713: Ken Chenault - Leadership Lessons from 17 Years as American Express CEO: How to Earn the Top Job, Hire Great Leaders, Build Culture, Challenge the Status Quo, and Lead with Character

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My Guest: Ken Chenault was chairman and CEO of American Express for 17 years, and Warren Buffett called him "the gold standard for corporate leadership." Today he's chairman of General Catalyst. His new memoir is Equal to the Task.

Key Learnings

"The only thing that you can control is your performance, so focus on your performance." His father's answer whenever Ken complained about a barrier. Ken says what makes it empowering rather than harsh is that it's both accountability and control at the same time.

"Ken, never forget that you are equal to the task." First day of kindergarten, Ken froze, started crying, and ran out of the room to hide under a bench. His father found him, pulled him out, sat him on his lap, put a hand on his shoulder, and said it. At five, Ken had no idea what the words meant. They became a measuring stick anyway.

What his father actually meant took decades to understand. Equal to the task is a challenge, not a reassurance. You still have to work for it.

"If you wish to be a king, you need to have followers. A king looks after his people." Ken's teacher in grade school, Mrs. Lacraw, called him down and told him that isn't what kings do. It wasn't enough to protect the hill. He had to protect people.

That became his North Star: judge a leader on the quality of their followership. Ken is emphatic that he's all about outcomes and driving results. The question is how those results were achieved and whether they'll endure.

The Followership Tree. Who are the best-performing people who came out from under this leader? Who do other people look up to? Who delivers on an ongoing basis? Coaches have coaching trees. Ken looks for a followership tree. Does this person train, develop, and attract the best people to work for them?

Trust is the core requirement, and everything flows from it. Intelligence and drive are givens on Ken's list. Trustworthiness is the thing that has to be there first.

Then: is this person willing to go against the status quo? It's the attribute that surprises people most when he names it, because what he's really screening for is courage.

So he asks directly. "Take me through when you had to go against the existing product set, the existing strategy. How did you do it? How did you go about it? Why did you do it?"

Decisiveness and caring is not a contradiction. The best leaders connect with the hearts and minds of people. Being caring doesn't mean you're afraid of the hard call, it means you're more effective when you make it.

"You could not imagine Amex without membership rewards." Membership Rewards was built in stealth mode. At the time, the culture at American Express held that rewarding card members for using the product was a form of discounting that damaged the brand's prestige. Ken disagreed, assembled a team across the company, and deliberately kept it quiet for about four months because he was afraid the traditionalists would kill it. He describes it as feeling like a startup. It launched in the early nineties and became one of the foundations of the company.

Take the assignment nobody wants. Ken decided American Express needed to re-engineer, meaning changing its processes and its structure. Most people avoid those projects because they're high risk and they can end a career. He took it because the company needed it done.

He never set out to be CEO. His objective walking in was to stay a few years and learn. He thinks making the top job your goal is dangerous: you start optimizing for what's best for you rather than the company, you stop taking the risks worth taking, and you can freeze.

The marker that mattered wasn't promotion. It was someone saying, "Ken, you can make that decision. Ken, you can handle that." The hardest thing to delegate is judgment. The way he earned it was by doing the assignment well and then working out its broader implications for the company.

"The role of a leader is to define reality and give hope." From a biography of Napoleon. Ken thinks about it every day in regards to leadership.

Defining reality is what earns you credibility. It doesn't mean having all the answers. It means being present, aware, and engaged, and doing real diligence with people inside and outside the company to find out what's actually happening.

But reality alone isn't leadership. Consultants can define reality. The second half is the specific, tangible reasons to be hopeful: a strategy, a product, something concrete. Sometimes the probability is five or ten percent, and the job is explaining why it's still worth the risk.

Simplify the mission. Simplicity doesn't make it easier; it gives you focus.

The three operating principles, written on a napkin at lunch. Provide superior value to the customers and clients we serve, do it in a way that achieves best-in-class economics, and make sure everything we do supports and enhances our brand. He went straight upstairs to Harvey, the CEO, and said these should decide which businesses the company is in. They took the board through it. Ken works from principles rather than a rule book.

"You should never make withdrawals in the brand bank. Only deposits." From Shelly Lazarus, then CEO of Ogilvy & Mather, and it shaped the third principle. Ken's extension: you have a brand, I have a brand, and the question is whether you'll knowingly do things that work against what you actually stand for.

Profit and purpose shouldn't be in conflict. Ken's first principle at General Catalyst: business exists because society allows it to exist; therefore business has a responsibility. Purpose is a real advantage in building something enduring, and you won't be around to make that purpose mean anything unless you're profitable and growing.

He wrote to four consulting firms admitting he didn't know much about business. Three almost certainly threw the letter away. Bill Bain happened to have just decided to hire two or three lawyers and two or three medical school graduates, looking for one thing: intellectual horsepower and drive. Bain himself hadn't gone to business school. Ken calls it a needle in a haystack and says that without it he doesn't think he would have had a business career at all.

Vernon Jordan's note. The day the board voted Ken in as CEO, Jordan folded a note and passed it down the table. It said the day was momentous, that he was proud, that their ancestors would be proud, and that many people had struggled so Ken could have this opportunity. Then, in classic Vernon: "If I were in church, I would say hallelujah, but the people in this boardroom would think I was crazy." Ken watched it pass through three or four pairs of hands, and nobody opened it. When it reached him, Jordan winked. Jordan believed strongly that nobody gets there entirely on their own, helped even by people they never see.

He was born three years before Brown v. Board of Education. His read on that: if he'd been born twenty years earlier, he would not have become CEO, and it wouldn't have mattered how good he was. Which is why the people, Black and white, who were in that struggle mean so much to him.

Feedback from Arthur Ashe. Ken was 35, told a business magazine, "I believe I can learn anything," and Ashe phoned him to say it sounded arrogant and that people would be looking for any reason to discount him. Ashe called it an unforced error. Ken's first reaction was to push back. Then he decided Ashe was right, and what he took from it wasn't to stay quiet but to operate with a higher level of intentionality. He would still challenge something or someone when it needed challenging. He just couldn't be careless.

Celebrate differences, and still hold the values that aren't negotiable. Ken loves team sports partly because you can't program them. You get thrown in with people whose background and beliefs are nothing like yours, and when alignment happens anyway, it's genuinely rare.

Warren Buffett's line about your most important decision being who your partner is. Ken and Kathy have been together 49 years. He describes her as down to earth, willing to speak her mind, with uncanny intuition about people. Someone once told him you have to feel it in the fingers, and he says Kathy feels it in the fingers. His four requirements for lasting that long: deep love, consistent communication, real trust, and patience, which took him several years to learn.

Ken's champagne moment a year from now: people talking about character and values. He didn't want to write a business book. His concern is that we're over-indexing on intelligence and success as a society, and he's careful to say he believes in both, but not at the expense of character. If he can get people talking about living a life with purpose, that's the celebration.

Action

• Write your operating principles down on one page. Can you get them small enough to fit on a napkin, and would your team recognize them as the ones you actually use?
• If you enjoyed this conversation, please check out Episode #662 with Nick Thompson: Move at an Uncomfortable Pace.

Episode Chapters

01:17 The Only Thing You Can Control

02:52 Where "Equal to the Task" Came From

05:03 If You Want to Be a King

08:35 What He Looks For in a Leader

11:31 Building Membership Rewards in Secret

14:20 Profit and Purpose

16:47 The Letter That Started His Career

21:40 How Bain Took On McKinsey

24:04 Define Reality and Give Hope

27:04 How He Earned the CEO Job

32:09 Vernon Jordan's Note

34:43 Business as the Next Civil Rights Frontier

37:12 The Call From Arthur Ashe

40:25 You Can't Program a Locker Room

42:44 Three Principles on a Napkin

47:20 49 Years With Kathy

48:54 The Champagne Question

51:15 EOPC