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Let me start with an unequivocal declaration: I hope Borders finds the means to avoid bankruptcy, or worse, liquidation. The immediate consequence of a Borders default on what it owes publishers would be a cash short-fall of millions of dollars. Even the most profitable publishers have limited leeway to deal with months of unpaid bills. The irony is that the surge in e-book sales across many platforms, the popularity of reading devices and tablets, some effective re-tooling at Barnes & Noble and the stronger independents, plus the continuing growth of Amazon actually have improved the overall outlook for the book business—which would take a considerable hit if the country's second-largest book chain goes under. Borders management is scrambling to get new financing and is soliciting publishers to accept bonds instead of payment. Will that strategy work? My guess is that most publishers want Borders to survive, and will find ways to keep it going at least for a while. But the longer term prospects for Borders—with 674 stores (many already scheduled to be closed)—remain, at best, a major challenge.

So what happened to Borders? An early innovator in controlling inventory, there was expert staff at its Ann Arbor headquarters and store managers who believed in the value of book-selling. At its peak, Borders superstores had all the attributes of good book-selling—extensive selections, browsing space, coffee bars, and outreach programs to surrounding communities. In 1998, Borders shares hit an all-time high of $41.75.

To understand Borders' decline, it is worth going back to its origins on State Street in Ann Arbor. The store was founded in the early 1970s by Tom and Louis Borders, University of Michigan graduates who developed an inventory tracking system that, by the standards of the time, was as sophisticated as computers allowed. When I came into publishing in the middle 1980s, I was impressed with the shrewd team of buyers who dealt with publishers' sales representatives and the store staff that made the most of the simple aluminum fixtures where books were displayed. The Borders brothers began licensing their inventory system and began to expand to locations in Michigan and around Philadelphia. I especially remember a night in 1992 at the height of the presidential primary season when a Borders events coordinator filled an auditorium in downtown Philadelphia by featuring political books I was publishing: a model for how a store could become a venue for public engagement and customer loyalty.

The Borders brothers decided not to stay in the book business, and in 1991 sold the small chain and inventory systems to Kmart for $125 million. In retrospect, that was when the trouble began. Kmart already owned Walden mall stores, which were an awkward commercial fit with the Borders culture. Kmart itself was at the start of a downward spiral, and in 1995 Borders was spun off in an IPO. For a time, the newly named Borders Group seemed to be working. Under the leadership of Leonard Riggio, Barnes & Noble was expanding also, and the competition between the chains seemed to create dynamic energy that benefited them both. The losers were the local independents who couldn't keep up with the marketing and promotional resources of these national corporations.

It was also in the mid 1990s that Amazon launched as an online book retailer and Borders made what, in retrospect, was a serious strategic mistake. Instead of beginning to develop its own initiatives on the incipient Internet (which Barnes & Noble did, with limited early impact), Borders went international, building a substantial chain in the United Kingdom and opening stores as far away as Singapore. This global expansion seems to have blurred the focus on Borders' business in the United States. Ultimately, the international strategy failed. Borders also was slower than it should have been in adapting new techniques for marketing. I was startled to find, on a visit to Borders in Madison, Wisconsin, in 2007, that the store still had no Internet access, instead channeling all communications through Ann Arbor. Working with Borders staff in an effort to introduce multi-platform (e-books and downloadable audio) into their planning, I spent hours in conference calls that went nowhere. Borders online sales were an affiliate of Amazon, which seemed pointless, given Amazon's own aggressive growth.

Meanwhile, the mall business was drying up, and Walden eventually all but disappeared. The role of the Ann Arbor-based experts in selection was gradually diminished. A series of expensive marketing roll-outs and loyalty programs never gained necessary traction. Most damaging was the management turnover, especially at high levels. CEOs and other executives flowed through the Ann Arbor offices, cutting staff, rounding up financing from private equity investors, and promising to catch up with the digital age. But Borders always seemed a step behind where they needed to be. Borders stores took on a generic quality as executives and investors lacked the knowledge and patience to address the chains' mounting problems. I'm sure there is more to this story (especially in the financial and real estate areas) than I know, but what really hurt Borders from the perspective of a book person like me was that the chain was no longer in the hands of true book retailers.

Len Riggio, Jeff Bezos of Amazon, and the successful independent proprietors, whatever their other business virtues and flaws, really have a deep attachment to books and the people who read them. But when Borders expanded, they brought in executives from supermarkets and department stores (all of whom insisted they were readers), and the result was a shuffle of titles and more downsizing against a backdrop of financial engineering, which only seemed to make matters worse. Ultimately, a successful bookstore, on any scale, depends on a specific understanding of how to make the most of the outpouring of books and the digital transformation that will attract readers. Whatever else Borders does in the months ahead, it needs to recover its belief that real book-selling is an art (with all the peculiarities that entails), as well as a viable business.