Designing the New Era of Experience: A Conversation with Mellody Hobson, co-CEO and President of Ariel Investments

Michael Rivo: Welcome back to Blazing Trails. I'm Michael Rivo from Salesforce Studios. And today we're continuing our special Dreamforce 2021 coverage. This year's Dreamforce theme is" Success Anywhere and Dreamforce everywhere". And you can experience it digitally on the newly launched Salesforce Plus. So head over to salesforce. com/ plus that's P L U S to experience Dreamforce this year, our customer and employee experiences connected, Mellody Hobson, the co-CEO and President of Ariel Investments definitely thinks so. She sat down with Kristen Bellstrom features editor at Fortune magazine, to discuss how everything from getting buy- in while working remotely to creating a fulfilling work environment, to aligning operations with company values impacts how customers feel about your brand. So let's jump right in and take a listen to Mellody Hobson in conversation with Kristin Bellstrom.

Kristen Bellstrom: Welcome to our session on designing the new era of experience today. We're going to be talking about challenges and opportunities with customer experience and employee experience and how those two things are often very closely intertwined. My name is Kristen Bellstrom I'm Fortune's features editor, and I am thrilled to be joined today by Mellody Hobson. Mellody is the co CEO and president of global asset management firm, aerial investments. And among the other hats she wears at Ariel Mellody is also the co- founder of Ariel alternatives, a private investment initiative launch just this year to support fortune 500 supply chain diversity and to help close the racial wealth gap. Finally, I should also mention given the context of this conversation that Mellody has done quite a bit of public board work and is currently chair of the board at Starbucks and a director at JP Morgan Chase. So in addition to bringing the aerial perspective, she also has quite a lot of insight and how other companies are thinking about these issues. Hi Mellody. Nice to see you.

Mellody Hobson: Great to see you. Thanks for having me.

Kristen Bellstrom: So just to lay the groundwork for this conversation, I thought we should talk about why we're focusing on both customer experience and employee experience. Cause I'm guessing there are some people who are going to be listening to our talk are going to think about these things as sort of like two separate and distinct topics. So I'd love to just hear a little bit about the ways that you think that they're connected and why you think it makes sense for us to, to talk about them and think about them sort of in tandem.

Mellody Hobson: I think it makes perfect sense because I think experience or that way of thinking is a mindset and that mindset should not be bifurcated by who you are serving. I would argue that the people that work with us and for us are as important and sometimes more than the customer because they ensure the customer experience. So to separate those or think of them differently or to rank order them where one is more important than the other, I think is inherently problematic.

Kristen Bellstrom: That makes sense. Let's dive into employee experience then at Ariel, what are your biggest priorities for the firm when it comes to employee experience?

Mellody Hobson: Well, I think in the world of COVID, that's a very important question, because the experience is more, perhaps more important than ever before for a host of reasons from health and we welfare to the anxiety that might be produced from people just being in an office. And so I think this idea of the employee experience has perhaps never gotten as much attention has never been more important. And in general, I just think in this country right now, the people who are doing the work are holding the cards because of so much that has happened in our society. Some of the labor shortages that we have and the like, and so as a result of that, I think when I think about the employee experience in Ariel, I want to start off by making sure that we're not managing with edict because I think that just doesn't work in this society. And that is a part of your experience being told, versus being asked, having a conversation and listening to other points of view. I have to tell you, I've had to push myself in this environment to think differently and to not hold ideas that I've held for the last three decades as a leader at Ariel. So dear, as we like to say, to be more open and to hold my ideas more lightly. I think that if you don't ask, you don't get buy- in. So if you just tell you, you have the risk of no buy- in. And I think again, in this environment, especially where our work has been distributed to our homes and people are far away from us and we can't see everything that they are doing, not that we ever could inside of the office, that buy- in is super important. And so again, getting that buy- in through listening, asking and engaging, I think is very important. I think this is fundamental, but it's just worth repeating in terms of an employee experience. We call them teammates scenario as opposed to employees. But you want to treat people the way you want to be treated. I mean, that it is, it's just the bottom line. It's part of the golden rule. But I think sometimes for expediency or for other reasons, sometimes legal, a whole bunch of things get in front of just the right answer. And so I think sometimes we need to really make sure that is the essence of what we're trying to solve for, how would I want to be treated? How would I want to receive this information or have it given it to me, I think a part of the employee interest and employee experience is making sure that you speak to, at least in Ariel, we try to do simultaneously, their own self- interest, which guides so many people's decision and how they do things, but also at the same time, fostering teamwork. So we're trying to do those things at the same time, you don't want to a selfish environment, where it's" a me first environment". We want to have people think of each other. And the only way I think that you can do that is to make sure you're being very responsive to that individual and what that individual's needs are. I think those are the top level things that I think about when I think about that, that employee experience at aerial, or as we would say a teammate experience.

Kristen Bellstrom: Yeah. I mean, I think it's really one thing that stood out for me, just looking back at some of the ways you've talked about this in the past is the idea of skin in the game. And I know at Ariel to some extent that really comes down to being largely employee owned, but are there ways other companies can think about making sure their employees feel like they have, that they have the skin in the game, they have the seat at the table. You know, some of the things, some of the overlying sort of big picture things you're talking about, like from a tactical level, how do you bring that to your employees?

Mellody Hobson: Well, I think it can be done in lots of ways. I think it's a great question. I think it's so super relevant because they have to feel like they belong and that they can. I always share. I always say we want people at Ariel to share and the rewards and responsibilities of ownership. It's not one or the other it's both. And when you're an owner, we want you thinking in the way of being responsible, thinking about every dime you spend is if it literally came out of your wallet, because in many ways it does. Now to think that we are the only ones who crack the code on this. First of all, it's an evolution. The process evolves over time, thinking change changes, what people value changes, but obviously at a big level, we've seen Starbucks share ownership with Bean stock as we call it with our, as we call them partners, everyone has their own term. And, and really, I think that that has been an ex a great example of tying the success of the company or sharing the success of the company within our situation that people behind the counter, which I think is, has been a part of secret sauce and the magic of Starbucks that they've been able to participate in the success of the entire business enterprise. I think people have done it in all sorts of ways. Sometimes it's been tied to special bonuses based upon the success or probability of the company going all the way down in the organization to obviously the issues that we just talked about, actual equity, fantom stock. I mean, there, there are so many ways to skin this CAD, but the idea is to get alignment. That's the bottom line. How do you align, not just the values of the company, the processes and outputs that you need to deliver to your customers to create a scenario that will lend itself to success.

Kristen Bellstrom: Let's talk a little bit about sort of the makeup of Ariel. Ariel really stands out for being a very diverse workplace. I think, especially in your industry, correct me if I get any of these stats wrong, but I believe the firm is 71% diverse and it has 67% minority and or female leadership. And as somebody who, who covers these issues at work, I know that that does not happen by accident. You build a culture like that with effort with purposeful leadership. So I guess I kind of have two questions about it. One is, what can you share with us about what it takes to build that kind of culture? And since we're talking about customer and employee experience, what do you think that that level of diversity and inclusion brings to the the customer and the employee experience?

Mellody Hobson: Those are great questions. And I'll start with the first one. What does it take? So I think I get the benefit of not having a mental model about what people are supposed to look like and be in any job. And maybe that comes from the fact that I'm diverse. I'm a woman. I come from a background where I didn't grow up with any money. I didn't get hardwired with a point of view. And I think that is super helpful to me. I tell this story all the time, that when I was growing up as a child, my mother used to say to me, Mellody, you could be or do anything. And I tell people, I believed her now at the same time, she set out all of the struggles and difficulties that I was going to have so that I wouldn't be sort of flattened out by my first bad experience. She let me know what I was up against. And at the same time told me that I could be victorious. I modified this conversation from my now eight year old child. I have modified it. And what I say to her is Everest. You can be or do anything, but I want you to believe that is true of anyone and everyone. That is a very different way of thinking, not thinking about yourself. Like I can do it, but imagining that every single person you encounter or look will look to look at a meet, that they have the same potential, the same opportunity to crush it, the same ability to succeed. If you look at the world in that way. And I think that we've been able to put that in the DNA of Ariel. When people come to meet with you and talk to you about opportunities, again, you don't have a mis- mental model that you have to overcome. And you assume they could be great as opposed to coming up with reasons in your mind that they can't. To your second question about what does the diversity equity inclusion mean for the company and the customer? I actually think, and I've said this many times to be a 21st century company today, if you are not diverse or not serious about it, not just talking, but doing as my husband, who many people know is the father of star wars. And I always say, Yoda's dad Yoda says, do or do not. There is no try. There is no try on this one. It's literally talk is cheap now. And so what I say is, when you think about what a 21st century company needs to be, if you are not diverse or not seriously chasing diversity, the way all these annual reports call it a strategic imperative. If it isn't real, you're committing corporate suicide. And it's not a question of if you'll die, it's when. Now it could take a long time. And people say that I sound very fanatical in saying that, especially when you think about some of the big successful companies out there, but I really do believe it. It has a lot to do with how you'll be able to relate to the customer base that you have all over the world, not just in this country, but it'll have a lot to do with the kind of people you attract within your organization. Lastly, Jesse Jackson always says that base baseball wasn't as good as it could be until Jackie Robinson could play until you can feel the very, very best players. You will not have the best team that you can have. And because I believe strongly in the facts do speak to this. Science proves it genius and talent do not discriminate. They were equally distributed in our society across ethnicity. And yet you wouldn't know that when you walk into most corporate organizations.

Kristen Bellstrom: For the record, I don't think you sound fanatical. I think if so, only in the best possible way we need more fanatics like that. I think this is probably related to some extent, but you started yourself at Ariel as an intern and you have climbed your way up to basically running the company. And I'm curious about how having that experience through like the different levels of the company has shaped the way you, you think about experience either for employees or for customers or both.

Mellody Hobson: I think that is a fantastic question. No one has ever asked me that. I thought a lot about it because the one thing I could say, and this is the honest truth. As honest as honest can be. In most situations I can say inside of our company, I've done that job. You know, I have a perspective about it and I've done the menial work, the work that required long hours staying up all night, I've done the work that required 15 edits, still do. I've done the work that was we tedious. I mean, if you want to talk about tedious work, respond to an investment RFP, it's a document that

Kristen Bellstrom: I would prefer not to. Thank you.

Mellody Hobson: I have literally done all of those jobs. And so it, it gives me a perspective. I think that is much more cognizant of the pain points, the difficulties, as well as the joys that you get from the work people always focus on. What's hard, but it can also tell you the tremendous sense of accomplishment I got from doing those hundred page RFPs and putting them in the FedEx box myself and sending them out. All of those things became victories for me. And I got to feel the benefit of that. And then when we got the client you could sit in bed at night and say I was a part of it. And so realizing that and understanding it, as relates, I haven't done every single job, but I've participated in a lot of things at, from entry level to senior level. And I think that that gives me great insight into one, how we can do things better. Two, the fact that anyone can have a good idea, anyone, three, that you never know where a good idea can come from, including our clients and, four, making sure that when we are encountering challenges, we're not defensive about them. So what I keep telling my team, let's just assume we get feedback that isn't great from a client or from a colleague. I keep telling our team, instead of immediately coming up with an answer that is based on the fact that we think we're good people who work hard, let's assume what they're saying is true every time until we cannot disprove or prove it. That's just a different way of thinking and putting yourself in the shoes birth of that individual, the person that works with us at Ariel, or the person that we serve assume their criticism is true until you cannot, and try to disprove it until you can't. And then see what kind of insights can come from that, that can make you a better company.

Kristen Bellstrom: That's so that's so interesting. And I agree that is, I think particularly when you've been in there yourself, as you have been, You know how easy it can feel to be defensive when you don't feel like your boss understands you and they don't understand your job and what you do. And to have a boss who has, who really does, I think is, is such a unique experience. I want to also, so dig into some of what you were talking about earlier, about the way in the pandemic, we're all very tired of thinking about it and talking about it and living in it, but there's just no denying that has changed expectations. As you talked about employee expectations and also customer expectations. So can you talk a little bit about what changes you have seen and how you are trying to react to them?

Mellody Hobson: I think the number one change that this whole society has seen is the need for customization speed, which ultimately means a tech enabled workplace. Every company is now a technology company in my view, and we've moved at light speed during COVID to catch up with where society wants us to be. It's just been forced upon us. And a lot of that was just practical. We had to, to in order to keep the place running. But I think at the end of the day, if there are any silver linings that will come out of this horrible situation that we've had with this pandemic that has taken way too many lives and decimated so many aspects of our society, if there are any silver linings that can come out of it, I think it's forced us to catch up and it's from a technological standpoint. And it's also forced us to be less bureaucratic and more in the mode of problem solving. I always say it Ariel when someone asks, why do we do something this way and our response is because we've always done it this way. I think that's one of the worst answers you can possibly get. And so I think this environment has forced all of us to rethink how we service our clients, how we pick stocks, what kind of work environment we have, all of those things have been forced upon us. And we've had to respond in real time. The good news, I feel good about how we've responded at Ariel, but I think society overall has done pretty well, all things considered when you think about where this economy is, where this stock market is, and the, like, I think it far exceeds any expectation. We all would've had of where we would be at this point, given the stress to the system. But as Warren buffet says, so eloquently one of my favorite lines ever" champions adapt". I think this has been a clear example of where the champions have adapted.

Kristen Bellstrom: Yeah. I think many of us are working in ways that we never, would've not only never would've anticipated, but never would've believed were possible. I know that's a case at our company where we thought we can't do our jobs from home. And this has obviously shown us perhaps we as a society, more innovative than we even gave ourselves credit for. Although I would prefer to have found this out in a different way. Right.

Mellody Hobson: Exactly. And it's not only, we can't do our jobs from home, which maybe was the initial thinking. It was, we won't do it well. And I think we've seen just the opposite. There's been the opportunity to simplify in this process. Jamie diamond always talks about the fact that nothing more complicated is ever better. You know, it's like, it sounds so basic, but it's really true. And you think about how things get explained to you sometime, and you think to yourself, this is complicated, you know having that mindset, especially in COVID, we've had to simplify. And I think in simplifying, I, I think if we can hold on to some of that thinking around simplification. A gain, it'll serve the customer better and it will create, I think, a better work environment.

Kristen Bellstrom: And how are you thinking about, I mean, such a huge topic of, for the companies that, that we, we speak to at fortune we report on is how the workplace will evolve. And that's obviously very closely tied to the employee experience and what employee employees want and don't want as we hopefully someday come out of the situation we're in now and are in sort of a new working reality. Are there things you're hoping to carry forward at Ariel from this period? Or are you hoping to sort of go back to the old way of working? What are you thinking? How are you thinking about it?

Mellody Hobson: I think you can't ever go backwards in society. I think that just isn't possible. And so, no, I'm not realistically thinking of about or waxing on about" the good old days". I don't think that's the right way to run a company. You have to be forward thinking and you have to respond to the scenarios, the environments that are presented. I do think, however, and I talked about not managing by edict. I feel very strongly about that, but at the same time, again, I can hold two thoughts at the same time. In this regard, you have to have vision. Someone has to lead and have a point of view. You can ask and consult and engage, but at the end of the day, decisions have to be made. And that is where I think we find ourselves now as a society, there is no playbook here. There is no manual. And we're doing this off the cuff. And I think sitting and sort of looking right to left, hoping for some example, or some leadership that you can follow, I don't think that's working or will work. And so from my perspective, we're going to try things. What I told to Ariel. My Ariel teammate says," I'm not going of pin myself to something in this environment that I would have to live with or come back with a sense of having disappointed or Ren renewed on some promise that I've made". So we'll pilot things, we will try after we really do restore our return to office. Our offices are open I'm in the San Francisco office right now, but we have a very thin staff working inside of our offices right now. And people are working like crazy at home. So I'm very, very grateful for all of the effort that people are putting in. But I, I have said, we will try the flexible schedule and see how it goes. See, we will like it trying to land on what's the right way to do it. What's the best way for us to continue to innovate and engage with each other and have the collaboration and collegiality that has been so essential to the aerial culture. We actually like the people we work with, they are our friends, John Rogers, who founded Ariel is my child's godfather. So it just gives you a sense that we're tight. And so we miss each other, we like to be with each other and we want to make sure that, that isn't lost, especially as we bring new people in the organization that don't have the decades long history that we've had with each other, which could create haves versus have nots in our society, which would be unacceptable to me.

Kristen Bellstrom: I think this overlaps with what you were just talking about, which is another concern that, I hear from all the CEOs that I speak to is like for better or worse, what's often called the war for talent, right. You know, it's a really hot job market right now. And there's a lot of concern about how to be attracting the best talent, especially at a time when our company's cultures are not necessarily on display. As you were talking about, they're operating in sort of a different way right now. And, and also as you mentioned, as companies are leaning more into technology, there's just extremely high demand for certain workers with certain technological skills. So I'm wondering, are you feeling that at Ariel? And are you hearing that from the companies whose boards you sit on and how can employers respond to this sort of incredibly hot job market

Mellody Hobson: First and foremost, there's no question that the game is changing in real time, as it relates to attracting and retaining the best talent. Okay. That's just a fact. Some people literally after COVID and the time they've had at home in their heads alone and thinking through what they want out of life, they are going to opt out and we all have to accept that. They're going to want a different life or to do things differently. And I don't think we can have value judgements around that. We just accept that people do what is right for them. I think trying to cling to people in that scenario is a recipe for disaster. So trying to talk someone out of a life changing move that they want to make, I don't think that's the right thing for us to do. At the same time I think that there is going to be an arms race on, there always has been one, but I think it's gotten a bit more treacherous, an arms race for the best people. At the end of the day. However, I think the organizations that will survive, thrive, and ultimately actually at attract the best people are those who do things that are authentic to them and their culture. As that old saying goes," do you" I think that's super important. And I can think about the cultural differences from the front row seat that I get at JP Morgan versus at Starbucks versus at aerial and our point of view and the way the organizations have been built and are run. And the leaders of them, there is not one is not right or wrong, good or bad, they're just different. And it would be a mistake to try to overlay one culture and one the other, because" that's what's happening in the society". I don't think it would be authentic to those companies or to those brands. And ultimately doesn't lend itself to a sustainable culture. It must be authentic. So I am seeing all sorts of things that are happening in other companies. And I think, Hmm, that's interesting. It might work for them, but these are the reasons it would not work here. And I'm not defensive about that. And that's, again, we're not managing by edict, but being very clear about who you are and what you stand for.

Kristen Bellstrom: You know, you mentioned the fact that some people are just have, have gone through an experience with COVID where they're just saying, this is not right for me anymore. But there's also a lot of people who are sort of on the cusp. They are experiencing burnout. They are having a difficult time from sort of a mental health perspective right now, but they're not ready to, to walk away from their jobs. How can employers better support those employees? At a moment where you can't enjoy the other parts of the employee experience if your mental health is not where it needs to be.

Mellody Hobson: I've seen so many companies actually step up on this issue of mental health. We have a mental health benefit for all of our partners at Starbucks. And it's been something that I think has been very, very, very important through this pandemic. Before as well. If we didn't just get it, we've had it there as a benefit. I think those are the kind of things where employers have to be very conscious of the fact that they're having to do more than ever before. Maybe in the days of old, when you think back to the Robert barons and the corporate town and the Robert Baron who was the patriarch and provided the sort of cradle to grave opportunity. You worked at a company for 30 years and retired with a secure opinion pension and a gold watch. Maybe that's reminiscent of that. But I think companies, now we understand that there are a lot more considerations that we have and societal problems are at our feet. They aren't things that we can just look past and say, not my problem. And if you think that that is the case, I always told people everything from, for example, mental health benefits to the fact, I mean, 20 years ago, you didn't have live shooter drills in companies. There are so many things that didn't exist before that really are a sign of the demands on a corporation. And I think we recognize in order to have the best people in order to be able to ultimately serve our customers in a world class way, we have to realize that the whole person walks into that door, the office, the store, the branch, whatever it might be. And we have to, it's not our job to make them happy, but we should at least have the conditions that exist that create a happy work environment for them. These are tall orders. I am not suggesting this is easy. It's super hard to do at scale. And it's super hard to do when everyone has an opinion and different needs. But I do think there are some big buckets that corporate America can, can, can focus on that ultimately will move us forward in this regard.

Kristen Bellstrom: Thank you so much, Mellody. It's a, a pleasure talking to you. I really appreciate your time.

Michael Rivo: That was Mellody Hobson, the co CEO and president of aerial investments in conversation with Kristen Bellstrom, the features editor at fortune magazine. If you like this episode, be sure to subscribe wherever you get your podcast and be sure to check out this year's Dreamforce on Salesforce Plus that's salesforce. com/ plus P L U S. Thanks for listening today. I'm Michael Rivo from Salesforce studios.