Celebration of Fools: An Inside Look at the Rise and Fall of JCPenney

Bonehead Moves and Other Mistakes

Back to the competitive, integrated merchandising divisions originated in the early 1980s. Were they as good as the plan had promised ? Not exactly. In their practical application serious flaws began to surfaceparticularly among those who understood the importance of maintaining the delicate balance between merchandise and store influences.

Here were the problems:

• Competitive merchandising divisions operating in silos knocked the second "C" out of HCSC in the company's basic business. Merchandising was JCPenney's raison d'tre. Eliminating internal cooperation has to rank high on the Edsel list of bonehead moves in corporate America.

• It also tended to muffle the grapevine. Why did this matter? Because the grapevine almost always helps keep the executive suite more responsive to customer concerns and those of the rank and file. However indirectly, the grapevine speaks to management. It also helps keep a company alive and vital . One has to care to complain and gossip.

• Top executives became more isolated. In the executive suite, a war party from silo number one coming across one from silo number two promoted anxiety, not camaraderie. Hence, the reflex to limit access.

• The abilities of senior management diminished. A new idea from one silo would be torpedoed by another. Since ideas have authors, and because such people were now largely seen as threats, they were represented less and less among company officers. This contributed to the infection of mediocrity that eventually overcame company leadership.

• Combined with Howell's insistence that second thoughts and mind changing were counterproductive, limited access to the top also contributed to the lockstep bureaucracy that increasingly enveloped the company.

• In a divide-and-conquer foreshadowing of the Dallas move, splitting up the merchandise department hastened the stores' total triumph.

• The management of most new merchandising divisions was fromwhere else?the stores!