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Cover Story May 28, 2009, 5:00PM EST

Ursula Burns: An Historic Succession at Xerox

One female CEO will hand over the reins to another—a first for a major company. But Burns has her work cut out for her

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Colleagues saw chief executive potential in Burns almost 20 years ago Steve Pyke/Contour/Getty Images

By Nanette Byrnes and Roger O. Crockett

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Exiting CEO Mulcahy helped bring Xerox back from the brink of bankruptcy Ben Baker/Redux

Ursula M. Burns isn't one to savor victory—even if it's being the first African American woman to lead a major U.S. corporation and the first female CEO to take the reins from another woman. Within days of being named chief executive of Xerox (XRX) she was on a plane to Europe. The mission: a 30-day tour to meet with staff outside the U.S., where Xerox has almost half its sales, and discuss ways to get customers buying again. "I think the celebration of her announcement ended about 60 seconds after the e-mail went out," says Clarke Murphy, a recruiter at Russell Reynolds.

Burns, 50, has a war to fight. Xerox, a brand so synonymous with copying that its name long ago became a verb, faces a brutal business outlook. Customers are buying less equipment. Prices keep dropping. Managers are curbing paper use for cost-saving and environmental reasons. While departing CEO Anne M. Mulcahy, 56, pulled the $17.6 billion-a-year copier giant from the brink of bankruptcy and restored profitability, her successor has much to do. Burns will find herself battling competitors with stronger balance sheets and more heft as the industry consolidates. The Norwalk (Conn.) company's sales dropped 18% in the first quarter, to $3.6 billion, producing a profit of only $49 million. The stock, trading at more than 14 a share in September, is now less than half that.

And yet expectations are high as Burns ascends to the CEO post. Executives inside and outside the company speak of her deep industry knowledge and technical prowess, as well as her frankness, sharp humor, and willingness to take risks. For many working mothers, it's inspiring to see Mulcahy, a mother of two grown sons, step down in favor of a woman who has a 16-year-old daughter and 20-year-old stepson—and was herself raised by a single mother in a New York City housing project. "This is a bases-loaded home run," says Noel M. Tichy, a professor at the University of Michigan Ross School of Business. "We now have something to share with our MBA females that we've never had." Adds Robert A. McDonald, chief operating officer of Procter & Gamble (PG) and a Xerox board member since 2005: "Ursula is a strong leader who has an unusual ability to understand the power of technology and innovation."

The excitement is understandable. Three decades after women flooded into professional jobs, the C-suite continues to be dominated by men. While women now make up 59.6% of the U.S. labor force, fewer than 16% of top corporate officers are female, according to Catalyst, an advocacy group that tracks women's advancement in the workplace. For minorities, the figures are even worse. Avon (AVP) CEO Andrea Jung became the first nonwhite woman to lead a major company in 1999. Frank D. Raines, former chief of Fannie Mae (FNM), became the first African American CEO of a top company the same year, though he later left amid an accounting scandal. By 2007, there were seven black men running major corporations. Since then, three have left. While other black women have run major divisions, Burns is the first to lead a large public company.

"CLASSIC NEW YORKER"

A mechanical engineer by training, Burns has a strong understanding of the business and its challenges. Like Mulcahy, she's a Xerox veteran. She came to the company as a summer intern in 1980, joining full-time a year later after completing her master's degree in engineering at Columbia University. Xerox was drifting at the time, having largely ignored the threat posed by Japanese copiers and new office printers, while failing to get innovative products to market. She took on roles of increasing responsibility, distinguishing herself as a quick study who could handle multiple tasks at once and wasn't afraid to flag a problem. "

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