One on One with Anne Mulcahy, Chairman & CEO of Xerox
Wednesday, February 25, 2009
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SUSIE GHARIB: My guest tonight says this is a fasten-your-seatbelt economy. She's Anne Mulcahy, chairman and CEO of Xerox and one of the nation's business leaders advising President Obama. Earlier today, I talked to her about the president's plans to revive the economy and if he's on the right track.
ANNE MULCAHY, CHAIRMAN & CEO, XEROX: I think he's put the right priorities in order. I think the balance between both spending and stimulus and tax is appropriate. It's addressing the right issues. So, yeah, I am supportive of you know, what he's put forward. And I think the biggest challenge is going to be executing it.
GHARIB: As you know, the president gets a lot of criticism from business people that his stimulus plan won't work. I know you're an advisor to President Obama. What are you telling him that he really needs to do?
MULCAHY: I think from a business perspective, our single biggest worry is unemployment, that you know, certainly job creation, you know, doing everything we can to stem the tide in terms of job loss is hugely important.
GHARIB: What about the employment picture? When do you see it getting better?
MULCAHY: I think most of us know that this year is going to be a tough year and that you know, we're hopeful that by the end of the year, we'll start to see some of the flow-through from the stimulus package. We'll by the way from a corporate perspective see the results of restructuring and getting fit from an economic perspective so that we'll begin to see some light at the end of the tunnel. But I think realistically, we're all looking for a tough 2009.
GHARIB: Fed Chairman Bernanke says that the recession will be over by the end of this year. From what you're seeing, does that sound right?
MULCAHY: I think it can in this country. Actually, I think the U.S. is better positioned to come through this quicker than perhaps some of the rest of the world. There are signals. We do see that credit is beginning to ease up. One of the things that I think the corporate environment has done is acted appropriately and aggressively to get fit and take care of our own businesses which will have positive flow-through by the end of the year as well and that gives us some time to see the results of the stimulus and other private actions that are being taken. So I think it is possible and I think it's the right message in terms of expectation-setting.
GHARIB: Is there anything in this economic stimulus package that will help tech spending and will help Xerox sell products like these?
MULCAHY: I do. I think that probably the most direct impact for us is the fact that our customers and suppliers will be helped by the stimulus package and therefore, a healthy supplier and customer environment is probably the most important thing we can ask for from the stimulus package. But also the focus on energy, IT, health IT, certainly educational spending in the area of technology, math and engineering. All I think, are important areas of investment and focus from this administration.
GHARIB: Anne, you've been cutting jobs. You've been cutting costs. What other steps are you taking to get through the recession?
MULCAHY: Well, I actually think that the most important step you can take getting through the recession is customer focus. This is a time where you have to be listening to your customers, understanding how you help them through this recession and that's the big differentiator in terms of how successful you'll be. We all know how to manage the cost and expense side of the business. I think that's a core competency in most corporate environments, but it's the ability to deliver value, to make investments that continue the kinds of returns that you want for the future that really will be the differentiator coming out of this kind of weaker economy and that's a major part of our focus.
GHARIB: But let's say that the economy doesn't recover for three years, four years, maybe even five years, what can you do to protect Xerox?
MULCAHY: Optimization of resources. Before you hire a person, you have somebody internally that can do that job, so making sure that you're not -- that you're protecting as much of your resource base as possible. Travel, remote technology, really making sure that we're optimizing the ability to communicate without necessarily getting on planes. So there's nothing that goes untouched at times like this including the quality of the investment spend as well. You have to make tough choices. You have to pick your priorities and make sure that you don't spread yourself too thin.
GHARIB: As you're making choices, Xerox has a tradition for innovation. How do you balance between introducing new products and also preserving cash?
MULCAHY: Right. Well, it's a trade-off that I don't think you can actually let happen. You have to be tough-minded, really ruthless in terms of, you know, current decisions, but not trade off the future. Don't mortgage the future for the present. You know, we're a company that is going to come through this stronger versus weaker and therefore, making sure that we are preserving investments particularly in research and development that will provide that pipeline of innovation in the future. It's absolutely what we have done in the past and what we'll continue to do in the future.
GHARIB: Anne, thank you so much for your time. Great seeing you.
MULCAHY: Always a pleasure. Thanks, Susie.
