Until recently, Lei Chen held an unusual title at American Express, the $34 billion credit card and financial services firm: Vice President of New Capabilities Innovation. She was focused on bringing in new talent and new technologies, and building new capabilities, to help the company do things like creating a speedy online loan platform for small businesses, an area in which American Express competes with fintech startups like Square and On Deck Capital.
Chen says she was tapped for the new capabilities innovation role thanks to her diverse and broad business background at American Express, which she joined 19 years ago after completing her PhD in statistics at Michigan State University. “I have pretty much held positions in almost all areas from fraud prevention initially to credit risk management, from very heavy analytics jobs to building new capability.” Along the way, she has also worked in all three American Express businesses: consumer, commercial and merchant.
She credits her background, growing up in China in a peripatetic military family, for making her adaptable, and says the variety of opportunities is one of the things she enjoys most about American Express. “Innovation has been part of every single role and to me personally, innovation is about driving change and driving excellence and always finding a way to do things better and faster.” We spoke to Chen earlier this fall to get her advice about innovating in a company with no centralized innovation function — and a declining market cap — as she was moving into a different role.
#1 Blend Inside and Outside Talent
In her position as VP of New Capabilities Innovation, which Chen assumed in 2015, she was at the helm of a brand new team. She viewed the role as having three main components, and task number one was to “make sure we have the right talent in place to embrace the innovation that’s opened up by technology,” says Chen. She hired both from inside the company, recruiting people who she knew were top performers — even if they didn’t have the background or experience with the type of technology they would be building. And at the same time, she looked externally for people on the technology side. Her goal was to create a diverse pool of internal and external talent, where team members could learn from each other.
“I’m a big believer in growth mindset,” she says referencing the 2007 book “Mindset,” about talent development, by Stanford University psychologist Carol Dweck. “I have people who joined my team who do not have [a specific] capability or technology background, but they have very strong attention to detail, problem-solving skills, and very deep knowledge on the risk management side.”
To get these team members up to speed, there was a lot of online and offline training, as well as learning on the job. At the end of the year, the top performer on the new team was someone who hadn’t had directly relevant experience when he joined. “He was committed to learn, willing to learn, and had the ability,” says Chen. “Some leaders hire based on experience. Some leaders hire based on potential. …I look more at the potential. …As long as you have the right qualities to start with, and you are willing to learn, everything can be solved.”
#2 Understand Customer Needs and Build Fast
American Express has in recent years identified commercial lending as a major area of potential growth. The company spotted an opportunity in lending to its small and mid-sized commercial business clients, who needed short-term funding to better manage their vendor payments and cash flow. Chen says that if the businesses go to banks, they experience a number of “pain points,” the process may be slow, and they might not get a loan for the amount they want.
Chen says that her second rule for innovation is to build a deep understanding of the customer’s needs, and develop the best solution to meet those needs. A cross-functional team created Working Capital Terms, a short-term online financing product that helps small businesses get the funds to pay their vendors quickly and ease cash flow constraints. Chen’s team developed the platform with the end-to-end functionality to support the new, commercial lending product. Thirty, sixty, or ninety day loans for up to $750,000 can be approved online in minutes, with funds transferred within 48 hours. The flat fees are competitive.
American Express used so called “big data” in assessing lending risk on the new loan platform. While Amex has always been a leader known for leveraging data, “big data has been one of our most important tools in being the company we want to be,” says Chen. (The term “big data” refers to volumes of both structured and unstructured data so large they are difficult to process using traditional database technology.)
Chen says that building a big data competency can help companies increase the speed at which they develop new products and services. For example, it used to take months to build a model that can now be finished in days. “Now, the employee can have the capacity to drive more innovation,” says Chen.
#3 Rewards and Recognition are Essential to Innovation Culture
Chen says the third of her three tasks was creating a culture of innovation, “where everyone is always striving to try new ideas and new things.” There is, however, no magic formula here. It’s about encouraging employees to find new ways to solve business problems — whether that involves a new tool or technology, or simply a different perspective. It’s important to provide rewards and recognition to the employees that come up with ideas that move the needle, Chen says.
In her latest role, Chen is now Vice President of Global Commercial Analytics, leveraging analytic insights to support American Express’s commercial and merchant businesses. “Even though my new title doesn’t have innovation in it,” she says, “there is tons of innovation happening to leverage big data, to drive customer insight, to improve our marketing strategy and make our products more relevant to our customers.”
As Lei Chen wraps up her conversation with InnoLead, she returns to a theme she has emphasized repeatedly throughout the discussion. “Innovation in itself is not about one particular project or one particular initiative,” she says. “Innovation is about a mindset.” Successful companies focus on hiring people who have it, building teams that share it, and rewarding it when it leads to tangible results.