It was supposed to have been a routine business trip to Salt Lake City. Kenneth Chenault, CEO of American Express Co., was on a conference call with a group in AmEx's headquarters overlooking the World Trade Center when the first plane hit. Gasps, then screams came rushing over the speakerphone. Horrified as he watched the towers collapse on television, Chenault knew instantly that he was about to face one of the toughest challenges of his life. "Our leaders, including me," he says, "were going to be tested like we'd never been tested before."
Indeed, in the aftermath of the tragedy, AmEx's revenue went into free fall. Airline bookings and corporate entertainment expenditures tanked, card charges plummeted, and the declining stock market slashed the value of AmEx's mutual funds. Unsteady hands might have faltered. But, as Chenault himself observes, "reputations are made or lost during times of crisis." Chenault's was about to be made.
Known for his affability and integrity as much as for his discipline and drive, Chenault had already tackled two of AmEx's most vexing problems: a merchant revolt against its elevated fees and customer migration to its competitors' cards. Thanks in part to his membership rewards program, AmEx card revenue grew robustly during the 1990s. Just weeks into office, riding partly on his predecessor's success, Chenault announced record annual earnings of $2.8 billion.
But the rave reviews soon gave way to some seriously bad press. In the spring of 2001, Chenault had to write off more than $180 million in bad junk bonds, a hidden problem that he had also inherited. That July he was forced to take another $826 million write-off. Quarterly income plummeted by three quarters, stock prices by half, and staffing by 14,000. AmEx was rumored to be takeover material.
And then came 9/11.
Unable to immediately return to New York, Chenault set up a command center in his hotel room, ordering the evacuation of headquarters and a search for new office space. He instructed telephone operators to see that all AmEx employees were located and their families safe. The company assisted distressed customers, waived late fees, and raised credit limits. It even chartered buses for stranded travelers. "In a crisis," Chenault says, "you can't manage by manual; you have to manage by values and beliefs."
When Chenault returned to New York several days after 9/11 he found a company traumatized by the loss of 11 employees and dispirited by the drop in revenue. He made dozens of decisions during hourly conference calls—creating a crisis center in Phoenix, dispersing staff to seven buildings in three states—with a determination to revive the enterprise. The role of the leader, he says, is to "define reality and give hope."
Nine days after the catastrophe, Chenault convened the entire AmEx staff at Madison Square Garden. Exhibiting both compassion and command, he pledged financial support to the victims' families. And he insisted that the company would come fully back. "We are going to emerge a stronger and better company," he declared.
That pledge would require patience and considerable sacrifice. Three months after the attacks, AmEx announced that monthly travel revenues had declined by some two fifths, resulting in the elimination of 6,800 jobs and an after-tax charge of $179 million.
Yet a year later, AmEx reoccupied its headquarters, and five years later, it was reporting record earnings. Its stock price has grown ahead of the Dow Jones industrial average, and this year, Fortune magazine named AmEx one of the nation's best companies for leadership development.
Chenault insists that the success was not all about him. "Anyone at any level can be a leader," he says, which is why he is committed to giving everyone at the company a chance to become one.
Today, AmEx is a $27 billion franchise with 65,000 employees, renowned for both profitable performance and civic engagement. It faces continued challenges, to be sure, including controlling costs, gaining access to new markets, and dealing with slowing consumer spending. Chenault says he is confident those challenges can be met. But like the battles that preceded them, he says, they will be fought on high ground. "I want to win every day in the marketplace," he says. But "I want people to say that Ken Chenault is a person who, while he's focused on winning, [does so] with the highest level of integrity."
Michael Useem is director of the Center for Leadership and Change Management at the Wharton School, University of Pennsylvania.