Lally School of Management and Technology

eMBA-6966H24

Organizational Design and Leadership Development

Robert R. Albright
June 10, 2011

Personal Learning Application

Leadership &Turnaround At XEROX

Prepared by

Eric M Kaplan

Abstract For decades, the XEROX Corporation was the leader in the copier industry. However, in the 1990 s the company was losing market share due to increase competition from Japanese companies. Rick Thoman, and ex-IBM executive was brought in 1999 to bring an outsider s perspective of the company and return the company to profitability. He failed. Anne Mulcahy, a XEROX veteran was then appointed the new CEO in 2001. As chairman and CEO, she was responsible for orchestrating what Money magazine called the great turnaround story of the post-crash era . By keeping the company laser-focused on customers and employees, she was able to turn XEROX from the brink of bankruptcy to become one of the world s most profitable and innovative technology and service enterprises1. This paper will highlight the key leadership strategies and techniques used by Mulcahy in her planned transformation. Furthermore, I will synthesize how Mulcahy was a master change agent, who succeeded by applying many of our recently learned theories and concepts.

Background and Context: During a recent interview with Fortune magazine (May 3 2011)2, Mulcahy shared her key insights as to the success behind XEROX s transformation. In that interview she cited a strong turnaround plan, dedicated people, and a firm commitment from company leaders. I will expand on how she employed some of the theories we learned. During another speech at MIT, she revealed six of the key leadership strategies that helped drive change and turn XEROX around Listening, Vision, Instincts, R&D, Customer Focus, and Communication.My focus will be on the three of these six, specifically Listening, Vision, and Communication, all of which are keys to the initial phases of Kotter s Eight-step Process for Leading Successful Change. LISTENING: Anne Mulcahy was known for being part of the people. As a seasoned XEROX veteran she understood the culture of her company. In my research, I discovered that Mulcahy empowered employees at any hierarchical level to approach senior leadership freely with any information. In fact, in an interview with ComputerWorld, she stated that creating effective communication was her highest priority. During her first three months as CEO, Mulcahy traveled the globe listening to colleagues not senior managers but line workers, who were closest to the customers to understand what their view of the problems were. She would reach out with sincerity and ask what would you do if you were me? and effectively listen to the responses. This is powerful. She was clearly gaining multiple perspectives, and these new perspectives she gained by actively listening to employees at all levels of the company allowed her to uncover weaknesses and eventually identify and solve the TRUE problems. Recall, that the problem is NEVER the problem . Mulcahy was actually quoted as saying how the looming bankruptcy was actually a easier problem to fix and that it was tougher to obtain employee engagement and to get them to do the right things .3 Once Mulcahy had multiple perspectives, she used her strong leadership instincts. She commented that in the 1990 s XEROX was a highly matrixed organization, which looked great on paper, but in reality was a nightmare, because you couldn t find anyone with clear responsibility for anything .

VISION: One of the keys to her successful turnaround was how she created a clear vision for change. As we learned from Kotter s eight-step process for leading successful change, getting the vision right is a critical element of the initial change phase. Mulcahy is well known for the following visionary statement: Even while Rome is burning, people wanted to know what the future city would look like. This was also true of the employees, shareholders, and critics of XEROX. At the brink of collapse, employees and investor s wanted to know what XEROX would be like after I survives and turns around. Questions persisted such as What will XEROX look like? and What will happen to me? . How would Mulcahy address these tough questions and succeed in creating a new, bought-into vision? Ironically, and brilliantly she turned to her critics as the Wall Street Journal to help provide focus on a new shared vision for the future. In 2001, she and her empowered team wrote a fictional WSJ article, dated 2005, that outlined and detailed exactly what the new company would like. It outlined the vision of a future XEROX, a company which would focus on digital transition, services, innovations in color technology, and transform the graphic arts industry, This was truly visionary, effective, and motivating. Included in the new vision was the announcement of a Turnaround program designed to help ensure liquidity, re-establish profitability, and build a solid foundation for growth. People were able to envision themselves as part of that new organization, and be inspired as change agents.

COMMUNICATION: It has been said that during XEROX s transformational period of change, Mulcahy was known more as a Chief Communications Officer than as a CEO. Transparent and tireless communication of the issues and the actions to be taken were delivered personally. Her entire Transition Management Team , a key element from Jeanie Dick, was in the trenches communicating, repeating, and overcommunicating. Messages were delivered with a face, not a memo or email. This over communication must have been an effective change tool. When she cut one-third of the workforce, surprisingly she was not viewed as a villain but why? Since she adopted an open, honest, transparent communication strategy, she gained the trust of her employees. By telling the workforce in advance that she was trying to do the right thing but that it would be painful, people actually believed her. One particular division that Mulcahy had started herself was actually shutdown. She personally delivered the devastating news, but stated that those workers actually acknowledged how tough it was for her despite them losing their jobs. This would have sounded unbelievable, if there was not a culture of trust previously established by open communications, a clear vision and leadership by example.

In summary, although I did not extensively research the technique used by Rick Thoman, the outsider and predecessor to Anne Mulcahy, I might theorize the main differences in styles as follows:

Rick Thoman Management Focused Planning & Budgeting Dictatorial rules Ivory tower Organizing, staffing, Controlling Misguided by limited perspectives

Anne Mulcahy Leadership focused Setting Direction Clear Objectives & Vision Lead by example Walk the floor Aligning & Motivating people Multiple perspectives

I ve highlighted what I believe were the three key leadership strategies that enabled Anne Mulcahy to be successful at turning XEROX around, and theorized why Rick Thoman, her predecessor may have failed. While these most directly resonate with Kotter s 8 steps to Transformation, there are also elements of Jeannie Ducks Art of Balancing that she exemplified. I believe that with her strong focus in the initial phase of Kotter s 8 steps, the latter phases became easier for her to manage. Through her strong leadership and Emotional Intelligence ,whereby she maintained she was always approachable she not only turned XEROX around, but went on to be named 2008 Chief Executive of the Year, by Chief Executive Magazine.

Resources, cited and Articles referenced: 1- MIT SLOAN MANAGEMENT Newsroom article, Dean s Innovative Leader Series Presentation Mitsloan.mit.edu http://mitsloan.mit.edu/newsroom/2006-mulcahy.php 2- Fortune Magazine Postcards Anne Mulcahy s New Pitch for Prosperity May 03, 2011. 3- Online Bloomberg Business Week interview conducted by Chief Reputation Strategist Leslie-Gaines Ross. Link can be found at: http://feedroom.businessweek.com/?fr_story=b15c08eaa1c171f6c72a3a1f08837bb7999aa6f5