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CHAPTER 9: LEADERSHIP COMMUNICATION 283

IN THE LEAD Anne Mulcahy, Xerox Corp.
Anne Mulcahy, a Xerox veteran who began her career as a copier salesperson, says she
was probably a last-resort choice for CEO of the company, but Mulcahy has saved the
giant corporation from almost certain death. When she took over, Xerox was in a mess:
$19 billion in debt, revenues falling by double digits, the stock price sliding, and the
Securities and Exchange Commission investigating the company for possible fraud.
Previous leaders had often pretended that things were getting better at the
giant company, but Mulcahy took a different approach. Five months after she
became CEO, Mulcahy bluntly told Wall Street analysts that the company’s busi-
ness model was unsustainable. She’d been warned that the market would react
badly—and indeed, Xerox stock fell 60 percent within hours—but Mulcahy believed
it was important to tell the truth about the company’s dire situation. She was equally
straight with employees, spending three months traveling the globe listening to
employees and customers tell her what they thought had gone wrong and sharing
with them her plans for revitalizing the company, which included massive layoffs
and outsourcing. When she made the diffi cult decision to close the struggling per-
sonal computer division, Mulcahy personally walked the halls to tell people she was
sorry and let them vent their anger. To remaining managers and employees, she
reportedly “looked people in the eye and said, ‘This is going to be one of the most
stressful situations of your life, so if your heart isn’t in it, please don’t stay.’”
Her courage in telling the truth gained Mulcahy the respect and commitment
of employees. In addition, she showed that she genuinely cared about people. She
hid her own fears and insecurities and, even during the darkest days, refused to
consider bankruptcy, choosing instead to focus people on her vision that Xerox
could once again be a great company if everyone pulled together. Her willingness to
work with employees on the front lines expanded her credibility and enabled her
to energize people who had been demoralized and hopeless. “She was leading by
example,” said one of Xerox’s creditors. “Everybody at Xerox knew she was work-
82
ing hard, and that she was working hard for them.”

Anne Mulcahy didn’t hide in her office and send out pink slips while pretending
things were okay at Xerox. She emphasized face-to-face communication and keep-
ing employees up to date on the company’s problems. People rallied around her and
rose to the challenge she put before them. By mid-2006, Xerox was growing again,
debt had been slashed significantly, the stock price had quadrupled, and Fortune

magazine named Anne Mulcahy the second most powerful woman in business. 83

Summary and Interpretation

Effective communication is an essential element of leadership. Leaders are communi-
cation champions who inspire and unite people around a common sense of purpose
and identity. They lead strategic conversations that get people talking across bound-
aries about the vision, key strategic themes, and the values that can help the group
or organization achieve desired outcomes. Five elements necessary for strategic con-
versations are an open communication climate, asking questions, active listening,
discernment, and dialogue. Open communication is essential for building trust, and
it paves the way for more opportunities to communicate with followers, thus en-

abling the organization to gain the benefits of all employees’ minds. However, lead-
ers must be active listeners and must learn to discern the hidden undercurrents that
have yet to emerge. It is through listening and discernment, both with followers and