Making a Global Impact feat. Steve Collis - Withology Ep. 11

Hi Brian, good to see you again.

Well, part of this came up when I told you recently that I went in 2023 to Lithuania and I was actually stunned at the beauty of the country, which was you know way in excess of anything I'd expected. But my grandparents didn't like to talk about the past that much. But what they did used to call Lithuania was the 'heim,' which meant the home. And they had memories because they left so much family behind. Just an interesting historical note: my father was born in 1932, and so if you add 13 years to that, that would have been his bar mitzvah for 1945, which was the week the Germans surrendered. And he said they literally hadn't spoken to anyone back at the, in the 'heim,' the home, and just the week after his bar mitzvah, they were able to get back and found that all the family there—literally everyone on his side—and then I think my mother would have had a similar experience, of course they hadn't met yet, but that everyone was killed, almost prior to the Holocaust, it turns out. So almost prior to the Germans invading Lithuania. And to be 13 years old and going with your family back to see that, it's hard to wrap your arm around that. It's just amazing. So, well, he found that out right. So he was back there. They were able to finally communicate back home. So my grandparents... I can't imagine the pain of that.

Yeah, yeah. So I was born on May 29th, 1961. So two days later, the South African government, the Nationalist government, the apartheid government, we could call them, declared they left the Commonwealth on May 31st, 1961, and we became a republic. So, you know, I was unaware of all this. In 1966 or 1967, there was a huge uprising known as Soweto, in which the police and the army killed the protesters, and that set off an inevitable end to apartheid. And that nationalist regime, the protests started, the ANC was formed, Mandela's resistance was hardened, etc. So that was really a big change. The Steve of 1967, 1968 was a happy kid, suburban kid, driving his bicycle, playing sport all the time. You know, going through eventually going through teenagers, you know, changing to a private high school and dealing with all that. I'd say the next significant political awareness became really in college, which we called university, where I was in the commerce department. So if you're an arts student, you tended to be very liberal; if you're an engineer, you tended to be conservative. My university, which was overall left of where the government was, an English-speaking university, so by inclination naturally a little bit less conservative. But there was tremendous strife in those days when I was in university, which was really 1978 through 1982. There was a tremendous amount of rioting, of protests, of the police taking very harsh actions against students. And you had to decide whether you wanted to go one way. I literally knew kids that I'd grown up with, went to junior school with, that got what was called 'banned,' where they had a full-time policeman watching them, monitoring everything they did, they weren't allowed to interact. There was a kid that I was aware of, a medical student, that wasn't allowed to be with the classmates even when they were doing the anatomy and carving up the body; he had to have his own body, his own cadaver. That sort of crazy stuff. And so, you know, I made a decision to get my degree and I went to Price Waterhouse to do my articles of association to become a chartered accountant. And then I had a big crossroads in 1984 when I had to decide that I want to do my national service. And if you didn't do your national service and left the country without completing it, you could not come back. You were sort of considered an outlaw. So I did it, and I was fortunate enough to get into the Air Force. And there were a lot of life lessons I learned there. But also I learned to use a PC for the first time. I actually had to manage a business in my second year in the Air Force. So lots of interesting experiences. But sometimes the things that you dread doing and that you are reluctant to do land up becoming positive, formative experiences for you, which of course I'm sure you've heard from other audience, other participants in your show, Brian.

Well, having been born outside the country and not really... I now had a son, Jordan, and I had a wife, and probably was expecting to have another child in the next year or two, so you start thinking differently about the future. And something about working for a large company that could really help me understand how to get along in business in America. It had financial stability, had a lot of training programs. Whereas my background had really been more in accounting and financial services in South Africa, and then I'd had this very interesting experience running for a wealthy individual, who's the largest shareholder of this medical supply company in Orange County. So it just seemed like it was a good opportunity to learn from a different set of influencers, a different set of stakeholders, in a way a public company. I remember the excitement of getting a 401k and having stock options for the first time, so having a proper benefits program. Because we were a small company, around $10 million in revenue, in the other distribution business, which was probably more than it is today in distribution terms, but we were still a pretty small business without a lot of the resources and training and access that we had. One of my first experiences when I did move to Texas to run the business for Bergen Brunswick, which was called Alternate Site Distributors, was the workforce that we were able to attract. And I've always been a people person my whole life. It's just something I think I inherited from my mother. But it was tremendously gratifying for me to find such high quality employees. And I feel like part of it might have been the difference between the talent we could attract in Texas versus California. Part of that was driven by cost of living. In California, you literally couldn't get by earning $30,000 a year; you had tremendous expenses that you didn't have in a state like Texas. And so the workforce we had was much better employed at the level of income we could pay.

Yeah, yeah, yeah. You know, it's funny. I often would describe my mother as my role model, because she brought such an energy and passion and purpose to whatever she did. And my father was a dentist. So maybe it's not as easy to do that as some of the other causes that we all support—you've been involved in journalism, I've been involved in healthcare, which we describe ourselves as a purpose-driven company. But my father said to me, 'It's enough. Go work for a big company. You're going to learn a lot. It's going to look good on your resume. You probably won't, at this time of your life, be able to do the MBA that you always covered, that you always wanted to do. So think about this as your opportunity to earn a good living for your family and get that experience from a larger company, which would understand the U.S. and has deep roots in American society. And look at what a wonderful experience you'll have.' And it turns out he was more correct than any of us could have anticipated. Because one of the best decisions I ever made in my life was joining Bergen Brunswick and helping to start this business.

So we have to talk about Nelson Mandela, because a lot of people do because he's one of the most incredible figures of the last 100 years. But he said, 'If you want to go fast, go alone. If you want to go far, go together.' And I think that's really been my motto. But a few people that stand out, Brian. The first person, the person that brought me into Bergen Brunswick, was a wonderful gentleman who was a CFO of the company. His name was Neil Dimick. Neil was Mormon, very, very resolute Mormon, and the first one that I'd ever met, and certainly the first really good friend. And I still regard him as a friend. Once someone has that role with you, even if by some measures your career has supplanted his, he's still always your mentor, and you have that tremendous respect and deference for him. And I was fortunate enough to visit with Neil a few months ago. And he was not only a mentor, he was our supporter. He understood what we were trying to do with the business. We needed tremendous roadblocking because what we were doing was controversial within the company, which was really about having a different distribution model depending on what your site of care was, and the manufacturers were recognizing that with different trade contracts. And if we hadn't established this business, we wouldn't have got those contracts. But that's all logical. The emotional side was, 'You're taking business out of my distribution center. You're making it harder for me to make my plan.' 'No, it's not me. It's the competitors, it's the manufacturers, it's the environment.' But it was hard to understand. So we needed a lot of internal support. We also needed an investment. I'll give you a tremendous example. We had different requirements with regulators, we had different requirements with customers, we had different reporting requirements. Our systems could not work. We almost immediately identified that the legacy AS400 systems in those days wouldn't work for our business. Well, no one wanted to give me the money to do that. So having the CFO on your side was a little bit like having Washington on your side, you know, in Hamilton, you got Washington on your side. So having Dimick on my side was amazing.

Yeah. You know, I was privileged to be at the JP Morgan conference. They asked me to come to a think tank, and I was the only non-manufacturer there. And I was literally with some of the largest pharma companies in the world, and we were talking about innovation and how things are going to change. So we do a lot of work around access for medications. And part of that is patient access and the complexity of insurance and benefit verification here in the United States. So we are doing a lot of that through digital and machine learning and now AI technologies. So the head of one of the largest companies in the world was describing how they were listening to a bot call with our bot talking to the insurance company's bot, and how our bot was outmaneuvering the insurance company bot. And he said, 'We need to make sure that we carry on supporting companies like Steve so they have the best technology so they can make sure that our products carry on getting covered.' It was just so fascinating that with all the innovation that's going around manufacturing, some of these things that we do are so important. We're a behind-the-scenes company. People often don't appreciate your IT department until your system crashes or you have a security breach. You could think in a way about the work we do on distribution and supply chain. Everything works well because of how effectively and how productively our industry works. You think about it, we're shipping to over 100,000 sites a week—healthcare sites, from large hospitals to small community physicians to community veterinarians, community oncologists, to a nursing home. So we cover all the classes of trade. And we're shipping in often adverse circumstances—weather circumstances, climate change comes to mind. And everything's expected to be ordered today and show up in most cases by lunchtime tomorrow. Sometimes much more. I was talking to our Turkish team. We have to do sometimes in Istanbul, one of the busiest cities in the world, seven deliveries a day to meet customer requirements. So all is adapted to market conditions, to the class of trade, the type of customer that we're serving. So the flexibility, resilience, durability that a company like Cencora has to have is remarkable.

Well, one of the fortunate outcomes in my career, you look back on now, just having finished 50 quarters, public quarters, as a CEO, which I didn't realize. My predecessor, Dave Yost, also would have mentioned in terms of those who you go along with. He sent me a sack with coins in, and there were 50 quarters in there. And I thought, 'Good, this is good. I've got a lot of money to put in the parking meters because some places still take those, and I prefer that to all the apps.' So anyway, he noted that I'd finished 50 quarters. But one of the things you learn is the value of teamwork. And we've always had tremendous teams, and we respect other cultures. A couple of lessons that I've learned: in 2013, we bought World Korea, and that taught us to be very global in nature. World Korea was already present in about 50 countries and had major divisions in Latin America and Asia, and we'd never done business there before. And we had, I'll give you one extreme example. We had four people working in Vietnam. One of the requirements we had was for every location, you have to do weekly cash flow forecasts. Well, if you have four people working in Vietnam, what do they need to do weekly cash flow for, because they have no revenues? So we had to change things. We had to learn. It was a wonderful learning experience and really set us up to do these tremendous acquisitions that we've done with Alliance Healthcare and Pharma in particular. And World Korea has ended up being an acquisition that we could be tremendously proud of, but the organizational muscle that it gave us has been most profound and set us up well for a global future. The other lesson I'd say, not necessarily related to international: in '96, I did my first acquisition, two years after joining the former Bergen. And everyone just thought, 'Well, these people will leave.' They were in a small town in Southeast Alabama. Well, we invested behind them. Within four or five years, they had gone from $30 million in sales to a billion dollars in sales. I'm kidding you not. The population had gone from six or seven associates to 100 or 200. And we became the heroes, and whenever we posted for a job in Dothan, Alabama, we got so many people applying. So things have changed, and business has changed, and supply chain needs have changed, but we still have our presence in Dothan, Alabama, and until recently had some people working there from the acquisition in '96. We still do, I think.

Yeah, yeah. I think some of the most interesting things that Cencora does is around helping... We have very large complex customers—think about Walgreens, of course, think about Express Scripts, part of Cigna, think about Cardinal Health in the US, think about Boots in the UK, and think about the huge pharma companies we work for. But we also do a lot of work with helping small and medium, developing companies develop their commercial infrastructure. We do tremendous work with community veterinarians, oncologists, pharmacists, small rural hospitals that have very different issues to the Penns and Jeffersons of the world, the Presbyterians of the world. So I think we have to be flexible. If you ever looked at what is a requirement to be a leader of this company, you can't be arrogant. It would be a death blow. I'll tell you why. You have to deal confidently with the CEO of Novartis one day and then a small community pharmacy. And you have to be attentive. You have to be appreciative, because that small community pharmacy is part of a big buying group, and that big buying group wants to know that the CEO cares about its members, else they won't stay with you. So I feel like you need to be flexible, you need to be really respectful, and you have to be authentic and interested. So those are some of the requirements, but they're also the requirements that make acquisition successful and make global respect and global participation work.

Well, I think we were very influenced by the purpose-driven corporation. So some of our board members really encouraged us. There were two in particular. One of them was Doug Conant from Campbell Soup, who was on our board for a while and really encouraged us to think about being a purpose-driven company, and he had spent a lot of time on that. Another one was Dick Gozon, who had implemented it at two companies that he'd been a part of. And then my board director, my lead director, was Jane Henney, Dr. Jane Henney, who'd been FDA director. And we met a lot actually with companies. One of the most interesting to me was Becton Dickinson. Becton Dickinson's been tremendously successful. They are a supplier to us and also a contracting partner with us. We do work with them in hospitals, and they actually lead into new markets with their purpose, with their philanthropy arm, with their foundation. And they help establish an environment where their products can be successful in a place because they improve infrastructure. So one of the most visible projects we did is we built warehouses for vaccines in Port-au-Prince, Haiti. We helped finance. We found credible partners; we don't do that ourselves. We know that we need the right partners. And that's the sort of work that we do. We have tremendous foundation partners. We have partners that take care of families whose kids have pediatric cancers. So what happens in those instances is the drugs may be covered, but one of the parents will lose their income, so then the whole family goes into a tailspin, which could result in homelessness in addition to pediatric cancer. So we help support the family, help them while they're going through the treatment, and you won't have an economic crisis which is affected by a diagnosis. So those are the sort of things that I think our foundation helps with. And I think recently we had a really smart idea, which was actually quite extraordinary, insightful. We had our venture capital fund, which is also a new strategy that is working hand in hand with some innovation ideas that our teams have. We are going to donate 10% of our profits from those deals, when we sell them or when they have their next liquidity event, to the foundation so we can help create an enduring legacy. So when we think about our name change to Cencora, which we'll talk about Brian, I'm sure, it really is a transition to a purpose-driven company that takes itself and its role very, very seriously and anticipates that we'll have that role for generations to come.

I think which in our case is extremely authentic. It comes from the top, but probably just as importantly or more importantly, it's supported throughout the company, throughout those 46,000. I think most of our team members feel very, very strongly about being in healthcare and affecting patients' lives.

Well, we really wanted to do a program called Global Unite and go to a global brand. And we did a lot of studies, AmerisourceBergen. And we are fond of it because it's been such a success since its formation in 2001. And the two predecessor companies both had their own strengths and brought essential elements. If you think about forging iron, the Marisol side and the Bergen side both had very important elements for us. And it took about half of my tenure to have people stop talking about this merger that happened in 2001. So it was a very profound event in people's lives who stayed with the company. But it was really time to move on from that and have a name that we could reflect our global branding, reflect our purpose. And we wanted to find a name that was really relatable to our central role in society, the core role we play in healthcare and healthcare infrastructure. And this name, the more we played with it and the more we thought about it, we couldn't have come up with a name that reflects that global brand and reflects how central we are to the infrastructures of companies and countries and patients and health systems. Manufacturers, we want to be that essential partner to them. So I think it's been a great step for us and is really part of how seriously we take and how confident we are in the future of our company.

Yeah, I know everyone's tired of hearing a lot of CEOs of my generation talking about the importance of being in the office. But I do think, I just look at the visits I've had, and I find that... and of course everyone's different. We're doing some work with the Working Genius. We've been doing a lot of work with those models. And all these programs for me do is reinforce how different we are as individuals, and we have to bring that to the workplace. But I've been privileged to work with a lot of great teams. My executive management team comes to mind. The different quality sets, and I think for you to sit down and have that direct relationship without the distraction of screens and phones flashing is so important. I would say, try even if you are working remotely, try come in and try meet with people, or just do a lunch with people. That human touch, that human association, I think is still so important. We are having very good experiences from having our leadership meeting here just before the holidays last year. We had 200 people literally from all over the world come and get together. And I think we're paying, we're seeing dividends from that with ideas, with new relationships, with best practices that don't get shared as much, with breaking down barriers. So I would say be open, be passionate about what you're doing. Don't worry as much—if I had to give advice to my younger self, I'd say don't worry as much about what your peers are doing. Worry about managing your career for the long term, which means doing something that's important to you but also is intellectually stimulating, that you identify with the values of the company that you're working with. And be open to new challenges. I would never have had a chance. I thought I was joining a huge company in '94 when I joined Bergen Brunswick. Probably, I think in those days, with maybe 1,100 or 1,200 team members and about a billion dollars in revenues, maybe it was about $2 billion in revenues actually. But it's amazing what you can do now with a company, the training you can get, the fact that you can work in so many different countries. And now with Cencora, we recorded $262 billion in revenues for fiscal year '23. And I'm fond of saying this—I actually said it on Mad Money two weeks ago. $262 billion, I'm very proud of that. $3.3 billion is our operating income. I'm very proud of that number, probably even more proud. But taken together, those two numbers are terrifying for a business person, right? Because it's a very small percentage, under 1.4%. So everything has to be managed extremely well. And the financial expertise that a company like Cencora has is remarkable. The way we have to manage everything, the way we have to manage our cash flows because our cash flow will still come out to our operating income, so quite remarkable and requires just a lot of expertise. So what you said about working in different companies in different countries and learning to be flexible and adjust to the market can also be said about the different staff disciplines, right? Whether you're in marketing communications such as you are, or finance, or sales, or the incredibly precise operational expertise and regulatory compliance needs we have. Just think about all that dexterity you need, and everything has to work together. And that's why you need strong purpose, that's why you need strong identification from the 46,000 team members.

It all comes back, doesn't it?

It does. And thank you for spending the time to do this and give people like me a chance to share our experiences. And hopefully it does. We need a lot more positivity in our society. So if in any small way we can both contribute to that, I know we're happy to do that. Thank you.

Thank you, Brian. What a wonderful way to end. It's very heartwarming. Thank you.