By Patricia Sellers
May 21, 2009

by Patricia Sellers, with Jessica Shambora

This is a groundbreaking day in American business. With the decision of Anne Mulcahy to pass the chief executive role at Xerox to Ursula Burns, the Fortune 500 has its first ever woman-to-woman CEO hand-off. The transition, due July 1, will also make Burns, 50, the first African-American female CEO in the Fortune 500.

Mulcahy and Burns prove how far women in corporate America have come since the era of the Queen Bee. That was when so few women were at the top — and apparently there was room for only so many more — that women generally didn’t help other women on the way up. Now Mulcahy, 56, and Burns, 50, have shattered that stereotype. As “Xerox’s Dynamic Duo,” the cover story in Fortune‘s 2007 Most Powerful Women issue detailed, Mulcahy, who grew up in sales, and Burns, an engineer by training, taught one another and leaned on each other as they pulled Xerox from the brink of bankruptcy after Mulcahy’s 2001 appointment as chief.

Who would have expected it? Not them. Mulcahy, a 33-year veteran of the company, never wanted to be a CEO. A Fortune profile in 2003 called her “The Accidental CEO.”

Not only did Mulcahy doubt herself; many others doubted her too. I recall being in a conversation with Jack Welch, General Electric’s former chief, and some top execs at a 2002 Fortune Leadership Forum in Chicago. Welch was riffing about the toughest jobs in America, and how a surprising number of them were in the hands of women. He mentioned Mulcahy, Pat Russo–then CEO of Lucent–and Carly Fiorina, then Hewlett-Packard’s chief and No. 1 on Fortune’s U.S. Most Powerful Women list. Welch observed that all three women were tempting fate as they strove to pull off hugely difficult financial and cultural turnarounds.

The stereotype is that women don’t take risks in business. These women did. Two of them, Russo and Fiorina, fell. Mulcahy went onto save Xerox and make the company profitable.

Mulcahy grew into the job — and grew comfortable with power. During a panel discussion in 2003, I heard her explain how she learned to embrace power beyond the classic way many women do: “I used to define power as influence — that you gotta get everyone’s vote. So it doesn’t feel like power. It feels like consensus. But I’ve learned that a decision needs to be made. A call needs to be made.”

She went on to say, “I’m still learning. I can’t say that I’m there yet — but it’s about taking responsibility for making a call. It’s that decision — taking responsibility that distinguishes you from the team. It’s not so much about consensus as it is about communication — making people feel part of the process. I hate consensus. It’s totally obnoxious to have to meet some consensus.”

What was Mulcahy’s best decision as CEO? She answered that question in a first-personer in the recent Fortune 500 issue: “When Xerox went through a downturn of its own making earlier this decade, everywhere I went, lenders and investors were demanding I cut our R&D spending. But to me, Xerox innovation was sacred. Why avoid financial bankruptcy only to face technological bankruptcy down the road?…I can’t say I got everything right back then, but investing in innovation was indeed the best decision I’ve ever made.”

Management guru Jim Collins said at the Fortune 500 Forum last December that he believes that Mulcahy is one of the best CEOs of the past 20 years.

So, she surprised a lot of us — and even herself in not wanting to give up the CEO job. In “Xerox’s Dynamic Duo,” Mulcahy admitted, “If you had told me back in 2000 that this would be difficult, I would have said, ‘What? Are you nuts? If I can survive in my job that long, I’ll be so happy to get out…But it is a hard thing. It’s hard to learn how to give the next generation the opportunity to be ready when their time comes.”

“It’s like your kids growing up, I guess, right? It’s like, ‘Oh, I’m not the center of the universe anymore.'”

Mulcahy will stay on as chairman — and continue to help her successor. More about Burns, another remarkable leader, on Postcards tomorrow.

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