HOUSE OF CARDS: INSIDE THE TROUBLED EMPIRE OF
Jon Friedman and John Meehan.
272 pages. $19.95.
Image is important in business, but it defines few companies in as large a way as it does American Express. In many ways, image is what American Express sells.
The green, gold and platinum cards that make you an American Express member -- not just a credit card holder -- still have cachet, despite ever-increasing competition that buffets the core franchise. The allure of the card, which says, "You've made it," is nicely symbolized in the company's soft-sell advertisements that featured photographs of celebrities, with no other information except the year they became members. Such ads dripped with tone.
This makes it somewhat understandable that James D. Robinson III, the longtime chief executive officer of American Express, is all but obsessed with image, according to this breezily written account of American Express' travails by journalists Jon Friedman and John Meehan. It's also understandable why the company is especially ill-suited to weather some of the black eyes suffered in the Robinson era, from the admission of a smear campaign against a big shareholder turned banking competitor to the unexpected woes of the company's Optima card, which was designed to go head-to-head with the revolving credit cards offered by banks.
The book's main focus is the thinking and maneuvering at the highest levels of American Express in the past decade or so as it rode the go-go 1980s through a series of major acquisitions in the securities field and overseas banking. Despite some boom years, big problems kept cropping up. The authors are gloomy about the future, predicting a shrinking company and a core business "in serious jeopardy."
They write: "Without a clearly defined strategy and the strength to forge a single management team from the disparate players that passed through AmEx's doors, Robinson's vision for American Express was more illusory than real. In the end, AmEx was a collection of purchases and personalities, not a cohesive corporation."
The picture of CEO Robinson is not flattering. Out of touch with the day-to-day realities of his own company, he is portrayed as a man consumed with empire-building to satisfy his own ego. The authors write: "Throughout his career, Robinson was less a leader than an overseer, his flashes of brilliance overshadowed by his propensity for bureaucracy."
In fact, the men who ran this huge global company since the late 1970s are reported to have operated often from the drives of ego and the imperatives of political jockeying for position, rather than methodically putting into place a well-conceived strategy for growth and dominance in its markets.
The authors, who say the book grew out of their reporting on American Express for Business Week magazine in 1989 and 1990, did not have the cooperation of the company or Mr. Robinson on this project. They say they conducted more than 100 interviews with past and present AmEx executives, as well as talking to competitors and analysts. Many sources demanded anonymity.
The book's novelistic, fly-on-the-wall style makes it easy, entertaining reading. One trade-off, perhaps, is that there is little explicit sourcing of private conversations or assigned motivations. Its very focus on a limited number of top managers and their foibles, rather than the nuts and bolts of the very large businesses that make up American Express, gives the book the same shallow veneer it essentially finds in the American Express executives.
American Express has a long corporate history, tracing its roots to an "express" company (as in Pony Express) founded in Albany, N.Y., in 1841. Such companies swiftly delivered everything that fell in size between the letters handled by the U.S. Postal Service and the heavy freight carried by trains. From there, it was a short step to doing business in money orders, and when the shortcoming of those became evident, to the advent of the American Express Travelers Cheque, which the authors call "the only original product the company ever invented." All this happened before the 20th century rolled around.
By the time Mr. Robinson, son of a prominent Atlanta banking family, took the top spot at American Express in 1977, the famous card was well established, and set to boom as the preferred plastic of the yuppie generation. Mr. Robinson wanted more -- a global company on par with Ford Motor or General Electric -- and saw acquisitions as the way to go. After an ill-fated attempt to acquire McGraw-Hill, AmEx landed Shearson, whose top man, Sanford I. Weill, was about as different as he could be from Mr. Robinson. "Unlike Robinson's proper and controlled demeanor, Weill was expansive and warm," the authors say.
Mr. Weill had ambitions of his own that Mr. Robinson sought to thwart. Here's one example of the political intrigues the authors say beset American Express: With Shearson riding high in the early 1980s as the stock market boomed, "rumors of a Weill coup d'etat abounded," the authors say. Lou Gerstner, who now heads RJR Nabisco, for years piloted AmEx's Travel Related Services, home of the card. He also reportedly had aspirations to the top at AmEx. He's quoted as exhorting his top managers at the time: "We have to maximize profits over the next few years instead of going for market share or Sandy and Shearson will end up running the company. We have a political fight on our hands!"
Mr. Lipschutz is a writer living in New York.