What About Bentonville?

Perhaps the board was beguiled (as was Howell) by Wal-Mart's ability to buy well in Bentonville, Arkansas, its home town and still where it is headquartered. Or, likewise, Target's success in Minneapolis. To this day, there are people at or recently retired from JCPenney who would swear that the company can buy as well in Dallas as in New York. So it's time to check a premise or two.

First of all, we are discussing JCPenney, not Wal-Mart or Target. We're talking about Penney's roots being in New York, as the other two chains have never left their own roots. And we're talking about the kind of defining soft-tone business Penney does, which is done in New York City more than anywhere else on earth by far. Why did most of Penney's professional buyers quit and stay there? Because that's where this particular action is.

Some, then, would quickly ask, "But what about L.A.? What about Hong Kong?"

They are satellites, important but no more than satellites . The situation could change, of course, and someday New York could become a satellite. Possible, although it really doesn't seem likely.

Most important, whereas Penney was torn from its roots, Wal-Mart and Target still have their roots. They never moved anywhere. They didn't lose their talent. They don't have amateurs posing as buyers. Penney still does. The others are booming. Penney is not. (Maybe it will with the new management, but it will have struggled for a time before it really does if it does.) Companies are like people, as this book has endeavored to demonstrate . Uproot people, and bad things can often occur.

It is interesting to speculate how people like Bill Clinton's favorite fixer and longtime Penney board member, Vernon Jordan, did not get a handle on the acquired weaknesses in the company as a result of the move. And how about the board taking so long waking up to Jim Oesterreicher, a man clearly in over his head as CEO? The company's historic parochialism may be as close to an answer as we will ever have in this regardand one that is hardly satisfying . Out of all my attempts to contact and interview the outside directors in the Howell and Oesterreicher years , only one directorGeorge Nighbothered to reply. And Governor Nigh simply and politely declined. Not a word from the other 20.

There is, of course, a remarkable postscript to the mysterious ineptitude and inaction of the Penney board. After waiting far too long, and with equal mysteriousness, the board suddenly sprang into action. They hired Vanessa Castagna, arguably the best person in the world to take over the company on a day-to-day basis. The board gave her a mandate to institute the sweeping changes and, after a year, acted again with utterly surprising effectiveness. They brought in Allen Questrom, arguably the best person in the world to conceptually frame a possible recovery and provide incisive, classy leadership. ^[2]

^[2] Since his arrival, Questrom has apparently so dazzled the board with his erudition and leadership skills that the directors may at last be performing with some consistency of competence.