Companies disappear because they can't reinvent themselves....
Visionary, inspirational, resolute, diligent and feisty, with a never-let-go and no-nonsense attitude are some of the adjectives that one rarely uses for one single personality. But, a great deal of all those leadership qualities is exactly what would define Anne Mulcahy, the former Chairwoman and CEO of Xerox. And, without a shred of doubt, she has earned every bit of the plaudits and accolades conferred upon her. The paper copying and printing giant was in a state of utter disarray, to say the least, when Mulcahy was handed the CEO's job. A lesser individual in a similar situation would perhaps have buckled under pressure from not one or two but several quarters, and said quits as soon as it became apparent that what s/he was asked to ride a tiger.
You don't agree? Try this: A company built on a customer-centric approach had lost the confidence of its customers –as well as its share-holders – thus losing much ground to competition, was deep in debt (to the tune of about $17bn, which is a lot more than the total net worth of a million other companies) following a series of loss-making quarters, burdened by huge operating costs tugging progress back, a market that was relentlessly dynamic in nature not helping its prospects either, a SEC investigation lurking around the corner and bankruptcy staring you in the face. Needless to say, the employees' confidence was also at its lowest ebb. It is under such trying circumstances that the prepared but not-groomed-to-be the CEO (out of her own admission), Anne Mulcahy, took upon herself the mantle of resurrecting the company's fortunes.
Mulcahy mustered all her resolve –fighting it out was ingrained in her by her family which had always made her believe that she was as tough, and importantly, as good as her brothers or anyone else and, had encouraged and egged her on to compete with the world including her four brothers- and caught the errant bull by its horn (as one article put it), and brought it back on the right track i.e. to consolidation and, eventually, to profitability. Obviously, it is all easier said than done. So, what exactly did she do to effect this turn-around will make for a good lesson in effective leadership (problem-solving, decision-making, focus, commitment, and everything else that it took to get Xerox out of troubled waters) which we shall see in the later part of this write-up.
Early years
Anne Dolan-nee-Mulcahy was born in Rockville Centre, NY, on October 21, 1952, by which time Xerox had already made its mark on the business world -on the back of its break-through product, the plain paper copying machine. She was the only daughter in a family with four sons. This meant that competition was that much more for Anne in an already predominantly male-oriented society. But this competition was healthy as the family wanted her to pick up the finer aspects of growing up, and life in general, like listening to criticism with an open mind and taking it in the right spirit and so on, things that would stand in good stead in her later professional life. She had her primary education from a Catholic school and she followed it up with a B.A. degree in English and Journalism from Marymount College, NYC.
The Spark
Her joining Xerox as a sales representative in 1976, not long after she graduated, appeared logical. For her husband, Joseph Mulcahy as well as her brother, Thomas J. Dolan, worked for Xerox. She had become a thorough-bred by the time she was made president and chief operating officer in 2000. Her rise through the Xerox ranks to ultimately become its CEO had been shaped largely by her 16 long years of association with Xerox's customers. This experience of direct contact with the end-customers would play a big role in her efforts when Xerox had to virtually re-invent itself.
The Journey
But much before that, as recounted earlier, she worked as a sales representative for about 16 years before her first move up the ladder happened. But when once she started to, she did fantastically well: she was made vice-president (human resources) in 1992, VP and staff officer (customer operations worldwide) in 1995, Senior VP and chief staff officer in 1998, President (General Market Operations) in 1999, and President and Chief Operating Officer in 2000.
All was fine upto this point, and perhaps, along the expected lines for someone who had stuck it out with Xerox for so long. But the following year (August, 2001), when the board recommended her name for the CEO's post and, never the one to shy away from responsibility, she accepted her promotion to the top position of the company, it was baptism-by-fire in every sense of the phrase (we've already seen the dire situation the company was in at the time of her appointment earlier in this write-up). So much so that investor confidence stooped to an all-time low and the stock price of the company on the bourses tanked by more than 20% on the day her appointment (as CEO) was announced. It was not only a reflection of the company's performance but was also a sort of investor-referendum to the appointment of someone who the investors thought she was not groomed for the position. Their apprehension was palpable, for in her appointment they dreaded worse was to come from their already under-performing investment.
To be sure, Mulcahy was never exposed to the financial and other crucial aspects of running the business. All she had done in her 24 years of service at Xerox prior to becoming its CEO was sales and staffing. Never before was she in a role that required her to make business decisions which would have far-reaching implications for many – herself, employees, investors, promoters, and, importantly, the company's customers.
As the saying goes, when the going gets tough, the tough get going (old-fashioned and clichéd as it may sound, but so very true in her case). Therefore, resisting some wisdom that was floating around proffering advice towards filing for bankruptcy, she chose the difficult path instead, and started the resurrection -some called it the repair job- from the root of the problem. Although there were many root-lings, the major problem was undoubtedly that of customer dissatisfaction, and dissension even.
Thus, she had to draw from her sales experience, although she more or less knew the pulse of her target market, to make sure that the focus of the company's efforts – which had somewhat wavered in recent times- are customer-centric henceforth. She had to drive home what she always believed in, much more emphatically. And, the customer is where she started Xerox's recovery saga, as she rightly gauged that Xerox had perhaps stopped listening to its customers.
There were primarily two aspects to this turn-around: Recovery and Consolidation. For the company to recover from the lows it had let itself slip into, she sketched a very bold plan which some considered as contentious at the time. First things first, she had to wipe-off a good portion of the $17bn debt with the powers at her disposal, and let the recovery and eventual profitability take care of the remaining part.
She travelled across the globe (almost 100,000 miles in just 90 days after she became CEO) meeting customers, stake-holders, and everyone and anyone that mattered, and explained to them her plan in no uncertain terms, without mincing words. Obviously, her honesty, focus, and determination stood out amidst the conundrum of misgivings, negativity, and near hopelessness.
Her effective communication skills and the clarity of thought manifest in every single assessment she made, and the probable plan she laid out in order to address the situation, caught one's eye in more ways than one. As things would have it, the debt burden was reduced first by encashing on some of the company's well-performing but non-core assets (it sold Fuji Xerox), as that was one way to get a premium. She followed it up by addressing the heavy operational costs owing to its bloated infrastructure. This she did by outsourcing manufacturing to Flextronics besides eliminating some products from its offerings (personal copiers and desktop inkjet printers). Then came about the culling of excess personnel – the company off-loaded (so to say) around 28,000 employees. All these initiatives helped cut the annual expenses by about $ 1.7 bn. Then there was also the little matter of the Securities and Exchange Commission (SEC) investigation into alleged misrepresentation of facts (apparently the company had falsely reported beefed-up profits with stock-market sentiment in mind) that she had to contend with. Painful as it may have been, but she took the decision to both restate the results (that were allegedly wrongly reported in earlier years) as well as pay a $10 million fine to reach a settlement with the SEC.
The consolidation part hinged largely on how the company treated its customers who had every reason to feel that they have been taken for granted by the technology giant. This glaring anomaly to any business model had to be corrected, and she did everything in her power to do so. She met with CEO's of client companies to seek their feedback, working upon which led to a lowering of prices of many of its products. Innovation has always been at the froe-front of successful conglomerates, and Mulcahy had always admired the same about Xerox. Her understanding of what the customer thinks also came in handy with the repair job. Hence, even in times of utter financial quagmire, she did not cut down on research spending. In fact, this was one area of the company's overall business ecosystem that she was never going to compromise with, come what might. As a result, the company introduced new products and services that offered true value proposition to its customers.
Another thing that she did wonderfully well was to take her employees into confidence, communicate to them what she had in mind, and how they can help her achieve the goals. Preposterous as the plan may have sounded to many – selling off the company's crown jewel, jettisoning a good chunk of the work force, cutting down prices that would in all likelihood further dent investor-confidence vis-à-vis margins- most of the senior officials stood by her, and most importantly, believed in her vision for the company. Her efforts paid off. Xerox returned to profit-making in 2002 after six terrible years of losses. It had been able to generate $1.9 billion in operating cash flow and $91 million in net income on $15.8 billion in sales besides upping its market share in many products. The company's second-quarter performance in 2003 also beat analysts' expectations and, by 2004, it was back in the buy list of many investors.
She knew if these gains were to be sustained then the mantra had to be a strong focus on client service instead of financial re-engineering. In other words, Xerox hard to offer much more, much better, and for much less, if required. To make it possible, Xerox had to invest heavily into R & D, which it did by allocating $ 1 bn annually for this purpose. And it has paid rich dividends. Two-thirds of Xerox's revenues (year end 2009) come from products and services introduced in the preceding two years, as the company ventured into extension of its product-line (digital color copying and printing) and services such as consulting services, helping companies manage their document flow, and setting up computer networks, that may have potentially provided it with an edge over competition for sometime in the future.
By 2008, Xerox had paid off the company's entire debt (except for financed purchases), rebuilt its product line and technology base, and installed a new management team. Having orchestrated a fantastic turn-around, built largely on customer-focus and investing in R&D, she knew it was time to pass on the baton to the next leader in line. An icing on the cake to this story that would leave her mark on the company for some time at least was the succession plan she had in place. Mulcahy had already served for a decade in the top position and, true to her personality, she thought that staying there any longer would not have been fair to her successor as indeed to the company itself. So she planned her exit in the only way she could – by making sure that the incumbent was well-groomed to assume the mantle of leadership at the now resurgent Xerox Corporation: more importantly, one who was well and truly dipped in the Xerox culture like she was as well as one who would see to it that all the years of hard work is not undone by somebody whose fabric is not Xerox. Therefore, much before she decided to make way for the new leader, she had chosen Ursula Burns (Senior VP up until her appointment as CEO) and prepared and mentored her well, so to say, so that the transition was smooth and effective.
There is a striking similarity in the career graphs of Xerox's ex-leader and its current one. Right from the beginning of their careers to their growth to the top position of the company, one career mirrors the other, barring of course, the fact that Mulcahy's inception was far more dramatic and was anything but a bed of roses, while Burns inherited a relatively problem-free and stable business to lead. Like Mulcahy, Burns had also joined Xerox right after her graduation (Master's) – although as a summer intern. She also worked her way up the ranks, assuming several positions of responsibility during her long and, like Mulcahy, so far only professional association. Like Mulcahy, who was the first woman CEO in Xerox's history (in August 2001) and its first female chairperson in January 2002, Burns also has some firsts to her name. She is the first African-American woman CEO to head a Fortune 500 company, as also the first woman to succeed another woman as head of a Fortune 500 company.
Other Associations
Mulcahy stayed with Xerox as its Chairwoman until May 2012 before relinquishing that post, also to Burns. She serves on the board of Catalyst (a non-profit group that works for the advancement of women in business -something that Mulcahy strongly believes in), Citigroup, Fuji Xerox, Johnson & Johnson, and Target Corporation.
Awards & Accolades
* CEO of the Year 2008 by the magazine, 'Chief Executive.'
* Ranked 6th among the 'Most Powerful Women in America in 2005,' by Forbes magazine.
* Selected as one of America's best leaders in 2008 by U.S. News and World Report.
Quotes
"Customer connectivity is something that has to be a part of all jobs in business. I spend a tremendous amount of my time with customers as a CEO and so do my peers."
"Leaders should surround themselves with people who are different and smarter than you are (and) people who have skills that you don't have."
"When your organization is struggling, you have to give people the sense that you know what's happening and that you have a strategy to fix it. Beyond that, you have to tell people what they can do to help."
"My experience at Xerox has taught me that crisis is a very powerful motivator. It forces you to make choices that you probably wouldn't have made otherwise. It intensifies your focus, your competitiveness, your relentless desire to attain best-in-class status. I want to do everything I can to make sure that we don't lose that now that we're back on track."
"Companies disappear because they can't reinvent themselves."
"I believe strongly that my success as a leader is driven by my commitment to understanding and meeting customer's requirements as well as developing and nurturing a motivated and proud workforce."
"If you schmooze and spin your communications, it comes back to bite you in your ability to establish credibility with people"
"It's really hard to give up power. You get up with a bounce in your step every day because you know you can make a difference."
