Latest / The CEO Diary with Fexingo: Leadership Lessons, Executive Decisions, and Corner Office Stories / How Ursula Burns Led Xerox Through a Radical Reinvention
Transcript
- Lucas: So today we're talking about a CEO who started as a summer intern and ended up running the whole company. A woman who took over a classic American icon at its lowest point and tried to drag it into the future. Luna: You're talking about Ursula Burns at Xerox. And I think most people know her as the first Black woman to run a Fortune 500 company, but the actual story of what she did — the reinvention — is less known. Lucas: Exactly right. She took the reins in 2009, right after the financial crisis. Xerox at that point was famous for inventing the photocopier and then basically inventing the modern office. But by 2009, the core copier business was in secular decline. Paper was dying. Luna: And she didn't come in as an outsider either. She'd been at Xerox for nearly thirty years by then. Started as a mechanical engineering intern in 1980, fresh out of Columbia. Lucas: That long tenure is actually crucial to the story. Because the conventional wisdom in corporate governance is that insiders can't do radical change. Burns proved that wrong. She knew the culture, she knew the technology, she knew the politics. And she used that knowledge to move fast. Luna: What was her first big move? Because she became CEO in July 2009, but the real pivot came pretty quickly. Lucas: Within six months she announced the acquisition of Affiliated Computer Services — ACS — for about $6.4 billion in stock and cash. That was a huge bet. ACS was a business process outsourcing firm. They ran payroll systems, managed HR departments, handled claims processing for insurance companies. Nothing to do with printers or copiers. Luna: So she was basically saying: we are no longer a hardware company. We are a services company. Lucas: Exactly. She called it transforming Xerox from 'a product company with services' into 'a services company with products.' And that's a subtle distinction but it changes everything about how you allocate capital, how you train your sales force, how you think about competitors. Luna: I remember reading that the ACS acquisition doubled Xerox's revenue to about $22 billion overnight. But it also doubled the workforce. Suddenly you had 140,000 employees, many of them doing totally different work. Lucas: And that created a massive integration challenge. But Burns had been through integrations before — she ran Xerox's global operations for years. She knew that culture eats strategy for breakfast. So she spent a lot of time making sure the ACS people felt like they were joining a new kind of Xerox, not being absorbed into a dying one. Luna: Let's step back for a second. How did she even get to the CEO chair? Because her predecessor, Anne Mulcahy, is a legend in her own right. She saved Xerox from bankruptcy in the early 2000s. Lucas: Mulcahy took over in 2001 when Xerox was in serious trouble — accounting scandals, debt pile, a stock that had cratered. She cut costs, restructured, and brought the company back to profitability. And then she made a really intentional decision about succession. She handpicked Burns. Luna: That's actually rare. Most outgoing CEOs leave a mess or a committee picks the successor. Mulcahy groomed Burns for years. Made her president in 2007, then handed her the CEO title in 2009. Lucas: And Burns has said in interviews that Mulcahy told her: 'You have to be you. You can't try to be me.' That's the best advice a successor can get. Because Burns's style was different. Mulcahy was a consensus-builder, very collaborative. Burns was more direct, more willing to confront. Luna: I've read that she was known for being brutally honest in meetings. Sometimes to the point of making people uncomfortable. Lucas: She's a New Yorker, grew up in a housing project on the Lower East Side. She has said: 'I don't have time for games.' And in a company that was struggling to change, that bluntness was probably an asset. She needed to tell people that the old business model was dying and that services were the future. Luna: But here's the thing. After the ACS acquisition, Xerox's stock didn't really take off. The market was skeptical. They saw a company loading up on a lower-margin business in a competitive space. And services margins are indeed thinner than hardware margins typically. Lucas: That skepticism persisted for years. And then in 2016, an activist investor named Carl Icahn got involved. He bought a big stake and started pushing for a breakup. Luna: Right. Icahn argued that the services business and the hardware business were dragging each other down. That Xerox would be worth more split apart. Lucas: Burns fought that initially. She believed in the integrated model — that services could drive hardware sales and vice versa. But eventually, in 2016, she agreed to split the company. Xerox kept the hardware and document technology business. The services side became a new company called Conduent. Luna: And she became chairman of Conduent, stepping down as CEO of Xerox. So in a way, her grand reinvention was unwound. Lucas: Partially. But here's what I think is the real lesson. Burns took a company that was on an irreversible decline in its core market and repositioned it for survival. She created a services business that could stand on its own. Even after the split, Xerox the hardware company was smaller but healthier, and Conduent had its own path forward. Luna: It's a fascinating case study in the limits of CEO power too. You can have a clear vision, execute well, and still end up with a forced breakup because the market doesn't believe you. Lucas: Right. And that's the tension Burns lived in. She was trying to do something genuinely difficult — transform a legacy industrial company into a modern services firm. And she was partly successful. ACS is still a big part of Conduent today. But she couldn't escape the gravitational pull of Xerox's past. Luna: Do you think the split was ultimately the right call for shareholders? Or was it a capitulation to short-term thinking? Lucas: I think it's a genuinely open question. On one hand, the sum of the parts argument made sense. A services company trading at a services multiple, a hardware company trading at a hardware multiple. But on the other hand, some synergies were lost. And Icahn's involvement meant the decision was made under pressure rather than on Burns's timeline. Luna: Which brings us to a broader theme: succession and timing. Burns had been CEO for seven years by 2016. That's actually a pretty typical tenure. But the transformation wasn't complete. Lucas: And that's the hard truth about corporate reinvention. It takes longer than any single CEO's tenure usually allows. Burns did the hard part — she set the direction, made the big bet, built the culture. But the full payoff may take a decade or more. Luna: You know, there's a moment in her memoir where she talks about walking through the Xerox research center — PARC — and seeing all these brilliant inventions that never made it to market. The mouse, the graphical user interface, Ethernet. Xerox invented them, but others commercialized them. Lucas: That's the tragedy of Xerox's history. They had the best R&D in the world but couldn't capitalize. And in a way, Burns's ACS bet was an attempt to break that pattern. To say: this time, we're going to buy our way into a new business and actually execute. Luna: And she did execute. The integration of ACS was considered a success. She also streamlined Xerox's portfolio, sold off non-core assets, and improved margins on the hardware side. The stock didn't soar, but she kept the company alive and relevant. Lucas: Speaking of keeping things alive — this is a topic we care about deeply on this show. We deliberately don't run ads on these episodes. If you want to support that choice, the link is buy me a coffee dot com slash fexingo. It's a small gesture that helps us keep doing deep-dive conversations like this one. Luna: Yeah, and we try to make every episode worth your time. So if these leadership stories have helped you think differently about your own work, that's exactly why we do it. Lucas: Alright, back to Burns. I want to talk about her perspective on diversity. She's often asked about being 'the first.' And her response is usually: 'It's not about being first. It's about making sure you're not the last.' Luna: She's been very clear that she didn't want to be a symbol. She wanted to be a CEO who happened to be a Black woman. And she used her platform to push for more diversity in corporate America, but always tied it to business outcomes. Lucas: One of my favorite stories about her: early in her career, a senior executive told her she didn't 'look like a Xerox manager.' She said she didn't know what that was supposed to look like, but she knew how to do the job. And she just kept doing it. Luna: That's the same directness we see in her leadership. She didn't waste time on politics. She just delivered results. Lucas: And those results — while not always reflected in the stock price — were real. Under her leadership, Xerox's revenue from services grew from essentially zero to over $10 billion. She built a new business from scratch inside an old company. Luna: So what's the takeaway for a leader today? If you're running a legacy business that's facing disruption, what can you learn from Burns? Lucas: I think the big one is: be willing to cannibalize your own business. Burns knew that every dollar she spent on services was a dollar not spent on improving printers. But she also knew that printers were a declining market. You have to be honest about the trajectory of your core business. Luna: And you have to be willing to acquire capabilities you can't build yourself. ACS wasn't something Xerox could have developed internally in a reasonable timeframe. Lucas: That's right. And you need a board and a management team that supports a multi-year transformation. Burns had Mulcahy as her predecessor, who set the stage. And she had a board that backed the ACS deal. Without that alignment, it would have been impossible. Luna: But even with all that, the activist investor still forced a change. So maybe the lesson is: you can do everything right and still not get full credit from the market. Lucas: That's the tough reality of public company leadership. Your timeline is often shorter than the transformation requires. Burns bought Xerox a decade of relevance. Whether that's enough — well, we'll know in another ten years. Luna: She's now on the board of several companies, including Uber and Waystar, and she speaks about leadership frequently. So her influence continues. Lucas: And I think her story — the summer intern who became CEO — is one of the great American business stories. It's not just about diversity. It's about having the vision to see where your industry is going and the courage to bet the company on that vision. Luna: Even if the market doesn't fully appreciate it at the time. Lucas: Right. And that's the final note I want to leave us with. Burns once said: 'If you don't like change, you're going to like irrelevance even less.' And she lived that.