In my 25+ years as a management consultant, I have had the chance to work with some of the top CEOs in the world. Out of that group, there is a handful I would consider superstars. Anne Mulcahy is on that list.
In 1998, Xerox was doing well, listed as No. 72 in the Fortune 100. Then, just a year later, things began to unravel with alarming speed as a perfect storm of problems evolved.
The organization took on a massive restructuring project, and its competition became more aggressive. The company was too inwardly focused and caught off guard when the economy weakened around the world. It found accounting improprieties in the Mexico division that spread to other areas of the organization. The situation landed it in a Securities and Exchange Commission investigation. By late 2000, Xerox was in serious trouble, with revenues and market share declining sharply. At the time, Xerox carried $19 billion in debt with only $150 million in cash on hand.
This led to unhappy customers and an exodus of employees, all compounded by a 50 percent drop in stock value.
It was around this time that Mulcahy was named the chief operating officer of Xerox, a position she had worked to achieve her entire executive career but now was not so sure she wanted given the circumstances. However, she knew she had two big things going for her: One, a very loyal customer base that wanted Xerox to survive and was willing to work with the company during the difficult time. And two, she had an incredibly talented and committed workforce that would do just about anything to save Xerox.
After the company teetered on the verge of bankruptcy, Mulcahy was eventually named CEO and returned Xerox to its former greatness.
Here are the 11 ideas she credits for the turnaround.
- Slow down and listen. Although it was an incredibly precarious situation, Mulcahy spent the first three months traveling the world to listen to customers, employees, and anyone else able to help her understand what went wrong and how to fix it.
It turned out that she received unanticipated feedback and discovered that the list of critical issues she thought Xerox should address was drastically different from the opinions of her customers and employees.
- In a time of crisis, communication, communication and then over- communication are critical. When things go wrong and capable leadership is absent, people tend to go underground and stop communicating. This is precisely the opposite of what they should do. Mulcahy’s model: be transparent and tell people the brutal truth.
- 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:
- Here is the problem.
- Here is the strategy.
- Here is what you can do to help.
- You must have a good strategy that is at least roughly right, a good plan to execute it and a workforce that is 100 percent aligned with a standard set of objectives.
- Crisis can be a huge motivator; it pushes you to do things you know you probably should have done all along.
- Partner with your customers to put them on your team.
- Get back to the basics and focus everyone on the core elements of running a business well: discipline, strategic focus, customer intimacy, cash management, a sense of urgency and
high productivity.
- Follow your instincts; once you have 80 percent of the data, use your management experience and abilities to make decisions quickly.
- Create clear accountability across the entire company.
- Culture drives success. Xerox had to rebuild its culture from a slow, bureaucratic company to one focused on quality, empowerment, results, diversity, fairness, customer service and corporate responsibility. Things that make your team proud. The culture was the reason many people came to Xerox, the reason many people stayed and the reason some people left, which can be a good thing.
- Customers are the reason companies exist. Focus everyone in the organization on “owning the customer relationship.”
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.
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JOHN SPENCE has been recognized as one of the top 100 business thought leaders and as one of the top 500 leadership development experts in the world. He is an international keynote speaker and management consultant and has written five books on business and life success. www.johnspence.com