The Not-So-Quick Fix

But, I was amazed at the reaction we got. While it was painful for employees, they clearly understood the rationale for the decision, and as tough as it was, they knew that it was right. They understood that we know the business and that we were handling things as sensitively as possible. And I think that makes a difference.

People understood that we had worked every option and that the decision wasn't just a fly-by-night one. Now we have people signed up to help make change happen, instead of having a real fight on our hands.

History and relationships help when you have to deliver tough decisions. It helped that I knew every part of the company, and every general manager around the world, when it came to winning the alignment that's required to do tough things.

Good relationships tell you what's possible, what's culturally permissible.

Absolutely. You have to listen. You don't back off from tough things, but you have to know where to stop and take a time out to make sure that you're not doing stupid things. You have to allow for diverse opinions and then make some balanced judgments about what you can do.

Leading change is also about reducing the risk in your implementation plan. Part of Xerox's problem in the past was that we didn't have the execution plans to reduce the company's risk given the amount of change we were facing. It's a lesson I learned as I watched some of the things that haven't worked for the company.

I've really tried to be diligent about the precision of our execution plans, which are hard work to do well. We're now in the process of totally restructuring our manufacturing operations. We're outsourcing our office manufacturing and resizing our remaining operations in dramatic ways. We're reducing square footage by 80% and maintaining only the things we do really well.

In advance, we spent six months doing a deep, competitive assessment with a critical view of where we could retain expertise, competency, and competitiveness. We had to admit where we were disadvantaged, and where we could find partners who had capabilities that we could never hope to replicate. We had to have consensus on what we didn't do well.

There was enormous pressure to do all this as quickly as possible. But I believe that when it comes to the critical parts of your value chain, you have to be damned careful. We will not do it before we have the best possible solution. We have announced that we will do something, but not what -- and we're taking our time getting there.

The flip side of urgency is that you operate in a fishbowl, with every twitch of your face subject to interpretation.

I'm not terribly astute in terms of delivering messages that are contrary to what I feel in my gut or what I'm passionate about. There are times when you can't share as much as you want to; you have to hold back and be stoic -- and that's hard. It's stressful having to play a role for your employees when you know certain things that they don't.

It's been a difficult time for Xerox publicly. It's been painful to watch the company go through the difficulties it has and to receive the negative press it has, sometimes unfairly. Xerox is a big brand name, and there's been a lot of coverage of the story's negative aspects, rather than coverage of any light at the end of the tunnel.

It's a challenge for us to manage the news. Our 88,000 employees can read about a bankruptcy crisis within hours of its being printed. Whether there's any legitimacy or not, you've suddenly got a big problem. You need to address those things quickly, so you don't lose people's hearts and minds.

How did you handle those reports of bankruptcy?

People need to hear things personally to gain confidence in the company and its management. During the first few months of my job, I lived on planes. I spoke to thousands and thousands of employees. During one three-week period, Paul Allaire and I reached nearly 60,000 of our 88,000 employees, either live, by phone bridges, or in massive town meetings.

In the early days, we made sure that we were highly visible and in constant communication. It was pretty wearing, but if people understand your leadership style and you earn credibility, you get permission to take a lot of actions. People say, "I'm okay with that because I saw her, I heard her. I'm confident it can work because of her leadership." When you're in a situation like ours, that confidence dramatically affects your ability to pull off change.

Do you still have permission? For how much longer?

My goal is to never lose it. I want to have an environment that allows us to keep pushing the company, to be better and more competitive.

But it's not practical to keep up the level of intensity we've had for the past year. The turning point for us is the return to profitability. We'll continue with cost restructuring, and we'll finish disposing assets. And we'll continue to engage employees in "turnaround talk," keeping them abreast of progress and enlisting their support throughout the balance of this year. After that, "the turnaround" may not be the mantra for moving forward. But I think that we'll be positioned to create a new Xerox with new rules and an operating style that will allow a much greater level of intensity than in the past.

If you stop using the word "turnaround," you'll have to find a new mantra.

[Laughing] Yeah, I look forward to that.

Keith H. Hammonds (khammonds@fastcompany.com) is a Fast Company senior editor.