Late last week, Target shareholders defeated a proxy battle led by hedge fund magnate William Ackman, who wanted to expand the board and elect five of his own hand-picked directors. Ackman’s Pershing Square Capital Management owns nearly eight percent of Target’s stock and has taken a beating as the company has underperformed during the recession.

Target’s shareholders (probably wisely) said no to Ackman’s advance, but the distraction could hurt the company for months to come. According to the New York Times, “The two sides have spent at least $25 million for high-priced lawyers, bankers, public relations advisers and proxy solicitors.” The Times quotes Damien J. Park, an expert on shareholder activism, saying, “I guarantee you that every single Target board discussion over the last six months has been about this proxy fight and not about setting the business strategy of the company.”

Indeed, Gregg Steinhaffel, Target’s CEO, was quoted recently in Fortune Magazine saying, “This is a very challenging economic environment, and it’s unfortunate that we are having to invest our time in [fighting] a proxy contest.”

Target’s experience is just the latest example of how a lack of consensus can derail even the best managed companies. As I detail in When Growth Stalls, as long as boardroom battles trump customer considerations, little progress can be made. More often than not, companies go backwards.

Hopefully Target’s battle at the top is now a thing of a past and the company can take aim at getting back on the growth curve. That, after all, is what both Ackman and Steinhaffel are after.