C400 Final Exam Scenario US ARMY COMMAND AND GENERAL STAFF COLLEGE

Anne Mulcahy & Xerox When Anne Mulcahy became CEO and chairperson of Xerox in 2001, the odds of saving the ‘doomed ship’ were stacked against her. Mulcahy replaced an ousted CEO who had only lasted 13 months on the job. Xerox was teetering on the edge of bankruptcy. Xerox was one of those rare companies whose brand name became so common in use that the word entered the language as a verb. People didn’t ‘photocopy’ a document, they ‘Xeroxed’ it. But as with many other megalithic companies, decades of industry dominance led to complacency. Xerox began to lose direction and market share and by 2000, had lost $273 million in revenue. By 2001, it had over $17 billion in debt. In the two years previous to Mulcahy’s appointment to CEO at Xerox, not only had the debt ballooned to $19 billion, but they were battling an internal fraud scandal. Customers and employees were quickly walking away. Coupled with a seriously weakening economy, Xerox’s last effort to survive saw them sack their CEO of thirteen months and appoint Anne Mulcahy – a Xerox employee who has been there for nearly her entire career and who had worked in many different divisions. Her thorough knowledge of the company made her an ideal candidate – and she knew Xerox had lost its way. Her first task was CEO was to go on a ‘listening tour. Over 90 days she spoke to employees, customers and industry experts across the US on where Xerox had gone wrong. Employees said that they needed clearer goals. Customers said Xerox had lost its responsiveness. Tech gurus said it was investing randomly, rather than focusing on a few markets where it could dominate. Mulcahy also tackled the huge financial problems facing Xerox. She formed a team of advisors, and focused first on cash generation in order to survive. For three months she relentlessly lobbied the 58 banks who had loan arrangements with Xerox and managed to persuade all to stay with Xerox. Across the company people became fearful and uneasy. Many had known for a long time that things had to change – but there had been no managerial impetus to do so. During the 1990’s Xerox had tried to centralize administration and reorganize its sales force but poorly executed, it had left employees unsure of their roles and sceptical about the company’s direction. Trust in the leadership began to wane as decision-making became murky, nothing was clear. Everybody in the field knew it wasn’t working, but nobody said anything