Black Business Leaders Series: John Rogers and the Importance of Hiring Minority-Owned Services Firms

The African American CEO of a money management firm publicly criticizes the Fortune 500 for paying lip service to diversity. His board urges him to stop. What should he do? HBS Professor Steven Rogers and protagonist John Rogers discuss a new case study about the risks of speaking up, and the importance of black empowerment in the investment sector.

Subscribe on iTunes  Follow on Libsyn

Subscribe on iTunes  Follow on Libsyn

Brian Kenny: If Fortune 500 companies are a gauge, the case for diversity in the workforce is indisputable. According to a 2017 McKinsey study, companies in the top quartile for racial and ethnic diversity are 35 percent more likely to have returns above national industry medians, and these companies routinely show up in Fortune magazine's best places to work list. But the race towards diversity isn't limited to hiring employees. It's also a dynamic process taking place within the nation’s supply chains, where minority-owned businesses have become a critical measure of the nation's economic health.

A study by the National Minority Supplier Development Council showed that in 2014, minority-owned businesses generated more than $1 billion in economic output every day. They created 2.2 million jobs, and contributed $49 billion in local, state, and federal tax revenues. Even so, these businesses face obstacles that others don't experience. Today, in the latest installment of our Cold Call black history month series, we'll hear from both professor Steve Rogers, the author of the case, and John Rogers, the case protagonist. The case is titled John Rogers, Jr.—Ariel Investments Co.

I'm your host, Brian Kenny, and you're listening to Cold Call.

Brian Kenny: John Rogers is the founder, chairman, and CEO of Ariel investments. Steve Rogers teaches at Harvard Business School where he created the new course Black Business Leaders and Entrepreneurship.

Kenny: This is going to be the inaugural case for your course this semester, so we are having this conversation in advance of the case being taught. Steve, tell us how does the case begin? Who's the protagonist?

Steve Rogers: The case begins with a phone call that John Rogers, Jr. receives from one of his board members. John Rogers is one of America's great entrepreneurs, who is an African American in the financial services industry, he manages money. In the words of Warren Buffett, he is one of the greatest investors of our time. The case began with John Rogers receiving a call from a board member, who very clearly and unequivocally tells John, "Please stop criticizing Fortune 500 companies and major foundations. Please stop criticizing them in the media." At that time, John was saying very explicitly to the media ... that [top companies] were paying lip service to the whole ideal of inclusion, that they alleged to have interest in diversity, and in sharing the wealth, and being a part of the society that shares opportunities with everyone, but all the facts show that they were not including people of color, specifically African Americans, in their supplier base.

The case is about John Rogers speaking up, being admonished by his board member, saying to John, "You could actually be doing a disservice to your own company by going public, because you are speaking negatively about companies that you will hopefully do business with."

Kenny: John, it would be helpful for our listeners who aren't familiar with your industry to describe the money management industry, and the place that Ariel sits in that landscape.

John Rogers: Well, thank you. Ariel Investments is a money management firm where we manage about $13.1 billion currently. We have 90 employees, and we do money management for institutions—corporate pension funds, college endowments, foundations, and public retirement systems. And then we have a family of mutual funds for individual investors... We are a mini version of what Fidelity does, T. Rowe Price; they have multitrillion dollars [invested], and we have $13.1 billion. But we do exactly the same thing.

Kenny: The case goes into some of the numbers, it certainly looks like Ariel Investments is a real player in this space.

John Rogers: Well, thank you. We feel like we should be bigger, and we think we should be more of a player nationally. We have some dynamic leaders at the firm like Mellody Hobson, who's been with us for 27 years as probably our most well known leader. We have several top people who have helped us build the firm. And most importantly, we have had outstanding performance. If you go back to 1986, when our first mutual fund was founded, we've compounded at over 11.5 percent a year.

We're a top decile performer in the Lipper universe, and number one in our category, even though there's only about seven funds that go back to 1986. But it's pretty cool to be number one in our category. Since the March 9, 2009 low, when the market finished its crash, we've also been number one in our category—this time with over 230 or so funds. We were willing to go in and buy during that period of enormous amount of fear, and crisis in the American economy.

Kenny: Those numbers are really relevant in the context of how firms make decisions about who they're going to hire to manage their money. How did you get into this business in the first place?

John Rogers: My father was a Tuskegee airmen, and he flew over 100 missions during World War II, and he was in the original group of fighter pilots that went overseas. When I was born, he was 39 years old, so I was a late child, and he had a lot of time to figure out how he wanted to bring me up. At every age he had specific targets for me. So, when I was 12, it was that I was going to have my own stock portfolio. Every birthday and every Christmas, he would give me stock certificates instead of toys, and I loved it. I loved reading about the markets. He would let me keep the dividend checks, which was really smart—it's really cool when you're 13, 14 years old, and you're getting a dividend check in the mail.

His stockbroker was a man named Stacy Adams, who was the first African American stockbroker on LaSalle Street. He became my role model. I would visit Stacy and watch the ticker tape go by, learn about the markets and learn what he thought about the markets. I followed in his footsteps, and became a stockbroker when I graduated from Princeton.

"Most firms that are professionally owned by minorities should possibly be much larger, if given the proper opportunity"

I spent two-and-a-half years at William Blair, in Chicago, a great regional brokerage firm. I was the first African American hired there in a professional position, and learned about money management and mutual funds while I was there and decided that's what I wanted to do for my career, and started it when I was 24, in 1983.

Kenny: So you've been at this for a while?

John Rogers: Yes, it's been 35 years.

Brian Kenny: Steve, let me turn it back to you for a second. Can you talk about minority representation in the money management sector, and along with that, can you describe why economic empowerment is so important right now?

Steve Rogers: I used to think that the two worst industries relative to inclusion, specifically as it relates to hiring and doing business with African Americans, were the real estate development industry and Silicon Valley's technology industry. What I've discovered is the financial management industry is just as bad, if not worse, and the financial management industry is one where it should be as simple as determining and evaluating performance… the numbers tell the story. John cited to you his performance: He's a top quartile performer, and the result is that he should be a much larger firm. Most firms that are professionally owned by minorities should possibly be much larger, if given the proper opportunity.

The importance of that is that we know from research that black-owned companies and other minority-owned companies have a proclivity to hire more people who look like themselves, and so part of the way in which America can solve its problem around unemployment, and providing fair opportunities to everyone, is for these companies to grow. Research shows that the largest employer of African Americans in America is the federal government. The second largest employer are African American-owned companies.

When African American-owned companies are allowed to prosper and grow, we see the creation of more jobs. When people have jobs, they're self- sufficient. When people are self-sufficient, they live in healthy communities. That's exactly what happens when diversity and inclusion is actualized, and people like John are given a chance to grow their companies.

John Rogers: I was just going to add, I often quote professor Rogers when I give speeches about the importance of black businesses hiring other African Americans and being role models. The other thing I would add is that he talked about the philanthropic empowerment that comes from having strong minority businesses. We saw that in Chicago, with really great entrepreneurs like John Johnson, with, Ebony, and Jet, George Johnson with Afro Sheen and Ultra Sheen in his products.

They did enormously wonderful things for the community. Reverend Jackson often tells the story of Dr. King coming to Chicago, desperate to make payroll, and how George Johnson not only got all of his business leader friends together to write checks at that critical time in civil rights history, but also he had founded Independence Bank, which became the largest black bank in the country, so he got Independence Bank to back loans for SCLC (Southern Christian Leadership Conference) at that time.

Kenny: So the ripple effect is really significant, and all these businesses trying to hire a diverse workforce is important, but at the same time, hiring a diverse supplier can also achieve the same end.

Steve Rogers: Absolutely, well, it provides the opportunity, as you stated in your introduction, it provides the opportunity for businessmen and businesswoman entrepreneurs to do one of the great things that they always do, and that is, create jobs.

Steve Rogers: Let me add to what John said about the impact of successful black entrepreneurs, businessmen and women. We have a case study in Chicago that has proved to be extraordinary. President Obama came from Chicago, and the seed capital for his campaign to run for the state senate came from the black business community. He literally came to the black community at a trade organization in Chicago that represents black businesses that have at least $1 million of revenue.

I would tell you that the reason he came to Chicago to live, was because of the great history of black businesses in Chicago being supporters of black politicians and others throughout American history.

Brian Kenny: Yes, and as a two-term president, that turned out pretty well.

Steve Rogers: Exactly.

Brian Kenny: John, you are on several boards ... and the case starts out with your role as a director. Where does that come from in you, the sense of activism?

John Rogers: Well, I think we talked a little bit about my father being a Tuskegee airman, but my mom, Jewel Lafantant, was the first African American woman to graduate from the University of Chicago Law School. She was very involved with the civil rights movement, was involved with sit-ins, and going to restaurants and forcing people to serve her and her friends. Then, when Reverend Jackson moved to Chicago 50 years ago, and she and my first stepfather would host him in their home.

I can still remember, it's vivid to me, sneaking down the stairway and peeking at Reverend Jackson holding court in our dining room. And so I think that's where it started for me to be able to see that passion for civil rights, and to see their investment in it, and their participation in it, and saw how hard my mom worked at it. I think it had a lot of impact on me.

Kenny: Steve, we live in a day and age, I think, where companies all want to own issues; we talk about corporate social responsibility. In your experience working with leaders across a range of industries, are CEOs expected to own these kinds of issues? This is something that they need to step up to, yes?

"It's vivid to me, sneaking down the stairway and peeking at Reverend Jackson holding court in our dining room"

Steve Rogers: Absolutely, and Brian it is not something new. CEOs have been advocates for positions and things that interest them throughout history. Part of the responsibility to be a change agent is to speak very strongly in public about positions that one has, that hopefully will better society.

Kenny: John, you've done that unflinchingly, I would say, based on articles that are included in the case, exhibits that are there. You've really taken a strong stand on this, and using your position as a director in these companies to try and have some influence. What are some of the things that you hear from the CEOs of firms when you tackle this topic with them?

John Rogers: The place where I've had the most conversations the last several years have been with presidents of universities, and I would say at least a dozen different instances where they've said [in construction jobs] ... "No one's ever talked to us about the fact that we should do professional services work with minority, or African American, or Latino firms. It's just never come up."

That's what they basically say, that no one's ever talked to us about this. I tell people the economy has shifted and adjusted. One hundred years ago, most of our wealth was created in manufacturing. Now, the wealth is created in professional services and technology, that's where it is.

This idea that they they've all got caught up in the supply chain mentality, and haven't adjusted when it comes to working with minority-owned businesses to the new economy. That's the thing that's the problem, they just have not thought about it, no one's pushed them on it, and so people just do things the way it's been done, because that's the way it's been done before.

Steve Rogers: One of the amazing things about that fact is that if these same ... institutions run by these leaders were 100 percent white, they would view that as something that they would not like to see, as well as something they would not endorse. The fact is they see the importance of inclusion in certain areas, but there seems to be almost these blinders on when it comes to inclusion relative to economics.

We see people making decisions to not include African Americans, when it's actually to their detriment to do so. The best and the brightest are being left out when there's this exclusionary mindset, these blinders that people have. There should be this automatic DNA that says, "Wait, we have no African Americans, we have no minorities, we have no women in our portfolio, why is that?" They should have the mindset that says, "I don't come from a world that doesn't have any brilliant African Americans in it," especially when we think about the people who come from this institution.

John Rogers: There are institutions that have shown this works. At the University of Chicago, over the last 10 years under Bob Zimmer's leadership, we have over 60 professional services firms that are doing business with the university that were not [doing so] 10 years ago. It goes to everything from black radio stations, to Ebony and black enterprise magazines, to black investment banks, and law firms, and accounting firms, 15 money managers for the endowment. The University is extraordinarily proud of it.

It's worked really well. They're getting great professional service, they're getting great results. It fits with the values of the institution. Because one of the things that Bob Zimmer felt was important, the university stands up and says that diversity and inclusion are important, should be important in everything we do, not just in a few areas. Dr. King talked a lot about that, if we were going to be able to make progress as a people, we had to be included with power into all aspects of our capitalist democracy.

It can be done, and I think Steve's right, it's that people are comfortable doing things the way they've always done it. There is the implicit bias, unconscious bias, that's sometimes there. On top of it of course is that when it comes to professional services, people do business with people they know well.

Kenny: Are there examples of how to overcome this bias ... how to overcome the impasse?

John Rogers: What I've found is that you have to have leaders. It starts with leadership, someone who has the courage to tell the staff that we're not going to do things the way we've always done them.

We're going to make sure that we're, again, executing our values consistently around every single thing that we do. There are people out there who are making a difference, but a lot of times, those are just few and far between. We have to find a way to get role models so that others can emulate the behavior of the winners.

Steve Rogers: What it really comes down to is leadership. The leadership comes in different levels of the organization, the leadership of the CEO of the enterprise, or the president of the enterprise. The leadership of the board members, and that leadership has to be on the part of the African Americans who serve on that board, the non African Americans as well. The white Americans.

One of the great things that I experience was being on a board, and one of my white colleagues made the statement, "What's the problem with diversity around here? Why aren't more African Americans in our supplier base?" This was a white woman who made this statement. I was so proud of her, because the responsibility just didn't fall on my shoulders. I'm perfectly comfortable in taking that responsibility, but it's cool to see others getting that importance. And so John is an example of what we need to do to change this, and that is: people must speak up.

The speaking up must be in several forms. First of all, I don't believe that there are necessarily acts of commission versus acts of omission. I don't believe whites are getting together and saying, "Let's leave black people out of the opportunities." But the reality is that the results are the same, be it commission or omission. What I've found to be effective in this is to inform, and then to educate.

There are actually steps that one can take and we'll be teaching these in our class today about leadership, three different types of leadership. The first type of leader is the one who agitates; the second type of leader is the one who innovates; and the third is the one who orchestrates. The agitator is what we're all doing, informing everybody of the problem. The innovator is the one who says, "Now, I've told you what the problem is, here's the solution to the problem, and I'm going to help you participate in a solution."

Then the orchestrator is the one who says, "Now, we've had an example of lean success as a result of implementing the plan, now let's spread the joy around, let's spread it around to everybody." Those are the three categories of leadership. John emodies all three of them...

When John Johnson started Ebony magazine, this was the statement he started with" "I want to start a magazine to tell all the swell things about the Negro."

Brian Kenny: Yes.

Steve Rogers: I decided I want to use case studies in my course to tell all the swell things about black businessmen and businesswomen in the business world, and John is one of those swell things, quite frankly. John embodies, in my opinion, what we at Harvard Business School value, and that is, businessmen and businesswomen who make a difference in other people's lives. He's been an entrepreneur, very successful, he's created jobs for other people. He has given back to the community, he's created his own school. John is a role model for our students.

The other reason I wrote the case is because I want our students to learn how to make decisions when they're in leadership positions. That leadership as a businessman or businesswoman does not limit you to just focusing on the P&L, or the balance sheet, but it requires you to be a bigger part of society. John embodies that.

We have an opportunity to bring one of America's great entrepreneurs to the table. He's a change agent, our students need to see him as being one of the people. When you're blessed with the opportunities to be successful in business, with that blessing comes an obligation to do something for other people. That thing that we can do for other people, is be a change agent, and make other people's lives better, and John has done that.

Brian Kenny: Thanks to you both for joining us, appreciate it a lot.

Steve Rogers: Thank you, thank you.

John Rogers: Thank you.

Brian Kenny: You can find the John Rogers and Ariel Investments case in the HBS case collection, at hbr.org. I'm your host Brian Kenny, and you've been listening to Cold Call, an official podcast of Harvard Business School.

This interview transcript was edited for length and clarity. The interview was recorded January 31, 2018.

 Read more

Brian Kenny: If Fortune 500 companies are a gauge, the case for diversity in the workforce is indisputable. According to a 2017 McKinsey study, companies in the top quartile for racial and ethnic diversity are 35 percent more likely to have returns above national industry medians, and these companies routinely show up in Fortune magazine's best places to work list. But the race towards diversity isn't limited to hiring employees. It's also a dynamic process taking place within the nation’s supply chains, where minority-owned businesses have become a critical measure of the nation's economic health.

A study by the National Minority Supplier Development Council showed that in 2014, minority-owned businesses generated more than $1 billion in economic output every day. They created 2.2 million jobs, and contributed $49 billion in local, state, and federal tax revenues. Even so, these businesses face obstacles that others don't experience. Today, in the latest installment of our Cold Call black history month series, we'll hear from both professor Steve Rogers, the author of the case, and John Rogers, the case protagonist. The case is titled John Rogers, Jr.—Ariel Investments Co.

I'm your host, Brian Kenny, and you're listening to Cold Call.

Brian Kenny: John Rogers is the founder, chairman, and CEO of Ariel investments. Steve Rogers teaches at Harvard Business School where he created the new course Black Business Leaders and Entrepreneurship.

Kenny: This is going to be the inaugural case for your course this semester, so we are having this conversation in advance of the case being taught. Steve, tell us how does the case begin? Who's the protagonist?

Steve Rogers: The case begins with a phone call that John Rogers, Jr. receives from one of his board members. John Rogers is one of America's great entrepreneurs, who is an African American in the financial services industry, he manages money. In the words of Warren Buffett, he is one of the greatest investors of our time. The case began with John Rogers receiving a call from a board member, who very clearly and unequivocally tells John, "Please stop criticizing Fortune 500 companies and major foundations. Please stop criticizing them in the media." At that time, John was saying very explicitly to the media ... that [top companies] were paying lip service to the whole ideal of inclusion, that they alleged to have interest in diversity, and in sharing the wealth, and being a part of the society that shares opportunities with everyone, but all the facts show that they were not including people of color, specifically African Americans, in their supplier base.

The case is about John Rogers speaking up, being admonished by his board member, saying to John, "You could actually be doing a disservice to your own company by going public, because you are speaking negatively about companies that you will hopefully do business with."

Kenny: John, it would be helpful for our listeners who aren't familiar with your industry to describe the money management industry, and the place that Ariel sits in that landscape.

John Rogers: Well, thank you. Ariel Investments is a money management firm where we manage about $13.1 billion currently. We have 90 employees, and we do money management for institutions—corporate pension funds, college endowments, foundations, and public retirement systems. And then we have a family of mutual funds for individual investors... We are a mini version of what Fidelity does, T. Rowe Price; they have multitrillion dollars [invested], and we have $13.1 billion. But we do exactly the same thing.

Kenny: The case goes into some of the numbers, it certainly looks like Ariel Investments is a real player in this space.

John Rogers: Well, thank you. We feel like we should be bigger, and we think we should be more of a player nationally. We have some dynamic leaders at the firm like Mellody Hobson, who's been with us for 27 years as probably our most well known leader. We have several top people who have helped us build the firm. And most importantly, we have had outstanding performance. If you go back to 1986, when our first mutual fund was founded, we've compounded at over 11.5 percent a year.

We're a top decile performer in the Lipper universe, and number one in our category, even though there's only about seven funds that go back to 1986. But it's pretty cool to be number one in our category. Since the March 9, 2009 low, when the market finished its crash, we've also been number one in our category—this time with over 230 or so funds. We were willing to go in and buy during that period of enormous amount of fear, and crisis in the American economy.

Kenny: Those numbers are really relevant in the context of how firms make decisions about who they're going to hire to manage their money. How did you get into this business in the first place?

John Rogers: My father was a Tuskegee airmen, and he flew over 100 missions during World War II, and he was in the original group of fighter pilots that went overseas. When I was born, he was 39 years old, so I was a late child, and he had a lot of time to figure out how he wanted to bring me up. At every age he had specific targets for me. So, when I was 12, it was that I was going to have my own stock portfolio. Every birthday and every Christmas, he would give me stock certificates instead of toys, and I loved it. I loved reading about the markets. He would let me keep the dividend checks, which was really smart—it's really cool when you're 13, 14 years old, and you're getting a dividend check in the mail.

His stockbroker was a man named Stacy Adams, who was the first African American stockbroker on LaSalle Street. He became my role model. I would visit Stacy and watch the ticker tape go by, learn about the markets and learn what he thought about the markets. I followed in his footsteps, and became a stockbroker when I graduated from Princeton.

"Most firms that are professionally owned by minorities should possibly be much larger, if given the proper opportunity"

I spent two-and-a-half years at William Blair, in Chicago, a great regional brokerage firm. I was the first African American hired there in a professional position, and learned about money management and mutual funds while I was there and decided that's what I wanted to do for my career, and started it when I was 24, in 1983.

Kenny: So you've been at this for a while?

John Rogers: Yes, it's been 35 years.

Brian Kenny: Steve, let me turn it back to you for a second. Can you talk about minority representation in the money management sector, and along with that, can you describe why economic empowerment is so important right now?

Steve Rogers: I used to think that the two worst industries relative to inclusion, specifically as it relates to hiring and doing business with African Americans, were the real estate development industry and Silicon Valley's technology industry. What I've discovered is the financial management industry is just as bad, if not worse, and the financial management industry is one where it should be as simple as determining and evaluating performance… the numbers tell the story. John cited to you his performance: He's a top quartile performer, and the result is that he should be a much larger firm. Most firms that are professionally owned by minorities should possibly be much larger, if given the proper opportunity.

The importance of that is that we know from research that black-owned companies and other minority-owned companies have a proclivity to hire more people who look like themselves, and so part of the way in which America can solve its problem around unemployment, and providing fair opportunities to everyone, is for these companies to grow. Research shows that the largest employer of African Americans in America is the federal government. The second largest employer are African American-owned companies.

When African American-owned companies are allowed to prosper and grow, we see the creation of more jobs. When people have jobs, they're self- sufficient. When people are self-sufficient, they live in healthy communities. That's exactly what happens when diversity and inclusion is actualized, and people like John are given a chance to grow their companies.

John Rogers: I was just going to add, I often quote professor Rogers when I give speeches about the importance of black businesses hiring other African Americans and being role models. The other thing I would add is that he talked about the philanthropic empowerment that comes from having strong minority businesses. We saw that in Chicago, with really great entrepreneurs like John Johnson, with, Ebony, and Jet, George Johnson with Afro Sheen and Ultra Sheen in his products.

They did enormously wonderful things for the community. Reverend Jackson often tells the story of Dr. King coming to Chicago, desperate to make payroll, and how George Johnson not only got all of his business leader friends together to write checks at that critical time in civil rights history, but also he had founded Independence Bank, which became the largest black bank in the country, so he got Independence Bank to back loans for SCLC (Southern Christian Leadership Conference) at that time.

Kenny: So the ripple effect is really significant, and all these businesses trying to hire a diverse workforce is important, but at the same time, hiring a diverse supplier can also achieve the same end.

Steve Rogers: Absolutely, well, it provides the opportunity, as you stated in your introduction, it provides the opportunity for businessmen and businesswoman entrepreneurs to do one of the great things that they always do, and that is, create jobs.

Steve Rogers: Let me add to what John said about the impact of successful black entrepreneurs, businessmen and women. We have a case study in Chicago that has proved to be extraordinary. President Obama came from Chicago, and the seed capital for his campaign to run for the state senate came from the black business community. He literally came to the black community at a trade organization in Chicago that represents black businesses that have at least $1 million of revenue.

I would tell you that the reason he came to Chicago to live, was because of the great history of black businesses in Chicago being supporters of black politicians and others throughout American history.

Brian Kenny: Yes, and as a two-term president, that turned out pretty well.

Steve Rogers: Exactly.

Brian Kenny: John, you are on several boards ... and the case starts out with your role as a director. Where does that come from in you, the sense of activism?

John Rogers: Well, I think we talked a little bit about my father being a Tuskegee airman, but my mom, Jewel Lafantant, was the first African American woman to graduate from the University of Chicago Law School. She was very involved with the civil rights movement, was involved with sit-ins, and going to restaurants and forcing people to serve her and her friends. Then, when Reverend Jackson moved to Chicago 50 years ago, and she and my first stepfather would host him in their home.

I can still remember, it's vivid to me, sneaking down the stairway and peeking at Reverend Jackson holding court in our dining room. And so I think that's where it started for me to be able to see that passion for civil rights, and to see their investment in it, and their participation in it, and saw how hard my mom worked at it. I think it had a lot of impact on me.

Kenny: Steve, we live in a day and age, I think, where companies all want to own issues; we talk about corporate social responsibility. In your experience working with leaders across a range of industries, are CEOs expected to own these kinds of issues? This is something that they need to step up to, yes?

"It's vivid to me, sneaking down the stairway and peeking at Reverend Jackson holding court in our dining room"

Steve Rogers: Absolutely, and Brian it is not something new. CEOs have been advocates for positions and things that interest them throughout history. Part of the responsibility to be a change agent is to speak very strongly in public about positions that one has, that hopefully will better society.

Kenny: John, you've done that unflinchingly, I would say, based on articles that are included in the case, exhibits that are there. You've really taken a strong stand on this, and using your position as a director in these companies to try and have some influence. What are some of the things that you hear from the CEOs of firms when you tackle this topic with them?

John Rogers: The place where I've had the most conversations the last several years have been with presidents of universities, and I would say at least a dozen different instances where they've said [in construction jobs] ... "No one's ever talked to us about the fact that we should do professional services work with minority, or African American, or Latino firms. It's just never come up."

That's what they basically say, that no one's ever talked to us about this. I tell people the economy has shifted and adjusted. One hundred years ago, most of our wealth was created in manufacturing. Now, the wealth is created in professional services and technology, that's where it is.

This idea that they they've all got caught up in the supply chain mentality, and haven't adjusted when it comes to working with minority-owned businesses to the new economy. That's the thing that's the problem, they just have not thought about it, no one's pushed them on it, and so people just do things the way it's been done, because that's the way it's been done before.

Steve Rogers: One of the amazing things about that fact is that if these same ... institutions run by these leaders were 100 percent white, they would view that as something that they would not like to see, as well as something they would not endorse. The fact is they see the importance of inclusion in certain areas, but there seems to be almost these blinders on when it comes to inclusion relative to economics.

We see people making decisions to not include African Americans, when it's actually to their detriment to do so. The best and the brightest are being left out when there's this exclusionary mindset, these blinders that people have. There should be this automatic DNA that says, "Wait, we have no African Americans, we have no minorities, we have no women in our portfolio, why is that?" They should have the mindset that says, "I don't come from a world that doesn't have any brilliant African Americans in it," especially when we think about the people who come from this institution.

John Rogers: There are institutions that have shown this works. At the University of Chicago, over the last 10 years under Bob Zimmer's leadership, we have over 60 professional services firms that are doing business with the university that were not [doing so] 10 years ago. It goes to everything from black radio stations, to Ebony and black enterprise magazines, to black investment banks, and law firms, and accounting firms, 15 money managers for the endowment. The University is extraordinarily proud of it.

It's worked really well. They're getting great professional service, they're getting great results. It fits with the values of the institution. Because one of the things that Bob Zimmer felt was important, the university stands up and says that diversity and inclusion are important, should be important in everything we do, not just in a few areas. Dr. King talked a lot about that, if we were going to be able to make progress as a people, we had to be included with power into all aspects of our capitalist democracy.

It can be done, and I think Steve's right, it's that people are comfortable doing things the way they've always done it. There is the implicit bias, unconscious bias, that's sometimes there. On top of it of course is that when it comes to professional services, people do business with people they know well.

Kenny: Are there examples of how to overcome this bias ... how to overcome the impasse?

John Rogers: What I've found is that you have to have leaders. It starts with leadership, someone who has the courage to tell the staff that we're not going to do things the way we've always done them.

We're going to make sure that we're, again, executing our values consistently around every single thing that we do. There are people out there who are making a difference, but a lot of times, those are just few and far between. We have to find a way to get role models so that others can emulate the behavior of the winners.

Steve Rogers: What it really comes down to is leadership. The leadership comes in different levels of the organization, the leadership of the CEO of the enterprise, or the president of the enterprise. The leadership of the board members, and that leadership has to be on the part of the African Americans who serve on that board, the non African Americans as well. The white Americans.

One of the great things that I experience was being on a board, and one of my white colleagues made the statement, "What's the problem with diversity around here? Why aren't more African Americans in our supplier base?" This was a white woman who made this statement. I was so proud of her, because the responsibility just didn't fall on my shoulders. I'm perfectly comfortable in taking that responsibility, but it's cool to see others getting that importance. And so John is an example of what we need to do to change this, and that is: people must speak up.

The speaking up must be in several forms. First of all, I don't believe that there are necessarily acts of commission versus acts of omission. I don't believe whites are getting together and saying, "Let's leave black people out of the opportunities." But the reality is that the results are the same, be it commission or omission. What I've found to be effective in this is to inform, and then to educate.

There are actually steps that one can take and we'll be teaching these in our class today about leadership, three different types of leadership. The first type of leader is the one who agitates; the second type of leader is the one who innovates; and the third is the one who orchestrates. The agitator is what we're all doing, informing everybody of the problem. The innovator is the one who says, "Now, I've told you what the problem is, here's the solution to the problem, and I'm going to help you participate in a solution."

Then the orchestrator is the one who says, "Now, we've had an example of lean success as a result of implementing the plan, now let's spread the joy around, let's spread it around to everybody." Those are the three categories of leadership. John emodies all three of them...

When John Johnson started Ebony magazine, this was the statement he started with" "I want to start a magazine to tell all the swell things about the Negro."

Brian Kenny: Yes.

Steve Rogers: I decided I want to use case studies in my course to tell all the swell things about black businessmen and businesswomen in the business world, and John is one of those swell things, quite frankly. John embodies, in my opinion, what we at Harvard Business School value, and that is, businessmen and businesswomen who make a difference in other people's lives. He's been an entrepreneur, very successful, he's created jobs for other people. He has given back to the community, he's created his own school. John is a role model for our students.

The other reason I wrote the case is because I want our students to learn how to make decisions when they're in leadership positions. That leadership as a businessman or businesswoman does not limit you to just focusing on the P&L, or the balance sheet, but it requires you to be a bigger part of society. John embodies that.

We have an opportunity to bring one of America's great entrepreneurs to the table. He's a change agent, our students need to see him as being one of the people. When you're blessed with the opportunities to be successful in business, with that blessing comes an obligation to do something for other people. That thing that we can do for other people, is be a change agent, and make other people's lives better, and John has done that.

Brian Kenny: Thanks to you both for joining us, appreciate it a lot.

Steve Rogers: Thank you, thank you.

John Rogers: Thank you.

Brian Kenny: You can find the John Rogers and Ariel Investments case in the HBS case collection, at hbr.org. I'm your host Brian Kenny, and you've been listening to Cold Call, an official podcast of Harvard Business School.

This interview transcript was edited for length and clarity. The interview was recorded January 31, 2018.

Post A Comment

In order to be published, comments must be on-topic and civil in tone, with no name calling or personal attacks. Your comment may be edited for clarity and length.