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[MUSIC] [BLANK_AUDIO] Ken thanks a lot for for coming out here we really appreciate it and I know a lot of people are looking forward to this.
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Just to pick up on Gart's introduction you know, you're one of the few CEO's on Wall Street who's still at the helm post the financial crisis.
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In addition, it couldn't have been easy, you know, just months after becoming CEO, being hit with 9/11, and facing those challenges.
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Through all those, what have you learned about leadership through crisis?
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I know there lessons that are applicable about, to day to day leadership?
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>> Yeah, I think clearly my tenure has been one where I've had to confront some of the most challenging crisis that we've seen in the last 100 years.
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And one of the mottos that I follow actually comes from Napoleon.
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And it's frankly a motto that I think about frequently, and it's very simple but very hard to execute, and that is that the role of a leader is to define reality and give hope.
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And that's what I think about, frankly, everyday, because if in fact you wanna have an inspired workforce, you have to, in fact, make sure that people understand that you're grounded in reality.
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But then you have to give them the strategies, the ideas, and the values that give them reasons to be hopeful.
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And as we went through the 9/11 crisis, certainly we went through the crisis of the this downturn.
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One of the things that I recognized is that it was very, very important, very quickly to analyze and then communicate what the reality of the situation was.
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And even if that meant that those facts were harsh, the organization needed to understand it, investors need to understand that.
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But second, very importantly, it was critical to, in fact, take what appeared to be a very confusing situation and, and it, this is not meant to overly simplify problems.
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But what I do believe is you've gotta give people an organizing device.
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And so in the case of the challenges of 2008 and 2009 I had a mantra that I really believe if you asked almost any company in around the world for us any employee, what was the mantra?
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What they would say is it's stay liquid, cuz that was part of the reality.
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Commercial markets were frozen, the credit markets were frozen, I thought our balance sheet was strong, but I wanted to make people understand based on what was happening in the financial services marketplace was stay liquid, what did that mean?
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Stay profitable, and that was part of one giving hope to the organization that despite the fact that a number of financial services companies were losing money, we in fact had an opportunity to distinguish ourselves.
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If we could be consistently profitable every quarter, which we were.
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And the third, back to the hope was that were still going to selectively invest in growth.
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And gave them very spec, very specific examples of the areas that we were going to invest in.
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>> Just to follow, pick up on that.
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How do you, in the midst of what looks like a complete perfect storm, get people inspired to drive for growth and invest in that and take those risks?
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>> I think part of what you have to do, again, as you state what the reality is, I'll give you some examples from our, from our business.
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You gotta give people some markers of, how do they judge you making progress?
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Because simply to go out to the organization and say look, we're, we're faced with an incredible crisis, one of the worst financial crises in 100 years.
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But trust me, I think I'm smart, I think I'm energetic.
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[LAUGH] We're gonna get throgh this.
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Your gonna say, give me a break.
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that's, that's not gonna work.
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So what I tried to do is one, I said, let's look at the history of our company.
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American Express is 160 year old company.
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I actually used a number of examples through our history.
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But in fact, was able to use some of the examples from 9/11.
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Because most investors had written us off in a number of ways.
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And I took 'em through, how we were able to get through that.
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But then I said, here are some markers that we are going to use.
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One is, are we going to be able to maintain the premium prices that we charge for our card, and to our merchants?
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Because, as you saw in the crisis with the downturn, and the precipitous drop in spending.
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So in our case, from 2002 to 2007, we averaged 16% growth in billings.
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Which really lead the market and five quarters into the, five quarters in, or five months into the downturn, we had declined in spending 16%.
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16% negative growth in Billings.
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People were saying where the bottom is falling out, credit losses were increasing.
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So I said, one is, one what we want to make sure is, will customers pull their card out of their wallet at the same time.
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So what's the transaction level?
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And frankly, part of the risk there, was saying to people.
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But that's part of the reality is, here's how you can judge if we're gonna have success or failure.
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So, people are pulling their card out of their wallet.
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At basically the same rate that they did pre-downturn.
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And that should give you confidence in the future.
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So even though billings had dropped 16%.
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The loyalty to the product is they're pulling that card out.
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And that was one, and that was one that we tracked and talked about to the organization on a consistent basis.
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And there were frankly some people concerns, saying Ken, if we give some of this out, what if we don't achieve it.
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So that's part of the reality, then we're gonna have to come up with strategies to ensure.
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That we can get people to pull their card out of their wallet more.
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Second thing we looked at is we said, will people trade down because as you saw with a lot of retailers, people were trading down.
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Our high price centurion products which in fact when you first get a card, you have to pay a 5000 dollar fee, and then a 25 dollar fee every year.
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The affluent sec, segment was hit hard, and we said, can we hold on to that?
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Well, one [UNKNOWN] we were pleased about, but we held that out as a metric, is that people kept their cards. They did not trade down.
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And so, so our, our retention levels, really stayed, in very, very good shape.
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Third area, which was an important one again, stay liquid.
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Is it was at certain points in time, an absolutely horrifying experience when the markets froze up.
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And people were very concerned about funding.
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So what we said at this point was that we in fact having.
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Limited to no experience in the deposit gathering business, that we actually were going to focus on gathering deposits, cuz we were rel, very reliant on the wholesale funding model. >> Hm.
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>> This is where I think a brand is very important, and fortunately the service.
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Ethic that the dean talked about, the reputation and the trust that was developed was helpful to us, but we put together a very innovative strategy and from a standing start in 12 months we in fact had gathered over 26 billion dollars in deposits.
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Taking care of our funding needs.
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That in fact helped the organization a great deal.
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Then because of the uncertainty of the environment, not because we thought we were gonna go out of business, but frankly I said as an insurance policy, should we do TARP?
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And we went back and forth with that.
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And we ended up taking close to three billion dollars of Tarp money which by the way we were.
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We were one of the first companies to repay at a 26% return for the U. S.
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taxpayer which I feel very good about.
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I also remind people when they talk about Tarp is I said I say I don't know about your investment portfolio.
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But I don't think you got a 26% return [LAUGH] on your investment portfolio.
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So the, the important point there was to take some contingencies out, and to explain to people the reasons why. And then, in fact, we.
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Identified areas for investment, so I think the balances, you've gotta demon, demonstrate the strategies, but then you have to set some markers that you can let people know about the progress on a very regular basis.
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>> As you deliver those messages, how do you get those messages out to the broader organization, and then what are some tools or tactics you use to actually pulse your organization so you're, you're not isolated in the executive suite? >> Well, it's a good ,.
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We, we do a lot of, pulsing through the organ, organization.
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There's obviously a lot of informal feedback, but what we have done, increasingly, is to rely online.
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On, on getting that feedback, because the terrific thing is you can.
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Get questions out very quickly.
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We're an organization that knows how to analyze information and data, that's one of our strengths.
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And so to be able to correlate, some of the drivers of satisfaction, where people are confused on an issue, is absolutely critical.
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We have town halls via satellite.
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Because I think you want to have a notion that we are one company and doing these global town halls have been very important.
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I do also as well as a number of our senior leaders.
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It's what I call brown bag lunches.
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With approximately thirty employees.
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Where I give them first sort of a three minute here's my temperature.
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Here's how I feel about the business.
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Then ask me anything you want.
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And then I say to them always at the end of the lunch. Only have one favor.
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Is I would like you to communicate to five to ten people.
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And give them your impression.
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And you can say, I think Ken is a jerk.
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I don't know what he was talking about.
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It's better that they hear it from you.
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Then they just imagine it.
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It would be preferable I don't say that to them. They are more positive. [LAUGH].
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and, and those have gone, those have gone very well.
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But, I think, basically, in the world we live in today just like marketing every single channel, you should be using.
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face-to-face, online, every single channel.
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Speaker: I've read, one of the things you, you encourage with an AMEX is this idea of constructive confrontation. Speaker: Right.
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Speaker: I'm just wondering what it means for you, and if there are any costs associated with that. Speaker: Yeah.
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Here's, here's what's important.
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And I think, you know, it's critical.
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What you're trying to develop in any organization, is a level of transparency.
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And openness and honesty.
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And what I find in most organizations that, where things get bogged down, is when people feel that they have to game the system in some way to get a point across.
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The amount of time you waste, the chances for, misalignment.
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Of, priorities, is a real problem.
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And, so what, what I try to do.
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Is to make sure that I leverage the information that we have about the organization.
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That people clearly understand what our priorities are.
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And I think that works very well.
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>> Switching gears a little bit, you've been at American Express since 1981, which I find incredible just given the world I see today at least where employees switch companies a lot.
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What has kept you at AMEX over all these years?
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And how has your leadership style evolved over the years to where it is today?
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>> You know, I think what has kept me at the company, and I'll give you just a little bit of background, in a sense is I, I went to law school.
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Thinking that I would probably practice for two or three years and then I really wanted to go into venture capital.
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And this is really going to date me, but when I was coming out cable was really the big deal.
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[LAUGH] That was going to change the world.
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[LAUGH] >> And so, Amex had entered into a joint venture with Warner Amex, and at the time, Lou Gerstner was running, one of the major parts of the company, and, Lou had heard about me from a client that, he knew.
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And I talked to him about joining the planning department in a relatively junior role.
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But I said I really want to work on cable.
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And he said we'll see if we can make that happen.
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And I've told this tory in the past and so Louis heard me say this. It never happened.
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[LAUGH] but, but it didn't happen for some very good reasons.
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And one of the things that was a particularly important point that Lou made to me was that, that AmEx was a company that was a service company, but was a very idea-driven. Company.
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And that you could, in fact, see your ideas implemented in a relatively short period of time, and you could impact people's lives.
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And for me that was one of the important things that I believe in business is I wanna make a difference in people's lives.
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I like being in the service business. >> Mm-hm.
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>> But I also like the intellectual challenge that you can come up with ideas, and you can make things happen.
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And so, this is a company that continues to evolve in some very major ways.
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And is a dramatically different company, because when I joined the company in 1981 it was on the verge of actually becoming a financial supermarket.
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We had Lehman, we had Shearson, if we had all those companies today, I would not be talking to you. [LAUGH].
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>> It would be a very different environment.
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So I think ideas, things that has kept me there, ideas make a big difference.
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The service commitment that people have is incredible, and I often say where the company has made strategic mistakes.
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What has protected the company has been our front line people cuz they really have built the reputation of the company.
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>> A number of CEOs who've spoken here in the past have remarked that reflection and introspection and setting aside time and space to think and generate ideas is important.
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And it has been important to their leadership style.
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Just wondering how you feel about that and what are things that you do to kind of set that time and space for yourself?
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>> Yeah, I, you know, I think what is important and what's critical is to make sure that you are exposing yourself to a range of ideas.
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So you had talked about constructive confrontation. >> Mm-hm.
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>> Which is I think I didn't answer as directly as I could, and this will, will actually be helpful there.
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I think what is important and why constructive confrontation is so important, and why it opens up ideas, is because the status quo has to be constantly challenged.
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And what you want is an environment, what I want is an environment where people really feel passionate.
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And if you feel passionate about things, you should debate them, and you should care about them, and you should challenge each other and that makes for an incredibly vital environment.
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So, I will sometimes instigate debate intentionally.
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And go in and frankly, take a position and a point of view that I know will screw things up.
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Now you got to be careful, because when you're CEO, they'll go, what, wow!
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[LAUGH] You know, what's the deal?
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So you have to be careful in doing that.
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But, what is critical is there are a lot of terrific ideas at every level of a company.
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And so you wanna set up the mechanisms again, through every channel to do that.
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But the tone has to be set at the top that you, in fact, are the type of person that people feel comfortable arguing with you on issues.
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I always then make the point, however, that once we decide on a course of action, we can't then have people continuing to debate, we gotta move forward.
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Then the other thing I try to do is to reach outside the company, and and I put together I think a pretty worldwide network of people that I check in with a fair amount online.
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Some of it on the phone, some of it in person.
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That really bring out some different perspectives.
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So, it may not be that they give you the brilliant idea, but they give you a different way of thinking an issue that helps you come up with that idea. >> Sure.
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I've, based on other places where you've spoken, you commented that mentoring is important to you.
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And I was just wondering if you'd speak to who, who've been some of your mentors along the way, and who inspires you as a leader today? >> Good.
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I'll, I'll, talk about two or three mentors that I'll have and then the other point I'll make about mentoring, cuz I think it's sometimes is misunderstood.
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What I really believe is that if you wanna develop, to develop a true mentor relationship.
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And you wanna network, you wanna network off of your performance.
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Just in fact, to meet someone is generally not that helpful because, here's sorta how the trade works, at least for me.
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Is if I'm gonna take on a mentee, and I really do like to help people and work with people and develop.
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I think it's one of the most satisfying parts of leadership.
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I wanna get something in return.
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I wanna be stimulated by the ideas that they can come up with in the dialogue.
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I want in fact, for them to have the commitment, that they're gonna really improve in the areas that they need to improve on and that they're capable of really making things happen.
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that's, that's, that's part of the trade off.
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And I think when you look at a mentor at different levels, sometimes you're looking for someone who can give you technical advice.
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That's not a mentor, to me. >> Right.
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>> That's an expert and that's very important to seek out that expert advice.
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What I look for in mentors, is really, judgement.
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because, that, to me, at the end of the day, from a leadership standpoint, is, is, is really the toughest challenge.
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and, so, over the years, I've had a diversity of mentors.
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And I'll talk about them in two categories.
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One is there's the obvious senior mentor.
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And a few of the people that I would put in that category for me is Warren Buffet.
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Is a mentor I've been fortunate that he is our largest investor.
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But we've also developed a very good professional and personal relationship.
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What I know with Warren is that performance matters, a big deal.
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[LAUGH] He's a very nice man, but do not think at all that performance is not what it's about.
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But, but what is most impressive with Warren for me is this combination of his intellect and his values.
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And how he approaches an issue and how he has a criteria that really is one of balanced of someone who wants to be incredibly successful, do very well in his investments.
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But at the same time, he really wants to do the right thing.
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And how he approaches issues have been impressive.
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Early on in my career, Lou Gersner was, a very important mentor to me. Hard driving, rigorous.
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Objective and I really learned a lot from him.
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And Harvey Gollum was someone who had the ability to analyze issues and.
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Really drive down through the details, and never assume because someone was telling him a view, one of Harvey's favorite, comments was always, is that a fact, or is that your perspective?
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And that just is a useful discipline, cuz sometimes people get the two confused.
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So I've really tried to pick different qualities from the mentors.
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The other part of mentorship is, that is important though is, I've had a lot of mentors in a structural sense that have been at lower levels in the company.
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And and I also make this point that what you get with a, a mentor that's a lower level, is at a lower level in a company is an unfiltered perspective in the sense that they'll tell you who the phonies are, in the company.
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And really is amazing, cuz they've been there, cuz people take liberties with people that they don't think are senior, and and I really have developed relationships with people, cuz again, remember my criteria for a mentor is advice and judgement.
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And there are people at lower levels who have incredible judgement and incredible insight.
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That, coming up through the company helped me tremendously to say you know, at the end of the day, here are some people you should stay away from, because you can't trust them, for these reasons.
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Seen them in these situations or watch out for these situation.
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Or you may be approaching an issue in this way.
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Here's another way to think about it.
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And so, I really encourage people to develop mentors at different levels of the organization. >> Great.
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Before we open it up to the audience. >> Yeah.
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>> I actually had a personal question, if you don't mind.
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Unemployed MBA student, I was wondering if you'd help me qualify for the centurion guard? [LAUGH]. >> My shameless ask.
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[LAUGH] >> I can, I can help.
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[LAUGH] But unless you meet the criteria, I don't think I'm gonna have much of an impact.
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[LAUGH] but, I can advise you on how you can perform to certainly receive [LAUGH] [UNKNOWN] >> I'll take you up on that. >> Yes. [APPLAUSE].
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With that we'd love to open it up, I believe there are mics along, or they're already planted.
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[INAUDIBLE] >> Mr Schnell, thank you for your. >> Son.
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>> Thank you for your speech just had a quick question about Amex is undoubtedly known as kind of the flag bearer within the financial services industry when it comes to card member satisfaction and, and premier customer servicing, so my question is kind of.
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Moving forward when it comes to this, this, premier servicing and satisfaction what are your thoughts on sorta of the next wave and what is, what is AMEX doing to kinda get ahead of the curve?
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Is the you know, traditional centurion platinum style of servicing going to be relevant to sorta the next wave of high net worth individuals and how do you get ahead of that curve?
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>> Yeah, here's what's important, important, ,.
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as, as you look at our company cuz we have been traditionally identified with what we call the issuing business.
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That we issue a range of cards.
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The reality is that service is important in every area, but what you have to do is segment that value proposition of service in, in a very customized way.
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And that's what we are doing.
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However whenever you look at our company, and I'll talk about just a few of the areas that I think are very exciting going forward, we are more than just a payments company.
27:07
If you said, can what really is your company about?
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What we do is we facilitate value to a range of segments using the payments vehicle, but what we're not is a commodity payments company, so I'll just give you a few examples that will illustrate this point.
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One is if you look at the payments landscape, and you say, who's on, who's in the issuing business, we are in the issuing business.
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In terms of billings, we're the largest issuer in the world $620 billion in billings last year.
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However, we also are a network processor similar to Visa and MasterCard, and we're a global network processor.
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But our card member, which helps our value proposition with merchants, spends three to four times the size of average spend of Visa and MasterCard.
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The third piece that we're on is that we actually acquire merchants which Visa and MasterCard don't.
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Fourth piece is in rewards and loyalty, we are actually one of the largest loyalty companies in the world.
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Now, the fact that we have information, unlike any other person in payments, company in payments, we have information and data on the issuing side of the business.
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And we have information and data on the merchant side of the business.
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Information, as we all know, is power.
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So as we go forward, and this is some of the things that we are doing now, is one, business to business represents a tremendous opportunity.
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And we're one of the leading payment companies in business to business.
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But the value proposition we're offering companies is, we're just not saying we're going to facilitate your transaction.
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We're saying to them, we actually can help you reduce your expenses using our products and services.
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And so we have entered ventures which concur in a range of companies.
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Because if part of what we can do, is facilitate that value to drive it.
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We think that presents substantial opportunity.
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Emerging payments, we made an acquisition of a company called Revolution Money.
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That is, has some similar capabilities to PayPal.
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Because I believe person to person is gonna be important, I believe mobile is gonna be very important.
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We are doing a deal right now with ICBC, the largest bank in China, and UNPay, the largest mobile provider, where we have a mobile payments capability.
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But what we're increasingly doing is using our information management capabilities- To drive additional value for our customers.
30:05
So a few things that might surprise you, Darden Restaurants is one of the largest restaurant chains in the country.
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They rely heavily on our data to cite their, their restaurants that they're gonna put up. Why?
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Because we have a range of data of spending, which we aggregate.
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We don't violate privacy laws, but we're using that information.
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They, they pay us a monthly fee.
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That is a very attractive area, we're doing that for more and more companies.
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We have a deal with AT&T Wireless because our customers travel all over the world, so you connect the modeling with that with roaming opportunities, and that's major.
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If you go on the Delta Airlines site now, for their loyalty program, the company that is managing the site, the marketing and the merchandising, is us.
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Now, the important part of that, from a virtual circle standpoint, is that we in fact, believe that the opportunity with our information to connect online and offline is tremendous, because we not only know habits and preferences and sites where people go, but we actually know if the transaction was consummated.
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So emerging payments and alternative payments is gonna be important for us because we now have what I call horizontal scale across the payments landscape that is gonna help us drive that business.
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So what I see for us, is that increasingly you're gonna see a melding of what we're doing and what I call the broad category of servicing, in a range of businesses, that will help facilitate value for a number of online and offline companies.
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And we're going to leverage and optimize the data we have more and the and the partnerships, and our customer connections more than ever.
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However, the hallmark has to be, that I believe particularly in the uncertain environment that we're in, and you look at the importance of reputation, is that trust is gonna be even more important, and we know it's even gonna be more important online, and that's where service comes in.
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>> Thank you for sharing your time with us today.
32:31
You've remarked that leadership need to be consistently worked on in order to attain the followership needed to be successful.
32:39
You cited at the time improving your listening skills.
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What are you working on now, and what would you say is the most important skill for us to develop while at GSB in light of the changing economy?
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>> Here's, here's, here's what I would say.
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I think, first I'll go with, what are the important skills, then I'll tell you what I'm working on which is always a range of things, and I really do believe, if you wanna be a strong leader, you gotta constantly work on areas.
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I think that, what is absolutely critical for a leader today is the ability to connect the dots.
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You can't remain alone in your discipline.
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What you gotta understand is how thing interrelate.
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What are the connections, and then what are the relevant value drivers for your business?
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So the ability to in fact take in a broad set of facts and knowledge, and to see what the connection is to your particular business is critical.
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And so that means at the end of the day, awareness of what is going on in the world and trends, and constantly saying, what does this development mean for my business and my customer?
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Because at the end of the day, if you wanna be a market leader and innovate, you actually have to come to conclusions that most people don't.
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And most people don't because they take a conventional view of what they're working on.
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So that ability to connect is critical.
34:24
For me what I'm particularly focused on now is the BRIC countries.
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And part of what I'm doing from a development standpoint is while I'm learning a lot about the business issues, I'm actually spending a fair amount of time through history books, trying to understand some of the culture and the psychology in the markets that we're operating in, because I think that it is easier to have a view of some of the technical issues, but if you want the type of emotional engagement.
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And one of the things that I think is critical in the marketing of products is this balance be, between rational value and emotional connection.
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And if in fact people really believe that I understand who you are, and I actually respect how you think, and that can make an incredible difference.
35:35
So that's one of the areas that I'm working on.
35:41
>> Yeah thank you very much for your talk.
35:43
My name is Kristoff Freezee. I'm an MBA one.
35:46
You draw this picture of the great investor you'll have who wants to do well, and at the same time, right.
35:55
Can you, from your point of view, give us, or elaborate on, how do you define you are doing right?
36:04
You are in an, in an industry where trust is important.
36:07
You mentioned the data and sensitive data you have, and where as the CEO, you actually draw the line in your company, and be this person that says, we can't do this because it's not right.
36:20
>> Yeah, I, I think one of the most critical responsibilities of the CEO is to understand how to draw that line and when to draw that line.
36:37
And, very frankly, it's very easy to articulate in a broad way that you are a principled person.
36:48
Where the rubber meets the road is how did you act?
36:53
So I'll give you a few examples.
37:00
Five years ago, we did a competitive analysis in the card business, and we said, what are all the drivers of revenue that our competitors are using?
37:13
And what we found was that there was a substantial reliance on back end fees, and a range of practices that, frankly, would have generated a substantial amount of money.
37:27
And I'm being circumspect here but it was very, very substantial.
37:34
And and most of our competitors were in fact, engaged in some of those practices and many were engaged in, in most of them.
37:48
We actually were very clear that we could dramatically, even more, improve the financial performance of the company, but, we said, we don't think that's right.
38:00
And we said, and I said I don't think it's right for the following reasons, is I developed when I was running our card businesses, what we used in the company, we have three operating principles.
38:11
One is provide superior value for the customers and clients that we choose to serve.
38:16
Second, do it in a way that allows us to achieve best in class economics, and every thing we do must support the brand.
38:26
Then we have a set of values for the company.
38:28
What was clear is, that one, we felt that those practices were not consistent, and we articulated that to the team of why we were not going to pursue it.
38:39
We went through in general, and we went through one by one.
38:43
And we said this is, this is the trade off.
38:45
This is what we stand for as a company.
38:48
And there are a number of examples where you're faced with a situation where you know one, and these are the toughest issues. It's legal.
39:09
It's really not a problem, I mean so the ethical, legal issues, I mean if you're gonna do something that's wrong, you got a problem.
39:17
But we have a situation where it's not, it's perfectly legal. Everyone's doing it. Why not?
39:29
And the question is, what is the commitment?
39:31
We were in a situation just this year.
39:36
Every major financial services company basically decided that they would cut their dividend.
39:43
And, and we talked about it, and every, every banker that would come in, investment banker, would say, Ken, everyone's doing it, there's really not any pressure.
39:51
And I said, look, you gotta understand, with our company, we really have this concept of promises to keep, and unless I thought that the company was really going under, I just don't think we should do that. And that wasn't illegal.
40:07
It wasn't, wouldn't be anything wrong, morally, if I did that, but the question is, what were the values of the company and what's the commitment that you need to make?
40:18
And I don't criticize another company for cutting their dividend, but for us, I didn't think that was the right thing to do.
40:25
[BLANK_AUDIO] >> I'm wondering in your 30 years at American Express what you think you've, you did differently both early and later in your career in terms of both within your job, and then within the, within the sphere of doing things to sort of, further longer-term objectives that that resulted in you being CEO today.
40:56
>> You know, I think, and it's, I would say it's more, it's been more that my behavior has evolved rather than a radical change, but I'll give you a few examples that I think were helpful to me and what I would caution with all advice, you've gotta personalize it and you've gotta customize it to your own situation.
41:19
One is what has always excited me is, I always wanted to work with really bright people who I thought had good values and would allow me to do exciting things.
41:33
I never came to the company with the intent that I would become CEO.
41:39
Really it was until two or three years before I became president, I remember Harvey saying to me, you know I think you could run the company, it really was not, not that I was naive, but that just was not the objective for me.
41:54
And, and I think it's important that your personal ambition does not overcome you.
42:03
So that allowed me to be independent, to take risks and help me develop a perspective that I thought I was focused on.
42:14
Here are thing that are not only right for the company, but here are things that I wanna do.
42:19
Doing them in a, in a, in a team concept so I'm not a lone ranger, but at the same time not just focused on myself.
42:30
The second is that I've always believed that you should focus on, what are some ideas that can really change the status quo in the business?
42:45
And and one of my first jobs which was a lot of fun for me, it was a big risk, is we had a business that sold merchandise through the mail.
42:55
Now if you think about what's happening in the online world: segmentation, information analysis, and whatever, this was terrific preparation.
43:06
But it was losing money, and no one who was regarded as high potential wanted to go into that business.
43:13
I actually thought that that channel was exciting, and again, at that time, since I didn't believe I was gonna be at a big company for a long time, I said this would be a great entrepreneurial experience when I run my own business.
43:26
So, let me get in and learn about this direct marketing channel, because they sell a wide variety of products, but we came up with some very innovative ideas in how to merchandise, and in a two or three year period, we went from 100 million to 800 million in sales.
43:46
And we developed some sourcing strategies.
43:49
We went over to Asia and Japan and we had a deal that I was able to work out with some of the top manufacturers, that they would let us have a new product for 90 to 120 days and we'd sort of tested for them, and then they could go retail with it.
44:06
And that worked out great for us, and helped us get some decent margins because in that business you're always pressed on the margin side.
44:16
I also was very involved in the development of our loyalty program, and saw the power of what that could do, and, and rewards has made a major difference for the company.
44:34
So I, I like strategy a lot but I also like to implement, but what's most important is I really like changing the paradigm and I think that helped me tremendously.
44:47
The third and I hesitate even saying this because this can be self serving, but I think if you really wanna build leadership, what's most important at the end of the day, and the first thing I look for.
45:01
And try to analyze with people is integrity.
45:04
And in my definition of integrity it's not just being honest, it's what's the consistency of words and actions.
45:11
And over time what people saw in the organization certainly is not that I was perfect.
45:18
Because as I said, I would have strong views if I thought sometimes at meetings, I've gotten better that their comments were not particularly insightful.
45:29
I would not necessarily listen carefully to those comments I had been told I've improved a lot.
45:38
[LAUGH] in that area over time and I, and I think I have.
45:43
But what I did develop a reputation for in the company, was a consistency of words and actions.
45:50
And that helped me to develop a followership and get the emotional engagement that you need as a leader.
45:56
>> Hi is this, [SOUND] okay, the concept of constructive conflict really stuck out to me and from the outside you can see the value of conflict in situations but when you're actually inside.
46:17
And you're hearing negative ideas or embracing that conflict, it can be really uncomfortable, and people can get quite defensive.
46:24
So I was just wondering how you have been able to turn those negative thoughts and emotions into a positive aspect for the company and use it to really motivate performance.
46:35
Yeah, here's, and let me very clear, is this is a ongoing effort in the company.
46:44
And I would certainly not put us yet at the level that I'd like to be at, cuz to your point, it is that hardest thing to make happen.
46:55
We're a company that I think is very driven for results.
47:03
But what we have always not done historically and we've improved a lot in this, is to confront each other.
47:12
So what I say in AmEx speak, and I use this often in the organization, that we, when we started off on this around ten years ago, is I would say when you hear someone say at AmEx, I don't mean to disagree with you.
47:26
What they're really saying is, I totally disagree with you.
47:29
[LAUGH] I will annihilate you.
47:31
[LAUGH] I will do everything in my power to make sure this doesn't happen.
47:34
So, that was extreme, but the reality is that the sort of, behavior rules that were set up is I want open and constructive confrontation. Here's what that means.
47:52
You've got something to say, say it at the meeting.
47:55
And if it's outside the meeting and so, the first few times when we put this in more than a few times, you'd have sort of the usual behavior of people would have the meeting, they'd go through issues, circle back.
48:10
Ken, let me tell you, I really have a concern with what so and so said.
48:15
And I said, excuse me, let's call up so and so, no, no, no, don't do it.
48:19
We're gonna call them up.
48:20
So and so, come in the office. So and so said.
48:23
[LAUGH] Well, why didn't you say at the meeting?
48:27
And then I said, look, now let's respect each other, so what I don't want when we disagree.
48:33
That you necessarily say I think you're a jerk.
48:37
What you can say is look, I disagree with the idea, but personal respect is critical.
48:44
But don't hesitate to be very direct in saying why you have the issue, how you're thinking about the issue, because that's gonna bring out better ideas.
48:56
And it is uncomfortable but I will tell you, in every single area one of the most difficult things to accomplish is the transition of CEOs.
49:11
One is I did with Harvey, which was great from a constructive confrontation.
49:15
I said Harvey, let's take two day, and let's go through a set of issues.
49:20
What is it in the transition you're gonna do. What am I gonna do?
49:23
What do we agree on, what do we not?
49:26
And sometimes those sessions get heated.
49:29
Sometimes, but the end of the day was done with really very strong personal directness and the behaviour was very well done.
49:45
So I think you can be direct, I think you can be honest.
49:48
I think you can raise your voice.
49:51
And part of the counseling I give to people as they go through is.
49:55
Sometimes, you may wanna telegraph, and I'll say to someone, you know, I'm gonna, I really feel strongly about this, so I am gonna argue in a very vociferous way.
50:09
[LAUGH] Don't take it personally, but understand, this is something that is really meaningful.
50:18
And so what I what I don't want to leave you with the impression with is that constructive confrontation is taking place everywhere and is at the level but is something that I am relentless about in the organization because you, you waste so much time.
50:41
I mean, if we're, everything is moving so fast paced in this world, that if you had people saying, another phrase we used to use is, let's take this offline.
50:50
What do you mean take it offline?
50:53
[LAUGH] We're right here. Take it offline?
50:55
Let's talk about it right here.
50:57
So it's, it's, it's very very important.
51:00
The more you can get people engaged.
51:03
And talking through the issues.
51:04
What it actually says is that I respect you and your ideas, and the fact that you are impassioned about those ideas, and you're willing to take some risk.
51:15
Because that's what it takes in business is, you gotta put some risk out there.
51:19
If you're gonna be careful, then we're not gonna move forward as a company, we're not gonna be a leader. >> Last question.
51:29
>> Hi, my name Regina Cross and I'm an MBA one.
51:32
I had a question with respect to some of the learning that you have with the BRIC countries.
51:37
You mentioned that you're focused on the traditions and culture and history.
51:40
And just wondered, kind of, maybe, what the top one or two things are that you have learned so far with your research.
51:45
And how you are working within your organization to meet the needs.
51:49
And the, the, the variances within the culture in order to meet their needs?
51:52
>> Here's two or three, and some of these are pretty basic, but, there is a strong view, that the U. S.
51:59
looks down on everyone, and can be patronizing.
52:08
And the issue that I think is important, and one of the things that I learned is, in fact, if you're meeting someone and people really believe, and you tell them I actually read a book about your country.
52:27
I read some history about it, and I took a step back, I found and say, wow that's pretty unusual [LAUGH].
52:33
I mean, really, it's, it's I just came back from a week trip in the in the the Mideast and went to a number of countries.
52:46
And I wasn't able to read up on every one.
52:51
But whether it was a dinner meeting or lunch meeting letting someone know that I knew something about the politics of the country, I knew something about the economic environment, I may have known a particular history point.
53:09
Lets people know, just as you're forming, some type of personal engagement, that you take them seriously.
53:21
And that you think that their country is important and they even learn something.
53:26
And so the biggest loaning in a sense to me is, just as you would any business problem, to go into a country, and you're running off the plane and you might say to someone, look, brief me about a few things that are happening here, is not exactly gonna endear you to the people that you meet with cause they're going to say it's all superficial, we know they're about.
53:50
This is the deal, but if they say, boy this person actually took time.
53:55
and, and there's no problem admitting that, look I'm a neofight, I don't have, I've only been to the country once, or twice, or whatever.
54:06
But to show real engagement, and.
54:11
Remember giving some feedback to one of our people where we went into a market and the person wanted to take him to a place that he thought was very special in his country.
54:32
The person has said I think I'll go back to the hotel it's been a long trip, little bit tired, I don't think that helps [LAUGH] build the type of relationship and engagement that you want. >> Thank you very much. Really appreciated. >> Thank you.
54:49
>> [APPLAUSE] >> [BLANK_AUDIO]