PBS’ CEO Exchange Brings Mulcahy and Isdell to Emory University

Published: March 14, 2007 in Knowledge@Emory

In a recent taping of PBS’s CEO EXCHANGE at Emory University’s Glenn Memorial Auditorium, Anne Mulcahy, Chairman & CEO of Xerox Corporation; and Neville Isdell, Chairman & CEO of The Coca-Cola Company, sat down with the show’s host, Jeff Greenfield, to talk about modernizing their well-known companies.

Xerox, having serious financial problems in 2000, faced bankruptcy when Mulcahy took over in 2001. Nearly a decade after the death of its revered leader Roberto Goizueta, Coca-Cola’s sales were sluggish and its archrival was gaining ground with solid growth in noncarbonated beverages such as Gatorade and Lipton Teas.

Both company insiders—Isdell had retired in 2001 after 35 years at Coke and Mulcahy had been with Xerox since 1976—they knew and understood their organizations. They’d seen what had gone wrong. When Mulcahy was asked to take over as CEO, she saw it as much a mission as she did a job. “I didn’t come in to do a turn-around, I came in to bring it back,” she said. “It was something I wanted to be a part of.”

          Although Isdell arrived at his current job differently—he was coaxed out of retirement—he felt compelled to undertake what he called “an awesome challenge,” he said. “The business I loved was in trouble and I wanted to see it do better.”

          Although Mulcahy and Isdell inherited different challenges, both enlisted the help of their employees and customers to clean them up. The respective CEOs created communicative environments where management was seen as on their side—not as out of touch and aloof. “People have to come with you, otherwise turn-arounds are a spectator sport,” noted Mulcahy. Isdell agreed. “You have to make people come to the solution,” he added.

What the pair learned from their constituencies was key to Xerox’s resuscitation and to the attitude adjustment at Coke. Xerox poured what money it could into its research center. According to Mulcahy, the company needed to focus its strategy on core strengths – for Xerox that meant document management - so she cut unprofitable divisions and shifted to a services-led approach. These were tough decisions that affected employees’ livelihoods and they weren’t easy for Mulcahy to make. “It created a lot of anxiety in the company,” she explained.


To reduce the anxiety, Mulcahy made sure that such plans were in alignment across the company and to communicate company plans to employees and customers. “It’s about getting people to feel like [they’re] part of the story,” she said. In order to optimize what the company was doing, systems like Lean Six Sigma were implemented.

At Coca-Cola, Isdell was in the midst of his own attempts at communicating with employees. “I spoke to and listened to the people in the business,” said Isdell. He spent four months visiting with employees in 16 different countries. “I have a fundamental belief that people in the business know what’s wrong. If you go deeply enough, people in the business know.”

What he learned from listening was that employees considered Coca-Cola’s leadership arrogant and didn’t trust it. Even though it stung to hear, Isdell believed that by listening to his constituencies, he could find a solution and shake the company out of its complacency. What he did know was that Coke was the world’s greatest brand and there was tremendous value associated with that.

Coca-Cola’s core business is carbonated beverages; however, employees, bottling partners and customers told Isdell that the non-carbonated beverage market would be the future. The company is developing new non-carbonated products that would appeal to different markets around the world while continuing to expand its carbonated soft drink line. “We have to revitalize the core but recognize that there’s a whole new level of competition in non-carbonated beverages,” said Isdell.

In the United States, Coke (along with Nestlé) recently launched Enviga, a sparkling green tea drink the company claims helps consumers burn calories via the “negative calorie effect.” According to Isdell, Enviga is one of the company’s attempts to increase its presence in the health and wellness market. He added that the company hopes to achieve long term, sustainable growth via the launch of innovative products like Enviga.

The company’s recent performance is promising. Coke’s third quarter numbers beat predictions. Strong growth in non-carbonated beverages like Powerade, Dasani water and Minute Maid juice as well as growth in carbonated and non-carbonated beverages in China, Russia and Latin America, has allowed the beverage behemoth to gain momentum.

Although Mulcahy admits her company has a long way to go, Xerox, like Coke, is making strides. 2005 sales numbers were flat, but the company’s net income grew nearly 14%, and Xerox’s third quarter 2006 earnings per share climbed to 54 cents—49 cents higher than a year ago. An increase in revenues from Xerox’s color systems and an increase in demand for document management services led to the solid performance.

Both leaders give credit to their management teams. Isdell surrounded himself with a group he knew wouldn’t be afraid to challenge him. When Mulcahy took over, a few board members left, but she was okay with that. “I couldn’t afford to carry a team that looked over its shoulder,” she said. “Upon reflection, the people who stayed made a conscious decision that they were going to be a part of it.”

Neither Mulcahy nor Isdell is afraid to take risks. Both are fans of discovering mistakes early and learning from them the first time. As a leader, Isdell believes that “E.Q.” (Emotional Quotient) is “the most important piece,” he said. Any leader of a global company like Coca-Cola needs to understand business, Isdell explained. “If you’re not strong in E.Q., you won’t be successful,” he added.

Mulcahy agreed. “It’s less about skill sets or capabilities and more about creating a following to move the company.” She also admitted she can get emotional. “I’m not cool, calm and collected at all times. I express [my feelings]. Sometimes I have to clean up afterwards, but I think it’s important to express [how you feel].”

Both CEOs commit a tremendous amount of time to their companies. When asked about work/life balance, Isdell smiled. "My wife will tell you that I don't [have work/life balance]," he said, then glanced at Mulcahy. "We have to enjoy what we're doing to work the way we do; otherwise it's impossible." Isdell occasionally plays "bad golf,” and he does his best to keep in touch with friends. 

Mulcahy also finds work/life balance a challenge. "It's about choices," she told the audience. Because she loves her family and what she does for a living, Mulcahy stressed she makes home and work a priority, everything else has to take a backseat. "You have to arrange all that," she added.

Until recently, Mulcahy was reticent to accept recognition for being one of the most powerful women in business. She wanted Xerox to get the credit, not her. She’s since softened on the subject. “It’s part of the opportunity of this role to talk about women leaders. It’s important for women to have this aspiration,” she said.

Things are on the upswing at Coca-Cola and Xerox, and both leaders plan to keep things moving forward. Both plan to keep talking—and listening to—their various constituencies so they can stay in step with the changing marketplace. Both plan to stress innovation and roll out new products or services that distance them from their competition. Both plan to use their insider experience to assist them. As Mulcahy explained, “The thing we share is that we both know and understand our organization. We know what went wrong.”

A unique series of conversations with dynamic and visionary leaders, CEO EXCHANGE is taped at the world’s most prestigious business schools. The Mulcahy-Isdell episode, including a profile of Emory’s Goizueta Business School featuring MBA student Ben Slaughter, will air on public television stations throughout April 2007. CEO EXCHANGE is sponsored by the Society for Human Resource Management.

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