BUSINESSWEEK Article -Xerox Management

Topics: Paul Allaire, Chief information officer, Xerox Pages: 13 (4517 words) Published: May 26, 2014

Assignments for Tuesday:

1. Read the article on Xerox and the Management Fiasco. Bring a write-up of the following: (Typed; proper grammar, sentence structure and punctuation.) Describe the behaviors of Xerox management noted in the article. How do you believe the behaviors of the management team contributed to the issues the company faced in 2000?

2. Find/print a news article on a topic you believe is relevant to Organizational Behavior. Provide a brief summary of the key points of the article and how you believe this content is relevant to OB. (Concept Application #1)


Xerox: The Downfall
The Inside Story of the Management Fiasco at Xerox

One morning last May, G. Richard Thoman arrived for work to find an urgent summons from Paul A. Allaire, the man he had replaced as chief executive of Xerox Corp. (XRX) just 13 months earlier. Allaire, who had remained as chairman, was waiting next door in his office at Xerox headquarters. A man of few words even on happy occasions, Allaire delivered the bad news without preamble. He said that Thoman's colleagues had lost confidence in him and that the next afternoon the board would announce his resignation. In other words, Thoman, who had left IBM in 1997 to join Xerox as heir apparent to Allaire, would be out of a job in about 30 hours.

Thoman was livid, but obligingly fell on the sword Allaire handed him. Late the next day, after the board had announced Allaire's reinstatement as CEO, Thoman sat alone in a Xerox conference room and fielded calls from the press. ''The board and I agreed that it made more sense to implement our strategy with an internal team,'' he told one caller. Actually, he could only guess at what his fellow directors wanted. Thoman had not been invited to the board meeting or even asked to defend himself by speakerphone. He had been fired in absentia, the bizarre but perhaps inevitable outcome of a CEO succession that had begun so promisingly yet ended in utter disaster for Allaire and Xerox no less than for Rick Thoman.

Xerox' failures to commercialize the breakthroughs made in its famous Palo Alto Research Center (PARC) in the 1970s and 1980s--including the personal computer--have been thoroughly documented. It is also common knowledge that over the past few years the company fumbled the digital future yet again by badly underestimating the inkjet printer, a deceptively humble device around which Hewlett-Packard Co. (HWP) has built a profitable division larger now than all of Xerox. What is not well understood--what has been hidden until now behind the silence of its participants--is that Xerox' downfall was also rooted in executive-suite discord so intractable as to amount to corporate civil war. This is the story of the management fiasco at Xerox, based on exclusive interviews with Allaire, Thoman, and many other company executives, past and present.

On one side of the struggle were Thoman, the perpetual outsider, and a small coterie of like-minded executives, mostly newcomers to the company. Pitted against them were Allaire, the consummate Xerox insider, and most of the senior management team he had assembled since he was first named CEO in 1990. This is a saga in which neither of the two principal antagonists fits comfortably into the role of villain. Each man's reach exceeded his grasp by an ultimately ruinous margin, but neither seems to have acted from venal motives or indifference to the greater good of the company and its shareholders. Allaire, now 62, and Thoman, 56, shared a basic belief that Xerox needed to reinvent itself to succeed in the Digital Age. In the end, though, each would blame the other for screwing up the implementation of the strategic plan they developed together.

Thoman contends that he never had the authority he needed to be an effective leader because Xerox' board, dominated by Allaire, denied him the crucial prerogative of assembling a full management team of his...
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