Few companies can better appreciate the yin and yang of good and ill fortune than McKesson, the $80 billion health-care-services corporation. On April 28, 1999, it announced a small earnings restatement in its HBOC business unit. Investors reacted by selling off, in a single day, $9 billion (or nearly half) of McKesson's market capitalization.

Forensic investigations in the succeeding months revealed widespread accounting fraud at HBOC, the medical-software business that McKesson had merged with, to great fanfare, only three months earlier. In addition to bringing about further earnings restatements, the scandal soon claimed the jobs of the newly merged company's board chairman, CEO, and CFO, as well as five top managers of HBOC, several of whom were later indicted for securities fraud.

In the scandal's wake, McKesson's previous chairman—who had retired when the merger with HBOC closed—resumed his post and named a new management team with an unusual co-CEO structure. One of the co-CEOs was John Hammergren, who since 1996 had served the "old" McKesson in a variety of executive roles. Hammergren became sole CEO in early 2001. He and his new leadership team faced the daunting task of rebuilding not just one shattered company but, in essence, two: the...