In my last post, I looked at the difference that CEO Denise Morrison is making at Campbell Soup. She is slowly taking the company away from its traditional business mix and modernising it, gelling the company?s employees together by instilling a sense of community and teamwork.

Managing Change

In all big corporate change successes, one thing is clearly noticeable. The change has been led by a strong CEO. That leadership is the biggest single factor in effective change, though, of course, such change cannot happen with leadership all the way down the line.

Some organisations ?lose their way? over time. Practices and processes get staid, and there is a failure to even recognise changing market environments and customer needs. Competition catches up and introduces new and innovative products which grab not only the attention of customers, but their business, too. Sometimes the need for change is satisfied by a quiet, internal switch of CEO. The change then is more piecemeal, and made progressively over an extended period.

However, other times corporate fortunes have fallen so far that the organisation has little option but to seek drastic and disruptive change. Often this takes the form of bringing in fresh blood, but sometimes it?s made by a go-ahead insider.

Changing a blotted copybook

At the end of the 1990s, Xerox, the American copier giant, went through a period which nearly saw it declare bankruptcy. The company, under the long-term leadership of Paul Allaire, was sinking faster than the Titanic. Realising that massive change was needed, and that, because of the length of his tenure, he was not the man to lead the change at that time, Allaire stepped down and bought in an outsider.

Looking outside for answers

Richard Thoman took the reins, yet discovered problems that had been born years earlier. However, this was one of those examples which prove bringing in an outsider doesn?t always work. He was unable to do anything about the company?s inability to drag itself into the 21^st century. Results continued to decline as his plans to diversify collided with brick walls.

Under Allaire, Xerox had shunned the opportunity to diversify from its core photocopier business. It had left digital printing to HP, and avoided a combined PC approach like that taken by IBM at the time. Now, despite internal R&D which, through the previous two decades, had proved itself capable of developing advanced technologies, Xerox was left with a fast-becoming-obsolete business.

After little more than a year, and with Xerox?s financials plunging even further into the red, Allaire ousted Thoman and took the reins again. But he was incapable of instigating a turnaround: he was, after all, the CEO who had overseen the seeding of the organisation?s woes.

Finding effective change leadership inside

In June 2001, Anne Mulcahy, a long time servant of the company, was promoted to the CEO table. She was one of the first female CEOs of a Fortune 500 company, and began her leadership period in much the same way as others; she fired thousands of people.

Being an insider, though, she was well-placed to understand the company?s problems. She could see why Xerox was haemorrhaging cash ? it had outdated working systems and procedures, and, worst of all, was almost wholly reliant on products that the market no longer wanted to buy.

Her next move was to close down the printer division and lose another 1500 jobs. Even internal estimates had put the division two years away from turning a profit ? that was two years she didn?t have. Perhaps foolishly, she admitted the company?s dire state when she publicly told shareholders that ?Xerox?s business model is unsustainable?. Shareholders dumped stock, the share price collapsed, and Mulcahy was advised to declare Xerox bankrupt. The company was, by this time, $18 billion in debt. Her reaction was that ?Bankruptcy is never a win.?

Disruptive change in action

Her solution was simple. First cut out the loss makers. Next, address the issues that were blocking company progress.

She met with 100 of the company?s top executives, laid her cards on the table and gained commitment from all but two. She then did several things that her predecessors had failed to do.

She went into the field, listening to customer complaints. One customer told her that she had to ?kill the Xerox culture.? She told him she was the culture. However, she did realise that the sales force had been alienated by Thoman, who had destroyed years of relationships by moving sales managers to assignments where their effectiveness was hugely decreased. Mulcahy reversed these moves.

Next, she sold off some of the company?s businesses, making it leaner and more agile.

Then, against advice, she encouraged R&D to develop more innovative products, and tasked the sales force to sell them.

Finally, she used an approach similar to that of Gerstener at IBM. She knew that Xerox?s customers wanted their life to be easy. If they could do so, they wanted to deal with one company for their needs. They wanted an IT supplier which could handle sales, servicing, and consulting.

Mulchay had her R&D division develop products which scanned, stored, and printed.

She improved the sales force, providing new innovative products for it to sell, and gave customers a new way of dealing with Xerox.

The rest, as they say, is history.

3 principles of effective change from one of the world?s best

In describing her time and her success at Xerox, Mulcahy offers several pieces of quality advice to companies and change leaders. She was able to transform Xerox, even though at the time losing 28,000 jobs and cutting billions in expenses was a bitter pill to swallow.

As she says, ?Companies disappear because they can?t reinvent themselves.?

Her success is founded in these principles of effective change:

• Do not defend yourself against the inevitable
• Focus on the client
• Get your team aligned with the new vision

Ask yourself these three questions:

• Do you understand the reality of the market in which you operate?
• Is your organisation focussed on its clients?
• Is your management team focused on vision and objectives?