While at Sapphire last week, I took a call from Phil Wahba, a reporter at Fortune. The original topic was about Target’s couponing app, Cartwheel. But the subject turned from that to the company’s search for a new CEO. In the course of that conversation, I had an epiphany.

Phil asked the question, “Why didn’t Target have a succession plan? How could they not prepare someone for the role when Macy’s and Kohl’s have clearly done a far better job? ” That part was easy to answer. Macy’s and Kohl’s are successfully executing on a successful strategy. So of course, it’s reasonable and appropriate to work with a successor on understanding the logic and thoughts behind those strategies while he or she learns the ins and outs of running a mammoth retail operation.

Target, on the other hand, appears to have lost its way. While it’s easy to say that Gregg Steinhafel was forced out because of the now infamous data breach, frankly that doesn’t have a lot of credibility. Do we really think customers feel better about shopping at Target now that the CEO is gone? I doubt most of them could even spell his name. I sure couldn’t.

In fact, the company’s interim CEO John Mulligan said just that as reported by the San Francisco Chronicle on May 31, in just those words (which I found while looking up how to spell Mr. Steinhafel’s name). And no, I don’t think the problem was limited to the Canadian expansion either, although that’s a very strong symptom of the problem. Mr. Mulligan is going to have to work really hard to get the board to see him as an agent of change. We wish him luck, but it’s not going to be easy.

The same could be said for JC Penney. The company appeared to be slipping, so an activist board brought in Ron Johnson. It all looked good on paper. I personally drank the Kool-aid. Mike Ullman warned the Mr. Johnson had never been a CEO before and wanted to spend some time mentoring him. It rang hollow and the board said “thanks, but no thanks. ” We all know how that turned out. Mr. Ullman knew exactly what he was talking about and his return allowed the company to narrowly skirt disaster. Still, there is no one standing up ready to follow him. While Walter Loeb points out on Forbes that Mr. Ullman has now surrounded himself with a strong team, I’m not sure the board will allow this to go forward.

But it still begs the question: How could this be? Where have all the CEOs gone? That’s the question that has been floating around for months. I realized the answer today.

The reason there are so few qualified executives to do job is all about the industry consolidation over the past 20 years. In the beginning there were chains like Lazarus, Rich’s, Gimbels, Broadway, Montgomery-Ward, Hills, Caldor, Alexanders, etc. etc. etc. If you’ve been around for a while, you know the names. So CEOs could move from job to job, with successively larger companies.

But serious consolidation began about 25-30 years ago, coinciding with the Federated / May company consolidations and the rise of Walmart, which drove so many mass merchants out of business. Now there are very few, and those mass merchants and department stores that are left are mostly massive. In other words, the only people who really know how to do this have grown to run bigger chains as the chains got bigger and fewer. Now they’re all in their mid-to-late 60’s, and no one else really knows how. Could the CEO of Belk run a company like Target? It’s a big shift. Phil suggested that the CEO of the Bon-Ton is a bright man, and also observed that Target is about forty times its size.

In other words, the unintended consequence of all the mergers and acquisitions of the past 30 years has led us to a place where very few know how to do it right, and they’re all getting past the age where they want to, or are otherwise losing their touch.

This is not a problem unique to the retail industry. In his keynote address at Sapphire, SAP co-founder Hasso Plattner observed that one major problem with companies today is they’ve decimated the ranks of middle management, and so they’ve lost a major source of new management talent. Mr. Plattner was absolutely correct. Today’s mammoth enterprises must focus on building talent from within, without the organizational structures in place to make that happen.

A fine mess we’ve made. I’m happy to have taken the first step: realizing we have a problem. But I haven’t the faintest idea how to solve it.