Day 3 of the NRF Big Show kicked off with a killer interview between Macy’s CEO Terry Lindgren and AMEX’s long-time CEO Kenneth Chenault. The topic of conversation was Digital Transformation. A hot, if not way overplayed topic. Hot because there are numerous companies still getting their heads around it and overplayed because you can’t enter a room at NRF without hearing someone talking about Omni, digital etc.
Why this talk was so good was that it was about the principles or values that underpin Chenault’s view of transformation – be that digital or other.
Here they are:
1. Cannibalise: Amex started as a freight forwarding company but is now a payment company. ‘We’re focused on customer needs and a willingness to cannibalise ourselves…for example, ‘one of our most successful businesses was ‘Travellers Cheques’ – generating 90% of the profits – it we had not cannibalised ourselves then we would not be in existence today’.
2. Let it go: ( I already have the Frozen song in my head). ‘Innovate or die – if the only thing we’re doing is simply facilitating a payment we become a commodity’ said Chenault. ‘I don’t care if plastic goes away’ – because Amex is bigger than plastic and has to move with the change. Don’t rely on what made you famous.
3. Partner: ‘The boundaries are coming down geophically and between businesses. All coming down together. What’s important is making sure you’re not looking at your particular business too narrowly. what are the capabilities and areas that can affect your business. The fact uber has simplified the payment process has had a huge impact on us. It’s the ability to connect the dots (and partner)’.
4. Customer first: ‘You have to go back to basics – what are the customers needs, what are the unique attributes of your business model that satisfy that. For us that’s data – relationships with billions of customers – we’re closing the loop between merchants and customers – we’re putting a trillion dollars through that loop so the learnings we get give us the opportunity to evaluate the services we offer (and our merchants offer)’.
5. First principles reasoning: Made famous by Elon Musk – it’s about boiling it down to why? not what. For example,’we’re focused on understanding the impact of Bitcoin and protocols of bitcoin. What bitcoin is addressing? Well, it’s addressing the replacement of cash – there’s reason why credit cards came out in the first place. If you look at it from a cash flow point of view it’s to defer payment. What are the basic needs it’s fulfilling? We don’t feel threatened by cryptocurrencies – what’s important is the integrated model we have.’
6. Survival of the fittest: ‘The greatest disruption is the convergence of online and offline and the inability to adapt to the change. Between 2014-2018, 75% of the growth in retail sales will be web influences but those sales will take place in brick and mortar stores. The changes in what motivates and influences customers on the purchase path is the holy grail – crucial that we have to understand the interplay between this convergence. The disruption will be intense… The reality is Steve Jobs redefined the retail experience (offline) because of his appreciation and knowledge of mobile and online’. He went on: ‘People need to be more flexible and open – you can’t adhere to a single model. That would be a mistake.’
A final quote to sum it up from Terry Lundgren:
‘Many of us saw the digital transformation but we didn’t see the speed at which it occurred’.