Mellody Hobson, President and Co-CEO, Ariel Investments Interviewer: Michal Lev-Ram, FORTUNE


MPW Summit 2023: Leadership Lessons With Mellody Hobson

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You Community Melody. Hobson is CO CEO of the Global Asset Management Firm, Aerial Investments. She's chair of the Starbucks Board of Directors, a board member at JP Morgan Chase and an influential force in the world of finance. Melody is a longtime advocate for closing the racial wealth gap. And earlier this year, she launched project black, a groundbreaking fund designed to create and support minority owned businesses of scale. She's known for her business acumen and recently shared her wisdom, teaching a master class on strategic decision making. Melody is no stranger to Fortune's most powerful women in business list ranking once again in 2023 her fifth time on the list. We're delighted to have her with us at the summit to talk about her recent projects, the the decisions that shaped her career and to offer lessons in leadership, she joins Mahala Brahm for this conversation. Please welcome them to the stage. Thank you for joining us Melody. Um So you literally uh taught the master class on strategic decision making as we heard and I wonder if you could start out by just sharing with us? Where do you feel like your lessons in strategic decision making um throughout your career, where, where, where did most of that come from? Was it from the boardroom from your childhood? From somewhere in between? So, first of all, thank you so much for having me. I always love coming to this conference and I used to dream of being here when I was really young and reading fortune. So it's very exciting to sit on the stage and to be on the list and just meet and be with so many amazing women. Um My strategic, my point of view around strategy came through growing up. My mother had really practical advice for me all the time. From my life experience, generally, the hardest things and the worst things taught me the most about strategy when things weren't going well. And then I've had the opportunity to work with some iconic leaders like Howard Schultz, Jamie Diamond, Jeffrey Katzenberg, being in a room with David Gethen. Um people who John Rogers be married to an icon like George Lucas. And so those titans all have been great um uh advisors and I try to eat up and soak up wisdom. Uh best lesson from your mother though was what? Well, I was telling some of my mother's stories in the green room, which were hilarious. Um But I think in work, her number one lesson was make myself indispensable. She always said, make it so you couldn't lose your job that everyone would want to work with you. And I used to joke with John Rogers when I first started Ariel, I want one of me because I really did make myself indispensable. But this was also the mother who told me which I made the joke in the other room. No one wants to see you eat all of that. So she would say if you're out at any kind of event, you know, with dinner with people half she's like, never or does anyone want to see you eat all of that? That hilarious. That's hilarious. True. It started at very young. So it wasn't like at 13, she started saying it, she started saying it very young. That's very funny. Um, so you were a four year old who left half your plate as it started pretty, I was like, oh, I supposed to eat half. So, um, one of the things you've talked about in the past and the master class as well is kind of the, the, the art of having tough candid conversations. And, um, I wonder if you could just give for us, like some of your biggest lessons over the years when it comes to that something everybody in this room has to deal with. And so many of us have a hard time doing. Gambi Sa Moyo was the person who crystallized this for me. She's one of my best friends. We're doppelgangers. She grew up in Africa, I grew up in America and was an economist. Right. And um she always used to say to me in the very early years, feedback as a gift, it is not a right. And that was something that I realized was really important. I think people think we have a right to feedback when we don't. And so she was like, what, wherever you can get it, however you can get it, you should be excited about it. We had a coach inside of Ariel who always used to tell us that um you, we'd ask permission to get feedback because he, he said everyone doesn't want it. So when we were in a situation, we would say and still at Ariel, do you want feedback? And don't say yes if you don't want it. And so getting feedback in that situation. And then last, lastly, don't qualify feedback by who gives it to you. I think what typically happens is we say I don't really like that person. So therefore I'm going to discount everything that they say when sometimes someone you least like admire maybe think has the values that you have. There is a kernel in there that could be helpful to you. And so being accepting of feedback from anyone at any time anywhere is the goal that I've always had. And then I can tell you, you know, being willing to accept it. And there have been many times in my life where the feedback was extremely tough and I have had a rule do not cry. Because if someone gives you feedback and you start crying, then they have to spend a lot of time putting you back together and they never want to do it again. So they're thinking to themselves like, I don't have 30 minutes to give melody when I give her this feedback. So do not cry. I tell people, you know, if you cry, you sort of ruin the possibility of getting feedback again. Don't cry. Eat half your plate. What does he eat all of that? Um So Alan Murray, our CEO and I recently interviewed the Newish CEO of Starbucks for our, our podcast leadership. Next. And it was fascinating hearing him talk about his sort of immersion into Starbucks, not just doing the, you know, typical listening tour, but actually taking months getting to be a certified barista working as a barista across the world. And, and this is something that you and Howard Schultz really put to Howard really thought of it. So I want to give Howard credit because that's really the person Howard said, let's give him six months to get totally immersed. And during that time, he said I'll stay longer because he was supposed to leave earlier than he did. I'll give him that time where no one is reporting to him. He doesn't have to make any really hard calls and he can spend the time just learning the business from the ground level up. And then we slowly layered on, um, reporting responsibilities. But he was unencumbered for a long time to really move around the world and be behind the counter and in being behind the counter, it's the way you really learn the business. You got to spell everybody's names. It's not easy. If only it were just that. Yes, I'm sure the baristas is hard. I have zero doubt. But one of the interesting things to me was that he mentioned, as we were asking him about this process that in kind of the Western mentality, it's like, oh my gosh, how did you take so long to train for this to do this, you know, immersion and the Eastern mentality is why was it so short? Just six months? So can you talk about just your role and and in in shaping that helping to shape that? And why as chair of the board um of Starbucks, you decided that this was really worth his time because the culture of our company is so important to our success and understanding that culture is truly um critical to understanding the customer, the partners who work inside the company and what makes us different. And you know, when you think about it on the one level, we sell a commodity. On the other level, we sell an experience that is so ingrained in cultures, not only here in America but around the world and it's so important to people and they choose this third place because it makes them feel something like they belong or special or um valued. Noticed it's the name on the cup. All of those things. They set us apart from a traditional um mind competitor. No disrespect. And I think making sure that someone could really assimilate inside of that culture was, was very important. When you think about many careers, you know, there were jobs where you were an apprentice for a long at aerial. We talk about our analysts being apprentices, their apprentice, they're an apprentice for a very long time where they're just learning the craft. And that's what Lakshman had the opportunity to do. Again. It was Howard's idea. And as a board, we were fully, fully behind that idea based upon we thought what we thought ultimately would be important to his success and therefore the success of the company. Amazing. Um I know this audience loves to hear from you. So I definitely want to give you all an opportunity to ask melody some questions as well. Please raise your hand and we'll bring a microphone over to you. Um But I, I wanna pivot a little bit in the meantime, um we saw so many um diversity initiatives um after the murder of George Floyd in particular um and so many commitments um and, and, and, and statements put out and um and now we're seeing at least uh in some companies uh de prioritization um of those commitments of those initiatives. And so obviously, this is near and dear to your heart and to Ariel and the whole mission from the get go. But what's your advice to other companies on how to, how to keep your eye on the ball, how to keep it a priority and why? What's the argument? The argument is very simple. So my perspective around diversity and initiatives, inclusion belonging is that if you want to be a world class 21st century company, if you want to understand your potential customer, if you want to understand the people who work in your company, you need diverse perspectives, diverse ideas, diverse backgrounds, all to come together for better outcomes. If you don't want that, then stay monolithic and over time you will disappear. And I think that, you know, people are trying to make this about the right thing to do. This is good corporate governance. This is about being a fiduciary to all the stake holders that are important to a company. And unfortunately, the pullback after the horrific murder of George Floyd that shined a light on an issue that anyone who was black or brown already knew about. There was no revelation for us is that the pullback has certainly been been directly related to the Supreme Court decision with Harvard in the sense that they're coming for us. If we have diversity on our agenda, I say don't give in to that. I think companies have to stand firm because this is ultimately in the best interest of the company, the shareholder and our society. Are you? And we have a question over here, but I wanna just real quick ask a follow up. Are you concerned about the legal landscape? You've got projects Black, the, the fund that you started? Um Does that concern you? How are you navigating? No, I'm not concerned at all. We've looked at all of the legal possibilities and we feel very, very strong and, and confident in our point of view about what we're doing to grow and scale minority black businesses, uh minority businesses, black and brown in the United States. So this is a good business decision and that's ultimately, you know, what matters over time. Hello, um The Hair Washington, Ceo of Otri M Melody. I just wanna thank you for your leadership example. Um You spoke, uh my company is Index back and um you spoke at a conference earlier this year and you looked across the room and you asked where were the Black and Brown founders and CEO S? And you know, if you saw me, I was one of the ones, but I wanted to thank you for at least for example, 11. Exactly. That was meant to say that you often speak truth to power in rooms that need to hear the message. So thank you for that. The question on a lighter note, I'm a Seattle Seahawks fan. So when Russell came over to the Broncos it was definitely one of those who had mixed feelings. I wonder how your ownership in the Broncos with the sports franchise has changed your leadership or perspective on winning and losing in business. Curious, since it's so public and emotions run so wild. So, first of all, I just want to be very clear. Never in a million years did I imagine I'd own part of a football team just so like, just to be super clear, I didn't like grow up thinking that's what I'm going to do. But what I will tell you is you can learn anywhere and I've learned one a lot from sports. It's hard, it's a very hard thing. And I have two takeaways that I think have really influenced me in the last year of ownership. One, I was on the phone with Sean Payton, our coach very recently on a Zoom and he said you have to earn the right to coach hard, wrote it down. And I was like, you have to earn the right to coach hard in any setting. And I thought about why I could co chart at aerial after 30 years or how I show up in boardrooms because I've said in those rears for a lot rooms for quite a while, but you have to earn the right to coach hard. I think that's a really intuitive statement. The other thing that I learned from and I, I used this example with my young colleagues who are very excited about hybrid work and maybe never done it before. And it's not my favorite thing. I'm being very honest and I always told them, I said, listen, I want you to just imagine the Super Bowl huddle. I want you to imagine the two teams on each side. I can assure you neither was hybrid, even like the time in the weight room is together. It, you can't win like that. And so, you know, just using that as a real life example, it's hard to argue with, but it's true at melody. Super, super quick. What's next for you? Like what's on your, you know, we talked about vision boards earlier. You've done so much. Is there something that you're like, just dying to, to, to own or to, to work at, or to accomplish that you haven't done yet? There are so many times that I wanna do. I mean, I, I can't even, my list is long. Um, you know, I, I, there's so much, I mean, it's, it's hard for me to, I want all kids to learn financial literacy in schools. I mean, that's one of the things I wake up every day thinking about. I want Ariel to be um great and that's, you know, so I've never looked for another job or something else that I wanted to do. I wanna do a really good job as chair of Starbucks because, because right now, which is tragic of the Fortune 500. I'm the only black woman chair that doesn't make sense. And so these are things that are all really important to me as understand being cognizant of the fact that they set trails for other people and needing to do a good job. So there's a lot, I, I think we're all in awe of your to do list. So thank you for coming and sharing with us. Thank you. Thanks for having me. Thank you.