How did Mulcahy’s life and professional experiences contribute to her personal a

Question

How did Mulcahy’s life and professional experiences contribute to her personal application of the four dimensions of EQ (emotional intelligence) and AL (authentic leadership)? Provide examples. • When Mulcahy became COO, in what ways did she use EQ and AL to navigate a challenging organizational landscape? Explain your reasoning. • Does Mulcahy use power, influence, or both? Provide a specific example to support your perspective. The normally confident Anne Mulcahy, chief operating officer of Xerox Corporation, was worried as she prepared to meet with her top management team on Monday, October 23, 2000. She was preparing to announce Xerox’s first annual loss in five years at the quarterly earnings announcement the following day. On a telephonic briefing on October 3, 2000, Mulcahy had forewarned security analysts and investors of the losses, stating candidly that “Xerox’s business model is unsustainable.” Her remarks had set off a firestorm, causing Xerox stock to plunge 26% that day alone. Ten days later Reuters reported the rumors circulating in Europe that Xerox was preparing to declare bankruptcy. Shortly thereafter, Moody’s and Standard and Poor’s downgraded the company’s debt ratings, further roiling the financial markets and shaking Xerox’s customers and its employees.

Xerox was not only losing money, but facing a major liquidity crisis that threatened its survival. As a result of stiffened competition and a major sales organization realignment, which followed an administrative reorganization, Xerox sales had plunged into a sharp decline. The crisis was compounded by rapidly rising interest expenses and the collapse in the company’s Latin American business amid a series of currency devaluations. As one executive put it, Xerox was facing “the perfect storm.” With $18 billion in debt, a market capitalization that had dropped to $5 billion, and a string of earnings disappointments, Xerox was in deep trouble. (See Exhibit 1 for company financials.) As the storm was building, Xerox stock had tanked, plunging from $65 per share in 1999 to $27 when Mulcahy became COO in May 2000, and all the way to $6.88 on October 19. As the stock price fell, outside advisors placed increasing pressure on Mulcahy to take the company into bankruptcy and relieve the enormous debt burden and the associated interest expense. As Mulcahy met with her key executives and outside advisors that afternoon, she was deeply concerned about whether the company she loved so much could stay afloat long enough to avoid bankruptcy and give her time to implement plans to restore the company to its former greatness. Company History Xerox was built on the foundation of one of the most successful product launches ever. After a decade of development, Xerox had introduced the model 914 copier in 1959, leasing the refrigeratorsized office machine to customers in low-cost long-term agreements, under which Xerox collected a fixed price per page printed. Demand exploded for the new xerograph process, which replaced messy carbons and various wet process duplication methods. Initial sales of $32 million in 1959 grew to $1.1 billion in 1968, and employment increased from 900 to 24,000. By 1970 Xerox enjoyed a 95% share of the plain-paper copier market, with gross margins on key products ranging from 70% to 80%. Xerox joined trademarks like Yo-yo and Hoover as a household name.

Xerox was a model corporate citizen, especially in its hometown of Rochester, NY. Chief executive Joseph C. Wilson set the tone for Xerox’s focus on its customers, values-based leadership and roots in the community. Over time several generations of families came to work for the company. Xerox became a trendsetter in encouraging diversity in its workforce. Sterling civic values and meticulous corporate controls were matched by heavy investment in R&D. Xerox was a research scientist’s dream job. One of its crown jewels was the renowned Palo Alto Research Center (PARC), established in 1970 when Xerox entered the computer industry. PARC originated many technologies that launched the information revolution: the graphic user interface, computer mouse, Ethernet protocol, first laser printer, bit mapping, advances in information theory, object oriented computer languages, and the idea of “windowing” computer applications. While PARC’s research was important for company prestige, it had “little connection to the people who dealt with customers on a day-to-day basis,” explained a Xerox executive. “Our operating culture was focused on the next product to be introduced.” Product development was based near Rochester, where engineers worked on ink and paper movement technologies that applied directly to hard documents. Xerox carefully scripted the development of new technologies in a slow but exacting multi-stage process, extending from initial research to model introduction. Reinvention Xerox’s overwhelming success bred anti-monopoly pressures. Confronted by several lawsuits, Xerox negotiated a 1975 settlement with the Federal Trade Commission whereby it forfeited its formidable store of patent protections and agreed to license its technology to competitors. The next decade brought dizzying competition as new competitors Canon, Minolta, Ricoh and Sharp aggressively entered the U.S. market. Xerox’s share of U.S. copier installations fell from 80% to an estimated 13% by 1982. Unprepared for price competition,

Xerox was unable to adapt to smaller margins and appeared to be headed for insolvency in the early 1980s. In response, new CEO David T. Kearns introduced several companywide initiatives in the areas of benchmarking, employee involvement, and quality to help Xerox build a competitive position. Kearns rallied employees under the moniker of Team Xerox and Leadership Through Quality, and they responded enthusiastically. Between 1984 and 1993 Xerox improved its share of low-end copiers from 8% to 18%, as mid- and high-end share rose from 26% to 35%.1 As its copier businesses rebounded, Xerox diversified, launching a computer business competing directly with IBM. It also acquired insurance and finance arms. Despite improvements in market share, profit growth stalled in the early 1990s. Amid the networked office and digital computer printing revolution, Xerox’s entire product line consisted of stand-alone, analog machines. In manufacturing, employment levels were fixed by union contracts and production was vertically integrated down to plastics molding and screw turning, making it difficult for Xerox to compete on cost. Named Kearns’s successor in 1992, CEO Paul Allaire was determined to spread a sense of urgency throughout the company. Allaire created three geographically defined sales organizations selling products from nine product divisions organized . around market segments. Each division assumed “end-to-end” responsibility for a set of products and service and had its own manufacturing, income statement and balance sheet. Allaire eliminated 10,000 jobs across the company, modernized Xerox core technologies, and divested the insurance business. Over the next five years, the nine divisions were reduced to four, and companywide management of manufacturing was reinstated. But while the organization was fine-tuned, Xerox urgently needed a new strategy. Beginning in the 1990s, Xerox sales had accelerated as installed leases began to be replaced with purchased machines. “This created incredible sales revenue,” explained a senior executive, “as we spent five years selling off our lease base. By 1997 we’d run out of steam on the conversions. A lot of the skills required to build new revenues – market development, attracting customers, and training salespeople – weren’t in the company.” New Strategy ... and a New Leader In 1997, Allaire announced that Xerox’s digital systems revolution had achieved critical mass. He again reorganized the company, this time into four business divisions. Production printing and retail channels businesses were new business forays, each targeted at a new market with new competitors, and all used new technologies in networking, color ink and digital processing. Xerox took direct aim at H-P with its desktop printer business. On the threshold of a new digital era, investor expectations for Xerox ran high. To spark profit growth, the Xerox board turned to an outsider as Allaire’s successor. Richard Thoman, then CFO at IBM, was appointed president of Xerox in 1997 to undertake a sales and process reorganization and shake up the slow, cumbersome bureaucracy critics called ‘Burox.’ “Everyone knew we needed the new strategy and a greater sense of urgency in our culture,” explained a senior Xerox executive, “but no one had the intestinal fortitude to do it.”

A protégé of Lou Gerstner, with experience in IBM’s storied turnaround, Thoman was greeted with optimism by investors. His track record in IBM’s transformation from hardware to services reflected Xerox’s aspirations. Thoman’s election as president put him in line to become CEO when Allaire retired in 1999. “We were going to be something fundamentally different from our history – a systems and IT company,” explained Xerox veteran Ursula Burns. Working with a team of senior Xerox executives and key senior hires from IBM and elsewhere, Thoman oversaw the implementation of further reorganizations. Four geographically oriented customer administration centers which handled billing and collections were consolidated into three customer business centers organized by business segment. Customer-facing order entry personnel from more than 30 geographic customer business units were moved to the three customer business centers to capture advantages of scale. Later, in 2000, geography-based sales team members were reassigned to sell Xerox’s solutions tailor-fitted for industry groups, and another layer of senior management was added. Thoman attempted to build a service business through a series of acquisitions and continued to buy out partners’ stakes in overseas joint ventures, looking to buy Fuji’s share of Fuji Xerox. Xerox expected to pay for major business investments in color and ink technology, desktop machines, production printing, and services with cost savings from process streamlining in sales, fulfillment, and billing. The stock market responded enthusiastically. Investors bid Xerox stock up from $30 per share in 1997 to over $60 when Thoman was officially elected CEO in April, 1999. The sales reorganization so disrupted customer relationships that revenue and profits suffered. Sales team members lost client relationships they had cultivated over the years. Many of them took advantage of the strong job market and left the company. • Xerox customers not only lost their sales contact, but also began experiencing increased billing issues due, in part, to the customer administration changes and more complicated pricing plans. With the two strong customer ties to Xerox broken, competitors exploited the opening for new business and stole market share from Xerox. • As the Xerox sales team scrambled to find new business, it cut prices sharply and wound up closing fewer and fewer profitable contracts.

The extent of the crisis was not apparent to management until the second half of 1999, when declining results caused Xerox to miss its earnings targets in both the third and fourth quarters. Xerox stock declined sharply from its high of $60 to $20 per share in early 2000, before a brief rally brought it back to $27. Just as Xerox was confronting these problems in its core business, the company encountered external profit challenges. Among them, Xerox’s domination in production printing ended with the entry of foreign-rival Heidelberg, and competition from Canon and Ricoh began to heat up as well. Second, the global financial crisis that began in Asia in 1998 spread to Latin America in the second half of 1998, where currency devaluation in Brazil put a hole in a particularly profitable operation for Xerox. Third, the market began shifting toward products with lower margins. After confirming through September of 1999 in-line earnings expectations for the third quarter of 1999, Xerox stunned investors by warning of a steep reduction in expected earnings in early October. (See Exhibit 2 for quarterly results.) With the share price in freefall and revenue and profits shrinking, morale was in disarray, and massive defections were plaguing the sales organization. At the same time, internal auditors found misclassified revenues and spiraling doubtful accounts in Xerox Mexico, triggering sweeping dismissals and a notice to the Securities and Exchange Commission. The SEC began inquiries across the company, suspicious that practices uncovered in Mexico were more widespread. The sudden change in Xerox’s prospects was a shock. The management team was shaken by the sudden downturn, and began to lose confidence in Xerox’s direction. As a result, several senior executives made plans to leave. As news of this disarray filtered back to Allaire, he took steps to stabilize senior management, trying to prevent the damaging defection of old Xerox hands. Changing Leadership…Again Allaire decided to replace Thoman, canvassing the Board regarding another leadership change. Having just elected Thoman CEO, the board did not have an obvious successor. Allaire suggested Anne Mulcahy, president of the General Markets Organization division (GMO). As Mulcahy was preparing for a business trip to Japan on May 11, 2000, Allaire dropped by her office. “He came in and he said, ‘Hey, sit down,’” Mulcahy recalled: Paul said, ‘I don’t think you ought to go to Japan today.’ He asked me to be COO and his successor and indicated the board had approved it. I asked him for a day. I knew I would do it, but I wanted to go home and chat with my family to make sure they understood the consequences and I had their support. That evening Mulcahy talked over the opportunity with her family. “Having worked for 35 years for Xerox, my husband has the same passion for the company as I do,” she said. “He said, ‘You go do what you have to do.’ Our two sons were somewhat enlightened in the topic of women leaders, so they were excited. Their support solidified my resolve and gave me energy for the task. I don’t think I would have been able to do this job without that support.” The next day, Allaire secured Thoman’s resignation and resumed the position of chief executive as the board elected Mulcahy president and chief operating officer. “I was certainly not focused on having this happen,” Mulcahy said. “It was a little like going to war, in terms of knowing that this was the right thing for the company and there was a lot at stake. This was a job that would dramatically change my life, requiring every ounce of energy that I had. I never expected to be CEO, nor was I groomed to be CEO

. It was a total surprise to everyone, including me.”2 My biggest fear was that perhaps I was sitting on the deck of the Titanic and I’d get to drive it to the bottom of the ocean—not exactly a moment to be proud of. Nothing spooked me so much as waking up in the middle of the night and thinking about 96,000 employees and retirees and what would happen if this thing went south. Entire families work for Xerox.3 The Making of Anne Mulcahy It had been clear to senior management that a change was in the air, but Mulcahy’s appointment came as a surprise. She had been running a business far removed from the challenges of the reorganization. “I wasn’t surprised that there was a change,” said Mulcahy. “I was surprised they came after me because I never expressed an aspiration to be there. I didn’t know the board at all, so it wasn’t exactly a vote of confidence. I was the only option left to them.” Joining Xerox While long recognized as high potential within Xerox, Mulcahy had followed a circuitous path to the ranks of senior management. Growing up with four brothers in suburban Long Island, Mulcahy attended Catholic schools and graduated in 1974 from Marymount College with a joint major in English and Journalism. (See Exhibit 3 for her account of her early family life.) After working initially at Chase Manhattan, Mulcahy said, “I came to Xerox because I needed a job. Not with aspirations, that’s for sure. I started out in sales and literally hounded the streets for the first ten years of my career,” she recalled. “There were only a handful of women sales reps at that time. I remember taking these little puddle-jumpers up to Presque Isle, Maine, to call on the paper mills. This was baptism by fire.” Despite Mulcahy’s lack of sales experience, Xerox had recognized her competitive instinct. “She would go and dig in the bowels of a territory to find things,” recalled Tom Horn, her Boston sales manager.4 By the early 1980s, Mulcahy was promoted to management, charged with organizing a sales team that included older and more experienced employees. She had married Joe Mulcahy, who was also a Xerox sales executive, and started a family. “A lot of what drove my career was actually work and family balance,” she explained. “We both wanted to play out our careers, yet still raise our kids in one place. We’d figure this out without one person’s career taking priority over the other. This was difficult because in a company like Xerox, relocation was part of the game.” Joe ran Xerox’s major account organization until 1988, which required extensive global travel, while Anne stayed in positions not requiring travel. Later their roles were reversed.

Explanation / Answer

Reliability

In a turbulent economy, it's elusive faithful representatives, considerably less committed pioneers. Be that as it may, Anne was a 25 year Xerox veteran when she ventured into the CEO shoes. Also, in spite of the way that the organization was close chapter 11, she resolved to settle on changes and intense choices to get it back on track . In difficult circumstances, devotion can be the most important nature of a pioneer.

Reexamination

Moving from costly buyer printers, Anne took a bet and concentrated on the new innovation of top of the line shading computerized printers and counseling administrations. She understood that the world was changing and Xerox expected to advance beyond the move. "Organizations vanish on the grounds that they can't rethink themselves," she said .

Esteeming People

Notwithstanding when Anne needed to slice employments and pitch divisions to get the organization on track, despite everything she endeavored to esteem organization culture . She once said "Workers are an organization's most prominent resource – they're your upper hand. You need to draw in and hold the best; give them support, jolt, and influence them to feel that they are a necessary piece of the organization's main goal "

When Anne left Xerox in 2010, the organization was revived and fruitful. This was on account of Anne had the unwaveringness to see it through, she was ready to go out on a limb in advancement and she was savvy enough to center around human capital through ability improvement.

Very quickly, she tended to the organization's liquidity issues and immediately brought $2.5 billion up in real money. Through a "simple" approach and a recharged center around operational effectiveness, the organization cut its capital consumptions by 50 percent; decreased its business, general, and authoritative costs by 33%; and cut its aggregate obligation down the middle. At the same time, Xerox fortified its center business by keeping up an association wide spotlight on development.

Mulcahy said that viable correspondence was maybe the absolute most vital segment of the organization's effective turnaround procedure. "I feel like my title ought to be Chief Communication Officer, since that is truly what I do," she stated, stressing the significance of tuning in to clients and workers.

Notwithstanding requesting fair input, Mulcahy said both genuineness and certainty are basic to viable correspondence, particularly amid times of emergency. consequently, Mulcahy acknowledged nothing not as much as aggregate help from her official group — or from some other Xerox worker. Her simple, down to business approach left her with a devoted workforce interestingly adjusted around a typical arrangement of destinations.

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