It's a pleasure to welcome all of you to Minnesota meeting. We also welcome our radio audience throughout the Upper Midwest who are hearing this program on Minnesota public radio's midday program broadcast of Minnesota meeting are made possible by the law firm of Oppenheimer wolf and Donnelly with offices in Minneapolis. St. Paul and major cities in the United States and Europe. Minnesota meeting is a public affairs form which brings National and international leaders to speak in Minnesota members of Minnesota meeting represent. This community's leaders from business government Academia and the professions We are pleased to present today's speaker Harvey golub president and CEO of American Express company Harvey joined American Express in 1984 when he became president and CEO of its then newly acquired subsidiary IDs Financial Services. Prior to coming to Minneapolis to lead IDs. Mr. Gallup was a senior partner with McKinsey and Company where he worked closely with American Express on strategy and operations management issues. In fact his final task at McKinsey as a consultant was to evaluate IDs as an acquisition for American Express. He not only recommended the deal that went after the job as well. Earlier, mr. Gallup worked for several businesses in different Industries, but has spent most of his career with McKinsey IDs and American Express Harvey attended Cornell and received his BS degree from New York University. Those of us who have had the Good Fortune to work with Harvey during his tenure at IDs Financial Services learned a lot about business strategy principled leadership and the Fine Art of change. We were deeply disappointed when he left but we were grateful when he was given the opportunity to help make the kinds of changes at American Express that worked so well for us here at IDs and Minneapolis. We are fortunate to have mr. Yollop here today to discuss change and how American businesses need to embrace it to compete successfully. And now it's my distinct pleasure to introduce to you Harvey gollop. Thank you, Jack. Thank all of you I really can't tell you how nice it is to be the back and what I consider home in Minnesota. Again, Roberta our 8 year old Josh and I are adjusting readjusting to New York, but we still miss Minnesota and we miss our friends here. Before the before we came in today. I ran into her wiser in the in the hall and Irv said we took two tables here. So we would like you to give a talk on how to manage press relations and Boards. I'm not going to do that. Although might be an interesting topic some time and as much as I would like to engage in personal reminiscence about our time here, I was invited here to talk about something that is more important than that. And that is what is happening to at least some of America's companies including the one I lead the American Express company. What is happening fundamentally is change change in in a different order of magnitude from what we've seen in the past change in complexity of the things we do in the volume of things that we do and in the speed with which we do it that collectively is of such a magnitude that it will require essentially a redefinition and the way we organize our work in the way we develop and motivate our Workforce. In fact, some people believe that this fundamental reorganization of our work life could prove as massive as that of the Industrial Revolution and like the Industrial Revolution will have our luddites to deal with as we go forward. Making that kind of fundamental change and making it happen in a way that will increase the probability of success is a key challenge facing American companies today. If right now, I held up my keys to my General Motors car. They would represent thousands of pounds of metal and glass and plastic and I can hold up in the other hand the discs I use for the Microsoft Word program that I have in my office and my home which represents a few ounces of ideas. GM has about three quarters of a million employees and sales last year of a hundred and twenty four billion dollars Microsoft has 10,000 employees and sales of 1.8 billion dollars big difference amazing thing about those two companies is as of the close of the market yesterday the market value of General Motors was only about 15% higher than that of Microsoft. 28 billion versus 24 billion in the words of an author in The Economist magazine investors are betting that Microsoft without a single Factory to call its own not the vast manufacturing Empire GM has the best chance of surviving into the next millennium. And bear in mind Microsoft Microsoft shares weren't even quoted in stock market until 1986 in this environment old corporate structures and functions. Simply can't keep up. They give you an idea of a limited. Can now get its Fashions from the designer sketch pad to its 3,200 stores and less than 60 days. Meanwhile, many of its competitors must still order apparel for Christmas the previous met. Of the hundred firms that had fought that headed fortunes 1956 list of biggest companies only 29 of them are still in the top 100 on 71 of them are gone. Some were acquired some fell behind some disappeared altogether household names at that time Admiral philco Pan Am and so on. So the question becomes how to corporations here how to corporations the rest of the country. How does my cooperation managed to avoid a similar fate? A company today can't become competitive by focusing solely on traditional cost-cutting reducing operating budgets by five to ten percent across the board. This kind of change is transitory. It doesn't eliminate problems doesn't result in any structural changes doesn't improve productivity. And worst of all costs that are cut in that kind of fashion tend to creep back and you still got the original problems and often some new ones along with it. You can't just Empower. Your Workforce empowering is a very popular concept right now and rightfully so because it can motivate people who are closer to the customer to make decisions and solve problems. But it doesn't work if people don't have the right scope or skills or direction or leadership. No Corporation can be a democracy and you can't run one that way. You can't even get there by focusing on quality improvement after a after all a company May focus on continuously improving irrelevant tasks or it may concentrate. Or it may concentrate so hard on meeting customer expectations as they exist today and misses the opportunity to create new products or Services of the future. Or it may simply get superficial compliance, but no real underlying change. At various times we at the American Express company have tried all of these methods of getting competitive and a host more and most of them unsuccessfully. So if you can't get competitive Supple and responsible responsive by cost-cutting or empowerment or quality improvement alone. What do you do? I believe that fundamentally you have to start over with a blank sheet of paper and redesigned the corporation for your markets. Its structure its culture its business processes. And in redesigning the corporation you have to groove into it the capacity for change. You almost have to inculcate a zest for change. You have to make change in the fundamental principles on which the culture structures and processes of the corporation of based. If one looks at the history of companies that have failed or leaders that have failed it's almost always because they grew the capacity to do what's important at a certain point in time. They grew of the status quo and the groove ultimately becomes a rut. And then change becomes very painful if it is possible at all. And all you have to do is read about this in the daily papers and weekly magazines for confirmation. So how do you build the capacity for change in an organization? One thing I do know is that I don't know how to do that very well, but I can tell you some of what we're doing at American Express to make change happen to make positive change happen first. We start with a vision an overarching goal that is aspirational but not unattainable this provision this Vision provides an overall direction for the organization broad enough so it can stand the test of time and be a stabilizing factor in a constantly changing environment. It must be relevant to the business must be compelling and it must be aspirational. For example, what IDs are Minnesota based financial planning, so Our mission is to help people achieve their financial objectives prudently and thoughtfully through a long-term financial planning relationship with a trusted and knowledgeable advisor. You'll notice in that statement. We've not expressed our purpose as being the best manufacturer of mutual funds and investment products, even though those are the major products which we are known and even though those products are excellent. That would be too narrow and understanding of our business would limit the company's view of its market and its customers needs over time our vision is that every one of our clients would have a long-term productive relationship with a trusted planner. For our core charge card business. Our newly stated vision is to help people manage their financial affairs bride providing a medium of exchange. They can use for a hundred percent of their payment needs. This is very different from our traditional travel and entertainment positioning what we are saying fundamentally is based on what our customers want us to do. They want to be able to use our card at every establishment not at those we choose to have but at every establishment. So we are putting in place now a strategy to implement that Vision. We will have 100% coverage. Our people will be able to use cards anywhere that cards are accepted. Those kinds of business Vision give a direction for our people. We also have to provide a set of rules for conducting our business. At American Express. We have six of them. And we call them our blue box values. We try to have all of our activities and decisions based on and guided by these values. Now, I would guess that any Corporation in America and perhaps in the world could have these same values and many do with slight difference in phrasing. What is what is necessary in organizations to make those values come alive as criteria for decision-making and not simply words on a plaque, but the words on the plaque Are placing the needs of clients and customers first continuous quest for quality and everything. We do treating our people with respect and dignity conduct that reflects the highest standards of Integrity teamwork from the smallest unit to the Enterprise as a whole and being good citizens and the communities in which we live and work. These values are not new for the American Express company, but we wrote them down in 1990. So that everyone in the organization would be absolutely clear that these were the principles that would guide our behavior and like our business Visions these values remain constant over time giving our people a stable frame of reference for how we conduct our business in an environment that changes every day. To make change happen. We not only need a vision and values. We need to have a clear understanding of four major constituents or stakeholders are what they require both today and in the future and so a third ingredient in our recipe for making change happen is identifying our major constituents and then aligning all of our business objectives processes and structures to meet their needs. Like all companies that American Express we have three major constituents our customers our employees and our shareholders. Determining what they require of us identifying the gaps between where we are and where we must be to meet those requirements and then developing a plan to close those gaps is essentially the heart of our business planning process from our constituents requirements. We determined the street strategic objectives for a business. This means we will always be in transition. This means we will always assess the relative pain of staying where we are in the status quo and making changes to some vision of the future. And I hope we always have the courage to begin that process from wherever point we are. At our travel related Services subsidiary or as we call it TRS, we've identified five strategic objectives based on our constituents. Primarily. Our customers told us we must do to satisfy their needs. Those objectives are build relationships with the service establishments that accept American Express card. We will indeed get 100% coverage. We will indeed get zero suppression. Even though most of our Card members don't require it enough of them do. Re-engineer the company's basic business processes so that we improve the quality of our service reduce cycle time and reduce our cost structure our targets a billion dollars. We set that Target as a three-year Target at the beginning of last year for the end of next year. We will exceed that billion dollars by a wide margin. And we are doing it only partially through stopping doing things that are done. We will do most of it by doing things that we do a lot smarter. for example Last year, it took us about 26 or 27 weeks from start to finish to do a mailing for new card member acquisition from the time we decide to do the mailing and it's done on a scheduled basis. We have to pull data from credit bureaus we have to match files. We have to set criteria for the mailings we're going to do we have to do all the promotion material public with your own. So on takes about 26 or 27 weeks during that time, there's enough change in the database so that we end up with errors in that cycle. And it also means that since it takes that long if we want to do two mailings a year. We can't use the information gained from the first mailing to use the second mailing so we can be more effective in second mailing of the year. We're cutting that time in half this year next year. We're cutting it in half again. What that will do is fundamentally change the acquisition of cardmembers the economics of Activision Card members had a TRS and adding the rest of the company as well. It takes us about five months to do an annual budget. Sometimes we do the annual budget three times. Not necessarily in sequence you time. We don't like the first answers we go back and do it again. And again, sometimes we complete it before the calendar year begins. Sometimes we completed the first quarter the following calendar year. This is a problem. I've heard exist in other companies as well. This year the total budget process will be done in three weeks. Next year the total project the total budget process will be done in one hour. We are going to free up hundreds of people from that process TRS company spends about three hundred million dollars a year in finance people a various kinds Financial control people all over the world. We're re-engineering our Basic Finance and control systems to take a hundred million dollars of cost out and we're taking the cost out not by cutting people were taking the cost out by redesigning fundamentally the work the work will be faster and it will be better and it will be cheaper. Third priority is increase the Loyalty of our Card members, which means when we get a card member, we treasure them we serve them we give them everything that we can reasonably do to make them happy and they stay with us until they die. That's our objective. And in fact, we're making major progress attrition rates are way down. Fix the problems in our consumer lending business. We have done that Optima which was a bloody disaster is now profitable. It is very profitable. It will become even more profitable and we have the lowest interest rates in the industry of major issuers for our customers. Unless we continue to build on our strengths and corporate card travel and travelers checks business. That was the only one of our five priorities that were not remedial and it's sense. All of the others meant fixing something that was broken this meant capitalizing something. That was great and it is so to close the gaps with our constituents to achieve our strategic objectives. We're imploring we're employing our version of total quality management, which we call America's best quality leadership. Throughout the organization. We have trained our people in process Improvement techniques that give them the tools to close the gaps in their area of the business. But because our constituents have told us that we have significant gaps to close the satisfy their requirements. We needed to use more than the usual continuous process Improvement techniques that many total quality management programs espouse. We needed a process Improvement techniques that will enable us to affect major change in the way. We organize and manage our business and to do it very quickly. The technique that we've chosen to do that is called re-engineering. It's gained a lot of popularity in the last year and last month. There have been several books come out. A lot of Articles have been written about it. Re-engineering is basically redesigning business processes in order to achieve dramatic improvements in quality cycle time and hence cost. The I think most experts will tell you that the best time to reintroduce re-engineering to an organization is when everything is going well in some ways, that's true. And in some ways it's not it's hard to get people to want to change when the asset that they're working with seems to be so good. But if I had a choice, I would think I would rather do that and do it when things are going badly having done both. The former is more fun. Fundamentally when things are going well. He don't you have to take the point of view that you will be obsoleted. The only question is who will obsolete you. Will it be a competitor or will it be yourself? An example of that is as IDs. That was the company. We overpaid for in 1983. We paid 700 million dollars fried. Yes 1983 It I can't tell what I learned this year, but it's doing very well. And in fact in the last 8 years. IDs has been one of the three or four most successful financial services companies in the United States. There's only three companies that have beaten IDs over that period of time in return on equity and then income growth and a handful on one of the other of those measures. So it is a very successful organization. But right now IDs is engaged in the process of redesigning itself into the company that will succeed it. We call that process ideas 1994 simply the hundredth anniversary of John tap and setting up a Ponzi scheme which later developed into this institution. And it is intended to extend ids's Premiere Market position into the next millennium. Although the past couple of years have not been as successful at TRS. We believe that re-engineering a basic business will help us rebuild that business. To that end. We've been working on a number of re-engineering projects some of which I described to you earlier some of which are worldwide and some of which are quite local. There are literally hundreds going on. They will result in improved quality greater speed and a much lower cost structure. To make the kind of changes that are socio-reengineering we believe that we have to develop an organizational culture that will accept it. So we're working very hard to align our compensation systems are Performance Management systems are Career Development systems, and our leadership development process has to be completely in sync with our Vision Values and objectives and also encourage people to be constantly learning to challenge the status quo and to embrace change. Most important we're focusing on developing a Workforce of all-around athletes instead of position players. We need to attract and retain people who are comfortable with the notion that while our vision and values don't change just about everything else in their life will That's a quick summary of some of the things that we're doing at American Express to try to groove the capacity to change. The kind of change that's facing Us and other American companies is causing great disruption in the workforce. Changes that are brought about by re-engineering and restructuring are reducing jobs at alarming rates as functions that inhibit speed quality competitive and competitiveness and cost are shrunk or eliminated. Some people have estimated that about 15% of us manufacturers and a much smaller percent of service companies have undertaken this kind of major structural and business process change so we can see much more of that happening ahead and we can expect to start reading about failures and re-engineering about organizations that try to re-engineer by injection and don't succeed. The job shrinkage we're seeing is nothing new. Us manufacturers and play the same number of production workers today as they did in 1946. But they produce five times as much stuff that's productivity. Fortunately new jobs have been created in service Industries and it smaller businesses to take up the slack. And another fortunate factor is that us labor force will be growing much more slowly in the future than it has in the recent past. So where will new jobs come from? From industries that probably don't exist and from industries that will grow much faster than anyone predicts. I believe that we are a flexible country in a flexible people and to the extent that we remain Supple we can remain economically successful. Ladies and gentlemen, we can't protect Minnesota or America from the future. We cannot protect ourselves from Global competition except through excellence and efficiency. We cannot protect ourselves from government entities that tax too much and spend even more. That try to split the pie differently rather than enlarge it. We cannot protect ourselves from this guided Advocates expensive litigation and special interests. Hopefully however, by developing corporate America's capacity for constant change, we can proceed to a new level of growth and prosperity in spite of these obstacles. Let me just make one remark and closing those of you who spend any time going down Hills in the snow. We remember years ago. There was a sled called the flexible flyer and flexible Flyers are what America's corporations and other institutions must become. So thank you for inviting me and thank you for your hospitality. And now I'd be happy to take any questions you want to put to me. Thank you. I reminder to our listening audience you're listening to mr. Harvey gollop president and CEO of American Express company at the Minnesota meeting on these stations of Minnesota Public Radio. Our first question is from Irv wiser. Harvey I won't ask you again how how you managed the public relations and you're bored during the last few months. But in this period of Rapid change many of us find in organizations that have had the same leadership for a long time that people have in fact become entrenched and doing things a certain way. And as you rapidly change a lot of employees get dislocated and have a very tough time changing. How would you address the issue of the balance between the need for the organization to change and its responsibilities to the many people who've worked there for so many years under a certain environment that encouraged them to do what they continue to do. You thanks, sir. I think that is one of the most profoundly interesting questions one can grapple with and you get and you get different responses people work in corporations and they work under some kind of compact. There's a set of rules about what is judged to be good. And what is judged to be bad and where they operate according to those rules as establish usually by leaders, not them and the corporation gets into difficulty. Some are other people get the blame if they don't get the blame the certainly get the hurt. We are laying off we will lay off a total of 5,000 jobs at TRS over the next year done. Someone some already some still would go as much as possible through voluntary programs and attrition, but still a lot of people hurt none of whom cause the problems that we're now we're not solving so I think we have we have an obligation to those people. To first try and make that process as as fair and as painless as possible. But in deed to the other people who will still remain to do the process because of the organization doesn't survive at the end of whatever it is. You've got to do you simply go through a process of slicing a salami a slice of time and not taking not taking the right chunks at the right time. You also I think have an interesting issue with regard to the The second and first level leadership not the most senior people but the people directly below them who somehow also get the blame. Now some of them reflect a principle of Simply being promoted to a level of incompetence and they need to be changed need to be changed gently. But in many cases it's not a question of that. It's a question of people operating according to a set of defined rules and you change the rules. So at at ideas, for example, when I came here, there were no changes made the man who headed up our life insurance companies fella named Joe Pickering and Joe was going to retire in January 1985, which was one year after the acquisition Joe decided he would retire a year earlier because he didn't want to go through the hassle. So he made the decision to retire early and Beyond Beyond Joe as far as I could call. There were no changes in Senior Management. Nova prove times people retire and leave you get new jobs, you move around the window changes that same management team got the result subsequent to 1984 as prior. It was not a question of competence or character courage meal at at the TRS company. There have been more changes than that, but not wholesale numbers of the top 100 people who were there when I came in to travel related service a little over a year ago. My guess is probably 95 or still here and will be is not simply a matter. They're waiting for me to act. That's the team that's a team going forward. There was nothing wrong with the people that there was wrong what there was wrong was a misunderstanding of our business our markets our customers and our values. Not the people not the people. Thank you. Mr. Garland. Our next question comes from Betsy Shelburne. What specifically is American Express doing in the area of compensation and management development to support a culture of change Okay, the issues of compensation and and training was the second part as a really a long list, but let me deal with with parts of us. We're changing fundamentally the compensation for people in a number of ways one is we're changing the mix between short and long term to have more long-term compensation. We're changing the long term component of it to be related more to how the total company performs rather than individual units. So we are at we are fundamentally going away from Individual performance related bonus and and payment systems to group related bonus and payment system. Even for the top people in the organization. We're making a major shift from objective to subject the functions. We used to pay people a bonus is simply on the basis of annual net income growth. That is one factor today and it's probably one of the smaller ones we're now measuring what we call health of the franchise, which is what is the health of the franchise in terms of our employees our customers and our shareholders simply because we can measure the shareholder Health more precisely than we can the other two. We can't use that as an excuse for not considering the others but we're waiting we're waiting all three roughly equally and we're bringing down team based compensation and performance-based compensation the much lower levels in the organization so that essentially now in TRS which is 50,000 people. So it's a huge percentage of American Express company IDs has already done it. Bonus based compensation based on team performance is now down to the manager level and in some cases to entry-level employees as well that that compensation system is fundamentally being redesigned throughout the company, and it's designed to be congruent from top to bottom. The only one that's that's weird about this is mine. Because I'm essentially paid based on only financial performance. And that's not smart. We're going to have to change that because I should be basically be paid on other things too because the people ought to behave as the compensation system is designed and we shouldn't have a system of cognitive dissonance that requires people to do things. They're not in their best interest in order to get paid the most so we'll change that for me in terms of training. We are cutting back a lot on training and increasing skill development. We spend millions of dollars a year on people going to training programs of one kind or another in which there's an attempt to develop something by injection as if the act of going to a training program will result in Behavior change, sometimes it results in Attitude Change, but it almost never results in Behavior change. So we are we looking at all of our skill development programs all of our training programs to make sure they're geared to get the behaviors that we want to get at the other end and then put in the systems that will measure the results those behaviors so that we know whether the programs we have in place or the right ones. We're putting a lot more emphasis in that context on leadership training and it is it is really an attempt to get the people who are in responsible positions of authority to understand that their job as Leaders is to give their subordinates what they need when they need it in a form they can use it so that those people can be successful that says quickly And executes hard and there's a lot of emphasis behind doing that is more to it. But that's a rough cut summary. Thank you. Our next question is from Ron Lewis. You describe the budgeting process at American Express. Would you would you describe the planning process and the changes that you're trying to affected in that process? You don't see if I can relate them. traditionally American Express has had a three-year strategy planning process which we started for a three-year period in March or April I guess right Lou about right much rayful sort of look at it in the summer for the three-year strategy beginning the following year. And then sometime in late spring early summer, we start the budgeting process which is the operational planning process simply gets reflected in the numbers, which we might go on till January the following year sometimes later depending on whether you like the answers or not and then it be continuous reviews of things as situation changes. This year we're cutting out the strategic planning process. We are going to focus on particular issues that are of interest to me and that I think ought to be of interest to the people are reports me. So we'll spend a lot of time and looking at those issues that I think are important to the company and we will we will divorce the operational planning process from the budgeting process the operational the operational planning process will be focused at at identifying those things that we need to change because we don't like outcomes and we'll get to then one of the things we're going to change so fundamentally what that will involve is from a financial point of view is we will be changing our basic financial reporting systems from object of expenditure type systems to business process systems where we will we will in fact develop a process map for the company. So the company viewed as a nested series of processes and we will plan against the outputs of each of those processes at the appropriate level of abstraction. Then the strategy planning will be in it has an effect on a continuous basis on issues. That's that's such a high level summary. I'm not sure it was any information content and what I just said. Thank you. Our next question comes from very night. Mr. Gall of this may seem a little bit far field, but I was impressed by your experience in managing change. I wondered if Bill Clinton called you up what specific recommendations would you give to him to help ensure that the u.s. Government? Could Thrive into the 21st century? Yeah. You that that question is now being listened to by American Express lawyers who are who are saying to themselves know? What is this guy now going to do I think there's a fundamental issue within the premise of the question. I'm always told please don't attack premises when people ask you questions Harvey because it shows a certain amount of arrogance. But but but let me take on I don't care whether US Government prosperous. I think it's never relevant matter whether US Government prospers except to the people who work for it. What I think is relevant is whether the u.s. Prosperous and and what we've got to what we've got to understand and we haven't come to grips with you are the limits of the levers that we can push in micro managing managing an economy and the country We are I think pursuing a number of policies that have at their core the premise that what people do in Washington in small ways and surgically can affect how people behave and the premise is fundamentally wrong. And therefore any attempt at micromanaging is going to be fundamentally wrong. If you took the analog to what I said, and I don't know that this applies to an organization where you also have an independent Congress, that's and which is which is a whole different issue and a complication this as well and say what what the administration would be doing is defined the finding Mission values and strategy for the for the governmental entities that affect our lives and figure out how to operate through a set of principles rather than micromanaging procedures. So that we don't do static tax collection analyses anymore which are waste of time. So we stop believing that we can raise tax rates to increase taxes. So we stop believing that we can impose. Monitoring costs on organizations that don't monitor what they're supposed to regulations that don't regulate with what they're supposed to and believe that that will have a benign effect on the organizations that are affected. We've got understand starting stand the limits of our power. That's what I would say to mr. Clinton. I had made comments like that to mr. Rubin and sometimes make those comments to mr. Rubin in one session and then soon thereafter. I'll have another meeting with somebody like Bob rice and I sometimes don't get the understanding they're working in the same government. Okay, thank you. Our next question is from Terry Larkin. Mr. Golub your previous company the McKenzie and Company states that those corporations in the service industry going to change will be the most successful if they have an overarching attitude about service that is so strong. And so simple that could be explained in a room of strangers in less than a minute. Could you expound on what that overarching attitude about service would be for your new company in the future? And when you know, I can't say hello in one sentence. I know McKenzie says I have to be able to do a lot of things that I can't do it. That's probably why I'm no longer there. But but very few of their Partners can actually say things in one sentence either. I think the I think the notion of that kind of service has to be business specific rev incorporation specific. So American Express is sufficiently wide kind of organization that on the one hand has Lehman Brothers Investment Banking and and traveler's checks credit cards of charge cards and IDs that it's it's difficult to have an over arching notion for all of that company and has to be business Pacific. In the case of of ideas. The notion of service is embodied in in what the customers say to them is the most important element of service, which is none of the things we normally think about like how fast you are in that sort of stuff. What they want is a long-term relationship with the trust advisor. That's the notion of service. That notion of service to them says if you're going to have a long-term relationship with a trusted advisor, that means the people who are doing the advising have to be there a long time. Add IDs as in most companies like that that has a decentralized field Force for year retention rate is about thirty percent. That is a hundred people hired today for years. Now. You got 30 left. I think it's better now since I left, but that was the number when I left. That number is actually very high in that industry compared The Brokerage industry and insurance companies. But what it does mean mathematically is that you're not going to have a long-term relationship because there's an 80% probability you won't be there for years later if you're starting today. So the number one service issue for that company is how to bring that 28 percent to 95. That's what IDs is trying to do. So the notion of service is that long-term relationship with the trusted advisor? The implication is if you believe that you got to act on it and if you got to act on it, you got to change the 28 percent for your retention rate than 95% which sounds like it's a hard thing to do. It is a hard thing to do. You got to redesign the whole company, but if that's what you say service is you better be prepared to do it. Otherwise, what you're going to do is simply have a patina of understanding about what it is. You're about that and that analog applies to business after business. Thank you. Our next question comes from Tim Stoddard. As you were talking I thought to myself it's been a few years several years since I've had an American Express card, but I do have three Visa cards in my wallet. I pay off every month and I want to ask you is the American Express card two years from now going to look more like the Visa card that we know now and if it is why is it taking so long to make your change two years from now the Visa card be look more like American Express card. Let me thanks claim that you are being crossed subsidized. See if you are what you say, which is that you have the cards and you use them and you pay your bills every month and don't have an interest charge a first of all you're unique 70% of the people that have bank cards think they paid off every month and and something less than have to so there's some people that don't really understand the behavior. Let's assume you're a really doing that you are losing money for the bank card issuer. You are not profitable and not making any money on you at all. They get by with it because they have lots of people who don't pay it off every month who pay interest charges the interest charges that they pay subsidized you now several things can happen. One is people pay the interest drugs and get mad at you. And they can say why am I who have to pay an interest drive subsidizing him who doesn't pay the interest charge simply because I can't pay my bills every month and some people are beginning to say that and hence. The interest rates are going to go down part of it is because the cost of funds to bank issuers have gone down over the last decade. So the spread is large enough to subsidize people on whom they lose money you so what Lisa has already done is it is is Institute of higher interchange phase which is the basic way you priced the transaction at the merchant to account for a higher rate. And I think it's in effect now told it is a higher rate for business Travelers. The next step is to do it for people who don't revolve so you will then pay on a transaction charge because you're unprofitable. Sorry about that. It's disappointment and no institution will behave irrationally forever. Our next question is from Anita Pam push. Mr. Caleb, I'm listening to your description of what we all need to do to be more efficient and productive and imagining that it's going to result in many more profitable Enterprises in the country. But I'm also worried about you mentioned that your it's a concern to you that the the country be prosperous and I'm worried about all those displaced workers who are being squeezed out of these profitable companies because they haven't been able to change with the times or because a companies have found ways to be more productive without them. Now. I'm an educator. I could urge them all to go back to school. But what I'm really wondering about is how are we going to bring about a prosperous economy if we continue to downsize and to create large cadres of people who seem who seem to be getting squeezed out of the system well as I indicated before the one and by way of illustration in our economy we have about the same number of people that are employed today as the end of World War II work 1946 in manufacturing business in the United States and they produce seven times as many so they're just not working in manufacturing. Now. We are pursuing policies in the United States that ask corporations not to create jobs. Here. We are we do not want to create jobs United States. We want to move them off shore. We want to get organizations to downsize and we discourage them from building plants equipment and hiring people through got to change the economics every one of our businesses is competing in a global economy. And the economics of those businesses have got to work on a global basis. So if we want to in fact create jobs in the United States and I think we can because we got lots of people who are willing to work. We've got to have an environment in which people are encouraged to build businesses and to hire people and to pay them and to have them stay if we don't do that. We will not get people to behave irrationally. It would be manifestly silly to build plants in certain states in the United States and certain kinds of plants at all in the United States. If you do not have the business ability to make decisions later what you do with those facilities you go build them in some place where you can so we do pursue policies that have consequences. We've got to understand what those consequences are. The only wealth that is created for everybody art is created by business government creates 0 wealth public institutions create zero. Well, they only use Capital they do not create Capital. So we need to have an environment in this country in which people who create Capital have some value proceed to have some value in a not strangled. Thank you. Mr. Gallup. We have time for one more quick question. This question is from way trail of wha. I think every company would like to have a Bill Gates amongst them. How does one retain and develop this type of entrepreneurial spirit? Well, I don't I don't actually know mr. Gates. So I have no have no sense of him as a person other than what I read and I'm not sure that that's relevant how you how you have an entrepreneurial spirit in an organization. That is not fundamentally an entrepreneurial organization is a very very tough thing to do. I think you need to provide some kind of environments in which people who have that bent in that capacity. They can't just be entrepreneurs. That's be entrepreneurs will be successful 90% or 80% of all entrepreneurs are unsuccessful. So you've got to find a way of working the channel, right? Within within large companies, you got to have a tolerance for diversity. You got to have a tolerance for Crystal breakers for weirdos for people who have nutty ideas that you're willing to give them some money and some resources to test and and some freedom to do that and don't require some of the same kind of structures that you have other parts of the organization. We have businesses like that in American Express and we manage them with a much much lighter touch try and leave them alone as much as possible. Try to let them operate within their sphere and then in fact at some point we may find that the culture doesn't work within American Express. We need to sell them and then we do that and they they Prosper more on their own. You just can't require everybody fit the same old. Thank you very much.