“They called me ‘The Master of ‘I don’t know!’” confesses Anne Mulcahy with a warm smile. For someone who didn’t know much, she certainly knew how to save one of the world’s largest companies. Ms Mulcahy was appointed CEO of Xerox in August 2001 when the company was in dire straights. Xerox had so dominated the world of photocopying that its name had even become a verb. By the time Ms. Mulchay took over however, this corporate giant was two weeks from bankruptcy. Despite the weight of expectation on her shoulders from the various stakeholders, Ms. Mulcahy claims that leaders should not give the impression that they know all the answers.
IBM and Xerox: two similar stories
Lou Gerstner’s cultural transformation of IBM is well documented. Ms. Mulcahy’s story is less well-known. Perhaps this is because she is so softly spoken and her calm, gentle discourse seems to make the whole process seems so easy. Her story though is perhaps even more remarkable. Indeed, Xerox’s transformation under her leadership was so impressed Chief Executive magazine that they names her ‘CEO of the Year’ in 2008.
Like IBM, Xerox was a huge corporate giant of the 1960s and 1970s. Having based its success on the 914 copier that was introduced in 1959, Xerox enjoyed a 95% share of the plain paper market by 1970. It’s gross margins were 70% – 80% and like the Big Blue this domination led to the ire of the US Anti-Trust Commission. Again like IBM, the giant came crashing down in the 1990s as innovation and low cost competition got the better of them.
Recognising the qualities of her predecessors
Unlike many leaders Ms. Mulcahy is quick to praise her predecessors. Xerox’s failure was not down to one rogue CEO and she is quick to recognize that Kearns, Allaire and Richard Thoman had all tried in their different ways to fix the company’s woes. Indeed, she even praises Thoman for his intellectual prowess conceding however that what the Xerox employees needed though was a ‘story’ that would motivate them. It was this narrative that Ms. Mulcahy set about redefining once she became CEO.
Defining your strategy
Having completed her first degree in English and Journalism, Ms. Mulcahy was certainly used to selling a story.
“You need this to align people within the organization.” She says.
She considers that any strategy should be simple to grasp and have the buy in of all employees. Having taken over as CEO she decided to focus on 3 things:
- To ensure that Xerox was ‘Best in the class’ at whatever process they were involved in.
- Making the tough choices necessary to save the company.
- Getting the costs of the company under control.
“Everyone in the company knew this strategy.” claims Ms. Mulcahy. “This was vital to its implementation.”
Making the tough calls
She immediately set about reducing the number of employees at Xerox to make it more profitable.
“Xerox had 100 000 people with an economy that could support 50 000.” she Ms. Mulcahy. “Our products were over engineered and weren’t getting to the market quickly enough.”
The company started outsourcing 90% of manufacturing and Ms. Mulcahy states that it was necessary to work very hard with the unions to achieve this goal.
2001 to 2005 was the real turnaround period. R&D was overhauled and moved to lower cost locations. Colour and customization became the key to innovation but rather than concentrate on press releases Ms. Mulcahy advocated a ‘behind the curtain strategy’. Early in her tenure as CEO she had met Warren Buffet who had advised to stop visiting financial analysts and to concentrate more on reconnecting with Xerox’s customer base.
“It was one of the most exciting times to be at Xerox.” Says Ms. Mulcahy though she admits that she “worried quietly about failure.”
Knowing your strengths and weaknesses
It is perhaps this openness that makes Ms. Mulchay’s story so remarkable.
“There is a degree of toughness necessary in business.” She says. “But you need to show your own vulnerability.”
People in the company described me as the “Master of the ‘I don’t know.’” It was this that allowed others not to have all the answers as well and meant that Xerox developed a culture of questioning everything they did claims Ms. Mulcahy.
“The worst thing you can do as a leader is to get ‘smart persons disease’. You are allowed not to know.”
Despite not knowing it all, Xerox was certainly undergoing a massive transformation under her leadership. In 2000, the year before she arrived, the corporation had reported a loss of $273 million. By 2005, it was making a profit of $859 million on sales of over $15 billion.
One of the main pieces of advice she gives is that business people should have an accurate reflection of their own skills and weaknesses. This can be critical to the success of a company and should be the basis on which you build a team.
“A leader should be someone that other people want to work for. You should stop trying to be picked out.”
Success in the business world also depends on having interests outside of the company. Here Ms. Mulcahy is unequivocal:
“Family is the ultimate support system. In fact, enjoying your time with family and close friends is necessary to your overall well being. You need to have another life so that you can enjoy the corporate one.” she concludes.
Ms. Anne M. Mulcahy served as the Executive Chairman of Xerox Corp. from January 1, 2002 to May 20, 2010, its Chief Executive Officer from August 2001 to July 1, 2009 and also served as its President and Chief Operating Officer from May 2000 to July 2001. Ms. Mulcahy served as a Vice President of Human Resources of Xerox where she was responsible for compensation, benefits, human resource strategy, labor relations, management development and employee training from 1992 to 1995. Ms. Mulcahy served as Senior Vice President and Chief Staff Officer of Xerox from March 1997 to January 1999. She served as a Vice President and Staff Officer for Customer Operations, covering South America and Central America, Europe, Asia, Africa and China at Xerox. She served as Executive Vice President of Xerox since 1999 and its President of General Markets Operations from 1999 to May 2000, where she headed up the divisions that sold products through reseller, dealer and retail channels. Ms. Mulcahy joined Xerox in 1976 as a Sales Representative and held various sales and Senior Management positions in Marketing and Operations. She has been Chairman and Trustee of Save The Children Federation, Incorporated since March 2010 and has been its Trustee since November 2009. She has been a Director at LPL Financial Holdings Inc. since May 2013. Ms. Mulcahy has been a Director of Citigroup Finance Canada Inc., since 2004 and LPL Financial Corporation since March 2013. She has been a Director of Johnson & Johnson since October 22, 2009. She has been Director of The Washington Post Company and WP Company LLC since January 17, 2008. She is Honorary Director of Catalyst, Inc. She served as an Executive Director of Xerox Corp. from 2000 to May 20, 2010. Ms. Mulcahy served as a Director of Catalyst Inc. She has been an Independent Director at Target Corp. since 1997. She served as a Director of Federal National Mortgage Association Fannie Mae (Fannie Mae) from 2000 to October 19, 2004 and of Fuji Xerox Co., Ltd. She served as a Director of Citigroup, Inc. from September 20, 2004 to April 20, 2010. She serves as a Vice Chairman and Member of The Business Council of Catalyst and the John F. Kennedy Center for the Performing Arts. She serves as Chairman of Corporate Governance Task Force and Member of Policy Committee at The Business Roundtable and also served as its Head Corporate Leadership Initiative. Ms. Mulcahy holds a Bachelor of Arts degree in English and Journalism from Marymount College in Tarrytown NY in 1974.