What Drucker Would Say About Mervyns

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In a sense, this is a page from the past. Being community-minded was originally a big part of Mervyns' culture. In essence, it had been baked into its theory of the business from the get-go. But here, too, Mervyns faltered—so much so that it lost its distinctive identity both inside the organization and among consumers. "Think of Mervyns and what image comes to mind?" asked a 1997 newspaper piece on the company. "If you draw a blank, you're not alone."

Drucker pointed out that it's not uncommon for a company to slip in this way, to take its theory of the business for granted as time passes. Management grows "less and less conscious of it," Drucker wrote. "Then the organization becomes sloppy. It begins to cut corners. It begins to pursue what is expedient rather than what is right. It stops thinking. It stops questioning. It remembers the answers but has forgotten the questions."

It would be unfair to suggest that Mervyns has done nothing to try to remedy its sagging fortunes over the years. It has highlighted its California roots, featured $1 to $5 in-store shops, and fiddled with its mix of name-brand versus private-label goods. But none of this amounted to what the company needed most: a thorough overhaul of its theory of the business. And, as Drucker cautioned, "patching never works."

A Desultory Nature

In 2004, Target sold Mervyns to a consortium of investment firms. Since then, Mervyns has had four chief executives—another sign of its desultory nature when what is called for is decisive action.

The current CEO, a highly regarded Levi Strauss veteran named John Goodman, has spoken in recent months of taking a tack similar to the one Kelley favors: In an era of faceless corporate behemoths, he has indicated that he'd like to turn Mervyns into a real "neighborhood department store" by catering to Latino customers, making strategic hires and investments in staff training, and directing sourcing and buying accordingly.

My fear is that it's too little, too late—that Mervyns didn't recognize soon enough that when a theory of the business becomes obsolete, it is, as Drucker put it, "a degenerative and, indeed, life-threatening disease." And that requires surgery, not Band-Aids.

Rick Wartzman is the director of the Drucker Institute at Claremont Graduate University and an Irvine senior fellow at the New America Foundation.