Leadership Strategies at Xerox

When Joseph Chamberlain Wilson took over as President of the Haloid Photographic Company in 1946, he was quick to realise that the firm needed a new product and a new technology to boost its profits from sales. He therefore began to search for innovative technology and this resulted in the purchase of rights for xerography, a technique developed by Chester Carlson which would use static electricity applied on fine powder to replicate an image through the application of heat on the powdered surface of the paper. In 1956, the company (now functioning under the name Haloid Xerox) had net sales of about $7 million, a workforce of above 700 and had 10 research scientists and engineers. This paved the way for the company, whose name changed to Xerox Corporation in 1961, in recording over a billion dollar in sales owing to fast and cheap photocopying introduced by the Xerox 914. The Xerox 914 ushered in a new style of office management by doing away with individual letters and carbon copies, thereby streamlining filing systems and revolutionising how documents at offices, firms and other organisations were managed.

Joseph C. Wilson was instrumental in creating a positive, people-oriented culture at Xerox. He encouraged risk-taking and fostered employee involvement as Xerox Corporation embedded a culture of fairness and treated employees with respect for their new ideas.

Charles Peter McColough (1968-1982)

Charles Peter McColough strongly believed in leadership by example. In his view, the organization’s employees, especially its top management make the company what it is. He joined the company in 1954 (when Xerox was known as the Haloid Company), became the President of Xerox Corporation in 1966 and was appointed CEO in 1968. 

In the mid 1970’s, there were two major environmental changes which posed a serious threat to the dominance of Xerox in the photocopier industry. One of them was the aggressive entry of Japanese firms in the photocopier industry with small, high-quality and low price photocopiers. The second dramatic change was that the Federal Trade Commission settlements required Xerox to open international access to key patents.

McColough redefined the company by setting up the PARC (Palo Alto Research Centre) in 1970 which focussed on innovation and new products. He envisioned an “office of the future” comprising of computers, photocopiers and printers. Owing to his drive towards innovation, PARC researchers felt encouraged and they brought out important innovations like GUI (Graphical User Interface), the commercial mouse and Ethernet network architecture. However, McColough and Xerox failed to take advantage of these pioneering innovations in the field of computers and internet and other companies derived commercial benefits by further development and utilization of most of these products.

David T. Kearns (1982-1990)

David Kearns was an ex-naval officer who joined Xerox Corporation in 1971 as Vice President. In1977, he became President of Xerox Corporation and in 1982, he was elevated to the rank of CEO.

Kearns believed that the essence of a quality workforce lay in people who had learnt how to think. He was of the opinion that the workforce needed to be retrained periodically such that people did not become complacent and overly compliant to the extent of losing their curiosity.

Kearns focussed on “Leadership through Quality” and Quality was defined as “conformance to customer requirements”. He set the organizational priorities as customer satisfaction, improved return on assets and increased market share. To implement Leadership through Quality, he emphasized on:

Ø  Competitive benchmarking, which was the process of measuring Xerox products, services and processes with respect to their top competitors.

Ø  Promoting employee involvement, to apply their creative skills and talent completely to problems and opportunities across various levels.

As regards organizational structure, the following steps were employed:

Ø  All operating units at Xerox had a Senior Personnel Manager and a Quality Manager to help in planning. Plans were reviewed by the Corporate Personnel Council for consistency and potential effectiveness.

Ø  Employee contributions were highly valued through team activities and individual suggestions.

Ø  Two way communication between employees and managers. Employee suggestions were frequently sought. Manager walk-arounds, Open Door Policy for suggestions/comments, surveys and communication meetings were common practices to enhance communication.

Ø  Importance given to teamwork with about 75 percent of the workforce being part of team projects.

Ø  Every Xerox employee was made to undergo at least 28 hours of training in quality. After this initial training, managers were made to act as Quality Inspectors to promote implementation of the quality tools and practices learnt. On-the-job Quality Training was emphasized upon

Ø  Recognition by honouring individual effort and teamwork by incorporating awards such as the Team Excellence Award (for teamwork) and the Xerox Achievement Award (for individuals)

Xerox Corporation revenue for the year 1989 was recorded as $17.6 billion with a net income of $ 704 million. There was a worldwide pool of 111,400 employees. Xerox products ranged from low-volume copiers to high performance integrated systems for handling document creation, storage and reproduction as part of the Business Products and Systems division of business, which was their mainstay. Xerox also forayed into Xerox financial services which did not prove successful.

Paul A. Allaire (1990-1999)

Paul Arthur Allaire joined Xerox in 1966 and rose to the rank of CEO in 1990.

Xerox had always focussed on “Employee Empowerment” within the workplace by means of creating “Empowered Work Groups” or EWGs that were high on components of speed, creativity and flexibility. EWGs were important in realizing higher customer satisfaction and hence, higher sales. EWGs were self-managed entrepreneurial communities comprised of various numbers of workers.

However, as Xerox poised itself to enter the digital market, the current structure was plagued with inflexibility to manage the growing volume of daily information. Employees sought more decision-making authority to deliver best results.

The digital market had very fast product cycles and value-added solutions had to be provided to customers to increase their productivity.

Paul Allaire realized that in spite of having superior technology and lured with attractive prospects in the market, Xerox Corporation had to overcome the functionally driven bureaucracy in order to be more productive. Moreover, a change was needed to elevate customer satisfaction ratings to “benchmark levels” in the industry. A matrix structure was followed with the company organized in terms of products, geographies and segments. The biggest disadvantage of this structure was that nobody had any clear responsibility or accountability. With the organization focussing too keenly on data and processes, timely decision-making suffered a setback. 

In 1994, an assessment of the organizational structure at Xerox showed that:

Ø  Business managers at Xerox lacked in openness and complete honesty and they had not linked their empowerment strategy to business results.

Ø  There was no shared vision as to what empowerment was headed towards

Ø  Lack in clarity of vision caused employee confusion and failure to act proactively

Ø  There was some resistance by management in delegating authority down the hierarchy

Ø  Less than half of Xerox employees felt empowered

The core elements identified to foster empowerment were:

Ø  Direction and Communication – Work Groups needed to understand what they were heading for and have open and transparent channels of communication with the management

Ø  Work Groups needed to undertake a sense of belongingness and ownership towards the company’s vision and its difficulties

Ø  Work groups should be based on needed skills

In spite of this vision of empowerment, the organization culture still had managers as decision-makers and employees as doers. Current business practices were often bureaucratic and not oriented towards greater customer satisfaction. Sharing of work group accountability and responsibility was not being practiced, thereby affecting customer-orientation. As a result, there was lack of customer and employee satisfaction, leading to poor business results.

For successful implementation of the Allaire’s envisioned Empowered Work Groups, the following steps were implemented:

Ø  Education and training across all levels of the workforce

Ø  Keeping employees well-informed and up-to-date as to where the company was heading towards

Ø  On-the-job support for employees

Ø  Post implementation surveys within every group and throughout the organization to assess employee motivation and empowering work environment

Ø  Sharing of solutions and best practices across the organization

Ø  Recognize individual contribution and reward empowered teams based on performance

Ø  Formalized work processes and documentation to ensure repeatability of successful practices, facilitate decision-making and aid continuous improvement by providing a “benchmark”

Following these methods, Paul Allaire was successful in boosting employee motivation across 85,000 Xerox employees and achieving high levels of customer satisfaction. Empowered Work Groups became interdependent teams to achieve higher levels organizational efficiency and effectiveness, fostering trust, respect and organizational learning.



 G. Richard Thoman (1999-2000)

Richard Thoman came to Xerox Corporation as President and Chief Operating Officer in 1997. He previously held the position of Chief Financial Officer in IBM. Thoman came into Xerox with a view that he would soon be appointed as Chief Executive upon Paul Allaire’s retirement. Thoman was expected to usher Xerox into the “Digital Age” and change Xerox from a seller of photocopiers to a consultant on advising use of Digital documents. Although Thoman was appointed CEO in April 1999 owing mainly to Paul Allaire’s support for him, he was fired by the Board of Xerox Corporation just 13 months later.  

Thoman could not efficiently control Xerox’s finances and the company lost $ 1 billion on account of foreign currency losses. Though Thoman had a clear vision, he lacked people skills to bring about a positive change. The Board of Xerox Corporation had seven directors who sat on the Boards of 5 other companies and one director who sat on the Boards of 11 other companies. This caused the Board members to have inadequate insight and lack of proper focus on improving the condition of Xerox Corporation.

Thoman was always seen as an outsider in Xerox, in which the workforce was mainly comprised of people who had worked with the company for long years, some having worked for Xerox ever since they finished college. Thoman made the situation even worse by his poor people handling skills and his inability to make Xerox succeed in the digital market. He was therefore, ousted in May 2000.

Paul Allaire (2000-2001)

On 10^th May, 2000, Paul Allaire ousted Richard Thoman and took over the reins of CEO himself as the company’s stock price kept plummeting. Stock prices hit a low of $7 and the largest quarterly loss was reported in December 2000. There were 4,000 layoffs in January 2001 and there were talks that Xerox Corporation was on the brink of bankruptcy. Leveraged buyout options were discussed in Xerox. Though Paul Allaire was contemplating retirement, his duty, the organization’s poor condition and the Board of Xerox Corporation urged him to stay on till end of July 2001, after which Anne Mulcahy took over as CEO from Paul Allaire.

Anne M. Mulcahy (2001-2009)

Anne Mulcahy joined Xerox in 1976 as a field sales representative. In 1992, she was appointed Vice-President of Human Resources and she was elevated to the rank of Chief Staff Officer in 1997. She was made corporate Senior Vice-President in 1998. Though Mulcahy was not in the race for the CEO’s position, the Board of Xerox Corporation realized the importance of her honesty and loyalty to the company. She was seen by the Board members including Paul Allaire as capable, hardworking, patient and loyal to the company and felt that her able leadership would help the company overcome the troubles which Xerox Corporation was experiencing.

Owing to her excellent people skills, Mulcahy listened to numerous, customers and shareholders across all levels gave her an insight into the hidden weaknesses in the organization. Mulcahy quickly set about aligning the organizational work-force towards a common goal of higher customer-orientation. So, a system of specific key customer accounts for every Xerox executive was put in place with the intention being to connect closely to customers.

Mulcahy continued to invest strongly in R&D to keep the spirit of innovation alive at Xerox Corporation. However, owing to the company’s poor financial state and high debt, she was forced to cut down heavily on the workforce by means of job cuts. Xerox was also forced to reduce prices owing to competitive price offerings from companies such as Canon and Ricoh. 

In spite of threats from competition and job cuts at Xerox, Mulcahy was keen to retain the innovative and spirited culture at Xerox alive.  

Xerox was highly customer-oriented and was constantly looking to serve its customers better. Xerox Corporation sought to position itself as a global document management company. Its mission was to constantly improve quality at reduced costs with the company having an R&D spend of more than 6 percent of total revenues. Xerox’s Innovation Group oversees the product and process innovations across the company’s business units.

Xerox’s three primary markets were:

Ø  High-end production and commercial print environments

Ø  Small to large networked offices

Ø  Value-added services

Xerox used the worldwide geographic area structure and the multi-domestic strategy to serve these markets. The advantage of using this structure was that it allowed a high degree of responsiveness to local/regional markets and customers. The four business groups at Xerox comprised of North America, Europe, Global Services and Developing Markets Operations. To drive profitable growth, divisions of Innovation, Corporate Strategy/Alliances and Human Resources/Ethics was focussed upon. Owing to low formalization due to low need for integrating mechanisms worldwide, co-ordination among the different business groups was often informal.  

Anne Mulcahy successfully led the turnaround of Xerox by making the company return to profits and imbibed a culture in which employees and customers spoke highly of Xerox. She encouraged Xerox employees to be truthful and hard-working. She cleared Xerox’s accounting scandal, which had cost the company a fine of $10 million, by replacing her auditors and making changes in the finance department. Anne led by example and encouraged employees at Xerox to save every dollar of the company as if it were their own. She was instrumental in cost-cutting and cost-saving processes which made the company return back to profits.

Ursula Burns (2009 - till date)

Ursula Burns, a mechanical engineer by training, joined Xerox Corporation as a summer intern in 1980. She became recognized as a woman who understood technology well, was not afraid to take risks and could handle multiple tasks together. She was appointed general manager in 1997 and vice-president of worldwide manufacturing in 1999. She was named President of Xerox Corporation in 2007 and took over as CEO in July 2009.

Burns’ initial focus was to improve the company’s top line growth by generating more revenue from sales. She spearheaded the $6.4 billion acquisition of Affiliated Computer services, which was into business-process outsourcing, to make Xerox Corporation more process-efficient.

Burns has effectively positioned Xerox as a global document management company. She made use of the factors of brand name, superior technology and global reach of Xerox Corporation to boost the company’s image as well as its sales. She also gives significant importance to implementation of sustainable practices, waste reduction and saving of energy. She has been focussed on the business of printing on digital devices and make colour printing/copying more affordable so as to enhance sales volume. With launches such as the ColorQube in the mid-range portfolio and the successful launch of Color Press 800/1000 in the high-end production color category, Xerox continues with its innovative streak to derive higher profits.

References:

1.      The IUP Journal of Corporate Governance, Vol. IX, Nos. 1 & 2, 2010. CEO’s Legacy to the Board: Honesty, Resilience or Trust? The Case of Xerox by Rajnandan Patnaik and P.K. Sahoo

2.      Harvard Business Review: September-October 1992. The CEO as Organizational Architect: An Interview with Xerox’s Paul Allaire

3.      Best Practices in Organizational Development and Change. Chapter 7: Xerox by Fernan R. Cepero

4.      An Historic Succession at Xerox by Nanette Byrnes, Roger O. Crockett and Jena McGregor. Cover Story of Business Week: Issue 4134 dated 06/08/2009

5.      David T. Kearns: A CEO’s View of Training by Patricia A. Galagan. Training and Development Journal (American Society for Training & Development), May 1990, Vol. 44, Issue 5

6.      Managing Global Innovation: Uncovering the Secrets of Future Competitiveness (2008 Edition) by Roman Boutellier, Oliver Gassmann and Maximilian von Zedtwitz. Part IV.1 Xerox: The Global market and Technology Innovator