In my 25+ years as a management consultant, I have had the chance to work with some of the top CEOs in the world and out of that group there is a handful I would consider superstars. Anne Mulcahy is on that list.
The Problem
In 1998, Xerox was doing exceedingly well, listed as number 72 in the Fortune 100. Then suddenly, just a year later things began to unravel with alarming speed and a perfect storm of problems.
The organization had taken on a massive restructuring project, and their competition was becoming more aggressive. They were too inwardly focused and were caught off guard when the economy started to weaken around the world. Later on, they found accounting improprieties in their Mexico division which spread to other areas and eventually landed them in a securities and exchange commission investigation.
By late 2000 Xerox was in serious trouble, with revenues and market share declining sharply. They carried $19 billion in debt with only $150 million of cash on hand. Customers were unhappy, employees were leaving, and 50% had cut the stock value.
The Solution
It was around this time that Anne Mulcahy was named the Chief Operating Officer of Xerox, a position she had tried to achieve her entire career, but now she was not so sure she wanted it given the circumstances of the business. However, she knew she had two big things going for her, a very loyal customer base that wanted Xerox to survive and were willing to work with them during this difficult time. Moreover, the second was an incredibly talented and committed workforce that would do just about anything to save Xerox.
After teetering on the verge of bankruptcy, Mulcahy, who was eventually named CEO, could return Xerox to its former greatness.
Here are 11 ideas she credits for the turnaround.
1. Slow down and listen. Although it was an incredibly precarious situation, Mulcahy spent the first three months traveling all over the world to hear customers, employees, and anyone else who could help her understand what went wrong and how to fix the company. Furthermore, it turned out that she received feedback she had not thought of, the list of the issues she thought the company had was entirely different from the record her customers and employees had.
2. In a time of crisis, communication, over communication, is critical. When things are wrong people tend to go underground and stop communicating, which is precisely the opposite of what they should do. Be transparent with everyone.
Mulcahy said you must tell people the brutal truth.
3. Communicate that you have a clear plan to move the organization forward. Communicate with all constituencies that are connected to the organization and let them know these three things:
- What is the problem
- Here is the strategy
- What you can do to help
4. You must have a good strategy that is at least roughly right, a good plan to execute it, and a workforce that is 100% aligned with a standard set of objectives.
5. Crisis can be a huge motivator; it pushes you to do things you know you probably should have done all along.
6. Partner with your customers put them on your team.
7. Get back to the basics, focus everyone on the core elements of running the business well: discipline, strategic focus, customer intimacy, cash management, a sense of urgency, and high productivity.
8. Follow your instincts. Once you have 80% of the data, use your right management experience and abilities to make decisions quickly.
9. Create clear accountability across the entire company.
10. Culture drives success. At Xerox, they had to rebuild the culture from a slow and bureaucratic company to one that focused on quality, empowerment, results, diversity, fairness, customer focus, and corporate responsibility. Things that make your team proud. The culture was the reason many people came to Xerox, the cause many people stayed, and the reason some people left, which can be a good thing.
11. Customers are the reason companies exist. Focus everyone in the organization on “owning the customer relationship.”
Anne Mulcahy is a fierce leader who took a failing company and brought it back to the top of the Fortune 500. She has much to teach us here; I hope you use it to help your company be even more successful.
If there is anything I can help you and your organization with, please contact me.