When Anne Mulcahy was appointed CEO of Xerox Corp. in 2001, many people were surprised, including Mulcahy herself. She had never run a company before and had little financial experience, having worked mainly in Sales and Human Resources functions. Xerox faced huge financial problems and the stock price fell 15% on news of her appointment. The financial market had little confidence in her ability to turn around the stumbling giant.
She took over the reins of a company which was close to bankruptcy. Xerox had made losses for the previous six years and its debts amounted to over $17 billion. Its credit rating had been slashed. Expenses were running out of control. The company was under investigation by the Securities and Exchange Commission for financial irregularities. Customers and shareholders were unhappy.
She started by talking and listening to employees and customers. She said, “When I became CEO, I spent the first 90 days on planes traveling to various offices and listening to anyone who had a perspective on what was wrong with the company. I think if you spend as much time listening as talking, that’s time well spent.”
Her advisers urged her to declare bankruptcy because of the mountain of debt. But instead she implemented a dramatic recovery plan. Capital spending was cut by half and general expenses by one third. But she ignored advice to cut research and development. She invested in innovation. She sold unprofitable units, eliminated 28000 jobs and slashed administrative expenses while protecting Sales and R&D. She saved the company.
During the whole painful process she placed great emphasis on communication. In order to promote her vision for the future of Xerox she created a fictitious Wall Street Journal article describing Xerox in the year 2005. “We outlined the things we hoped to accomplish as though we had already achieved them,” said Mulcahy. “We included performance metrics, even quotes from Wall Street analysts. It was really our vision of what we wanted the company to become.” The article was sent to every employee and people understood where the company was headed.
The company’s turnaround was built on restructuring and the introduction of innovative products and services. In 2008 Mulcahy was named ‘CEO of the Year’ by Chief Executive Magazine.
Anne Mulcahy was born in 1952. She joined Xerox as a field sales representative in 1976 and rose through the ranks. In 2009 she retired from her position as CEO having accomplished what Money Magazine described as ‘the great turnaround story of the post-crash era.’
If you want to lead change you have to communicate your vision. Mulcahy devoted time to talking to people and listening. ‘Good leaders listen,’ she said. She painted a different and better future for the company and communicated it with a mock-up of a future Wall Street Journal article. She changed the culture and processes in a huge organisation with the power of communication and with clear and decisive actions.
Based on a chapter in Think like an Innovator by Paul Sloane published by Pearson.