Strategy & Business Development Group of American Express
As the internal consulting division and incubator for new business ideas, the Strategy & Business Development Group (SPG) of American Express occupies a special place in its parent company's heart. Comprised of three areas of focus, Strategy Consulting, Business Development, and Mergers & Acquisitions, SPG offers consulting services to each of American Express's Business Units, as well as the Office of the Chief Executive. Recently, the unit was responsible for the successful launch of American Express's Direct Brokerage and Membership Banking services. Consultants at SPG tend to stay in the group for up to three years, before taking on leadership roles within American Express.
Reporting directly to chief executive, the Strategic Planning Group is staffed by thirty professionals who advise operating presidents on issues ranging from the development of new products to the acquisition of strategic assets. At the same time, the group serves as a conduit for bringing seasoned talent into the company and preparing it for senior management.
The Strategic Planning Group recruits many of its people from outside consulting firms. They work for several years as internal consultants with the Chief Executive and other top executives on a variety of the firm's most challenging issues in the U.S. and abroad. By time they are moved into a top position, group members have acquired direct exposure to the diverse issues that top executives must tackle.
Business Travel As a Competitive Advantage
William Deutsch credits the success of his White Plains, New York, wine distributor to “shoe leather traveling.”
Deutsch, founder and chairman of W.J. Deutsch & Sons, seeks a year on the road. Kelly Soendker, his senior vice president of strategic accounts, logs about 60 percent of her time traveling. Over the years, personal visits to customers and wine makers helped the 30-year old business grow to 180 employees and $500 million in annual revenue. “We have valued distributors around the country. Through that effort, our sales people continued to broaden distribution to national accounts,” Deutsch says.
As Deutsch & Sons learned, travel can give companies a competitive edge and the return often trumps the expenditure. For every $1 invested, companies realize an average of $20 in additional gross profit, according to a recent report from the Global Business Travel Association Foundation (GBTA) and American Express Global Business Travel.
Yet, not every mid-sized company looks at travel as an investment. Many view it as an indirect cost, and during the recession, trimmed travel budgets accordingly, according to the report.
Historically, finance executives and CFOs haven’t had good data to calculate optimal travel expenditures. As a result, no one knew how much to cut when the economy slumped so they slashed their entire travel budgets. “It could have been better managed,” says Christa D. Manning, director of American Express Business Travel’s eXpert insights, a subscription-based managed travel information service.
Companies started trimming travel spending before the recession. Ten years ago, business travel represented 1.4 percent of every revenue dollar; now it's 0.9 percent, Manning says.
The cuts were most drastic during the recession. A recent survey by Egencia, Expedia’s corporate travel arm, found that 59 percent of 500 North American business travel buyers slashed budgets in 2009. That number improved slightly in 2010, to 30 percent. GBTA’s 2009 business travel forecast revealed a similar motivation to cut travel expenditures. About one in five companies responding to the survey downsized travel departments and amplified cost-containment strategies by reducing non-essential travel, enforcing travel policy mandates, and using analytics to track spending.
“For every $1 invested, companies realize an average of $20 in additional gross profit, according to a recent report from the Global Business Travel Association Foundation and American Express Global Business Travel.”
Yet many U.S. industries under spend on travel, never hitting the point where additional trips add more to costs than they yield in new sales, according to the report. “You have to wonder, did they leave sales opportunities on the table?” Manning says.
To reach optimal revenue potential, U.S. industries could increase business travel spending by an average of just over 4 percent, or about $70 dollars more per worker, according to the report.
Gradually, though, attitudes are shifting. “Business travel is no longer seen as just an expense,” says GBTA President Craig Banikowski, whose industry trade group represents thousands of U.S. and international business travel managers.
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