Another reason the brand is so valuable is Amex’s commitment and reputation for customer service. In 2012 JD Power ranked Amex highest for customer satisfaction among card issuers for the sixth straight year. Fortune recently listed as one of the 15 most admired companies in the world. Ken Chenault and his team have certainly played a critical role in building and maintaining a strong brand.
When Ken was here in 2010, he talked about leading his 65,000 employees through the many challenges the companies experienced during his time as CEO saying, “Clearly my tenure has been one of confronting some of the most challenging crises that we’ve seen in the last 10 years. I take my motto from Napoleon: Make sure people are grounded in reality and give them strategies to be hopeful”.
Ken’s made an impact well beyond Amex. He is currently co-chair of the Business Roundtable. He serves on the board of IBM as a member of the Council of Foreign Relations and has received many business and civic awards. Every magazine named him one of the 50 living pioneers in the African-American community having been only the third African-American to run a Fortune 500 company. Today Andrew Baldwin, one of our second year student leaders from the View From The Top team is going to interview Ken. And so please join me today in welcoming Ken Chenault to Stanford GSB.
Andrew Baldwin: So thank you very much for coming today. When I found out that I was going to get the chance to interview you, I was thrilled. And it took me back to the first time that I interacted with American Express, the brand. I would just graduate from college. I was moving from Indiana to New York. And when I got to New York I found out that New York’s a little more expensive than I thought. So as any responsible 22-year old, I applied for my first credit card who was a Visa.
Ken Chenault: That was the first mistake.
Andrew Baldwin: That was the first mistake — the only mistake that made sense. And they gave me a credit limit of $1500. And I told a friend the story. He said you’re an idiot for not being on American Express. So the next day I applied for American Express. The American Express gave me a credit limit of $25,000. And when I look back I can only think that you personally thought that I was 16 times more valuable than Visa did. So hopefully I can repay some of that appreciation through this time.
Ken Chenault: Thank you.
Andrew Baldwin: I want to start out the interview with a very similar question to what Roanak asked during his 2010 interview. You led Amex through a pretty incredible time right after you joined — right after you became CEO, 9/11 occurred. And then you also were the head of a financial services company during the worst financial downturn in 80 years and kept your job which is no small feat. Can you walk us through the one or two days that were the biggest tests for the largest challenges?
Ken Chenault: Certainly. First, just let me say it’s a real honor to be here. And obviously I remember Roanak very vividly and was just impressed with both his authenticity and his humility. So it means a lot for me to be here. Really appreciate it.
So let me just say that obviously 9/11 and the financial crisis were absolutely incredible. I would say the most horrible obviously was 9/11 from a emotional standpoint, because we lost 11 employees and the loss of human life is always a tragedy. What was most important there was to rally the organization, to understand both the reasons why they should be hopeful but also dealing with the reality that the travel industry was in total disarray. Spending on our credit cards had dropped dramatically. And what I recognized was that we had to transform the company in a relatively short period of time. And that leads me to one of, I think, the real challenges from a leadership standpoint, is how to be decisive and compassionate.
So within 60 days of 9/11 I decided that we had to substantially change our cost structure, which meant that we were going to have to lay off employees. And many people in my top executive team said this is not the time to do it. And from an emotional standpoint, they were absolutely right. The concern that I had was that the future of the company was at stake. And I said we have to do this in a compassionate way with our employees. But we have to do it.
And what I believe very strongly that one of things you’ve got to do in leadership is you need to tell people both the truth and you don’t talk down to people and you explain to people the reasons why. And I’ll cut to the chase just to simplify so we can also talk about the financial crisis, is what I explained to people were the reasons why what was happening to the company. And at that time we always do a employees survey. And a third of our incentive compensation is really based on the satisfaction and engagement of our employees because we really do believe in the service profit chain. And people said, Ken, if you’re going to lay off basically 12% of the workforce, the last thing you want to do is to do a survey on it. And I said not only are we going to survey the employees but we’re going to survey the people that we laid off. Because from a leadership standpoint everyone has to be held accountable.