Xerox
Anne Mulcahy became CEO of Xerox in 2001 and described the company’s situation as “terrifying:”
- Its stock had dropped 92% in less than two years, destroying $38-billion in shareholder value;
- Its most recent fiscal year result was a $273-million loss;
- Its debt:equity ratio exceeded 900% and its bonds were rated junk;
- It had $19-billion in debt and only $100-million in cash;
- The SEC had just commenced an investigation into its books, which foreclosed any outside market fundraising;
- And the supposed superstar CEO Richard Thoman had just been deposed after only 13 months.
Mulcahy, a Xerox lifer of 25 years in sales and HR, never even dreamed she would be considered and was, as she later confessed, “the board’s last resort.”
According to Collins, she faced a choice: Whether to “grasp for salvation” by trying to revolutionize Xerox (if you’re thinking Carly Fiorina here, you’re on to something), or to figure out how to “bring the [Xerox] culture with me—it’s all about Xerox, not me.” Mulcahy declined an interview with Newsweek and Collins reports he could find only four feature articles about her during the entire first three years of her tenure—almost impossible to believe for a woman CEO of a high-profile Fortune 500 (and if you’re thinking of Lou Gerstner here, you’re right again). Mulcahy simply buckled down and worked seven days a week for the first two years of her tenure.
Mulcahy made some very difficult decisions and readily admitted they were hard on her: “I don’t think I want them to get easy:”
- Cutting $2.5-bilion/year out of the cost structure
- Greeting any mention of Chapter 11 with silence
- Refusing to even consider cutting R&D despite repeated advice to do so
And by 2006 Xerox’s profit was over $1-billion and its balance sheet restored to sanity. Chief Executive magazine named Mulcahy CEO of the year in 2008.
I’ll conclude with a few thoughts on all this.
Bruce,
A couple of years ago (Aug 2014) you wrote about a study of military officers, all trained at West Point, and the nature and outcomes of their careers. Central to this study, imo, is the notion of stewardship. Stewardship is not exactly a motivation, but perhaps something more along the lines of Eliot’s “objective correlative”, a suite of ideas/images/situations that provide the narrative focus and force for our actions. Said somewhat differently, but also in our cultural tradition, we have Proverbs:
“Where there is no vision, the people perish: but he that keepeth the law, happy is he.” [29: 18]
And needless to say, in this sense “vision” does not mean some vaporous “vision statement.”