1. Presented By:
Archana Sundarakrishna
Chinmoy Kumar Nanda
Deepak Jayaram
Prasanth Keerthiseelan
Mayank Bhat

2. The Robinson Years: 1977-1990
 Robinson had a larger company in mind.
 Robinson strove to make American Express the largest
financial supermarket in the world.
 Significant acquisitions like Shearson Loeb Rhoades,
The Boston Company, Trade Development Bank
Holdings, Investors Diversified Services (IDS)
,financially troubled Lehman Brothers Kuhn Loeb and
E.F.Hutton , a brokerage house on the verge of
bankruptcy.

3. The Robinson Years : cont…..
 Organization : Robinson divided American Express into separate
, largely autonomous businesses, each with its own chairman and CEO.
Each card for example, had its own management structure, credit
process, financial organization, customer service organization etc.
 Culture & Management Style:
 Described as complacent and arrogant.
 Managers frequently treated bank cards as local shopping cards rather
than serious competition.
 Lost the American Airlines deal to Citibank leading to steady exodus of
cutomers.
 Robinson was focused externally and was not a hands-on manager. He
liked deals and the strategy followed from the deals.
 Debates and contentions were the dominant mode, “Let’s see where the
chips fly”.
 Politics were rife and internal communications suffered. “You could not
challenge up”.
 People were rewarded for thoughts and suggestions, not results.

4. A Question of Survival
 Strategic Failure:
 The financial supermarket approach produced a holding company with little clear
direction. Everyone retreated to their own silo.
 Between 1987-1991 the company’s stock lost half its value, zealous overexpansion and
poor deal making, coupled with stock and real estate market reversals, led to massive
losses and a billion dollar write off in 1990.
• Competition in cards:
 Co-branding and entry of large, non-bank players dramatically change the industry.
Market shifted to the “Value Oriented Customers”.
• Erosion of the Core Business:
 Although Amex’s corporate card business continued to exhibit strong growth, the
personal card business grew slowly grew slowly in the 1980’s and began to decline after
1990. The quality of people being added was not known.
 Merchants were unhappy about paying fees that averaged 100-150 basis points more tha
other cards. The highly publicized “Boston Fee Party” dented the image further.
• Problems in Consumer Lending:
 Faced with increased competition , American Express entered the credit card business in
1987 with its Optima card.

5. Righting a Sinking Ship: 1991-1992
 In July 1991, Robinson asked Harvey Golub, who was running IDS to become
president of American Express. Three months later Golub added the posts of
chairman and CEO of TRS.
 In Feb 1993, Robinson was asked to step down and appointed Golub CEO of
American Express.
 Three hallmarks of his style; a commitment to principles, an intense focus on
the reasoning process, and an insistence on open,issue-oriented, fact-based
discussions.
 Never tells anyone what to do, pays more attention to how you think, always
tests the thinking process.
 Golub had very broad scope, brilliant at creating an overarching strategy and
dissecting the minutiae of problems. He was conceptual and logical rather than
emotional, but with ability to tackle problems creatively.
 He always emphasized on how a particular decision was made?
 He was far less interested in people having the right answer than in their
thinking about issues the right way.
 He always got to the bottom of the issues, and focused on deeper questions.

6. Changes in Performance Evaluation
 Golub changed TRS’ performance metrics and variable
compensation system.
 He wanted to get the metrics right, he emphasized group and
team incentives, judging performance not against budget but
by what you should have done , given the circumstances.
 He publicly graded managers from G1 to G5 based on their
performance in five categories: shareholders , customers,
employees, reengineering and quality.
 He looked at how the results were achieved and made the
criteria more subjective and more objective at the same time.
 For example, if someone meets net income goals but gets
them by cutting advertising expenses, he won’t get a good
rating.

7. Triage at TRS
 On his very first day, Harvey Golub decided to centralize and
consolidate TRS. It was the first step in blowing up silos
created by Robinson.
 He found out that the basic card business was “in great
danger of being marginalized”.
 He articulated five broad priorities to address the slide at
TRS:
 Fix the Optima credit problem
 Rebuild customer relationship
 Build the cheque and corporate card business.
 Reduce cost structure by 1 billion $.

8. Organization and Roles
 In 1992, he appointed Randy Christofferson, a former
consultant and strategic planner as Senior Vice President of
Quality and Reengineering for TRS and head of the
Reengineering initiative.
 Randy took ownership of the reengineering initiative, and
did not delegate it.
 He was always present in project meetings and attended
training sessions.
 Ensured that monitoring and reporting system were in place
and expanded the compensation criteria to include
reengineering.

9. Concepts and Frameworks
 Two frameworks provided organization and guidance.
 First, all reengineering projects were assigned to categories
and each category was managed separately.
 Cost projects expected to find cheaper ways.
 Structural projects to physically change how where work was done.
 Strategic projects would cut across organizational boundaries.
• Second tool , the process blueprint, provided a more detailed
map. It identified the five phases of reengineering –
opportunity identification, opportunity assessment, project
selection and design, implementation.
• An 80/20 rule prevailed where managers were asked to
identify 20% of projects that would give 80% cost savings.

10. Tracking and Results
 Christofferson worked with CFO of TRS to establish a
detailed tracking system. Savings were measured at three
points in the process.
 An identified save was a project’s estimated cost savings
 An implemented save indicated that physical changes in
process or structure had taken place.
 A realized save meant that net savings had actually been
booked.
 Between 1992-1994 TRS reduced its cost by $1.4 billion.

11. Turning the Ship: 1993-1994
 Leveraging the Brand : Golub viewed the brand as “the biggest corporate
asset” and saw himself as a brand manager.
 Since retail brokerage and investment banking did not fit the citeria, Shearson,
Lehman, the Boston Company and other non core business were either sold or
spun off. IDS was retained and remained AEFA.
 The parent company also adopted the goal of becoming the “world’s most
respected service brand”.
 Building a Principles-Driven Organization: Golub hoped to turn
American Express a principle driven organization, where managers behaved
according to principles and values rather than policies, rules and procedures.
 Corporate Metrics:
 Customer Health of the Franchise measures.
 Employee Values Survey
 Report cards

12. Setting a Course : 1994-95
 One Operating Company: In the fall of 1994, Golub
articulated a new goal : American Express would
become one operating company, rather than a
collection of separate, loosely-connected businesses.
 He did not believe in the term “Corporate Strategy”.
 Golub’s intention was to leverage the brand while
redesigning the organization around “shared utilities”,
common processes and platforms that would support
diverse products and functions.