He's Navigating the Dotcom Dustbowl

Peter Neupert calls it the "Death Watch" -- his daily scanning of the Wall Street Journal for news of yet another competitor gone belly-up. During a two-week span this fall, FuckedCompany.com reported that both Eve.com and MotherNature.com -- beauty and nutrition sites for women -- were calling it quits. Niche competitors of Neupert's drugstore.com, these sites crumbled amid rumors of impending doom for other health portals such as healthshop.com and HealthCentral.com.

While drugstore.com has outlasted the competition, Neupert is not dancing on any graves. He spent the fall working hard to prepare and inspire his staff for the upcoming holiday rush, while patiently answering their questions and soothing their fears about the fate of the online pharmacy industry and the company itself. Drugstore.com issued its IPO on July 28, 1999. Over the past year, its stock price has steadily fallen from a high of $70 to a current low of about $2. At the same time, the company's net sales have continued to grow each quarter; though, it has incurred net losses totaling more than $275 million since its inception in April 1998. In short, drugstore.com is not a sure thing. (Read drugstore.com's quarterly report.)

"I needed to separate our business from the perception of our business," says Neupert, who became president and CEO of drugstore.com in July 1998. "You wouldn't know it from listening to the press, but our company continues to grow. The perception is that our business is somehow flawed because some companies in our industry didn't put in place the infrastructure to make their business plans work. We have nailed down that infrastructure, and now we're moving forward to wow our customers."

Days before the Thanksgiving holiday, Neupert spoke with Fast Company about keeping employees calm, cool, and collected -- not to mention productive and innovative -- amid dotcom uncertainty and pessimism. Here, he offers a four-point strategy for growing and strengthening your business during turbulent times.

Breed True Believers

In good times and in bad, Neupert says drugstore.com scouts for talented people who understand and respect the importance of delivering a great customer experience. He doesn't concentrate solely on Internet masters or pharmacy professionals, but rather seeks out smart folks from disparate industries who will fight for their customers.

"No marketplace prognosis can change the way these people feel about customer service, or can dampen the passion they bring to their work," he says.

Neupert calls these devotees "true believers." And he has dedicated himself to making every drugstore.com employee a company zealot. In order to focus his team on the opportunities and challenges ahead, Neupert conducts monthly meetings with the 650-person staff. He talks about recent victories, upcoming goals, and the company's long-standing beliefs.

"I work to keep my talent focused on the very basic elements of our business and to remind them that I need them to work as evangelists for drugstore.com," Neupert says. "I ask them repeatedly, 'How are you creating value for the customer?'"

Confirm Employees' Worth

In these days of gloomy headlines and disparaging financial reports, it's easy for employees to lose sight of their strength and their impact on a company. Neupert has seen employees throw up their hands in despair, and he believes he can cure talent paralysis at drugstore.com with a strong tonic of recognition and praise.

"Financial awards are important, but more important is personal confirmation of your employees' worth and their impact on the company," Neupert says. "I give my true believers more responsibility than they know what to do with, and then I demonstrate how they're going to have a huge impact on the company. Furthermore, I make sure we put in place the support they will need to excel. We give our employees the opportunity to do exciting work with exciting people, and we help them understand how their decisions impact the day-to-day success of the business."

Create Cross-Functional Teams

In his effort to build a creative, innovative staff, Neupert has recruited drugstore.com employees of all shapes, sizes, and experiences. Together, the company's diverse employees are forming metaphorical stained-glass windows -- cross-functional teams consisting of people from unrelated departments with unrelated jobs who together can create something extraordinary. He pairs pharmacy professionals with Internet technicians, Web designers with communications teams members, and encourages them to learn from each other.