Business Turnaround Lessons From the Modest Saviour of Xerox

By Jatinder Singh, Associate Partner, Lighthouse International

Anne Mulcahy never wanted to be CEO of Xerox - yet she turned around one of the biggest companies in the world. When she took over as CEO in 2001, years of complacency by senior members had meant that the company had not kept up with the times: they were $18BN in debt, on the verge of bankruptcy and were being investigated for accounting irregularities. As a result Anne needed to make drastic changes to the corporate culture and change herself too, especially as the prior CEO had only lasted 13 months!

Being Candid and Using Her Network Inside the Company

Her first task was learning about the financial mess the company was in. However, coming from an operational background she knew little about finance. So she asked the financial department to mentor her on the problems they had to deal with, in order to understand the key issues they faced.

She also knew that she could not do everything on her own and would need help. So she met with 100 of the top executives within the company to obtain their backing and commitment to the strategy she was going to put into practice.  She also empowered her closest people to help her in this task -such as Ursula Burns who is now the CEO at Xerox. At all times she was immensely candid with everyone (as great business leaders like Jack Welch are). She told everyone how bad the situation was and did not sugarcoat her messages.

Using Her Network Outside the Company

With Xerox being so deeply in debt, Anne needed to collaborate with the 58 banks who were funding the company. Most of them came to an agreement with her but two refused. So she went to one of the most respected figures in banking at that time, Sandy Weill of Citigroup, who used his influence to help her come to a deal with those banks.

She also asked Warren Buffett to invest. While he said that the investment would not fit into his portfolio, he became a very good friend and advisor to her with his wealth of experience. People like Warren Buffett don’t help others who they don’t trust.

She Didn’t Run Away From Tough Decisions & Got Her Hands Dirty

Many people recommended that she declare bankruptcy so that the company’s debt would be wiped out. Anne refused, telling them that would ruin the company’s reputation and was morally wrong. She dug in and offered those on the ground her support to keep customers and refused to cut the research and development budget, knowing that was where future prosperity and growth would come from.

She also cut the number of employees by a third to save the company. However she didn’t hide from this by getting others to do her dirty work. She met employees and told them she was sorry, she hung around in offices and she worked on boosting morale. She saw herself as responsible for the lives of many of her staff.

The Turnaround

It took a long time to sort through all of Xerox’s problems and it was incredibly tough emotionally on Anne, but Xerox pulled through and began to thrive four years into Anne’s leadership. New products were created and the company became profitable once again.

Character of a Leader

Anne’s experience can help us all. She was able to use her network to directly help her cause. People who were initially unsure of her were positively influenced by others who they did trust, because that person had respect for and faith in Anne’s character.

Anne’s character was one of humility, candour and integrity. When she didn’t know something, she asked. When something needed to be said, she said it. This allowed her to lead others within the company. As she says herself she was surprised when the board elected her as CEO. They knew that she had everyone’s best interests at heart, not just her own. That meant that she could move quickly, especially at a period where time was of the essence to make changes.

Watch this short video of Anne’s in which she shares her belief that the mark of a credible leader is knowing that you don’t have all the answers!

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