0:00
It really is a pleasure to be here at Stanford, it's a partnership that Xerox has felt very positive about over the years.
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0:07
And particularly, I have to say, between the university and our Palo Alto Research center, which is just a few miles away, where I was this morning, and some certainly very distinguished graduates from the B school, Barry Rand being one of them, who rose to be a top executive at Xerox as well.
0:24
So for a lot of reasons, it's great to be here with you today, and I have about 45 minutes, not even.
0:30
And what I really like to do are four things, and what I've been asked to do is four things.
0:35
To talk about the past and not just to tell the story, but most importantly to talk about the lessons learned along the way and there were many.
0:43
To share a few thoughts on leadership, and particularly leadership at a time of crisis.
0:50
And then describe what I do, what's a typical day, and talk a little bit about just the priorities and how I spend my time.
0:59
And most importantly, leave plenty of time to take your questions.
1:03
So I'll get to it, and as Bob mentioned, in 1998 and early 1999, Xerox seemed to be doing very, very well.
1:11
Market shares were improving, our stock had risen and quite frankly was outpacing the market by a wide margin at that point in time.
1:21
We had made a change in leadership, brought in a CEO, it appeared to be doing very well.
1:24
And so most of us were kind of had our set sight on a fairly bright future.
1:29
I was actually running an independent startup company that Xerox had focused on to really develop the SoHo market and desktop products at the time.
1:42
So I think it's fair to say that with alarming speed things began to unravel in late 99 and 2000, and they unravel with alarming speed.
1:51
But the problems generally take place over decades, so important to note.
1:57
But we had also taken on a massive reorganization it did not go well.
2:02
Competition was stiffening big time, and we were focused on inward kinds of issues.
2:08
And then at that point in time, economy started to weaken around the world as well.
2:13
That was when we actually discovered accounting improprieties in Mexico.
2:18
And that actually spread into a worldwide SEC investigation, one of the first of this decade.
2:26
I often say we were early adopters of the corporate crisis [LAUGH] and I'd have to say that we took some actions that in the broad daylight of hindsight were just strictly dumb at the time.
2:39
So we actually captured it and called it the perfect storm.
2:42
What else could go wrong?
2:44
And I think it would be fair to say that this is a company that could have managed through a few of these issues.
2:49
But the cumulative impact really overwhelmed the company and set it back on its heels.
2:53
So by May of 2000, we were in deep trouble.
2:56
Revenue and profits were declining, our cash on hand was shrinking, as Bob mentioned, $19 billion of debt, $150 million of cash.
3:05
I could not find the $150 million [LAUGH] of cash it was scattered around the globe.
3:11
And so customers were not happy.
3:14
We had employees who were defecting, who certainly didn't want to be a part of a company that was heading south.
3:21
Our shareholders had seen the value of their stock cut in half and continued to head south.
3:26
And then there was this little matter of an SEC investigation that had spread around the world.
3:32
This was about the day I was named president and chief operating officer.
3:35
And typically, in a talk like this where you'd say I fulfilled a lifelong dream, and that was not the case.
3:43
This clearly was a case of a responsibility that I have to say I accepted with equal parts of pride and dread.
3:51
But I very quickly figured out I had two really important aces in the hole.
3:55
The first was a customer base that actually treasured the Xerox brand, wanted Xerox to survive, so people who were willing to work with us during this difficult period of time.
4:05
And the second was an incredibly talented and committed workforce who would do just about anything to save the company.
4:11
And so we really did roll up our sleeves and begin the hard work of addressing all these issues.
4:17
And I'd have to say, in the beginning, most of that time was spent listening to employees, to customers, and industry experts.
4:26
And customers told us we had great technology, but our responsiveness had slipped incredibly.
4:31
Our industry experts told us that we had a lot of great technology, but we better make some clear choices and focus as it related to our market opportunities.
4:41
And employees told us that they would do whatever it took to save the company, but we better provide clear direction and do it quickly.
4:48
So we laid out a pretty bold plan, didn't really qualify as taking a rocket scientist in terms of what had to be done.
4:56
The first piece was to fix the liquidity issues very, very quickly and raise cash, both through some asset sales as well as incredible management of all cash sources.
5:08
We had to restructure the cost base, it was very clear to me we had a huge cost base problem.
5:14
So we set a goal of taking a billion dollars out, knowing that it wasn't sufficient, but that we would strive to take the billion dollars out as quickly as possible.
5:21
Just to begin this process of competitiveness.
5:24
And the third leg was one that was really important to the Xerox team, and that was that we would actually strengthen our core business, actually invest in our core business at the same time as we were restructuring the company and fixing the liquidity issues.
5:37
So the results really have been fairly stunning based upon the challenges that we had on the liquidity front.
5:46
We really raised about $2.
5:46
5 billion of cash quickly, but we took a lot of tough actions.
5:51
We outsourced our office manufacturing, it was a union shop.
5:54
We exited our small office home office business, a business that I started.
5:58
And we focused on operational cash generation with a level of discipline and focus that was just extraordinary.
6:06
And on the cost front, we took out the first billion, then we started on the second billion, actually taking out our third billion now.
6:14
We reduced our selling and general and administrative expenses by over 25%.
6:18
We cut our capital spending in half.
6:20
And the most painful thing, we reduced our worldwide employment by about a third.
6:25
And when you have an experience like that, you really stay focused on making sure that you have a business model that's sustainable and can really support the cost and the infrastructure going forward.
6:38
But as much as I think we did some dramatic things, reducing our debt, our debt's been cut in half, and what's left is just kind of the customer receivables.
6:49
We improved our cash position, we've had great cash generation, about a billion and a half per year. We have $3.
6:55
5 billion of cash on hand.
6:58
As a matter of fact, during the SEC investigation, we had basically lost our financial staff, and we had no CFO in the company.
7:05
So I was acting CFO and had to manage through the SEC investigation.
7:11
But when I finally hired a CFO after we had resolved the investigation, and I said, I've been acting as CFO and I really don't have a sophisticated financial background here, and I'm really anxious to hear what your thoughts are on our cash strategy.
7:29
And he looked at me and he said hoarding would be the strategy for cash, [LAUGH] and it was quite appropriate.
7:36
So, as proud as I am of the financial turnaround, it is the progress on the third leg of the strategy.
7:42
We didn't take a dollar out of research and development.
7:46
We have four research facilities around the world.
7:49
We spend about a billion dollars on research and development.
7:53
And as a result, the past couple of years have been our biggest product launch years in history. And.
7:59
And I'm really on firm footing when I tell you we have just an incredible portfolio of innovative offerings and solutions for our customers that are combinations of extraordinary hardware, software, and also our people.
8:13
So it's good to be looking at a set of positive results, everywhere we look, fortunately, the trends are going in the right directions, our margins are where we want them.
8:24
Just this year alone, we took $3 billion off of our balance sheet, and our equipment sales, which is really the driver of our company going forward, have been growing for the last seven quarters.
8:36
And most importantly, we're winning in the marketplace, customers are voting with their checkbooks, so this is just to give you a perspective on where we've been.
8:45
I think it would be fair to say that a few years ago, people were writing our obituary, and now we're getting some very nice quotes, really looking at a great turnaround.
8:57
So this has been really, I think, the opportunity of a lifetime and certainly a thrill, and I think the biggest understatement would be to say that I've learned a lot along the way and that's what I'd like to turn to now.
9:11
And as we reflected on it, there are really 10 areas that are basic, certainly nothing terribly brilliant, but they seem to get lost in the shuffle when you are going through an experience like we have.
9:23
The first area is, I kind of characterize it as, look before you leap, as Bob said, I'm a lifer, 28 years at Xerox.
9:31
I really know the place, and I have to say that when you've grown up in a company, you think you know all the answers.
9:39
And if you couple that with some fairly intense decision making, which I'm noted for, it can be a pretty dangerous combination.
9:49
So, fortunately, I was slowed down and spent probably the first 90 days on planes just listening to employees and customers.
9:57
And just anyone who had a view on what the problems were, just to make sure that we would be addressing the core problems and not just addressing the symptoms of the problem.
10:07
And it turned out to be quite a different list than the list that I had originally anticipated, and I have to say that we were in a position where everybody was kind of putting out fires but not fixing the fuel leak that was causing the fire.
10:21
So it was really an important a part of the exercise, taking the precious time that was required to really understand what the issues were in the company.
10:29
And I'd have to say, if we didn't go through that, I think I'd be giving a very different talk today.
10:35
The second is really about communication, and it's always important, but in a time of crisis, it is absolutely the single biggest priority that you have.
10:46
And actually, that's when people tend to go underground, when things are ugliest, and this was a really important part of the turnaround strategy.
10:57
I have to say that I worried a lot, and I had a lot of doubts, but when I communicated with all of our constituencies, I was pretty transparent about the size of the issues.
11:08
I used to call it the brutal truth, and give people a sense of really what was happening in the company, but also confident about a plan that would overcome those issues.
11:18
And the combination of hopefully giving people a sense that we really do know what's happening here and it's not good.
11:24
And we have developed a plan that will address those issues, was really the approach that we used.
11:30
And I think our employees really appreciated that, and my message was always pretty consistent.
11:37
Here's the problem, and here's the strategy, and here's what you can do to help.
11:43
And to this day, if you ask Xerox people about the turnaround at Xerox, they will tell you what they did to turn around the company.
11:51
Because there was just an incredible alignment of people around, saving every dollar, taking care of customers, really trying to make sure that the company focused on the priorities.
12:04
And we asked them to make a choice, roll up their sleeves and go to work, or quite frankly, leave Xerox.
12:11
And I think that was just a hugely important exercise for everybody to make that conscious decision.
12:17
So fortunately, the response was really quite positive, and we really started to retain all of our people and started to make a lot of progress as it related to the turnaround.
12:29
So when people ask me how we accomplished so much so quickly, I always am quite clear in saying that you have to have a good strategy.
12:38
It can be roughly right, though, and a good plan is important, but it is in big companies, it is the alignment of your people around a common set of objectives, that is the single advantage to being big.
12:53
To have alignment, and scale, and use it constructively to really accomplish your goals, otherwise, quite frankly, than it is a disadvantage.
13:02
The third lesson that I learned was about crisis being a powerful motivator.
13:09
It enables you to do things that obviously you should have been doing all along.
13:14
And I think that in this case, I probably wouldn't have set a goal of taking out a billion dollars immediately.
13:21
Had we not had this window of opportunity called a crisis, and certainly in the past, a lot of those kinds of efforts would have been met with a lot of resistance.
13:34
But given the crisis, no one could argue it was either a billion dollars, or it was the gallows for Xerox.
13:39
So that was really hugely important in terms of taking advantage, moving quickly, getting things done quickly, while you had this kind of powerful motivator across the company.
13:50
Since then, not to lose the intensity of this focus on competitiveness and being best in class.
13:58
We've been deploying Lean Six Sigma in the company, which is a way to kind of create systemic productivity improvement throughout the company.
14:05
And it's a marriage of the speed, and simplicity of Lean tools with the rigor, and the discipline of the Six Sigma tools.
14:12
So this has given us a process and a language and a toolbox to address really tough problems, problems that have been around this company for decades.
14:21
And I have to tell you, it's been a great partnering tool, we partner with a lot of our customers, providing them with black belts and resources to solve their productivity issues, and it's created an enormous value for us as a company.
14:33
This year, Lean Six Sigma will bring $160 million of profit to the bottom line in Xerox.
14:39
So, and we'll double that next year.
14:43
We have an army of trained resources throughout our company.
14:47
I'm a green belt, and I have to say that it's been an enormous help in main, maintaining the intensity of constantly staying ahead of the productivity curve.
14:57
But I think the point is that we've taken out a lot of that cost without harming the core business.
15:02
And in many ways, it's made us more efficient, it's increased our clock speed, it's removed a lot of the bureaucracy.
15:10
And that's why it's hugely important to kind of maintain that focus on productivity and competitiveness for companies like Xerox.
15:18
Fourth is, I kind of call it back to basics, and you're very often intrigued by, and it's tempting to think about quick fixes, and new ideas.
15:30
You get a lot of help, too, there's a lot of people who have great ideas that certainly want to help.
15:35
But in our experience, a lot of the answers really were about getting back to basics, simple things.
15:43
Xerox had a incredible heritage and quality, one that we had lost.
15:47
Putting discipline back in all of our processes, aligning our people around objectives.
15:53
Lots of tough and regular operations reviews, and a lot of strict management of the usual things like.
15:59
Like inventory, and gross margins, and capital.
16:02
And it's amazing how quickly that discipline can unravel in a company, and it's not trivial to build it back.
16:09
So processes that had taken years to develop kind of lost their way overnight.
16:16
But the good news is that they can be built back, and they are clearly the only way you can run a business to deliver predictable results.
16:24
Fifth is an interesting one because I kind of call it following your instincts, and we are an incredibly data-driven and process-driven company.
16:33
But after you get the data and after you listen, and your open-minded instincts based upon good management experience play a big role in moving quickly and making decisions.
16:43
We had actually had a ton of consultants into Xerox over the 90s, who helped us kind of organize along many lines.
16:52
We were organized by industry, we were organized by product, we were organized by segment, we were organized by geography.
16:58
And as I was making my initial travels around the world, I was looking for anybody who felt any degree of accountability for anything.
17:05
>> Speaker 1: [LAUGH] >> And man, it was just me, it was scary, and so despite what looked good on paper, we unraveled it, and it's not perfect, but it's clear.
17:19
And I can look people in the eyes and I know what they're accountable for and you can hold them accountable for it, and it was a huge enabler for us to make operational progress.
17:27
The sixth is about corporate culture, and it's kind of gotten a bad rap lately.
17:33
As a matter of fact, when I was making my initial rounds, I was visiting a big customer and a new CEO for a bank.
17:41
And he was coming in with kind of a turnaround charter and wanted to give me a lot of advice about what needed to be done at Xerox.
17:48
And we owed him a lot of money, so I was listening, [LAUGH] so in any case, he said, you gotta kill the culture.
17:55
It's the culture in this company that has made it sluggish and bureaucratic, and you've lost your edge and your competency.
18:04
And I was listening, but I have to tell you, I realized it was kind of nonsense.
18:08
What is a culture other than the collection of people and behaviors that you have within a company?
18:13
And it's a great way of pointing out, it's your problem to the people of a company, and cultures clearly needed to be adapted.
18:22
Ours needed to gain a lot of speed, we needed to do away with some things, but you have to bring the culture with you if you want to get things done in a big company.
18:29
And it was hugely important that we really built on the strengths of the Xerox culture to enable us to do what we had to do.
18:36
And our culture puts a premium on things like quality and empowerment, results, diversity, fairness, customer, corporate responsibility, things that people are proud of.
18:49
And quite frankly, it's the reason a lot of people came to Xerox and why a lot of us stayed.
18:54
So if it helped us achieve greatness in the past, hopefully, it can be a path for the future as well.
19:01
Seventh has to do with focusing on customers, never forgetting the reason that companies exist.
19:09
But when bankers are calling and shareholders are knocking on the door, it's really sometimes easy to lose sight and forget the most important constituency of all, and that's the customer.
19:19
But I have to say that we decided as a team that that would be our number one executive focus, that we would own customer relationship.
19:28
So we all took key clients and went out and really personally communicated to our key clients, solved problems, addressed issues, we've kept that program we call our Focused Exec program.
19:39
But it's hugely important, it's built into the fabric of our company, but just to ensure that every single person, I'm talking, the chief accountant, you name it, has responsibility for a set of customers that they visit with.
19:50
And not only is it great for the customer to get the kind of senior attention that's required, but it's great for our executive team because it provides them with that grounding principle of what our customers are thinking, and it's really been hugely helpful.
20:05
Eighth is something I call the vision thing, and I guess the best parallel is that even when Rome was burning, people wanted to know what the city of the future would look like.
20:14
And I have to plead guilty that I didn't immediately get that part, I would do lots of town meetings.
20:21
And I was always amazed that the most frequently asked question is what Xerox would look like when we came through the turnaround.
20:29
I have been sitting there, why aren't they asking me, are we going to make it?
20:32
[LAUGH] Are we going to survive?
20:34
Yet they were beyond that, they were kind of if we're going to roll up our sleeves and we're going to be dedicated and we have a passion about this.
20:42
I want to make sure that I'm working for a company that will be a great company and not just a company that survived.
20:48
It was a very good sign and certainly a great example of the resilience and optimism of Xerox people.
20:55
But I'm not very patient, I have to say, with the vision thing and vision statements and all that.
21:00
So we decided to do something a little different and probably our biggest critic at the time, and where a lot of the ugliest headlines were present was in the Wall Street Journal.
21:10
Every day you'd pick it up, and there was some horrible story about Xerox.
21:14
And so we decided to write a fictitious Wall Street Journal article dated in 2005, that would really describe where Xerox would be in 2005, with all of the elements, if you will, of strategy and metrics and goals and opinions and feedback.
21:31
We had quotes from analysts and from our toughest critics, and we basically, it forced us to kind of express our vision and our strategy in plain English.
21:43
And we talked about everything from what technology we'd be bringing to market to what the revenue growth would look like and how we'd like to be seen.
21:52
And it was incredibly useful, people really rallied around this vision.
21:58
And to this day, no matter where I go in Xerox, that article comes out, and I'd say, fascinatingly, 80% of it probably is pretty accurate.
22:11
And I get asked about the other 20% all the time, and, well, when's this going to happen?
22:16
And I said, like, hello, we made it up.
22:18
[LAUGH] >> [LAUGH] >> It's not going to happen, and that's how people felt about it at the time, it was just an extraordinary thing.
22:30
So ninth is about good critics, I like to think about myself as being open and approachable.
22:36
But I have to say that this is an area where when you rise in the ranks, all of a sudden people around you want to please, they're a little bit more respectful, a little bit more intimidated.
22:48
And you have got to make sure that you have sources of honesty and critique available to you.
22:55
It's something that you have to work at, you can't leave it to chance, it's just hugely important.
23:00
What it allows you to do when it's such a gift is to actually ensure that you're able to deal with problems early.
23:09
[LAUGH] And when they fester in the environment, they're bigger and bigger, and eventually, clearly, they become crisis, so it's truly a gift.
23:19
Last thing, and we'll talk then a little bit about leadership, but it's about sense of humor and perspective.
23:25
And not to forget that part of what you makes work so great is that you enjoy what you do, you enjoy the people that you work with, you laugh a lot.
23:37
And you have this kind of relationship and community that becomes awfully important to a satisfying work experience.
23:44
And taking yourselves too seriously, even with the dire problems that we had, would have been a big problem.
23:53
We had to laugh at a lot of mistakes, we made a lot of mistakes, we laughed at ourselves.
23:57
But I don't think >> Speaker 1: I don't believe any of us would have survived the past four years if we didn't truly look forward to coming to work every day.
24:06
And huge goal for everybody.
24:10
So when I talk about leadership, I'd like to just say I think everybody has read so much about leadership and certainly I had been in lots and lots of roles where I led teams.
24:23
And you learn about it, you read about it, but until you come face to face with the impact of leadership, I have to say I don't think you can fully appreciate it.
24:33
And with that, I would tell you that poor leadership can do damage overnight.
24:37
It's amazing the extraordinary damage that poor leadership can do.
24:43
And really good leadership can move mountains over a longer period of time.
24:46
It's got to be consistent and certainly it takes a lot longer time to make progress.
24:53
I actually read a book from one of your alma maters who actually had a big impact on me.
24:58
And it was during a really important time and it was good to great.
25:01
And it was about companies that had extraordinary results over a long period of time.
25:06
And of course then a research project to analyze what were the common set of attributes for these really great superior companies.
25:14
And only a few companies really met those standards.
25:18
But the not so surprising answer, of course was the quality of the leadership.
25:24
But here's what was surprising.
25:26
That these leaders were almost unknown.
25:29
They weren't the household names and that they were this kind of paradoxical blend of personal humility, but an incredibly strong professional will.
25:38
And they really focus on building teams, giving credit to others, doing whatever it takes to make their company great.
25:47
But it is about their companies and it's not about themselves.
25:51
And it's just sounds very logical that if you focus on the institution, your contributions are far more likely to be lasting ones.
26:00
But one that may have eluded us particularly during the period of the 90s.
26:06
So last but not least was how do I spend a day?
26:09
And I'm glad to say that there is no such thing as a typical day.
26:14
And whether it's a cross crisis or an opportunity or circumstances change or stuff happens, it's really certainly not typical.
26:22
So I thought I would actually just tell you what I do, what I'm going to do and I have done this week because it should be pretty typical.
26:28
But I actually started in my office on Monday morning.
26:31
We have a board meeting next week.
26:32
It was my last time in the office, so it's, so a little bit of time just for preparation there.
26:38
Then I actually flew to Washington to meet with a very large customer.
26:42
And then I spoke to the senior management meeting of another very large customer, actually Fannie Mae in Washington.
26:50
As you know, they're going through their own version of a corporate crisis.
26:54
So they had an audience that was real interested in hearing what the Xerox experience was.
27:01
And then I flew out here to San Jose.
27:03
All day, yesterday we met with our Fuji Xerox colleagues.
27:07
We have a equity partnership with Fuji Xerox.
27:09
It's how we distribute in Asia Pacific.
27:12
We also have a technology and development exchange with Fuji Xerox.
27:15
So we met with our senior team there and had dinner with them last night.
27:19
This morning I met with our employees at our Palo Alto research center and then a customer meeting and then my visit here this afternoon.
27:29
Tomorrow we have 3M in for a day for an executive exchange on the topic of innovation.
27:34
We're hosting it at parc, but it should be a great half day.
27:39
And then I fly to Clearwater, Florida where I'm meeting with the CEO of Tech Data, our largest indirect distributor.
27:47
And I'll actually speak with their senior management team.
27:49
And then finally tomorrow night return to or Friday night return to Stanford.
27:54
So the good news is that it's a week out of Stamford [LAUGH].
27:59
So I travel most of the time because that's where the work gets done.
28:02
That's where our customers are and that's where Xerox people are.
28:05
Which is really the core of what I do is meet with customers and Xerox people, the most important constituencies.
28:13
So that's probably pretty typical.
28:16
So my last message is, by the way, that if you believe in communications being as important as I do, my title should probably be Chief Communications Officer because that's a lot of what my job is about now.
28:31
And if you listen as much as you talk, it's time well spent because it keeps you grounded and connected to the marketplace, to your customers, to your people, and gives you just an invaluable source and rich set of information.
28:43
So in any case, hopefully I've given you some food for thought and I would be delighted to open it up and take your questions.
28:51
So the question was about characteristics of work ethic and what served me well perhaps in attaining a CEO position.
28:59
>> [COUGH] >> Speaker 2: I guess I begin with I'm a pretty intense worker in the sense that.
29:10
I don't like any idle time.
29:12
So I'm generally try to get a lot accomplished in a short period of time.
29:16
I actually think that came from or hopefully a skill I developed being a working mother [LAUGH].
29:22
I think having children while I was working always put boundaries on my work life.
29:29
So that I wasn't going to stay at the office for 14 hours a day. That wasn't my shtick. I wanted to get home.
29:34
When I was home and have dinner with my husband and my kids.
29:38
So the ability to accomplish a lot in a short period of time became for me the most important work ethic.
29:47
And it's kind of stuck with me. I'm an early riser.
29:52
I go to the gym every day because it's for my head just to kind of start the day with a fresh perspective. And I stop working.
30:04
If I'm in Stamford at six o' clock I don't stay rarely any longer.
30:09
I have lots of dinners now and lots of other.
30:11
But I do have this belief that you need space from work to have perspective and you have to make that space available for you.
30:21
Work will consume as much as you will give.
30:23
And that's clearly the case.
30:25
And I should also reflect back in the 2000, 2001, I worked seven days a week, 24 hours a day, just because that's where the company was and.
30:34
There just wasn't any space.
30:36
But that's not the characteristic of my career.
30:39
And I'm now, I think back in a place where there's a little bit more balance, but you have to make it.
30:44
No one gives it to you [LAUGH].
30:45
And I've always been pretty tough on creating boundaries about my workday and it's really been helpful.
30:53
I think, both in the sense that you seem to get more accomplished when you have those boundaries.
30:58
And it also, I think is a much more rewarding life as well. Yes.
31:05
>> [COUGH] Did you not see a need for an MBA in Academy?
31:10
>> [LAUGH] >> Speaker 2: This is an interesting one to answer.
31:18
>> [LAUGH] >> Speaker 3: So, certainly if I ever thought I was going to be where I am, I probably would have gotten an MBA along the way. But that wasn't my plan.
31:38
And I must tell you that, you know, I started out in sales at Xerox and which clearly at that point in time didn't require an MBA.
31:50
And it just never, then I had kids, so the trade offs in time became really difficult.
32:00
>> Speaker 1: To make those kinds of sacrifices.
32:01
And when I weighed the commitment against my own ambition [LAUGH], I'm not sure my ambition measured up to get really just the additional training that clearly would have been helpful.
32:18
But I would tell you this.
32:21
I have had to make up for not just not having an MBA, but also not having a lot of the training in a company that I run by an incredible amount of intense learning on the job.
32:35
So I was acting CFO during one of the most complicated restatements in American business and I learned from every resource I could find as it related to financial training.
32:49
So I probably got there in a very non traditional way in terms of learning.
32:54
And it probably would have been nice to have had that head start in the background and the experience through an MBA.
33:00
But it just wasn't in the cards when I was starting my work career.
33:05
And I never made the trade off from that point on.
33:08
So it probably was just not something I planned for. Yes?
33:16
>> Often we hear from CEOs who are men who credit their wives with not only getting them to where they are in their career, but giving them a full home and family life.
33:25
I'm wondering what role your husband played and if he was balancing a career of his own and how you manage that deadly accident.
33:33
>> Speaker 1: Well, we always talk about the fact that we both need wives.
33:35
>> [LAUGH] >> Speaker 1: Yes, so we worked. He worked for 35 years. He's retired now, okay? For three years.
33:50
So the great news is, is that I'm not sure I could have pulled this job off without having full time support at that point.
33:57
And my kids are older now too, so it's a little bit of a different situation.
34:00
But I'd say we, the last 25, in the first 25 years were constant trade offs with regard to, certainly both of our jobs and careers.
34:14
I think we made some decisions that were really important for us.
34:17
If we both wanted careers, neither one was willing to kind of say I come first.
34:24
We fought that battle [LAUGH] for years and as a result made this agreement that we weren't going to relocate for the benefit of the other's job.
34:33
That tough, turn it down.
34:35
That's not the shtick that we were on, that we really needed to have kind of a feeling of importance with regard to what we did.
34:43
And that we would turn down some other opportunities so that we didn't have to kind of displace the other person.
34:49
>> [COUGH] >> Speaker 1: And we also decided that we also actually had this great goal to be good parents too.
34:55
That was certainly not the easiest of things during those years.
35:00
So this thing is always about choices.
35:04
And I think you get into trouble when you don't make clear choices.
35:07
Well, we made clear choices, and that was work and kids. That's it.
35:15
So when I first became CEO and they were putting together kind of my personal history and they were picking up all this stuff from my resumes, I had to stop them because I knew it would be published.
35:27
I said, I made all that stuff up [LAUGH].
35:30
I didn't do any of those activities or hobbies.
35:33
>> [LAUGH] >> Speaker 1: So, like, I'm not really a good skier.
35:39
>> [LAUGH] >> So falls into the category of boring.
35:45
But the fact is, is that we raised a family and we worked, and for a long time, that's really all there was room for.
35:52
So I think we made it work because we made an equal kind of sacrifice in terms of our free time and what we spent it on.
36:01
And there was for us, and it's not for everybody, there was no particular resentment about kind of this I come first scenario just wouldn't have worked for us. Yes?
36:15
>> Speaker 1: Could you talk more about how you addressed the employee morale issues when you were laying off a third of the workforce?
36:21
>> Speaker 1: Yeah, it was huge.
36:23
I think it was the toughest thing we did.
36:27
I should say that we did everything we could to save jobs, even if they weren't Xerox jobs.
36:36
So when we negotiated an outsourcing arrangement for manufacturing, we forced the transfer of at least a third of the manufacturing employees with the outsourced contract so that we could save as many jobs as possible.
36:50
We outsourced our back office operations to GE Capital.
36:53
They took all our people.
36:56
So right there we had several thousand employees who were working not for Xerox anymore, but we did a lot through managing attrition and retirement and trying to manage down the ranks.
37:09
But at the end of the day, obviously, we shut down businesses.
37:13
We made a lot of tough decisions.
37:15
So probably the best example is that I shut down the small home office business that I started with 1,000 people.
37:22
And there's only one way that you can do it and at least give people a sense of that you care and that you do it face to face.
37:34
And so that was our rule, that we always did it in person and met with the organization so that it was never delivered indirectly.
37:47
We had a context for it, which was a corporate crisis.
37:51
So it wasn't like this was just by desire. It was by necessity.
37:56
So I do think that the context of having Bankruptcy rumors in the papers every day built a little bit of more sensitivity from the employee population about the decisions that we were making.
38:09
It was a survival kind of thing.
38:14
So all I can say is that you certainly have to build an honest, incredible story about what you're trying to accomplish and what you're trying to do.
38:21
You got to deliver bad news face to face and take the tough questions and own up to the decisions that you're making.
38:28
And then you got to work really, really hard to convince people that you're trying to put together a company that isn't going to go through this drill over and over again.
38:39
And that's really what we've been about, is really the kind of adaptability and sustainability that a big company needs so that you don't go through that kind of retching disruption that huge restructuring is caused.
38:54
It's one of the main reasons why I'm so passionate about Lean Six Sigma, because it's a problem, curious discipline that forces you to deal with issues before they get big.
39:05
And that's why I want our people so engaged in it, so that they help solve them, they fix them.
39:13
We don't let this problem develop into something that has to be done in a really harsh way again.
39:19
So I think people know that we suffered through this and that we try hard to, I think, make as many decisions as possible about some saving jobs.
39:31
But at the end of the day, and I used to have this conversation with our union, it's no jobs or less jobs.
39:39
I mean, there really is a reality about what we were dealing with that you couldn't perfume that big.
39:44
It was just absolutely essential that we told people the truth about what was going on. So no easy answer.
39:53
And I still think the organization bears scars.
39:55
I feel blessed with people that are.
39:59
Loyal and terrific and love the company, but it definitely scars a company and it's no way to run a company, that's for sure. In the back.
40:08
>> Can you talk a little bit about the leadership team you assembled and put together due to the crisis, and if you could maybe focus on whether you kept the team intact as you went through the process of reorganizing?
40:19
>> Speaker 1: Okay, well, when I came into the job I knew that there would be certainly some people that probably weren't thrilled with the decision that I'd become CEO of Xerox.
40:32
So the first thing I did was sit down, it was a 12 member team, and I sat down with everybody and kind of did the same thing I did with employees, which is, no time to waste, I can't be looking over my shoulder.
40:48
If you sign up, you have to be signed up totally otherwise I'll make it really attractive for you to leave.
40:56
Because I can't waste any time with people who don't buy in and care about the corporation the same way I do.
41:06
Three out of 12 left, and I did I made it very attractive for them to leave so that they can own up to the fact that they really didn't want to stay, and that was a good thing because it happened quickly.
41:21
And if there's one thing I've learned throughout my career, that the quicker you deal with those things, the better off you are.
41:27
So I brought in some new people and made a lot of changes also within the team, but wound up then with a 12 person team that's still with me today, some of them in different roles, but they've all stayed.
41:40
I think the part that people don't appreciate, it was obviously a very difficult time at Xerox, very tough decisions, not a lot of rewards and recognition either, right?
41:51
You couldn't really buy your way through this one because there was no money.
41:54
But, the feeling of accomplishment when you can contribute something that really has an impact, is enormous.
42:04
And this team, feels this extraordinary sense of participating in the last three or four years and having this huge impact of putting a company back on its feet and bringing back a brand icon to profitability and stability.
42:22
So I think the satisfaction of what's been accomplished has been a huge retention vehicle for this senior team, and we're like a family [LAUGH].
42:34
It really does create an environment where you develop some very, very close relationships, so I feel really lucky to have this team in place, here.
42:48
>> Speaker 2: Was there a point of time in that turnaround when you thought that we weren't going to make it, we're going to fail?
42:55
And if you went through that situation, how you shared that or you did with your team?
43:04
>> Speaker 1: Well, there are a lot of points in time I certainly knew what the odds were on these kinds of things, and certainly our odds were not good at succeeding.
43:15
And I often think one of the things that happened to be a good thing at the time is that not having been trained, if you will, and groomed to be a CEO, there were a lot of things that I took on that probably I didn't have the, [LAUGH] if you will, the perspective of someone who'd had the experience and gone through it.
43:38
And then I think it kept me perhaps a little bit more in the dark and a little bit more optimistic about the possibilities.
43:44
One of the things that we did right, we lost all of our commercial paper and drew on a line of credit $7 billion, that's the 58 banks that we negotiated with.
43:53
And I had to meet with these 58 banks every 30 days and basically kind of report an update.
43:59
And at the end of the day, we had to get all 58 banks to sign on a renewal within 24 months because it was an expiring line of credit, or else the whole line wouldn't renew, so we would be bankrupt immediately and I had some serious doubts about whether or not we would be successful with that.
44:23
I think that was probably the loneliest part of the job, is that you don't get to have those conversations with many people.
44:33
You get to have the conversation about how difficult things are and trying to put a realistic perspective, but you have to balance it with the fact that we can get there and we can do it [LAUGH] and keep people engaged and motivated.
44:45
So I'd say that was one of the things that probably was most difficult, was just lots of nights kind of lying in bed and thinking about the security of all these people that was at stake if we weren't successful with some of the things that had to be done.
45:05
But I think it's the first time in my life that I wasn't in a job with lots of peers, people that I could kind of talk to and hang out with and share concerns or be a critic, and that guy's stupid [LAUGH].
45:22
So that was a learning experience for me, I have to say, and one that took its toll, I'd say, during the first couple of years, because it did require kind of an internal mechanism for dealing with the stress of some of the situations, and it was a tough time.
45:39
There was one over here and then there, yeah.
45:41
>> Speaker 1: You mentioned before that it's important to find sources of honesty and critique, and I'm wondering, where did you find those sources?
45:47
Were they internally, externally, and how did solicit that kind of?
45:52
>> Speaker 1: Well, the ones that are most helpful to me are usually employees and customers, because they really see what's happening.
45:59
So there's nothing more sobering than going to visit a really unhappy customer about what their experience has been and what the problems have been.
46:10
And I did a lot of it, I do less of it now because we have less, hopefully unhappy customers.
46:15
But getting that firsthand feedback and dealing with the frustrations and the issues firsthand, I think with the marketplace is really important.
46:25
Inside the company it's actually easier than you would think, there's constituencies that are very outspoken.
46:32
We have 8,000 technicians who are on the streets every day solving technical problems, and they're not aspiring to be CEO, they're like, let me tell you what's wrong with this company.
46:47
[LAUGH] So a lot less political overhang in certain constituencies if you create an environment where they can speak freely.
46:56
And we do tons of business with agent partners and people that see Xerox from arm's length, and it gives them a freedom to provide input and feedback that's hugely important.
47:07
So there are tons of sources, I think the real key is that, that you actually have to thank people and make them feel valued for giving you the feedback versus shoot them.
47:17
And that's the first instinct you have, is defense.
47:21
And you have to just kind of learn to absorb it and take it away and know that it's a gift and process it and deal with it.
47:29
But they're there to be had, you just have to create the environment, yes.
47:34
>> Speaker 2: So to what extent you be at the same company for 28 years helped you go through these times, I mean, is sticking with the same company something you would strongly recommend?
47:45
>> [LAUGH] >> Speaker 1: So it was probably one of the most important reasons why I could do what I did at Xerox.
47:56
So this is, It was a lot more emotion than it was logic, probably in terms of a lot of the effort that we put in at the time, it was very, very, it was not well accepted in the market.
48:13
If you read the headlines on May of 2000, it would have actually been very, very negative.
48:18
Because the conventional thinking was, is that when a big company runs into trouble, gets into a crisis, what you need is literally an outside turnaround expert who can be somewhat ruthless and quick and solve the problems and get it back on its feet.
48:34
And then you can turn it over to a more sustainable team or something.
48:38
So it was not well received. It was not.
48:40
The day that I was announced as CEO, I think the stock dropped 15%.
48:44
>> [LAUGH] >> Not a big confidence builder.
48:46
>> [LAUGH] >> Builds character, that's right.
48:53
So, no, but when I think back on it, it was so hugely important in terms of developing the loyalty and the relationships and building the team.
49:04
And I had such a head start because of what I knew about the place. I was one of them.
49:11
[LAUGH] And I really felt that the culture was hugely important, that there had to be a pride and a respect and a relationship about how we did this so that people could hold their heads high.
49:23
And that's not to say, by the way, I'd say a third of my team is hired from the outside.
49:28
So this is not a requirement.
49:30
But I think for this particular set of circumstances, I viewed it as a tremendous asset.
49:36
And I think that there's always going to be a mix in companies of people who stay for long periods of time and those that you bring in for external perspective and groom at different points in their career. So that's a good thing.
49:54
But I have this goal, and I know that it used to be, and it may be, well, it's in vogue to say you kind of have to build this portfolio of experiences to really develop your career.
50:06
I want to hire every Xerox person with the goal of making it a place they want to stay for a long time.
50:14
I actually want them to come with that same motivation that they can see a way that this could be a place they'd love to have their whole careers.
50:22
It may not work out, but I think both company and individual are served a lot better if that's the motivation for joining a company and hiring an employee.
50:33
So I'm sort of trying to instill that into the fabric of the company that we really would love to have people stay and be with us and have careers that are really fulfilling for long periods of time. In the back.
50:49
>> Speaker 1: What keeps you up at night now.
50:52
>> Well, I think the thing that probably I'm a worrier by nature, and so I will always find something to be concerned about.
51:02
But if someone asked me what motivated me more, success or failure, I would probably say failure.
51:12
And I think that's one where I run really hard to avoid failure more than I run towards success, I think.
51:21
And therefore, I think it almost makes me nervous that we're at a place where people kind of think it's business is normal, business as usual.
51:34
So it's trying to not put our feet up and fall into some of the characteristics that I think got us into trouble in the first place.
51:45
And having a level of intensity, it's a different goal.
51:49
Okay, we're about growth and greatness now, and not just about survival, but you need, I think, that same level of intensity and passion and going forward.
52:00
And that's a big challenge to try to sustain that.
52:04
I tend to think that right now, crisis was a more powerful motivator than perhaps the goal to being a great company again. And that's my job.
52:17
I've got to make sure that that's in place.
52:19
But it is something that certainly worries me that this next stage of the journey is one that I've really got a whole different set of things to accomplish than the last piece of it. And equally important. So pretty challenging. Yes.
52:38
>> Speaker 2: With regards to culture, and it had been a competitive advantage for Xerox for so long, and then you saw the need to realign it.
52:44
What advice do you give to other companies that are in similar situations that there needs to be some culture change, but yet it is so important for the success of the organization.
52:56
>> Speaker 1: Yeah, so, I generally say you've got to find the good, the strengths, the competencies and the strengths and the value system in cultures and really use it as your North Star.
53:09
So that people feel this sense of, we're not just a big company, we actually stand for something.
53:15
And a lot of that's embedded in the culture.
53:17
So identifying that and calling it out during times of change I think is just so important.
53:24
And for Xerox, it was all about our community involvement.
53:29
I mean, we did more probably community volunteering in the last four years than we did in the previous ten.
53:38
Because we really focused on the fact that that is part of what we're about as a company.
53:41
And that's why this company has to be great again.
53:44
And we have a foundation, and we continued to use our foundation for that kind of thing.
53:50
So identifying that core set of things that you can use for grounding while you go ruthlessly after the things that really have to be changed.
53:58
I think gives people a path that they want to follow.
54:02
And I believe kind of the definition of leadership is followership, and that's what you have to create, something that people feel proud about and that they want to participate in and want to be a part of.
54:14
And that's, I think, how you have to break down culture so that you can deliver the change.
54:20
But give people a sense of pride and ownership and history and reputation that, I think is a big part of what keeps people around so well.
54:31
Thank you all for participating on your day off. I appreciate it.