Anne Mulcahy, Xerox

April 2005

Xerox CEO Anne Mulcahy: A success worth copying

Anne Mulcahy became the leader of Xerox Corp. in 2001, just about the time most of the company's critics were writing its obituary. Revenue had declined in double digits, debt reached almost $19 billion, cash flow was scarce, and shareholders saw their stock values cut in half.

Four years later, after focusing on the company's strengths and bringing business operations under tighter control, Xerox is now a case study for a successful corporate turnaround. Still, Mulcahy, chairman of the board and chief executive officer of Xerox, is cautious about the way she describes the company's success, given its previous status as a great company.

"We're not a great company yet, but I think our ambitions are really clear about what we need to do to get there," said Mulcahy at the fifth annual Charles F. Dolan Lecture on April 25. Mulcahy delivered "From Survival to Success: How the power of people, process, and values reinvented Xerox, one of the world's most enduring brands."

Under Mulcahy's leadership, the company has cut its debt in half, doubled equities, and dramatically strengthened its product offerings. "Results have surprised all of us," she said.

"We've emerged from one of the worst crises in our history," said Mulcahy, who joined the company in 1976 selling copiers and worked her way up. The company's problems began to emerge in late 1999. Xerox had changed too fast, the competition was stiffening, and the economy here and abroad was weakening. Then the company faced a shocking blow when they found accounting improprieties at its Mexico site.

We would have and could have worked our way through any number of these issues, but the compounding affect of them ... set us back on our heels," she said.

According to Mulcahy, the company had two qualities that helped it from sinking: a loyal customer base and a talented and dedicated workforce willing to do what it took to make it strong again.

Xerox focused on what it did well, such as service to clients and quality technology. It tightened business operations to eliminate waste and increase cash flow. Xerox, however, kept its four research centers running, which helped the company stay competitive. Mulcahy also faced some tough decisions, shedding unprofitable areas. Xerox cut its workforce from 96,000 in 2000 to 60,000 in 2005. She had to close a Xerox company she had started years earlier. She made a point to join the employees at the site on the company's last day.

Mulcahy has always been an accessible leader, holding "town hall" meetings at Xerox sites to listen to employee concerns, which in 2001 helped her uncover some fundamental problems.

What became clear to Mulcahy during the company's transformation was the importance of being candid about problems, while simultaneously being confident about her ability to solve them. She also learned the value of giving people a vision for the future, and that a critic on the team - someone willing to point out the potential problems - is essential to success. "It's such a gift to find out about a problem early," she said, later adding, "You can't avoid making mistakes. What matters is how fast you can fix them."

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