Xerox Turnaround and Transformation
Anne M. Mulcahy
Chairman & CEO
Xerox Corporation
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Xerox Turnaround and Transformation Anne Mulcahy, Xerox Chairman & CEO If you had to pick just one particular word to describe the success of a massive turnaround at global high tech giant Xerox, it would be “alignment.”
To be sure, there were many elements that comprised Xerox’s stunning transformation from sinking liner to
streamlined growth engine nearly eight years ago. But the company’s chairman and CEO Anne Mulcahy attributed a fair percentage of the success to her early decision to align employees around the company’s customers. Speaking at an April 9 session at Accenture’s Global Convergence Forum, Mulcahy said that aligning employees gives companies a big advantage. It affords them the flexibility and nimbleness to move quickly and make a huge positive impact on customers.
While alignment was certainly a key in turning Xerox around at a critical time in its long history, Mulcahy also attributed the successful transformation to other factors, including listening to employees and customers. Specifically, she said, it was important to find out what their needs were and—at least in the employees’ case—where they saw the company five years out. Prior to the beginning of the turnaround, she said, Xerox was suffering from an “absence of clarity” over its direction, among other things. This had, in turn, contributed to its double digit revenue losses, plummeting market share and $19 billion in debt.
On the customer said, Mulcahy said, it was absolutely critical to hear their needs. Listening to your customers, she said, provides the “foundation for market-connectedness.”
Wisely, Mulcahy and her people decided that Xerox had to transform—indeed, evolve—into a services-led tech company and content management provider. As a result, Xerox planned to realign so it could focus on helping its customers make the most out of their IT assets and infrastructure, focusing more on the information than the technology. Part of solving that puzzle was creating customer value and deciding where to invest resources, Mulcahy said. Further complicating the puzzle, however, was the question of how to create value for customers while growing the company, she added.
Once the team was focused on its customer-oriented transition goal, Xerox had to take several important steps to execute its new strategy. First, the company decided that it wanted to become a leader in the color printing market, because that’s where it saw the future of its core business.
As part of that initiative, Xerox reinvented its printing business to focus on customized markets, such as short-run book printers. This allowed the company to deliver applications directly to users in the $25 billion print market, Mulcahy said. Another part of this strategy, she added, was focusing on the growing photo-imaging and digital capabilities, a market that is expected to exceed $800 million over the next two years.
Xerox also streamlined its business model to put more emphasis on providing office technology beyond printers and copiers. Mulcahy pointed out that the company has brought more than 100 new technology tools and solutions to the marketplace over the last three years.
While Xerox was cutting costs virtually across the board, Mulcahy said, one area where it simply refused to skimp was research and development (much to the apparent confusion and consternation of its investment banks). This decision paid off, she said, as the most prolific time in the company’s history ensued.
During its alignment process, Mulcahy said her team had to ask several key questions. Among them: Will the customer pay for the product and find it helpful? She found that communicating with customers on a more personal level could help those companies communicate with their customers. That, in turn, would give Xerox a leading edge in customer satisfaction. Along those same lines, Mulcahy said that customer satisfaction is a serious consideration. It’s not enough to offer “good” service and products, she said. You need to offer “great” service and products. Indeed, 75 percent of customers who defect from a company say they’re satisfied, not “very satisfied,” Mulcahy said.
Summing up, Mulcahy said Xerox is in a “better place.” But she also noted that there is a long road ahead. She characterized the current business environment as a “race without a finish line.”