The average tenure of a CEO in corporate America is just shy of 10 years. Despite the accolades, the glamour, the publicity (or perhaps, because of it) being Chief Executive Officer of a publicly traded company is a tough job. The quarterly grind of meeting earnings expectations and satisfying shareholders chafes away at the staying power of these business leaders.
That’s why it’s so impressive that Kenneth I. Chenault remains firmly ensconced as chief of American Express after 14 years. I’m certain a succession plan is in place (that’s what good leadership teams do) but to see Chenault, now 64, you’d think he’ll be at the helm for another decade. Despite the rigors of leading a modern financial services company, and despite some speed bumps and missteps, his gait remains vibrant, his demeanor positive, his insight sharp. I fought through the crowd at Chicago’s Millennium Knickerbocker Hotel recently to greet Chenault, who was in town to promote the value of small business. When his eyes caught mine, he smiled warmly and shook my hand as if we were treasured brothers. In that fleeting moment, he made me feel good, important (that, too, is what good leaders do).
After working the crowd better than even the best of politicians do, Chenault assumed his role for the day. He moderated a conversation with Jack Ma, founder and executive chairman of the gigantic Chinese online commerce company Alibaba, which was, astonishingly, a small business itself not too many years ago. Small business is a segment of the economy critical to both Alibaba and American Express. Chenault was stately and articulate as facilitator, unselfishly letting Ma, the affable raconteur, command the stage for most of the 40-minute dialogue.
Then, the last 12 minutes were Chenault’s. With the roles reversed, Ma asked him about the challenges that small businesses face. Chenault broke down the very real and significant need for access to working capital that small businesses have. At American Express, transactions of $10,000 or more are growing at a compound annual growth rate of over 20% — demonstrating the demand for short-term access to working capital, Chenault said.
Next came the real gem. American Express is a 165-year-old company. So, how does such a big, and, frankly, old, company innovate? Chenault’s answer is a lesson in one of the most important responsibilities of successful corporate leadership: overcoming complacency to perform continuous renewal. I’ve watched leaders of several companies — some formidable businesses — fail to master this approach, and watched them limp to a future of mediocrity and sometimes burial. Chenault’s instructive words are worth reciting in their entirety. So, below is the edited transcript. Read, enjoy, and learn!
Q: At 165 years old how do you continue to innovate?
Chenault: Continual reinvention. You have to innovate or die. That is the reality. After 165 years, here’s the challenge: How do you fight complacency, particularly when you are successful? That is when people get complacent, they get relaxed. When you are falling off the cliff, you know you’re falling. But when you’ve won that victory and everyone is telling you you’re terrific, often you don’t examine and say, ‘What do I focus on going forward?”.
Reinvention is in our DNA. Sometimes you have to challenge your business model. Here’s an example: American Express developed one of the most creative products ever: the travelers check. It was brilliant. Ninety percent of the earnings of the company came from the travelers check. In 1958, there was an intense debate at the company about should we enter the payments business. Very intelligent people inside and outside said, “You don’t want to do that because it will cannibalize your travelers check business. Why are you going to risk 90% of earnings on a new business? Are you crazy?” These were very logical people, but they lacked vision. They weren’t focused on the future. They were self-satisfied with the success of the company.
Imagine if American Express had stayed a travelers check company. We would not be in business today, or we’d be a very small company. What we’ve done in each area of our business, we’ve challenged the existing business. But what we didn’t debate is that any business that we enter has to serve the customer. We have to operate with integrity. We have to operate with a trusting relationship with customers. We kept a constancy of values, but with continual reinvention, the willingness to cannibalize ourselves.
One of the things that I say in our company is to become the company that will put us out of business before our competitors do. We’re not entitled because of our success to stay in business. We have to earn that every day. The way we do that is serve our customers. And the only way to serve customers well is innovating every day to make their lives better. That is what companies need to be focused on.