Justice Department is currently investigating whether the binding terms violate U.S. competition rules. If successful, Chenault and American Express could rapidly regain lost ground and court a larger share of the charge card market.
“That battle will be extremely critical to the long-term success of improving the merchant network system of American Express,” says Robert Hottensen Jr., an analyst with Goldman Sachs. He adds that there are a number of initiatives that the company has to tackle, including the implementation of broader charge card line. “They were extremely slow to jump on board with this. Until a few years ago, they only had three cards when Visa and MasterCard were segmented into a thousand market segments,” he says. Another task is for the company to continue expanding internationally. There’s tremendous growth potential in the charge card market worldwide, Hottensen says, “and American Express is one of the few global companies with an international brand name and global infrastructure. They must continue to grow outside of the U.S.”
Chenault must be a main player if the company is to outpace its competitors, Hottensen warns: “He will play an increasingly larger role in the execution of the initiatives American Express has planned. He will also take a larger share of the credit or bigger share of the blame depending on how those initiatives work out.”
For his part, Chenault realizes the heat is on, saying that those growth initiatives will require increased. coordination and hands-on management at the most senior level of the company. “As President and COO, part of my job is to provide management and an integrated approach that is needed to execute our strategy. I must play a major role in the cross unit coordination because that will be critical for the success of our growth strategies.”
James Parham, dean of the Hampton University School of Business, says American Express should be commended for ignoring stereotypes and choosing the best person for the job. And while one appointment alone does not signal a change in corporate culture, it can ignite a chain of events. “It starts a standard and something to be emulated,” says Parham. “Someone like Chenault breaking that mythical barrier to the inner sanctum would finally show companies that competency and excellence has nothing to do with race or gender.”
In fact, Parham likens Chenault’s potential appointment to Jackie Robinson’s breaking into baseball’s major league’s in 1947. Robinson, who ironically is being honored throughout this baseball season on the 50th anniversary of his joining the majors, changed the face of sports and society forever. Parham believes the CEO barrier is just as significant.
“With Jackie Robinson, someone had to say to hell with the repercussions- -I want the best player on my team,” says Parham. “That’s how Robinson got in. That’s how a CEO will break through.”