American Express Case Study

American Express Company was an appropriate venue for this kind of management. During the late 1970s, as an organization, it set aggressive goals for itself. Rather than accept static growth, or attempt a defensive posture in the face of growing competition, American Express TRS decided to emphasize growth in earnings and high ROE, while at the same time not damaging the larger organization. During the early and mid1980s, TRS was able to achieve, and surpass, its financial goals, primarily by emphasizing its entrepreneurial spirit and constantly generating new products, services, and marketing efforts. By the mid1980s, however, there was the new challenge of maintaining this rate of growth, and the entrepreneurial spirit. The financial services industry was quite volatile and competing card services were also being aggressively marketed.

Gerstner's philosophy, however, was that American Express was going to have growth and that it was going to

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that the organization is maintained, but it is not likely to encourage creativity. Instead, what it encourages is the kind of statement that Gerstner and others wanted to eliminate, the statement that "This is the way we do things. This is the way that we have always done things around here." The impulse to maintain the initial insight or vision is a positive one, but not possible. The entrepreneurial spirit is opposed to institutionalization. When certain insights, processes, or structures are adopted as the best, or most necessary, then the process of institutionalization has begun. Ultimately, this leads to stagnation, and to limits on flexibility and creativity. If the insight is indeed the "best" way to proceed, then the organization has no incentive to look for other ways, or encourage new ideas. By definition, they would not be as good. Consequently, there is a focus on stability and maintenance. Kao (1989) indicated that the entrepreneurial spirit could be carried in the established organization depending upon leadership and structure. He talked about a number of different models for maintaining a smaller feel within the larger organization, as in creating selfcontained work groups or divisions. American Expres
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Approximate Word count = 1814
Approximate Pages = 7 (250 words per page)

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