way a purpose is to employees
and recruiting. You know, I could go work lots of places,
but this one feels a little different and a little
better because it's got that purpose. I could buy lots
of things but this one feels a little different and
better because it's got a brand. Do you do an
internal telecast, podcast, town hall meeting? What are your techniques
to get it out? Yeah, So the challenge that we
have is the dispersion of our employees. We have ten
(32:19):
thousand locations. You know, Disney is an amazing company, but
they have two locations, and so what they can do
in two locations is just fundamentally different than what we
can do. Intend that we have a hundred and fifty
eight locations than we thought we had a lot, I'm
suddenly feeling very small, and so you appreciate the problem
of how do you get everybody to think the same
way and be on the same page. We've done podcasting
to all the employee base, We've done video blogs. We
(32:42):
are changing everything in our store so that seat of
the standard communications that come down they are quite dry.
They'll pick up a device at the moment they come in,
and that device will be preloaded with stuff that's more
site sound and motion for them to understand what we're
all about. And then there's the kind of the standard
big town halls and stuff like that. General Stan McCrystal
came in to talk to us. At one point he
ran Jaysak in the Middle East with special forces, but
(33:05):
he was talking about how they were structured in a
very hierarchical way, exactly the way you should be to
win a war traditionally, and they were fighting an army
that was structured in a very dispersed sort of way,
and they had to change everything they did. And I
still remember that because that's exactly what we are. Were
so dispersed, so you can't really operate in a hierarchical
way if you want them to change. And this is
(33:26):
where again you get back to purpose. You have to
know the why, and they have to know the why,
and then you have to trust their judgment to make
the right decisions in each of those locations. So you
are both a skilled manager and a talented marketing professional.
What do you do when you're marketing professional views clash
with the views of your other really talented marketing professionals
(33:48):
in your organization. I kind of have a belief that
everybody has a valid point, and so I want to
understand their points first. It's actually a little bit mercenary, honestly,
because I want to know if my point can be
even better. But then it's how do you engage someone
to bring them along. All companies are just organisms of people.
If you can't connect with them in a certain way,
you're not going to be as effective. Big transformation. We've
(34:11):
been talking about what kind of marketer can handle a
transformation like that? What skill sets do you need to have?
One is a very high tolerance for ambiguity. And I
don't just mean, oh what are we about. I mean
when things change, everyone's roles change, and so all of
a sudden, roles are overlapping everywhere. If you need real
(34:33):
clarity on what you own and you want to be
in control of everything, it's just not gonna work. You
have to have a really high to ledge for ambiguity.
You have to really remember what you're trying to solve,
because you can easily get pushed down rabbit holes. And
in some ways, I think it's been to the benefit
of creativity is having goals because it takes all the
noise out, like we're gonna achieve this goal, whether to
get a certain amount of sales or a certain amount
(34:54):
of people engaged in something, and that drives creativity. It
keeps everyone focused on that. Let's just focus on that.
Forget who's in which group or whatever. I have this
idea I call home room and classroom. You could all
be in different home rooms, but we're in this classroom today,
and so today we're gonna do this thing. Let me
jump to a big macro issue. You started Digitas, You
(35:16):
were sort of there when it began as an offshoot.
Today digital's got more money than TV, but you know,
TV has been really the bedrocket marketing for as long
as I've been alive. How are you to just actually,
I think what's happening. People are realizing that the mediums
like radio and TV are much more effective than they
got credit for. In the last few years. The idea
(35:39):
of broad reach is coming back in some ways. I
think we got distracted by the potential of targeting and
data and digital, and we tried to make everything like that,
and we got really smart, but we just weren't reaching
enough people to have impact or effect. Then there's the
emotional connectivity that both radio and TV have that most
(36:00):
other channels don't have. And so what I actually have
seen happen in the CMO community is a movement back
from being enamored so much with digital. The big question
is how do we reach all of our buyers in
a frequent enough way, And you need digital to help
with the reach, but you need to have those channels
in there to achieve your goals. Have actually been in
(36:21):
all three of those. And when we came along at
a well and I had to go pitch somebody, what
are we we talked about TV is sort of America's hobby,
radio's America's friend, and digital was what connects it with
that Alignments still going on is to who does what
and what's the perfect mix because it's not one or
the other. Yeah, we've generally found that we need the
full mix to be as effective as possible. And we've
(36:43):
tried it without and digital only. It just doesn't have
the impact you need to have. What advice would you
give a marketer who's just starting their career. Curiosity, entrepreneurialism.
Stick with those two things and they will take you
a long way. Think about the consumer, so of course
that's important, but you've got to drive growth. Be an entrepreneur.
Have curiosity constantly to find how you're going to drive growth.
(37:07):
Find new channels, find new techniques, find new customer sets.
Just keep going. Let's keep going on the advice. If
you could give advice to the college senior from where
you are today, what would the advice be. Creativity is
going to serve you well for the rest of your life,
and it's generally taught out of you in school. Said
don't let it happen. You need to be facile in
(37:31):
the thinking of code so that you can understand the tools.
Code is the new canvas. And then I'd say be
kind to yourself. So we wrap up every episode with
the grades of marketing and we give them a big
shout out. Who's the greatest math person analytical marketer that
you know or no of? Amazon has done an amazing
(37:52):
job from being a publisher and the media business that
they have built through analytics and the data they have
that is an estounding success. There's a billions of dollar
business for them that wasn't there a few years ago.
Who's the greatest magician right now? I actually don't know
the person's name, but remever running marketing at Nike. I
(38:12):
have to just give them so much credit for the
moves that they made recently. I did not think that
they would succeed, and I think that they saw more
than I saw about their business and they took the
risks and wow did they headed out of the park.
That was pure connection, Norm a great chat. Thank you, awesome,
(38:35):
Thanks so much. There are a few things I picked
up in my conversation with Norm. One, consulting work teaches
you to think big and communicate effectively, as in Norm's case.
These skills are invaluable to make it to the top
of your field. Two changes in just one company can
(38:56):
have a huge impact overall. The ripple effect of Seas
dropping cigarettes was a one percent drop in overall tobacco
sales in their states, So instead of merely sending the
consumer elsewhere for a purchase, their move led to less
smoking and better health. Three. When your company changes its focus,
everyone's roles changed to as Norm puts it, having a
(39:18):
high tolerance for ambiguity will help you and your team
weather the storm. Thanks for listening. I'm Bob Pittman. That's
it for today's episode. Thanks so much for listening to
Math and Magic, a production of I Heart Radio. This
show is hosted by Bob Pittman. Special thanks to Sue
Schillinger for booking and wrangling our wonderful talent, which is
(39:41):
no small feat. Nikki Eatre for pulling research bill plaques,
and Michael Asar for their recording help, our editor Ryan Murdoch,
and of course Gayl Raoul, Eric Angel, Noel Mango and
everyone who helped bring this show to your ears. Until
next time,
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