From the Podium: Anne M. Mulcahy

When Anne M. Mulcahy took the helm at Xerox Corporation in 2001, it looked like a sinking ship. The company had almost $19 billion in debt, revenues were in a double-digit freefall, and the stock was taking a beating.

As CEO and later chairman, Mulcahy brought the company back to profitability in short order. Xerox earned $978 million on $15.7 billion in revenue in 2005, and in 2006 had no core debt.

How did she do it? Mulcahy says she relied on advice from billionaire investor Warren Buffett: “Focus on your customers, and lead your people as though their lives depended on your success.”

At the height of the Xerox crisis, when investors were clamoring and the media was ringing the company's death knell, Mulcahy says Buffett's simple advice helped her filter out the noise and focus on the two constituencies that matter most.

Mulcahy shared the lessons of the Xerox turnaround during the Dean's Innovative Leader Series at MIT. The series is sponsored by the MIT Leadership Center and the MIT Sloan School of Management.

Spend time listening
All of Mulcahy's lessons stem from her focus on customers and employees. She advised the crowd gathered at MIT to listen to these core constituencies — and be prepared to act on what they hear. Actively look for critical feedback, because it's a gift to discover a problem early. Make customers the priority throughout the company by asking the question again and again: Would the customer pay for this?

Mulcahy, who started her career as a sales representative, continually emphasized the importance of the customer relationship. “Customer connectivity is something that has to be a part of all jobs in business,” she said. “I spend a tremendous amount of my time with customers as a CEO and so do my peers.”

She also stressed the importance of seeking success for the company, not as an individual. Leaders should surround themselves with “people who are different and smarter than you are (and) people who have skills that you don't have,” she said.

Plan for the long term
When a crisis hits, a leader needs to articulate a vision for the company that goes beyond just scraping by, because people have to feel that the company is worth saving. “Even at the worst of times, invest in the best of times,” Mulcahy said, adding that throughout the crisis, Xerox maintained funding for research and development. “Two-thirds of our revenue today comes from products and services we've introduced in the last two years,” she said. “So I'd hate to think where we would be had we not invested.”

Above all, leadership is a team sport, Mulcahy said, so communication is critical. “It was hugely important that people participated in the dialogue around what was happening at Xerox,” she said, adding that there is no substitute for meeting face to face. She and her management team kept their messages consistent and traveled the globe to keep the huge company connected and informed.

Although leadership is often characterized as an individual trait, Mulcahy said she thinks it's much more about the culture of a company. The best high-performing companies aren't typically led by big-name CEOs, she said, but by leaders who build great teams.

“When people ask me how this company made so much progress so quickly, I think they want to hear that there was something particularly brilliant about the strategy or the planning,” she said. “The reality is: it was the alignment of the people around a common set of goals.”

Click here to view the video of Anne Mulcahy's talk on MIT World.