1. STAYING GREATOrganizational Theory: Fall 2013 Group B Gonzaga University ORGL 505 B2 December 6, 2013Matthew Alexander Gerald Black Robert Gedeborg Katherine GilesDaniel Seydler John Wilke Karin Yonkoski

2. The Walgreens Mission To be the most trusted, convenient multichannel provider and advisor of innovative pharmacy, health and wellness solutions, and consumer goods and services in communities across America. A destination where health and happiness come together to help people get well, stay well and live well (1) (2) 3. The Walgreens Legends Charles Walgreen Sr. one of his greatest talents, the ability to recognize, hire and promote people he considered smarter than himself. His early managers and executives would guide Walgreens into national prominence for decades.(3) In 1939, Charles Walgreen died, but always the planner and visionary, he left his company in superb condition and prepared for the future. Alongside a strong management team, he groomed his son, Charles Walgreen Jr., to lead into the next decade and beyond.(4) 4. TheCulture Corporate Be One I know what Walgreens must deliver, and I align my daily actions with others to make it happen. Be Real I am open, honest and respectful in my words and actions every day. Be Bold I demonstrate courage in everything I do to create the future of Walgreens. Build Trust I listen, seek to understand and always assume positive intent. Love Customers I engage with customers and passionately innovate to exceed their needs. Own It I constantly ask, What else can I do to achieve our results? and refuseto blame others. Live It I help people get, stay and live well. (5) 5. TheCulture Customers Walgreens strives to make healthy living part of their customers and employees lives. They emphasize customer service and unity to their employees to help drive their business. Convenience is also a big part of their culture. They build stores in convenient locations to serve any at a moments need. Walgreens developed the Intercom system which ties all Walgreens across the country together. This ensures customer can pick up Rxs no matter where they are. After developing their internet services they pioneered drive-thru pharmacies to make pick-ups easier and more convenient for their customers. 6. TheCulture Employees Employee engagement is highly valuedto drive revenue and decrease attrition among employees. To help drive employee engagement, Walgreens developed an internal quantitative and qualitative program to help discover new ways to drive greater engagement and better understand what is most important to its associates (Alexander, 2012, p.45). Associates have opportunities to grow and develop into store or pharmacy managers. 7. TheStructure 8,000 StoresExecutive Vice PresidentResponsible for overseeing the operations of all the Walgreens storesThree Senior Vice Presidents who oversee stores in specific regions and cover sales, profitability, salary, expense controls, investment, employee morale and customer service, including service in the pharmacy department.Senior Vice PresidentOperations Vice President16 Operations Vice Presidents, each of whom oversees 200-250 individual stores and seven to nine district managers.District ManagerEach District Manager has responsibility for roughly 25 StoresStore ManagerManages both the retail and pharmacy sides of an individual store.Pharmacy ManagerReports to the Store Manager as well as a corresponding Pharmacy District manager(Tosh, 2000, p.153) 8. TheStructure The Numbers At the the end of Fiscal Year 2013 (August 31), Walgreens had the following figures: Sales & Earnings: $72.2 Billion with $2.45 Billion in Earnings (15.2% increase) Earnings per Share: $2.56 (5.7% increase) Store Growth: 198 new stores, 152 Acquisitions - totaling: 8,582 Locations Employee Count: 240,000 Total Prescriptions Filled: 821 million Customers Served Daily : 6.3 million A Typical Store: Total Size: 14,530 square feet Sales Area: 11,261 square feet Items for sale: 18,000 Employees: 20-25 Annual Sales: $8.5 million (6)6.3 Million 9. The Walgreens Structure Old vs. New(Eder , 2012) 10. TheStructure Old vs. NewAssumption: Organizations need restructuring to remediate problems and performance gaps. RESTRUCTURING ACTION Free up leaders time and give them better support Elevated decision rights so they were made in the proper place Change Motivations and rewards to place actions on desired behaviors Develop networks to drive changePROBLEMS AND GAPS Problems and Performance gaps More competition from online retailers like Amazon and Google More grocers offering Pharmaceuticals Mail delivered prescriptions Changes in healthcare (Affordable Care Act) Bad EconomyIn their desire to be an Experience Provider, Walgreens changed from a command and control structure of opening stores, to improving the customer experience. (7) 11. At the corner of:Diversity and Results 12. The Walgreens Human Resources Social Responsibility Community Supporting the community through services, resources and outreach Diversity Valuing differences and serving a diverse America Disability Inclusion Approaching technology, efficiency and opportunity in a new way Environmental Sustainability Advancing Walgreens sustainability efforts through innovation, efficiency and technology Supplier Diversity Reflecting neighborhood diversity through products found at Walgreens stores. 13. The Walgreens Human Resources Diversity InclusionKosik, 2011 14. The Walgreens Human Resources Diversity and Results Human Resources Frame:Walgreens Disability Inclusion Organizations exist to serve human needs People and organizations need each other. The individual and the system need to complement each other Individuals find meaningful and satisfying work, and organizations get the talent and energy they need to succeed. (Bolman & Deal, 2008, p. 122) 35-40% of staff at distribution centers Workers with disabilities are equally as productive as those without disabilities. Workers with disabilities have lower turnover rates Employees with disabilities have fewer injuries at workA welcome surprise has been that the process of ensuring that the needs of workers with dis- abilities are met has resulted in management, equipment and work-culture improvements that benefit the entire workforce (8) 15. ThePolitics Allocating Resources Products allocated based on Local Store Community Size (Headley, L., personal interview, Nov 20, 2013) Item allocations based on size of customer base Customer Habits (Alexander, 2010, pp. 11 & 14) Puerto Rico has large beauty product selection A New York City store has more groceries because Walgreens is also the local supermarket Another New York City store has fresh sushi and high end wine and spirits because their customers are downtown professionals Local Merchandise (Alexander, 2010, p. 11) Northern California and Washington stores stock a larger selection of wine from their region Products sometimes move between stores based on customer needs 16. The Walgreens Politics Power Pharmacy has more power than Retail (Retail Chain Pharmacy Yearbook Walgreens, 2010, p. 18) Pharmacy responsible for 65% of revenue Retail responsible for 35% of revenue Retail employees are cross trained to help the Pharmacy (Headley, L., personal interview, Nov 20, 2013) When the pharmacy needs assistance, retail employees leave their jobs at the front of the store to help. The store manager is certified as a pharmacy technician Clear lines of authority with a hierarchy in each store, district, region, and division (Headley, L., personal interview, Nov 20, 2013) 17. ThePolitics Conflict Employees are encouraged to address conflict with direct supervisor. Going above an employees supervisor is a faux pas Conflicts exist between retail and pharmacy employees. Retail employees are expected to complete front end tasks, even after time spent assisting in the pharmacy. Stores compete in the same geography. Competition exists between store manager and pharmacy manager positions. Managers want to be in the top position, in their home store. (Headley, L., personal interview, Nov 20, 2013) 18. Metaphor:as a Brain 19. Like a brain, makes strategic decisions by filtering information Two recent examples of strategicdecisions offer a unique perspective into Walgreens operating as a brain: 1) In 2010, Walgreens opened its first Wellness Experience stores in the Chicago suburbs. 2) In 2012, Walgreens merged with Alliance Boots to create the first global pharmacy-led health and well-being enterprise. (9) Organizations are information systems. They are communication systems. And they are decision-making systems. We can thus go a long way toward understanding them as information processing brains! (Morgan, 2006, p.76) 19 20. TheWellness ExperienceWalgreens transforms the corner drugstore! In 2010, Walgreens began working with IDEO, a consulting firm, to help rethink, reframe, and evolve the meaning of the 21st century community pharmacy. IDEO conducted interviews with consumers and discovered people looking for simple ways to take better care of their health. IDEO also learned that Walgreens was often thought as a convenience store, rather than a place to receive health advice. Walgreens and IDEO began working on a prototype to address this new information, and led with a few significant changes: (10) 1) Pharmacists will be more accessible in the front of the pharmacy, to answer more questions and offer more patient counseling. 2) Express refill stations will allow patients to pick up pre-ordered prescriptions. 3) Stores will have a dedicated Health Guide, offering health tips and FAQs for customers questions. 21. +&= Global Pharmacy Walgreens becomes international! Walgreens started to consider buying Alliance Boots in 2012 in order to grow the organization to an international level. Through extensive research, analyzing of Alliance Boots, and considering the current market, Walgreens chose to purchase half of the European company Alliance Boots for $6.7 billion in 2012. Walgreens acquisition of Alliance Boots has multiple implications for the pharmacy store moving forward: 1) The first global pharmacy-led health and wellbeing enterprise has been created, with over 11,000 drugstores under the Walgreens and Alliance Boots banners. 2) Walgreens now has 45% ownership in Alliance Boots, but will have the option to buy the entire company before 2016. 3) Buy acquiring Alliance Boots, Walgreens gains tremendous purchasing power with generic-drug manufacturers, which should cause the company to become the largest purchaser of generic drugs in the world. (11) 22. References Alexander, A. (2012, Sept). Transforming the hedgehog. Retrieved from: http://drugstorenews.com/sites/drugstorenews.com/files/TransformingTheHedgehog_092412_lowrez.pdfBolman, L. & Deal, T. (2008). Reframing organizations: Artistry, choice , and leadership. San Francisco: Wiley & SonsEder, R. (2012, Sept 27). Executive Viewpoint Series: Greg Wasson on the evolution of Walgreens [Video file]. Retrieved from http://www.youtube.com/watch?v=0mhulLmpiucHeadley, L. (2013, Nov 20). Personal interview.Kosik, A. (2011, Jul 12). Walgreens welcomes disabled workers [Video file]. Retrieved from http://www.youtube.com/watch?v=8ZPcKmfe7loMorgan, G. (2006). Images of organizations. Thousand Oaks, CA: Sage Publications, Inc.RETAIL CHAIN PHARMACY YEARBOOK WALGREENS. (2010). Drug Store News, 32(4A), 16-22.Tosh, M. (2000). Aggressive growth tempered with experience. Drug Store News, 22(15), 153. Retrieved from http://search.ebscohost.com.proxy.foley.gonzaga.edu/login.aspx?direct=true&db=bth&AN=3721503&site=bsi-live