CIO to CEO: Dawn Lepore's Lessons Learned

Dawn Lepore won Web success as CIO of Charles Schwab. Now CEO of drugstore.com and a CIO Hall of Famer, she tells her own CIO that all IT investments should be customer-focused.

By Matt Villano
Fri, September 28, 2007

CIO — As the CIO and later Vice Chairman of Technology of brokerage Charles Schwab from 1993 to 2003, Dawn Lepore was among those pioneering IT executives who became strategic business leaders. In 2004 Lepore parlayed the lessons she learned as a member of Schwab’s executive team to become president, CEO and chairman of drugstore.com.

At Schwab, Lepore rode high through the dotcom boom. In 1995, she launched Schwab.com in a matter of weeks. It was the first customer-facing website for the company that was then a worldwide leader in electronic trading by its brokers, and it helped Schwab preserve its competitive position as a discount broker against upstart E*Trade. For her achievement as a technologist who created a strategic role for IT, CIO chose Lepore as a member of our CIO Hall of Fame.

Dawn Lepore

Lepore left Schwab for drugstore.com as Schwab’s fortunes waned (then-CEO David Pottruck was fired in 2004). The online health and beauty retailer had turned only one profitable quarter since it was founded in 1998. Sales were sagging. Turnover was high. And company shareholders were growing restless. Lepore was hired to turn things around.

So far, the road to profitability has been challenging. Although revenues are rising, drugstore.com ended the second quarter of 2007 in the red. But Lepore is betting that fundamental business and IT principles will change that.

For example, she performed a comprehensive strategic review of the company’s business segments to evaluate the profitability of each customer order and partnership, then eliminated or adjusted the price on several thousand over-the-counter products. Among other accomplishments, she also reduced net shipping costs by introducing weight-and location-based surcharges for certain customer orders and nixed an unprofitable relationship with a pharmacy benefits management company.

Furthermore, applying the lessons she learned while selling her colleagues at Schwab on the importance of the Internet as a business tool, she has clarified the role of IT at drugstore.com as one of strategic business partner. “The role of IT as a strategic partner, especially when I was CIO in the 1990s, was not entirely the norm,” she says. “Today I think it’s clear that no company [can succeed] without defining a role for IT and how IT can operate within that role to improve business strategy. Drugstore.com’s IT team is a strategic partner in our e-commerce business. The business works closely with IT to identify top priorities and to analyze the ROI of initiatives based on revenue, profitability and customer satisfaction.”

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