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BOOK REVIEW

Cautionary lessons clothed in a corporate fairy tale

Once upon a time (I open with the same words that begin this corporate fairy tale), a man named James Cash Penney bought a handful of dry goods stores in the American West. Expanding his kingdom in the early decades of the 20th century, he told his store managers to do good things -- community service -- and rewarded them with good incentives -- autonomy and profit-sharing. The kingdom prospered.

But then ogres took over and made bad decisions, according to author Bill Hare, a former speechwriter for Penney executives.

A foray into European fashion fizzled, though not before enticing Princess Diana to visit a JCPenney store. (Johnny Carson cracked that Nancy Reagan, then first lady, was supposed to come along, ''but nobody could find a team of wild horses.")

A disastrous decision to buy the Eckerd drugstore chain saddled the kingdom with a white elephant. Then the ogres moved the kingdom's castle. Penney headquarters, long in New York, relocated to the alien culture of Texas.

Profits and JCPenney stock had tanked by the new millennium. Our fairy tale ends with new leaders struggling to recoup past glory.

''Over much of the 20th century, JCPenney was among the world's best-managed business organizations," writes Hare. ''In the march of years, however, the emphasis widened to include a variety of other businesses as the stores swelled with an ever-increasing range of merchandise. . . . Penney had shifted from being a company of merchants to an organization of managers, with its focus changing from serving customers and communities to maximizing sales and profits."

Hare gets credit for his efforts to make this an interesting read. Rather than the typically dreary management primer, he attempts a novelistic, character-driven narrative laced with anecdotes.

One memorable story involves a JCPenney convention at which the company urged executives to dress casually, with ''something like" blue blazers and gray slacks instead of suits. An entire ballroom showed up in blue blazers and gray slacks -- a tip-off, Hare writes, to the dangerous rise of conformity in the company's thinking.

While admiring the company's founders, Hare acknowledges their faults. If you knew old man Penney, you thought him generous, unless you cut his hair or served him his meal in a restaurant, when he morphed into a miser with the tip. And Hare is euphemistic in describing as an ''unflattering oddity" the company's refusal to hire Jews until the 1960s.

But his decision, duly disclosed, to invent events and dialogue from the company's early days to propel the story along is unwise; this is supposed to be nonfiction.

A later fact-checking lapse -- JCPenney board member Juanita Kreps was secretary of commerce, not the treasury -- reinforces the impression that Hare needed a stronger editor.

The reportage has other shortcomings. Hare is not especially persuasive that the intangible pluses of staying in New York outweighed the bottom-line benefits of the Texas move.

He omits information that might undermine the ''fall" in his subtitle, neglecting to note, for example, that the company's stock rebounded in the last couple of years. (He does praise the company's current leadership.)

The JCPenney saga offers a snapshot of American social history. For example, as downtowns succumbed to suburbia, the company cannily made itself the anchor store at many of the new suburban malls. But Hare gives only glancing attention to these broader themes.

Professional managers and scholars might profit from some of Hare's cautionary lessons, keeping in mind that talk of JCPenney's fall is premature. This fairy tale could still end happily ever after.

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