International Finance
Business Leaders Magazine May - June 2018

The unmatched stardom of ‘Accidental CEO’: Anne Mulcahy

The story speaks the exceptional character of former Xerox CEO Anne Mulcahy, who reformed the downfall of a Fortune 500 company and had a voice to disagree Wall Street

The master of I don’t know. Accidental CEO.

Anne Mulcahy once confessed the description stems from the fact that she was never conditioned to be the boss of Xerox Corp.

So starting in 1976 and two decades later, it was Mulcahy’s first senior job at Xerox as Vice-President of HR and then, she became the Chief of Staff for former CEO Paul Allaire. At the time, many including Mulcahy did not foresee her window of opportunity with Xerox to transcend boundaries for both: the company and her career spanning the male-dominated corporate force.

Her relentless efforts and sharp organisational skills was in the spotlight, but they did not document the profound experience of a CEO. Of course, most CEOs carry inherent leadership traits. Many of them have a vision. But are they all capable of reviving a debt-heavy company, like Xerox?—Anne Mulcahy was.

In early 2000, Xerox’s poor growth was seeking a positive turnaround. The company’s stock slashed from US$63.69 to US$4.43, prompting some of the brightest minds to quit. The following year, Xerox struck a US$17bn debt for the sixth year in a row. Its previous sales plan was a hard fail and the Mexico unit was under Securities and Exchange Commission investigation, unzipping an unconventional leadership change in the century-old company history: to name Anne Mulcahy as the first woman CEO.

Everything about Mulcahy was unorthodox. She was not the typical MBA graduate the world would second-guess. Mulcahy studied English from Marymount college and devoted 16 years of her work experience in the company sales—not the sort of resume that Wall Street would confide in to reform a tanked corporate giant.

After investing 24 years in the company, her working relationship with Xerox was deep and familiar. For a long time, Mulcahy contemplated on leaving the company to spend quality time with her children. But a chain of events compelled her to stay.

Her predecessor Paul Allaire, who spent 33 years in the company retired as CEO in 2001. In a few months since Allaire, Mulcahy became the President and the CEO-in-waiting. And she was forced to encounter Wall Street’s hard-hitting questions. The chance to encourage IBM CFO Rick Thomson to succeed Allaire seemed more like a responsible choice for columnists of daily news journals to flash a more powerful morning headline. Afterall, Wall Street loved him.

Anyway, in the same year the fated meeting that determined her leadership role took place in the presence of her family, top chief executives, auditors and a few significant others. Mulcahy’s husband Joseph Mulcahy was there accompanied by their two boys in blue blazers, who eagerly awaited to watch their mother create a rewarding moment for them all. During the day, some retirees asked her questions, but nobody evoked an unpleasant boardroom scenario. And in August she was formally announced the CEO of Xerox and chairman in January 2002.

There was nobody more surprised than Mulcahy herself. To this day, her tenure in Xerox inspires many women leaders on the global business front. At the event series View from the Top, 2004-05, recalling her first instinct “I took on this position feeling equal parts of excitement and dread,” she exclaimed.

Director of Corporate Finance Analysis Joe Mancini Jr. recalls his time with Mulcahy, when he assisted her through the company’s US$30bn balance sheet, and talked about debt structure, taxes and currency moves. All of this was done to help her understand the company mired in great financial shock. Mulcahy says, “It was an unusual situation for him—tutoring the CEO.”

In an interview with Discover Your True North, she narrates how the Xerox crisis stoked confusion and anxiety in her: “…it felt like being on the deck of the Titanic. It was a true crisis. To make it worse, my background was not in finances, or even in R&D. I was a salesperson first, and then worked my way into an executive role, but when it came to a crisis of this nature I really needed help.”

After a string of fiscal crisis, Xerox was blanketed in bankruptcy, and was advised to appeal for legal immunity from creditors, but Mulcahy opposed the idea. There was very little hope to bring back its financial stability, let alone firming up its global presence in the long run. In what would quickly become a disaster, she formulated a sensible direction and executed it perfectly.

Undeterred, Mulcahy led discussions with more than 100 top executives to assess their capabilities. “When there are no logical reasons to stay, it’s good to have some illogical ones” she says. “Reasons like ‘I can’t abandon the ship’ or ‘If I left now, what would my team think?’” Before she could reach the finish line, Xerox stock fell to a historic low of US$4.30.

Years later, no one could believe Mulcahy made it. She became the cure not only to end the financial trouble, but also to ignite a new beginning. Xerox, in three years reached US$91mn earnings from loss of US$273mn in 2000. By 2004, the company sales profit climbed US$859mn, and its stocks rose to 75% recovering from a loss of six percent for the Dow Jones Total Stock Market Index, as put in The Wharton School, University of Pennsylvania report.

But in this mission Mulcahy was not alone. Another Xerox loyalist, Ursula Burns, the then senior vice-president of corporate strategic services, who started her career with Xerox in 1980 as an intern got roped into the situation to neutralise its complexities. Together, Mulcahy and Burns found themselves waist-deep in the company’s financial dispute.

Picking up on this kind of a catastrophe, Mulcahy spoke to bankers, re-assured customers and informed employees. As Burns remembers, Mulcahy travelled three cities in a day to level the situation. She said, Mulcahy was perseverent: “‘If this place is going to fail, it’s not going to be because Anne Mulcahy slept.’”

Her long-term vision for growth plan squeezed the essence of a true strategist. She prioritised 30% cost cutting, stressed on productivity increase every year, swiftly settled the company’s SEC litigation and emphasized on heavy R&D funding, according to the book Strategic Management.

Mulcahy’s loyal leadership was hard to ignore, especially in a company known for its traditional management. Once, a company CEO’s over-enthusiastic suggestion to rework the culture, angered Mulcahy: “I am the culture. If I can’t figure out how to bring the culture with me, I’m the wrong person for the job,” she replied.

Always straightforward and logical, Mulcahy had the courage to debate on Wall Street’s narrow views. Many CEOs will agree to disagree on her comments. The tension from Wall Street is ‘a huge problem’ that may disable companies in the future, she said in reference to its next quarter’s report: “I talk with a lot of CEOs, and quietly to each other. ‘I’d love to say that I just don’t care and I’m just focused on the long term, but the pressure is extraordinary,’ I hope the next generation of leaders can reshape the way we interact with the financial community.”

As Burns recalls, Mulcahy’s realistic thinking and kind gestures appealed to all employees. For example: she taught them to “save each dollar as if it were your own,”—and finally, there she stood as one of America’s top business leaders, disproving The Wall Street Journal.

You have to live the mission…love what you do”

Strap: Reflecting how the years in Xerox made Anne Mulcahy an unforgettable CEO

  • 1976: Sales Representative

  • 1992-1995: Vice-President for Human Resources

  • 1997: Chief Staff Officer

  • 1998: Corporate Senior Vice-President

  • 2001: Chief Executive Officer

  • 2002: Chairwoman

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