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May 2005 From Fiction to Fact
After Anne Mulcahy took over ailing Xerox Corp. in 2001, she was asked by her employees to describe the Xerox of the future. Mulcahy had a novel idea. She committed her vision to paper by writing a fictitious Wall Street Journal article, complete with performance metrics and made-up quotes from analysts, to describe a revitalized company, circa 2005. Mulcahy’s prediction sounded more like science fiction than a vision statement. Truth was that Xerox was teetering on the verge of bankruptcy. More than $17 billion in debt, the company had recorded losses in each of the preceding six years and was under investigation by the Securities and Exchange Commission. But Mulcahy and her team devised a bold plan for recovery. They addressed their problems with liquidity by quickly raising $2.5 billion in cash, then cut the company’s capital expenditures by 50 percent; reduced its sales, general, and administrative expenses by one-third; and slashed its total debt in half. “Even with all the cost cutting we did, we didn’t take a dollar out of research and development,” Mulcahy told students during a View from the Top appearance last December. As for her literary attempt, Mulcahy said: “Looking back on the article now, I’d say we’ve already accomplished about 80 percent of the things we set out to do.” |
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