|
DOCUMENTED SUCCESS
The introduction of the plain paper photocopier in 1959 catapulted Xerox Corporation into the league of some of the world’s most successful businesses. By the late 1990s, however, the firm had hit hard times as mismanagement and the failure to adapt to customer needs had put it deep in the red. Anne Mulcahy, appointed president of Xerox in 2000 and CEO in 2001, spearheaded the drive to rescue the flagging Fortune 500 company. By responding to clients’ needs, she has helped wipe away the firm’s debts, increase its liquidity and improve its profitability. Now, with a new brand image, Xerox is once again asserting itself as a leader, this time in the field of full document solutions.
BY RÉHAB EL-BAKRY
Anne Mulcahy’s rise to the top of Xerox Corporation is a success story worth copying. Joining the company in 1976 as a fresh graduate, she rose up the ranks before taking the reins of the multinational firm in 2000 as it teetered on verge of collapse – then engineered a stunning turnaround. Her formula for good management? Listen, stay connected to your customers, respond to their needs.
It’s a strategy that not only helped resuscitate Xerox, it earned Mulcahy kudos from some of her harshest critics – those who had earlier charged that a woman with no formal management training and who had never worked for another company in her entire career would not have the business acumen to reverse the technology giant’s downward course. Indeed, the critics sorely underestimated the value of company loyalty and experience, and Mulcahy’s ability to take tough measures when needed.
After all, she hardly seemed geared for the task. Mulcahy arrived at Xerox in 1976 fresh out of college with a degree in English and journalism, and aspirations to follow in her father’s footsteps as a writer. Yet she also had a gift for sales, and quickly excelled as a Xerox sales rep. It was a golden opportunity, she admits, as at the time Xerox was one of the fastest-growing companies in the world. It was also one of only a few companies that offered equal opportunities to all its employees. “It was a great company at the time with a great reputation and was very focused on diversity long before it was in vogue,” Mulcahy recalls. “It was a great level playing field for a woman as well.”
Over the next two decades, Mulcahy rose through the ranks, holding titles in many departments including sales, marketing and human resources. But her appointment as the multinational firm’s president in 2000, and then as its CEO in July 2001, seemed to surprise everyone, even her. The board’s decision to hire from within, however, was a last ditch effort to help buoy the multinational firm following a liquidity crisis, and accounting irregularities pertaining to the company’s operations in Mexico, that had caused its stock to shed 93 percent.
Xerox was a listing ship when Mulcahy took its helm, and to right it she would leverage her intimate knowledge of the company’s inner workings, strengths and weaknesses. Her promotion during these difficult times hardly seemed a reward. “When I became president, it wasn’t like ‘yaahoooo!,’” she chuckles. “It was ‘roll up your sleeves and figure it out.’ But now, when I look back at it, it was the greatest opportunity of my career, because it gave me the opportunity to figure things out. I think that when you take on challenges, the flip side of it is that the opportunities are extraordinary.”
And extraordinary things have happened since Mulcahy took the company’s helm. For one, the company pulled out of its tailspin and has gone on to show profits. In 2007, Xerox recorded $16.7 billion in revenues, with $1.2 billion in net income.
Crisis management
In the late 1990s, Mulcahy recalls, Xerox was burdened with problems and was facing the biggest challenges in its long history. “We had a business model issue. We had gone from the analogue world to the digital world, but we still had a very traditional cost-based business model, which was not adapting well to the digital world. We weren’t making money.”
The technology giant was suffering under a huge debt, estimated at $7 billion – the result of an ill-devised copier leasing model and a costly factory expansion into Asia. The company’s stock, which had peaked in 1999 at more than $60 per share, plummeted to under $10 per share in a 12-month span. In late 2000, Xerox recorded losses on its quarterly results for the first time in two decades.
“We had a lot of issues at the time and they were just starting to emerge. A crisis always appears like it is happening overnight, but it usually has long roots,” Mulcahy says. “We had lost touch with our markets in terms of our ability to innovate and deliver technology that was going to meet our customers’ needs,” she explains. We had a liquidity crisis – a balance sheet that was in trouble [with] lots of debt and not much cash.”
Taking the challenge head on, Mulcahy managed to raise much-needed cash by selling the company’s onerous China and Hong Kong operations, as well as its stake in a joint venture with Tokyo-based Fujifilm that developed, produced and marketed xerographic technology. She also resolved the accounting problem concerning Xerox’s Mexico operation that had alerted Securities & Exchange Commission (SEC) investigators, consenting to pay a $10 million fine and restate the company’s profits from 1997 to 2000. Jobs were cut when needed – with more than 1,000 employees made redundant to streamline global operations.
Most importantly, Mulcahy made the decision to stop and listen, both to the company’s clients and its employees. “When you’ve been with a company for a very long time, you think you know every thing – you think you know everybody and what you’re going to do,” she says. “I actually sat on a plane and circled the globe for the first three months and talked to customers and employees just to get a handle on what the real issues were. I talked to people who were on the street and who knew how we were [faring] against our competition. I talked to customers about what they were seeing from Xerox and what they needed from Xerox. And [I acquired] a set of learnings that were sometimes very different from what I assumed were the issues. So for me, it was very enlightening to know what the issues were on a global level, as well as from the employee perspective.”
For the first time, the clients would help guide the company’s course – products, services, and even Xerox’s business plan, would be adapted to suit their needs. Based on the feedback, Xerox diversified its operations, moving away from simply supplying clients with photocopiers, and put its energy into providing them with service-based document solutions. “We [put a] big emphasis on services and wrapping services around our digital solutions so that we’re no longer selling technology to customers, we are solving the problems that these customers have,” she says.
A new business model
Much of this energy has gone into print-on-demand (POD) technology, which allows clients to publish their own high-quality printed materials inhouse both quickly and cost-effectively. Xerox’s venture into the POD market has helped make digital printing a viable alternative to traditional offset printing. More importantly, it helps companies to communicate better with their clients by allowing them to customize the printed materials they provide to individual customers. “The technology has arrived at a pace that is very exciting; color printing is really booming and when combined with print on demand and personalization, all of a sudden you are in the communications business.”
Capitalizing on the success of its digital printing products, Xerox introduced full document solutions in the early 2000s, providing companies with products tailored to their businesses’ individual publishing needs, as well as trained Xerox personnel to operate them. The new model created a more dynamic relationship between Xerox and its clients, allowing clients to benefit from more effective management of document flow that reduces time and cost, while increasing efficiency.
In Egypt alone, according to Mulcahy, there are 83 main clients for which Xerox manages all document processing. “One of the great things about services is that they create an annuity business,” she points out. “If you are just selling technology, then you are just selling transactions. You’re doing something and walking away. Services create connections with customers, long-term relationships. So the services component is great for business because it builds annuity, and it’s great for customers because it builds relationships and partnership versus just supplying.”
Another benefit of this relationship with clients is the steady flow of feedback that Xerox is able to incorporate into the development of new products and services. “We will take technology in its early stages to a customer site and we will actually complete a lot of the development by learning from the customers about how the development of that technology can serve them better,” Mulcahy explains. “And then if you are really listening and connected, you have to know when you need to adapt to different markets.”
This “co-developing” process has allowed Xerox to gain a deeper understanding of what its clients want. Clients in Egypt, for instance, might need technology that clients in the US do not. So some products may be made available here, while they are not in other markets.
Slow growth in traditional markets such as western Europe and North America has made developing markets an increasingly important component of Xerox’s strategy. Mulcahy predicts that developing markets will be the engine for growth for the company in the near future. “Although emerging markets have been important to Xerox for a long time – we’ve been here in Egypt for 30 years – emerging markets [have become a primary] source of growth. And for companies that need to be delivering growth, then the focus on these markets is really important, [especially since] these markets are very sophisticated.”
Corporate goals
Xerox unveiled a new logo earlier this year to reflect the fact that the company is very different today from what it was a decade ago. The focus has shifted away from supplying printing and copying hardware, towards helping customers manage their business better and improving their bottom line. The transition required a similar shift in mindset. Instead of evaluating new products according to their functions and per-unit manufacturing cost, the service business requires a greater dependence on people.
Fortunately, Mulcahy explains, Xerox has a reputation for investing in its own – and providing them the appropriate training and tools to do their jobs. “We have a very long history of investing in people and in developing their skills and growing talent from within, and then making sure that people are in their right roles; that they are motivated; that they are rewarded and that you are communicating in ways that give people meaning about what they do.”
For multinationals in particular, she stresses, having crystal clear common goals is critical. It is up to the firm’s leader to establish these goals and impart them to all employees. “You learn very quickly that if you’re running a global organization, the most important thing you can do is to motivate people around a common set of objectives. Without that, big companies have no advantages. In fact, they are disadvantaged. So having clarity about the company’s mission and having your people believe and feel engaged to accomplish [common] goals is the most important thing you can do as a leader.”
Mulcahy’s success in motivating her 57,000 employees has played a big part in Xerox’s resurgence as a leading technology firm. It also earned her the number two ranking on Fortune magazine’s 50 Most Powerful Women of 2007. While she is proud of her accomplishments, she argues that gender should not figure into the equation. “I live for the day when I am no longer covered in the press as a woman CEO, and just as a CEO,” she says with a grin. “The great news is that you don’t get to be CEO unless you have the qualifications and the experience, but it’s still an anomaly [for a woman to hold the position]; it’s still unusual.”
She hopes her success, and that of other women heading major corporations, will help shatter the glass ceiling that has created a huge disadvantage for business. “I think the opportunity to take advantage of the best talent is being missed because of the fact that we’re not seeing more women in leadership positions,” she says. “Women represent now more than half of the talent base that is coming out of universities. So, we need to do a better job so that women have the opportunity to get good experience, to rise through the ranks, and to have an opportunity and the ambition to be CEO. I think the important message here is that we really need to work hard to [get] to the day when it’s not unusual [for women to be CEOs] and we don’t need to talk about it.”
Submit
your comment
Top
|
