If you know me, you know I love being right, but lately, I wish I weren’t right so often.

When The Oregonian, interviewing me for a story about the Joe’s bankruptcy, asked whether I thought Joe’s could survive and/or might be sold to another company, I said, “No.”  Yesterday, Joe’s started liquidating.

The evaporation of so many retailers is a scenario being repeated too often for three key reasons:

1. Many retail operations operate with thin profit margins–or no profit margins–so when sales decline, the retailers simply have no (forgive the pun) margin for error.
2. Many retail operations have no raison d’etre–no reason for being–no strategy that separates them from their competitors, no strategy for meeting changing consumer needs.
3. Too often, good customer service is missing in action.  Poor customer service can result in lost sales, and few companies today can afford to lose those sales.

Perhaps, as a result of the current economic environment, we will see a return to good customer service.  I’d really like to be right about that!

In my January 20th post, “Distressed Investing Conference #1,”  I wrote, “…the Turnaround Management Association today might more appropriately be called the ‘Restructuring Management Association’ because so much of the educational content focuses on transactions and Chapter 11 rather than on the nuts and bolts of actually fixing distressed companies.”

In the most recent issue of The Journal of Corporate Renewal, in an article, “We are on a dangerous course,” David C. Finkbiner, CTP raised exactly the same issue AND pointed out the ethical conflicts inherent in situations in which “turnaround” experts get a piece of the action for selling companies.

In describing recent Turnaround Management Association panels, he said, among other things,

1. For most companies, Chapter 11 is not the best solution.
2. Few turnaround professionals are actually doing turnarounds because too many structure their fee arrangements to provide higher compensation for selling a company than for turning it around.
3. As a result, many companies that could have been turned around have been sold for less than the value would have been realized had a turnaround occurred.

In response to my email to David saying that I wholeheartedly agreed with his article,  he wrote that he had been hearing from “real turnaround people” all over the country–people who actually do TURNAROUNDS–who feel the same way.

I encourage you to read his thoughtful article.