Hauted Proposal

Anne Mulcahy joined Xerox when she was 23 years old. She spent her first 16 years in sales, then 8 years in an assortment of management assignments – director of human resources, head of the company’s desktop computer business and chief of staff to Xerox’s CEO. In August 2001, the Board of Xerox chose her to be the CEO. She was surprised that she was chosen as she had never aspired to be the CEO of Xerox and she was never groomed to be one. She accepted the job with mixed feelings. The company, however was in terrible financial position. It was about to begin seven straight quarters of losses. The competitors like Canon and Ricoh had taken a large part of Xerox’s market share in copying machines. Xerox’s stock price had dropped from nearly $64 in 2000 to $4.43. Duty and loyalty compelled her to take up a job that nobody else really wanted, even though she was not prepared for it.

Mulcahy did not know about financial analysis. She had no MBA and her undergraduate degree was in English/Journalism. However, she asked the company’s director of corporate finance to give her a cram course in Balance Sheet 101. He helped her to understand debt structure, inventory trends, and the impact of taxes and currency rates. This enabled her to see what would generate cash and how each of her decisions would affect the balance sheet. Mulcahy says now that her lack of training had its training had its advantages. She had no preconceived notions, no time to develop had habits.

Mulcahy and her executive team faced a difficult task from the beginning. Xerox is an oil-fashioned company and people resisted change. The average tenure of a Xerox employee is 14 years, double the overall corporate average. Although everyone knew the company was in trouble, there wasn’t a lot of willingness to challenge the conventional wisdom. Mulcahy appealed to employees with missionary zeal, in videos and in person ‘to save each dollar as if it were your

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