Anne Mulcahy was nearly an accidental CEO. She doesn’t have an MBA, and never thought she’d be the chief executive of Xerox. But when the opportunity came, she didn’t hesitate. “It wasn’t a choice for me. It was a must,” she says.

She took the job in part to assure the company’s survival. Mrs. Mulcahy grew up in Connecticut, the company’s home state. Both her husband and brother worked for Xerox, and she has spent her entire 29-year career at the company.

Five years ago, industry analysts worried that the imaging company might go bankrupt. Xerox had suffered a perfect storm of Japanese competition, economic recession, and a disastrous effort

to revamp its sales strategy. To boot, the U.S. Securities and Exchange Commission challenged the company’s accounting practices. Xerox restated its earnings and paid more than $10 million in fines.

Mrs. Mulcahy has quietly turned the company around. She and operations chief Ursula Burns farmed out most manufacturing and slashed 38,000 jobs. Mrs. Mulcahy has shrunk Xerox’ debt to $9.6 billion from $18 billion and has built a cash hoard of $3.5 billion. Xerox has reported a profit in 11 of the last 12 quarters. The company has once again become a significant force in copiers and printers

and has taken a lead, say analysts, in personalized color printing using technology from Tektronix, a company that Mrs. Mulcahy played a key role in acquiring.

Mrs. Mulcahy says she simply took Xerox back to the roots of its corporate culture: innovation and customer care. “You need to change and adapt,” she says,“but you need to respect and bring forward the things that are why people came to the company.”

Mrs. Mulcahy won’t likely run out of challenges. Xerox’ revenue has stayed flat and remains below the 1999 peak of $19 billion. Archrival Kodak is spending millions to catch up in high-end color printing.

She gives no indication of becoming complacent. “We focus on competition like crazy,” she says. “We all have to be paranoid about competition.” If Mrs. Mulcahy keeps Xerox on track, the competition may become paranoid about her.