8 things:
1) Immediately terminate Phil Spencer and Aaron Greenberg. Both individuals have had 10 years to turn Xbox around. They have failed on a level that nobody thought was possible. It's time to go.
2) Kill the Xbox branding -- including but not limited to renaming the entire operation, brand new color scheme (no more loud neon green), brand new segmentation strategy (i.e., target entirely new audience), brand new UI, brand new advertising strategy, etc.
3) Release a controller that isn't stuck in 2005. Brand new haptic and trigger features, rechargeable battery (doesn't matter if it's removable), brand new look, different/changeable analog stick placement, brand new D-pad, etc.
4) Eliminate any and all edgelords, fake experts (e.g., Jez Corden), and based bros as brand partners. No more thumbnail grifters and mentally unstable X users as brand ambassadors.
5) Brand new lower cost hardware identity. No more $650 consoles and $1,000 handhelds. Design $300 consoles and $400 handhelds. It does not matter if PlayStation is more powerful; the point is to gain as much market share as possible by being measurably more affordable than the direct competitor. Think $400 Android phones VS $800 iPhones.
6) Sell-off as many Xbox studios as possible. Start with Ninja Theory, Double Fine, Turn 10 Studios, Undead Labs, Compulsion Games, inXile Entertainment, and Rare. Then look into the possibility of off-loading ZeniMax and ActiBlizzard.
7) Radically rethink Game Pass. Killing it is not an option as it's the only reason to buy an Xbox. Start by eliminating all first-party day one games (from all tiers) and refocusing the service around smaller sized games. Additionally, pivot from the 100GB games that millions of people can't even download due to how crappy their country internet is.
8) Partnership with Nintendo. PC is a lost cause and Sony (not PlayStation) seem to still recognize how dangerous it is to sleep with Microsoft. Nintendo could offer games and access to their audience that allows the 'new' Xbox to be more competitive against PlayStation. It's not about porting Mario or Zelda; it's about porting Kirby and Yoshi and Captain Toad etc.
TL;DR: Fire the people at the top, no more CAPS LOCK branding, release a controller that isn't held captive in Jurassic Park, no more working with deranged people, much cheaper hardware, bye-bye most studios, new Game Pass direction, heeeeeyyy Nintendo.
Can they pull this off? Nope. It's unfortunate, but they're hell-bent on letting the boat sink rather than grabbing buckets to scoop the water out. They're finished.