Blindsided

A month in the desert sun had elapsed when Penney got a call from Roy Johnson, the dynamo who had retired after running the huge Seattle store for years (and, in the generous Penney way, making as much money on profit sharing as the highest-ranking executives in New York). Johnson invited the founder to speak at an upcoming Los Angeles dinner for retired managers, field executives, and their wives. Penney agreed, thinking it was just a social affair.

The old man thrived in such situations. He still had a fabulous memory and would be able to thrill many retirees by calling them by name and remembering their stores. And he didn't have to think twice about what to say on such occasions. For 50 years Penney had been making speeches, and if you accepted his almost evangelical style, he was pretty good at it. In his mind was an encyclopedic file of phrases and statements he had used publicly over time, fail-safe material to select for any audience. And so, tonight in L.A. as he strode to the podium and everyone in the ballroom rose to their feet to cheer , he had decided to keep it simple, short, and inspirational. He smiled and bowed and raised his hands to quiet them:

"Thank you thank you, my friends and fellow associates , thank you very much. Some today are expressing concern about the lower dividends of late due to the company's transformation for the future. This is natural and quite understandable. But I think that ”in my old age ”I might get away with some philosophizing instead of further comment on the company, per se."

He paused and looked around with a smile in such a way that the audience chuckled.

"Money, of course, can buy many things, but it can procure for us neither peace of mind nor well-being of soul. Therefore, the accumulation of wealth by itself is no measure of success, is it? No, we attain success only in proportion to the degree we are able to train ourselves to perform good deeds. Therein is the salvation of the soul. So things are of value only insofar as they serve to make us finer, more honorable, more cultured, more generous, more democratic , more influential and more faithful men and women. And as we likewise influence others. This I have seen and this I know from personal experience."

Again he looked around with a smile and again the people looked back with appreciation .

"Ladies and gentlemen, it's great being here and I am so pleased that Roy called to invite me. I look forward to speaking with as many of you as possible after dinner. Thank you."

Too short! He left them wanting more, and everyone got up and applauded ”led by Roy Johnson, who returned to the podium with an odd, businesslike expression. "Thank you, Mr. Penney! As usual, wise words from our beloved founder!" Those two sentences served two purposes: They reestablished Johnson in control; he was the one talking now, the one in charge. And they set up Penney to be blindsided.

"Now, Mr. Penney, we have some business. I speak for everyone here and I speak for Penney retirees across the country when I say that it's now urgent to get something on the table." He looked around at the founder and spoke directly to him. "Mr. Penney," he continued , "Mil Batten is ruining the J. C. Penney Company! Please listen to what I have to say ”listen to what our friends and associates here say after dinner ”and then go back to New York for the next board meeting and have them fire Mil Batten before he kills our great company!"

Penney was stunned. Johnson went on at some length, saying that it was sheer folly to fix something that wasn't broken, that the Penney Company had been one of the most successful businesses in the nation, that it had always paid great dividends, and that it was now being driven to ruin by Batten's foolhardy attempt to start a catalog and turn Penney stores into mall anchors. Finally, the founder was asked to return to the podium for any comment. This time the audience was hushed.

"Thank you, Roy, but I have no comment at this time," Penney said. Then he added, "Your remarks were earnest and thoughtprovoking, and I have listened carefully and understand what you want. Now I must think about it, so I have nothing more to say at this time and will not for the rest of the evening."

A week later, back in New York for the board meeting, Penney waited for someone to bring up Johnson's complaint. He was now prepared to comment. But nothing was said on the subject, and the meeting was adjourned. Penney turned to Ray Jordan and Mil Batten. "Would you two please stay? I want to talk to you."

Penney reported the Los Angeles incident and then said, "When I returned to Camelback, I thought, ˜Wait a minute. All of those managers in Los Angeles were retired. I wonder what the active managers think? I decided to go out and visit as many stores as I could before flying East. I wanted to see the managers who are out there every day meeting the competition. And I managed to visit eight stores and asked the managers what they thought of the changes that were going on. Their attitude was entirely different. In every case they said that changes had to be made. They said that mistakes were bound to happen, but the worst mistake of all would be not making changes."

Jordan sighed, rolling his eyes to Batten. "And Roy Johnson was a friend of yours."

"Still is, I hope," said Batten. "This is just money talking. Or the lack of it."

"Mr. Batten," Penney said, "I just wanted you to know that you have my complete confidence. And I would like to celebrate that by taking both of you to dinner. Someplace special."

They went to an expensive restaurant and enjoyed an elegant dinner. As they rose to leave, Batten looked at Jordan and nodded back at the table. The president then hung back and slipped some bills down beside the coins Penney had left.