relentless about performance and about measuring ourselves against the competition,” says Louise Parent, executive vice president and general counsel for the company. “He is the kind of person who inspires you to want to do your best. Part of [the reason] is his example.”
Says David C. House, president of Establishment Services Worldwide for AmEx: “Ken has tremendous courage in the face of adversity, and he’s incredibly competitive. He really wants to win.”
And according to House, he can persuade the proverbial Eskimo to purchase a cooler. In fact, House agreed to an interview with Chenault for a job in 1993 after previously turning the company down. “The only reason I accepted the interview was to meet Ken, whose name had come up several times when I was working at Reebok.” At a dinner meeting, House intended to tell Chenault what he’d already told his wife-that he wouldn’t accept a position as senior vice president for sales and field marketing for AmEx’s U.S. Establishment Services unit. He was surprised to hear the straightforward executive outline every reason why he shouldn’t take the job. Chenault candidly pointed out that the card business was undergoing a major restructuring and that if his strategy didn’t work, the company would go out of business. “It was high risk, and that got me excited, along with the fact that [Chenault] had the integrity to tell me,” says House. “Ken has the highest integrity of anyone I’ve ever met in business and personally, including my father.”
THE COURAGE AND INTEGRITY TO LEAD
Between 1992 and 1993, Chenault had
to summon up every bit of integrity and courage he had. “When you’re running a successful business, you tend to stay with the existing formula. But that success you’ve enjoyed over time leads you into a rut,” maintains Chenault.
He points to the company’s initial resistance to creating a revolving credit card because it would cannibalize AmEx’s existing business. “We gave the competition a window of opportunity to develop the products and services to meet the personal spending needs of our customers,” he says.
Visa USA and MasterCard International, which offered consumers revolving lines of credit through bank-issued cards, took the opening. They increased the number of cards used for purchases-excluding debit card and cash advance transactions-from 43.9% and 26.1%, respectively, in 1992, to 46.8% and 25.5% in 1997. Also, a number of merchants only accepted Visa or MasterCard because the discount fees they paid to banks to clear credit transactions were much lower than those charged by American Express-then about 2% on the dollar vs. AmEx’s hefty 3.2%. Most appealing of all, consumers had the choice of purchasing products all at once or over time.
To reverse the slide and improve results, Chenault and then new CEO Golub set up a four-point plan to refocus the company’s efforts: make AmEx the world’s most respected brand; restructure the Travel Related Services division; consolidate the company’s business lines to meet the overall brand strategy; and, finally, increase market share.
As leader of the reorganization, Chenault began the