Why All Leaders Should Be The Cheif Communication Officer

Xerox

In 2001, Anne Mulcahy was named CEO of Xerox Corp, responsible for leading a company on the edge of bankruptcy. Xerox had over $17 billion in debt and recorded losses in each of the preceding six years. Mulcahy said

"I was not ready to lead, let alone the one who was expected to reverse the company's fortunes after a sustained period of underperformance."

Wall Street also agreed; on the day Mulcahy was announced as the CEO, Xerox stock dropped 15 percent, “a real confidence builder,” she joked. But Mulcahy soon silenced her critics and led one of the greatest turnarounds in corporate history. According to Knowledge @ Wharton, under her leadership, Xerox moved from losing $273 million in 2000 to earning $91 million in 2003.

In 2004, the company’s profits had reached $859 million on sales of $15.7 billion. At the same time, its stock had risen, returning 75% over the last five years, compared with a loss of 6% for the Dow Jones Total Stock Market Index. Xerox fortunes change significantly, and Mulcahy credited communication for the turnaround. According to Insights by Stanford Business, Mulcahy indicated that effective communication was perhaps the single most important component of the company's successful turnaround strategy.

"I feel like my title should be Chief Communication Officer because that's really what I do," she said, emphasizing the importance of listening to customers and employees.” Open and honest communication with employees and customers help Mulcahy identified the problems at Xerox, which was a critical component in their transformational strategies. 

Starbucks

Communication is a crucial factor when you become a leader, and Howard Scitlz understood this when he returned as CEO of Starbucks. From 1992 - 2007, Starbucks was the darling of Wall Street. The company experienced unprecedented growth, won numerous awards such as "Best Business," "Most Admired Company," "100 Best Corporate Citizens," etc. In 2007, a leaked memo from Starbucks chairman and former CEO Howard Schultz alluded to the fracturing of Starbucks soul and boom. In the middle of the worse financial meltdown since the great depression, the company profit plummeted. 

The following year, in 2008, Starbucks was forced to close 600 stores in the US, its profit fell 28 percent, and in 2009, it closed another 300 stores and laid off 6,700 employees. During that time, the company’s Chairman, Howard Schultz, returned as CEO to lead the transformation and return the company to its glory.

One of Schulz's primary weapons used in the turnaround of Starbucks was communication. When he came back, Schultz surprised everyone when he took 10,000 store managers to New Orleans for a conference, yes, 10,000 managers in the midst of the worse time in the company history. Many people did not understand his decision, but Schultz knew that if people were reminded of its character and values, everyone could make a difference.

The conference was about galvanizing the company's entire leadership—being vulnerable and transparent with their employees about how desperate the situation was and making them understand that everyone must be personally accountable and responsible for the outcome of every customer interaction.

Schulz used his strength as an excellent communicator to galvanize support for his turnaround. The recovery of Starbucks started with that emotional reconnection with the values of the company by the leadership. Howard Schultz inspired everyone at Starbucks to believe in the core purpose of the company again. As a result, the company experienced a resurgence, surpassing all its company projections, cemented their status as the leader in their industry and one of the world's most recognizable brands.  

Leaders must work on their communication skills consistently because the power of communication can be used to inspire and motivate people to believe in themselves, believe in their gifts, and most importantly believe that they can achieve anything imaginable.

About The Author

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