How Good Businesses Go Bad



The small town where I grew up from age 11 was about half the size of Payson. It had three main stores: A Montgomery Ward, a Woolworth's and an A&P supermarket. All three thrived.

If someone had suggested that one of them might go out of business he would have been treated like the village idiot.

And yet they did go out of business.

The questions are: How? And why?

I have a theory that might apply. I call it the Bubble Theory of Corporate Management. Goes like this: The administrators with the lightest heads rise to the top.

How else could thriving companies like Woolworth's, Montgomery Ward, Gemco, Federated, Woolco and so many, many others go belly up? It certainly wasn't because they didn't have good products to sell at excellent prices. Nor was it because they didn't have people flocking to their doors.

It had to be because of corporate mismanagement that resulted in policies which cooked the golden goose from the inside out.

What got me thinking about all this?

Two recent experiences with new Wal-Mart policies that remind me of things I've seen before in businesses that died before their time.

I ran across the first one about a month ago when a checkout clerk looked at me, with my gray, almost white, hair, and told me I had to show ID to buy a small bottle of white wine. I couldn't believe my ears. I thought she was kidding, but she wasn't.

"New policy," she said. "Everyone has to show ID regardless of age."

Laughing with her at the absolute bone-headed stupidity of such a policy, I handed her my driver's license, but I stopped her when she started to run it through a scanner.

"I don't want all my personal information in Wal-Mart's database," I said.

She frowned. "Then I have to enter your date of birth."

"Tell you what," I told her, still smiling but no longer quite so happy because there was no legitimate reason why Wal-Mart should demand such an important piece of my private information. "I'll just keep my personal information to myself, and we'll let Wal-Mart keep its Zinfandel."

"Don't blame you," she said, looking over her shoulder.

I forgot all about that incident until the other day, when another Wal-Mart clerk told me, "Oh, you can't buy two of those."

"Two of what?"

"Those cans. They're the same thing and I can't sell you two of them at once."

I have a workshop that I keep supplied with thinner, linseed oil and turpentine.

"But one is denatured alcohol," I told her, "and the other is acetone. They're not the same."

"They're the same thing," she said. "The computer says so."

"I'm a chemist," I told her, rather stunned. "They're nothing alike. Want me to write down the formulas for you?"

"I'm sorry, I don't make the policies," she said.

I realized that I was making her feel uncomfortable, so I smiled and told her, "Of course you don't, and I'm not going to give you a hard time about something that's not your fault, but would you mind calling the manager over to do an override?"

The manager showed up. I explained.

I thought she would just laugh at the dumb mistake, insert her key, and override the error but what she said floored me. "I can't do it. I just can't."

The pained expression on her face told me all I needed to know. The poor thing was living in the land of Big Brother.

She looked as though doing an override, or doing anything else that smacked of exercising her God-given independence, might cost her her job.

I recognized that look.

I had seen it once before on the face of the manager of a Gemco when I pointed out to him that there were so few checkouts open anymore that it was becoming impossible to get out of his store. He gave me a pain-faced shrug.

Six months later there was no Gemco.

I might point out, by the way, that even though I couldn't buy two one-quart cans of acetone, or two one-quart cans of denatured alcohol, or one of each, I could buy a gallon can of either one. Make sense out of that.

Now God knows I don't hold any ill will toward Wal-Mart, but the plain truth is that when you chase customers off with policies that make it unpleasant, or even impossible, to buy some of the things they use in their daily lives, and make it necessary for them to shop elsewhere for those things, they may just take all of their business elsewhere.

I hate to think that someday we'll all be wondering what happened to Wal-Mart, the same way we wonder what happened to all those other places that were killed off by second generation administrators.

But then I didn't think retail giants like Gemco or Woolco would ever close either.

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