New Starbucks board chair Mellody Hobson lives, leads with urgency
Mellody Hobson, the Co-CEO and President of Ariel Investments, talks about the importance of time, having candid conversations and being the only Black woman chair of a Fortune 500 company in the U.S.
Dorothy Ashley was a no-nonsense, hard-working entrepreneur who fixed up condominiums to rent and sell. A single mother who raised six children, she had no time to waste. And she had a rule: no sleeping past 6 a.m. Mellody Hobson, her youngest child, remembers how she’d make her look outside the window in the mornings to see whose lights were on, to see who was awake.
“That person is getting ahead, and that person is getting ahead. If you’re sleeping, you’re missing out on opportunities,” Hobson remembers her mother saying. “I grew up working and really having this sense of getting out of bed every morning and having a purpose.”
The practical advice around the value of time inspired Hobson and propelled her on a rocket-shot path, professionally and personally – Princeton University graduate; Co-CEO and President at Ariel Investments, the nation’s first minority-owned investment company; a nationally recognized voice on financial literacy; board seats with Estee Lauder, JP Morgan Chase and DreamWorks Animation; starting a public school on Chicago’s South Side focusing on financial literacy; and relationships with the likes of Sheryl Sandberg, Facebook’s chief operating officer, investor Warren Buffett and former Senator Bill Bradley, the basketball great for whom she helped run a presidential campaign. Bradley was a Starbucks board member from 2003 until 2018.
Starting March 17, at the Starbucks annual meeting of shareholders, just a short few months before the company’s 50th anniversary, Hobson will add another line to that resume: chairperson of the Starbucks board of directors. In this governance role, she will serve as the contact point for every board member on board issues. In addition, she will be responsible for setting goals and objectives for the board, ensure all board members are involved in committee activities and assigning committee chairs.
Those responsibilities are critical, but the role carries an even weightier subtext.
“I understand the symbolism of my role. I will be the only black woman as chair of a Fortune 500 company in the U.S. There is something wrong with that,” Hobson says. “I like to think I am talented and smart, but there are others. But because I am the only one, I have to be doubly focused, to create opportunities for others, for all sorts of women from all walks of life to demonstrate excellence.”
It’s not a space she could have imagined for herself growing up, says Hobson, 51. Despite her mother’s best intentions, money was tight, and sometimes the family would be evicted, or their phones disconnected, or their power turned off. Hobson remembers having to heat water for baths on hot plates. She realized she needed to understand how money worked.
Her mother never let her give up hope, and Hobson decided she was going to love school more than anything and dream the biggest dreams. The first in her family to finish college, Hobson joined Ariel Investments as a summer intern, where she’s been since. She jokes about being the only one in her college class to have the same work phone number since graduation.
“I understand the symbolism of my role. I will be the only black woman as chair of a Fortune 500 company in the U.S. There is something wrong with that.”
The company’s founder, John Rogers, whose mother was the first Black woman to graduate from the University of Chicago Law School and whose father was a Tuskegee airman pilot during World War 2, became her mentor, inviting her into challenging and exciting spaces, rooms full of people who made money and had titles. He told her that her opinions mattered, that her ideas were good.
“Inclusion is someone saying that your voice really matters, and that’s what I learned (from Rogers) when I was 22 years old,” Hobson says. “I’m hard-wired that way, and I actually have a hard time when I’m in circumstances where that doesn’t exist.”
Being in the present and standing for the future
At Ariel, before meetings, Hobson flips over a custom-made timer – a tortoise holding an hour’s worth of sand. The tortoise is Ariel’s mascot, signifying the slow-and-steady approach to investing that is the company’s foundation, and the sand is a “a gentle signal, because we think that time matters. Time is more valuable than anything else you have, literally, because it’s limited.”
She organizes her weekly schedule by packing meetings tightly together, leaving herself uninterrupted chunks of time within each day to write, reflect and read (the books on her shelf right now include “A Promised Land” by Barack Obama, “How Boards Work” by Dambisa Moyo, “Think Again” by Adam Grant and “The Sum of Us” by Heather McGhee). She keeps office hours, like college professors, so she can stay accessible to anyone who needs her while limiting distractions the rest of the week. And she wakes up every day at 4 a.m. to squeeze in her workout to maintain the stamina and the physical strength she says she needs to get through the year. She’s always prioritizing and reprioritizing, breaking things down into what’s urgent or what’s important – knowing they’re not always the same thing – making sure that everything she does is aligned with her overall purpose and intent, making sure no moments are wasted.
At a recent virtual session with Starbucks leaders, Hobson advised the Executive Leadership Team to think about ways they might maximize time, maybe even manipulate it, by identifying and utilizing people on their teams who already have the innate ability to play multiple roles, as she’s done so often in her career.
Hobson thinks of Starbucks in terms of time as well. In the present, she says, Starbucks has always stood for the future.
She points to progressive benefits the company offers, such as comprehensive health care coverage for both full- and part-time workers at a time when most companies weren’t doing that, and Bean Stock, the first program of its kind in the retail industry, which turned employees into shareholders.
Starbucks has always stood by its principles, she says, even when there was pressure to do otherwise. After the financial crisis in the late 2000s, for example, when the housing market crashed, Starbucks continued to offer health care benefits to its employees. The company, in fact, was spending more on employee health care at the time than on coffee, Hobson recalls. She remembers a conversation with former Starbucks chief executive officer Howard Schultz, who insisted it had to be done.
“Leading by example, being early, putting the partners first, and understanding that if we did that, we’d ultimately have people who were healthier and had more loyalty, and who cared about the company and who cared about the customer because we cared about them,” Hobson says. “Those were novel concepts at the time, they seemed soft… I mean it when I say we’ve been the company of the future in the present, and that will be the challenge for us to continue to lead in that way, even though at times that has meant taking bullets.”
Even other efforts that were criticized externally, like the Race Together campaign in 2015, when baristas wrote the phrase on cups and tried to spark a national conversation about race relations, were important, Hobson says. The timing might have been wrong, she says, but considering the circumstances the country faces now – amidst a year of intense racial reckoning following the killings of George Floyd, Breonna Taylor and Ahmaud Arbery – those kinds of candid conversations today are not only appropriate, but necessary.
“We were early, we were criticized, but we were on to something,” Hobson says. “That conversation held us in good stead when real issues came up. People knew our hearts were in the right place.”
Civil Rights 3.0
In 2014, Hobson delivered a Ted Talk called “Color Blind or Color Brave.” In it, she talks about her experiences around race, being the only Black kid invited to a birthday party, and as an established professional, being mistaken once for the kitchen help at a campaign event. She wonders why white men make up 30 percent of the population but take up 70 percent of the board seats. She encourages people to get comfortable with the uncomfortable conversations around race, and argues that diversity is a competitive business advantage.
Diverse leadership throughout the company – on the corporate side and in operations – is one of Hobson’s top priorities. She refers to this time as “Civil Rights 3.0” – 1.0 representing the time after enslaved people were freed by the Emancipation Proclamation, and 2.0 being the 1960s, when societal momentum helped pass the Civil Rights Act and the Voting Rights Act.
“The difference between then and now, this problem, this issue is at the feet of corporate America,” Hobson says. “Now, corporate America is being held accountable in a very different way than we’ve ever seen before, by people inside the companies, by customers, by the broader society. Now, people understand there’s scorekeeping going on, and lip service isn’t going to work anymore. There’s just been too much talk. Now we need some real elbow grease, and elbow grease needs to be demonstrable outcomes.”
She likes that Starbucks is transparent about its diversity numbers, and has tied incentives to executive pay around reaching diversity and inclusion milestones. Those kinds of targets – not a quota, but a range, she says – are very familiar to corporations.
“The willingness to go public with numbers, these are baby steps. We are in the very early, early, early innings of real change when it comes to diversity,” Hobson says. “I am hopeful, but I think we have a big steep hill to climb before we see the real kind of economic parity in this country, as well as the opportunity parity that we need to see, based on the demographics and the changing of America.”
‘Because of me, someone else can have this opportunity’
After an unprecedented year of working from home, of pandemic and social unrest, Hobson remains committed to the work. Some of the things that keep her going are the stories of everyday people, Starbucks partners (employees) who are volunteering on the front lines, or who are taking time to deliver food to hospitals.
“Those are the kinds of things I think about. No, you can’t sleep another hour right now,” Hobson says. “Someone is up serving coffee to my people, someone is up at Ariel making sure our servers are working. That’s my inspiration.
“In my moments where I’m fragile or not brave, I keep calling up Dr. Martin Luther King Jr. He would keep going and he would walk into this fear, and because of him, I can be here and be who I am. What am I doing, that because of me, someone else can have this opportunity?”
She thinks of all the work before her at Starbucks: to add value to shareholders, to build upon the company’s first 50 years, to help the company “slingshot” out of the pandemic, not just stumble or crawl out of it. And she says she’s ready.
“We will work together and ally in outcomes,” Hobson says. “The goal is to do better every single day, to be a better company, to add more value to shareholders, and to be a place where people want to work, where they feel heard and feel the opportunity to speak their truth. We still have a mountain to climb, and I’m excited to be there for the next stage. Great companies can get better. People can get better. I can get better. And that will be the job of the board, to help the company realize all of the potential that’s yet to be unlocked.”
