HANNAH BATES: Welcome to HBR on Leadership, case studies and conversations with the world’s top business and management experts, hand-selected to help you unlock the best in those around you. What if I told you that in Richmond, Virginia, right after the American Civil War, a popular department store, a widely read newspaper, and a respected local bank were all run not by a corporation, but by a fraternal order? As the leader of the Independent Order of Saint Luke, an African-American fraternal order founded to promote Black economic independence, Maggie Lena Walker not only broke new ground for herself as a woman leader, she also created new professional opportunities for Black Americans in her community.
In this episode, Harvard Business School’s senior lecturer Tony Mayo traces Walker’s approach to leadership on her journey to becoming the first female bank president in America. You’ll learn how she led the turnaround of the Order of Saint Luke by cutting costs, increasing membership and launching new businesses that catered to unmet needs in Richmond’s African-American community. You’ll also learn how Walker relied on her personal networks and deep local roots to overcome challenges related to systemic racism throughout her leadership career. This episode originally aired on Cold Call in February 2017. Here it is.
BRIAN KENNY: Fraternal orders have been around since medieval times, and often they were the subject of suspicion and intrigue. In colonial America, they were incubators for revolution, democracy, science and religion. The Sons of Liberty, the Freemasons, the Ku Klux Klan, these were well-known, but there was also the Independent Order of Odd Fellows, the Molly Maguires and thousands of others that appeared and disappeared in the late 19th and early 20th centuries, the golden age of fraternal orders.
At its peak of the 1920s, as much as 40% of the adult population held a membership in at least one fraternal order. Today, we’ll hear from Professor Tony Mayo about his case entitled, “Maggie Lena Walker and the Independent Order of Saint Luke.” I’m your host, Brian Kenny and you’re listening to Cold Call.
SPEAKER 3: So, we are all sitting there in the classroom.
SPEAKER 4: Professor walks in.
SPEARKER 5: And they look up and you know it’s coming. Oh, the dreaded cold call.
BRIAN KENNY: Tony Mayo teaches MBA students and executives at Harvard Business School. He’s an expert on the subject of leadership and the director for the school’s leadership initiative. Tony, thanks for joining us today.
TONY MAYO: Thanks for having me.
BRIAN KENNY: I love the way the case began. It was with a quote by her. Can you sort of put us in that time and place?
TONY MAYO: Yeah. So, the quote is actually from 1901, and this is two years after Maggie Lena Walker has taken over the Independent Order of Saint Luke. She’d been involved in it since she was, oh, I don’t know, 14 years old, and now she’s in her early thirties. The organization is actually on the brink of collapse. Membership is down and she is trying to rally up the organization. She’s two years into a turnaround and her two years into the leadership, she’s actually tripled the membership. She’s created a juvenile division. She’s doubled the number of councils. So, she’s on this path of turning the organization around, building the growth, and she’s trying to get council members, fraternity members excited and motivated to continue this growth.
BRIAN KENNY: So, how did you find out about her? What prompted you to write this case?
TONY MAYO: So, the case actually comes from a lot of research that Nithinoria and I have done over the years looking at great business leaders. And so, about 10 or 12 years ago, we actually embarked on this notion of should there be a canon of business leadership? If you think about MBA students, they actually study the functions of business. Accounting and finance and marketing. But students of literature, they study the great writers and students of art, they study the great artists.
And we thought, well, what if we flipped that on its head and we treated an MBA like a liberal arts degree, if you will, and say, who would be in this canon of leadership? And so, that was the genesis of this research project that has lasted for over 15 years. We actually developed a database of 1,000 leaders and we wanted the database to be much broader than just Fortune 500 companies, much broader than public companies. People who broke the mold, people who actually were able to change the way in which people have lived and worked.
And so, the first book that we wrote was called In Their Time, and that really looked at contextual intelligence. We took these thousand leaders and we put them in the context of their time to try to understand what type of leadership was required for success. But then we had collected all this information about these leaders and we thought, is the Horatio Alger myth, is that true or is that a myth? This whole rags to riches story that anybody with determination and drive can actually succeed in the United States. So, when we looked at our database of 1,000, we saw that there were certain insiders and outsiders, certain people that had access to opportunity and people that didn’t have access to opportunity.
So, this particular case actually came out of looking at the outsiders. So, if you think about who was on the outside looking in in terms of access and opportunity throughout the 20th century, it was all people of color, it was women. And if you did create success, you often created success in your own environment, serving your own community, starting small. And so, we tried to get this sense of what is the path to power that insiders took and what was the path to power that outsiders took and what can we learn from that?
This particular case was actually a student project. So, one of my students, Shandy Smith, who had taken the Great Business Leaders course, we eventually created this big Great Business Leaders course. She wanted to write a story about an African-American woman in an industry that you don’t typically associate African-American women in. So, if you look at our database of great business leaders, every African-American woman on the list was either in personal healthcare or hair care similar to Madam C.J. Walker, or they were in fashion or something of that nature. Sort of women serving businesses for other women.
And so, this student of mine wanted to put a [inaudible 00:06:22] in a situation that would be quite unique for women. And as the first female bank president and first Black female bank president in the United States, she thought Maggie Lena Walker would be a great story.
BRIAN KENNY: She found a good one.
TONY MAYO: So, it was a great paper and ultimately became the basis for the case.
BRIAN KENNY: And it’s a great case. So, let’s talk a little bit about Maggie. She was born in, I think it was 1868,
TONY MAYO: ’67.
BRIAN KENNY: ’67.
TONY MAYO: Same as Madam C.J. Walker. Same year.
BRIAN KENNY: Oh, no kidding?
TONY MAYO: Yes. 1867.
BRIAN KENNY: So, tell us what was life like for her and for Black people in general at that time?
TONY MAYO: Yeah. So, she was born, and we have to put this in the context of where she was. So, she was born in the heart of the Confederacy in Richmond Virginia two years after the end of the Civil War. She was born to a free mother. So, her mother had been freed by the family that she’d worked for. The Van Lew family. She worked in it was like a hotel type of operation, but her father was actually a white Irish newspaper man who wrote for the New York Herald.
BRIAN KENNY: How common was that back then? Probably not very.
TONY MAYO: Not very common and it was certainly not common and not allowed for her to marry a white man, her mother to marry a white man. So, in fact, if you look at the laws of the state of Virginia, interracial marriage wasn’t allowed until 1967, a full 100 years later.
And it was actually not a bad life in terms of the context of Richmond. If you sort of think about what could happen and what most people faced because they had been freed earlier, her mother had been freed and her father had a stable job. She had a stable job. That was fine until Maggie Lena Walker was about nine years old, and then her father was mysteriously murdered. Well, they say it’s murder. I mean, it was never solved, but he left for work one day. He never came home.
And so, at that particular point, when Maggie’s nine years old, she has to go into business with her mother because they cannot survive. Her father was mostly the breadwinner. Her mother was doing laundry on the side. Maggie decides that she has to work with her mother, and so, she becomes a laundress or washerwoman.
BRIAN KENNY: At the age of nine.
TONY MAYO: At the age of nine, yes.
BRIAN KENNY: At some point, education becomes a very important part of her life.
TONY MAYO: Yeah.
BRIAN KENNY: What was the influence that education had? And actually I find it curious that the city of Richmond was progressive enough to recognize that they needed to educate this new upcoming generation of recently freed Black people or else their economy would not be able to support itself.
TONY MAYO: Yes. Yeah. So, Richmond was actually fairly progressive. In fact, they had the best schools in the South for both whites and Blacks for a number of years up until the turn of the 20th Century, and then things changed. So, it’s interesting, when you look at the first 10 years post Civil War, it was a period of reconstruction. And so, there was lots of opportunity. The 14th Amendment’s passed. The 15th Amendment passed granting citizenship, granting the right to vote for Black men. There’s opportunities for education.
And so, Maggie is growing up during this particular period of time, and even though her mother needs her help and needs the money from her laundry work says, look, you’re going to go to school. You’re going to get the education. And a new segregated school had just opened up in Richmond, Virginia, and she sent her to that particular school. And Maggie thrived in that school. She actually graduated high school when she was 16 years old. And at that time, she was asked to then become a teacher as well, which was one of the few professions that were open to women at the particular period of time.
BRIAN KENNY: Yeah. And this is about the time also where Saint Luke’s becomes an important aspect of her life.
TONY MAYO: Yeah. So, she joined the First African Baptist Church in Richmond, Virginia when she was about 11 years old. And that was a fairly progressive church at the time. It allowed both white and Black parishioners to be part of the church. That actually changed after there was a big backlash against reconstruction after 1877. And then there was this whole notion of separate but equal and the whites actually left the church. And so, by the time she joins the church, it’s a Black church that’s Black run, and there’s a Black pastor, and that’s a formidable experience in her life.
And when she’s 14 years old, she’s encouraged by her Sunday school teacher, her mother and the pastor of the church, who are the three key influences in our life to say, hey, you should join this Independent Order of the Sons and Daughters of Saint Luke. It was also one of the few fraternal organizations that allowed both men and women or boys and girls to join.
BRIAN KENNY: Most were all male.
TONY MAYO: Most were all male. Yeah. And so, she decides to join that with the explicit mission that they’re going to do community service, do projects. From a juvenile division perspective, that was the work was to help in the community. The broader mission was really to provide death benefits and to provide healthcare benefits to the Black community. There was no other services. No other insurance companies, no white owned insurance companies, no other fraternal organizations would provide those services. And so, you saw this huge growth of fraternal organizations designed principally to focus on insurance.
And that actually goes back to the Great Business Leaders database that Nithinoria and I had worked on. The second-largest business actually for African-Americans is insurance and finance. It was mostly focused on creating this opportunity to have a decent burial and to have some semblance of healthcare in an emergency.
BRIAN KENNY: And this is where some of her leadership skills start to emerge. What kind of a leader was she?
TONY MAYO: So, we see a little bit of a glimpse of her leadership style in high school even so and it parallels with being named a national delegate to the National Convention of the Order of Saint Luke. But when she was a senior in high school, I guess what we consider a senior in high school, she had petitioned the town of Richmond or city of Richmond to able to allow their high school to graduate at the Richmond Theater. That’s where the white schools had their high school graduations. The Black schools were told that they could have their high school graduations in their church.
And so, they fought, they went to the community and they said, look, our parents are paying taxes. We’re paying taxes. The white parents are paying taxes. They’re allowed to use these resources of the community. We as an institution should be able to use the same facilities. They were denied, but they were the first and actually, it turns out the only class for 25 years that was allowed to graduate in a place other than a church. They got to graduate in the gymnasium auditorium of their school, which may not seem like a big win, but-
BRIAN KENNY: Yeah, but that probably took a lot of courage for her to do that. Right, in that setting?
TONY MAYO: Yes, certainly to be able to do that. And if you think about what were the opportunities for leadership for Blacks and for Black women at that time, pretty limited. And that’s where the importance of the church and these fraternal organizations come into play, because that was one of the few areas where you can actually exercise your voice. And she was a very persuasive orator. She was a great speaker, and she could convince a crowd. So, you see these early foreshadowings of the quote that you asked me about at the beginning where she’s trying to rally the troops about the Order of Saint Luke. You see a little slice of that when she’s 16 and she’s graduating from high school and she’s trying to take on this white community, which is the heart of the Confederacy.
BRIAN KENNY: Yeah. So, let’s fast-forward a little bit then. We will go back to where she was when she made the quote. Was that the point at which Saint Luke’s had about $31 in funds?
TONY MAYO: Yeah. So, when she takes over in 1899, the organization has $31 in assets and $400 in debt, and it has about 1,000 members and about 57 councils. And so, many individuals felt like it had served its useful life. This is the end of this particular organization and she felt differently. She felt like, no, I think that we can do more for the community, and we have to figure out… We have to be creative about what this organization is. And maybe it can’t just be about insurance and death benefits, but maybe it has to have something else for the community. In 1899 when she takes over, she consolidates the operation. So, if you think about this from a broader business perspective, this is the turnaround.
BRIAN KENNY: I’d love to know. You can sort of describe what she does, but I’d also like to understand where did she get that acumen? Where did those ideas come from?
TONY MAYO: I think that it probably came from her affiliation with the Independent Order of Saint Luke for the number of years. By the time she takes on in 1899, she’s been a member for about 15 years, and she’s taken on successive leadership roles. She is the individual who decided, hey, we should have a juvenile division. She creates that. She staffs that. All the women volunteers are associated. So, she sort of built her leadership chops throughout the organization, through her life.
Certainly as a teacher. She was a teacher in the Richmond Public School System for three years. So, from the age of 16 to 19, she got married at 19. And the law in Richmond at the time was once you’re married, you were no longer allowed to teach. So, there’s a big debate about whether married women who are teaching, they were taking away a position from an unmarried woman or from a man that could need it. And if they’re married, then presumably they are being taken care for by their husband, and so they no longer need this particular position. So, she’s forced out of that particular role.
But the interesting thing to me is even though at 19 she’s forced out of being a teacher, I see her as being a teacher for an entire life. I mean, she took the skills of being a teacher and the development that she had from her work in the school system and brought that to the order of Saint Luke, and used that platform to educate women about the opportunity that they can pursue within the independent order. And that they should be able to have these opportunities.
BRIAN KENNY: And probably had far greater impact and far greater reach than she would have had she remained a teacher.
TONY MAYO: Yes. Yeah. You know, interesting, that’s that’s probably true. If you think about women and African-American women in Richmond at the turn of the 20th Century, 85% were in menial labor jobs. They were domestics. And if they were doing anything that was outside of that realm, it was probably in education. And here she comes along and she’s creating these new businesses, these new entities, and she’s staffing them with women and women managers, which was very unusual at that time.
BRIAN KENNY: So, what were some of the things that she did with the order of Saint Luke.
TONY MAYO: For the turnaround, she actually did two things simultaneously. So, she’s actually focusing on the top line and the bottom line. So, on the bottom line, she’s sort of looking at, okay, we’ve got to do cost management. She reduces her salary by two thirds. She consolidates operations, she skinnies down the staff. So, she figures, okay, that’s not going to get us that far. We can drop as many costs as possible, and she does all that. But the real big push is we need to increase membership. And so, she goes out on the road and she use her skills as an order and as a teacher, as an educator to get people excited about the organization.
But then she realizes that, okay, we need to do a little bit more. And she says, there are a couple of mutually reinforcing businesses. She probably didn’t say mutually reinforcing, but when I look back, I sort of say, wow, this is pretty clever. Because she creates a newspaper, she creates a bank and she creates a store at Emporium. And so, if you see the benefit of the Saint Luke Herald, which is the newspaper, it was a platform, yes, to have announcements about the Order of Saint Luke and what they’re doing. But it was also a platform to advocate for rights for women, for rights for Blacks. For talking about sort of the oppressive environment of the Jim Crow South and the whole life of separate but equal, trying to take that on. That’s a platform to speak to the cause for African-Americans.
It’s also a platform that also helps the Independent Order of Saint Luke because she gets people motivated and excited. And then the bank, when she decides that at the time there were probably, I think the case talks about 400 fraternal organizations in and around Richmond. Well, one of the other major ones was the True Reformers, and they had created a bank a couple of years before in 1899. And so, she looks at her bylaws and she decides that there’s an opportunity here. We could actually do the same thing. If we just change our bylaws a little bit, we can actually create a bank and get individuals, people like her mother, and that’s why it was called originally the Saint Luke’s Penny Savings Bank. Bring your pennies, literally your pennies to the bank to create deposits into this community that will serve the Black community.
And so, she creates and charges the Saint Luke’s Penny Savings Bank in 1903, and she does that with the advice of John Branch. So, he was a white banker in Virginia, and he became a mentor for her. And he sort of took her under his wing, taught her about banking. She had gone to night school as well. She had gone to night school. She had done some courses in we would call it accounting today. Back then it was probably bookkeeping. So, she was trying to educate herself, and he took her under his wing. And interestingly enough, there were four Black owned banks in Richmond at the time, and he nominated her to be as part of the Virginia Bankers Association. She was the only one that he asked and so she served in that capacity. And so, the bank became a big part of creating a resource for the community and enabled people to yes, join Saint Luke, also join our bank.
And then the third entity she created was the Saint Luke Emporium. And this is where she actually got the sort of ire of the white Richmond business community. Because the first two businesses, the newspaper and the bank, many in the white community felt like, okay, she’s flying under the radar, if you will. She’s serving a constituency that we don’t actually see a whole lot of promise in. If she wants to collect their pennies and they’re going to have their initial deposit of $9,000, that’s not a big deal to us.
But when she creates the Saint Luke Emporium, that’s a big deal because then she’s creating this department store, if you will, with 15 employees, all women, women managers running the different counters, that’s taking money from the white retailers. And so, she’s offered $10,000 to not even open. So, she’s doing the construction and she turns that down. And so, then they decide that they’re going to do these secret inspections to make sure that she’s complying to Virginia law. She passes all those inspections. It’s seven years of trial and tribulation, and then eventually, the white retailers win in convincing the suppliers of the material that she’s selling that they should no longer sell to her. That if they want to be able to sell the same sorts of garments and other material in the white owned stores, that they had to stop selling to her. And so, her pipeline of supplies and material dried up. And so, she eventually had to close that.
And so, that’s the one particular business entity where she sort of rose above the fray or got on the radar of the community and was shot down, which was all too typical of the time.
BRIAN KENNY: And all of this was done in a climate where racism was being institutionalized. You talk in the case about the laws that were being passed.
TONY MAYO: Yeah. So, if you look at what happened after the sort of backlash of reconstruction, and there was this big debate, I think it was an original case in Mississippi about whether the states were allowed… You had to create accommodations for all citizens in the same way, and so that was the idea that everybody was a citizen and everybody should be treated equal. And then there was a case that was brought on whether you could actually push for separate but equal. We can still give you equal treatment, but it was a railroad case and whether the Blacks could sit in the same railroad cars as whites. And so, this was the original case, and that was actually brought to the Supreme Court. And eventually it was determined that that was perfectly appropriate to institutionalize separate but equal.
But in reality it was separate but inferior, and that actually was the law of the land because it came to a Supreme Court case in 1896 in Plessy versus Ferguson, where they essentially legitimized this practice of separate but equal. And that stayed in place until 1954, until the Brown Versus Topeka Board of Education case actually overturned that because there wasn’t really equal access, there wasn’t really equal opportunity. It was always inferior.
And so, this was basically essentially the law of the land that you could sort of put this shroud on it to say, oh, it’s equal. Everyone’s being treated the same, but don’t mix together. So, you should have your own community. You should live in your own place. You should have your own churches, but never the two shall meet. And she used the Saint Luke Herald, Maggie Lena Walker, her newspaper and her speeches to be able to rail against that.
So, the challenge for her, she wanted to sort of put it out to the Black community to support other Black businesses. And she kept pushing them saying, why are you putting your money in a white bank? Why are you supporting the white retailer? We have Black businesses. We have Black insurance. We have all of these opportunities. You should be supporting our particular community. You should stop sort of feeding this line of prejudice. While that wasn’t entirely successful, certainly she was pushed out of the retail business, she felt that that was her cause and her desire to try to create this opportunity for self-sufficiency, for governance. If it’s going to be separate but equal, let’s try to make it as equal as possible for us.
BRIAN KENNY: Again, very courageous in a climate where people are being lynched and other awful things are happening. So, you’ve discussed this case in class, I assume.
TONY MAYO: I have, yes.
BRIAN KENNY: So, what kind of reactions do you get?
TONY MAYO: You know, it’s interesting. It’s hard sometimes for students to put themselves in the context of 1867. So, the first time I taught the case, they thought, oh… I’d say, well, on a scale of one to 10, how challenging was this situation for her? I had a few students who were saying, oh, maybe a three or four. I thought are you kidding me? This is going to be 10 or higher. And I think that’s sort of the beauty of history, is trying to put yourself in that context and trying to say, okay, maybe in today’s context, if you think about a woman being a bank president, that’s still relatively rare. It’s not that common, but you can imagine that much easier.
In doing some of the research for the case, I was reading Booker T. Washington’s book on the Negro businessman, and he has a chapter about the Negro banker. And I was wondering if Maggie Lena Walker was in it. He tended not to have a lot of stories about female entrepreneurs, but she was in there. She was the only one in there. And there was a quote in there from the Richmond community that basically the predecessor to the Saint Luke Penny Savings Bank was the True Reformers bank. And the Virginia board that approved that particular bank actually did it in a humorous way. They thought it would be funny to see how the Black community could create this bank. That it would actually never get off the ground. It would not be successful. They thought it was a joke. So, they actually approved it thinking that it was going to be a big failure.
BRIAN KENNY: Yeah.
TONY MAYO: Interesting enough, that True Reformers Bank, that was the first bank did fail in 1910, and Maggie actually consolidated it. She bought that into her organization, which was a pattern that she followed again later in life to consolidate the Black banks in the Richmond community.
BRIAN KENNY: She had great success in her efforts to revive Saint Lukes and to organize and she even maintained her activist stance. One of the things that I thought was remarkable was that she anonymously supported the Urban League in Richmond for three years. I mean, so really by all accounts, a pretty remarkable woman and a great exemplar for people even today.
TONY MAYO: Yeah. So, if you look at her… And that’s why I think when we talk about insiders and outsiders, and we think about… When we looked at our research about outsiders, there are four ways in which insiders and outsiders approach the context that they had. We looked at place, we looked at professional credentials, we looked at perseverance and we looked at personal networks.
And so, what we mean by place, it’s really like where did you actually create your opportunity? And for most insiders, they could create their opportunity within the context in which they lived, and they could establish their businesses in their home environments. If you were an outsider, you traditionally left because the opportunities were closed to you.
But if you’re an African-American woman in the South, your opportunities to leave are pretty limited. And so, what is your place? Your place is creating a business for your community, starting small. The second is sort of this professional or personal networks. The ability to have a mentor to be able to have somebody work with you, and she had a number of those. She had her mother, she had the pastor of her church, and she certainly had John Branch, the white banker who helped her. So, taking advantage of these opportunities to build this network.
Professional credentials is about education and really thinking about using that as a lever, and certainly being a teacher and being educated. If you look at our database of 1,000 leaders, the ultimate outsiders were far more educated than the insiders, because that was a path that you could take. If you couldn’t get in one way, maybe you could get in through education and we see a big change. So, if you think about post-World War II, and the GI Bill, and the access and the opportunity, that actually creates those opportunities.
It’s sort of interesting to note that one of the inside paths, if you sort of think about who is the prototypical great business leader at the early part of the 20th Century, was a white man from the Northeast, and he was probably a Presbyterian or Episcopalian. So, one of the things that we looked at was religion as a social marker of success. And the concentration of Episcopalians or Presbyterians, in terms of great business leaders, they represented about 30% of great business leaders. If you look at the percent in the population of the US, that’s about 7%. So, it’s way overrepresented. Now, whether that’s a marker of whether they were spiritual or religious, I don’t know, but it was a marker of social status.
And education sort of supplants religion in the mid-part of the 20th Century as an access and opportunity to being an outsider and to have this chance at a new opportunity. And so, Maggie, she actually benefited from Richmond’s progressive approach to education for that short period of time, and so she had those professional credentials. And then the final area we talk about is really perseverance, which is entrepreneurship and drive and determination and all of that. And if you think about an outsider, you often had to be a founder. So, of the 1,000 people we have in our database, there are only 40 women. And of those 40 women, 90% are founders and all of the African-American women on the list are founders.
BRIAN KENNY: Remarkable.
TONY MAYO: Because you weren’t going to get any opportunities if you didn’t found something yourself.
BRIAN KENNY: It’s a great case. Thank you for writing it.
TONY MAYO: Oh, thank you.
BRIAN KENNY: And thanks for joining us.
TONY MAYO: Thank you very much.
HANNAH BATES: That was Harvard Business School’s senior lecturer, Tony Mayo in conversation with Brian Kenny on Cold Call. We’ll be back next Wednesday with another handpicked conversation about leadership from Harvard Business Review. If you found this episode helpful, share it with your friends and colleagues and follow our show on Apple Podcasts, Spotify or wherever you get your podcasts. While you’re there, be sure to leave us a review and when you’re ready for more podcasts, articles, case studies, books and videos with the world’s top business and management experts, you’ll find it all at HBR.org.
This episode was produced by Anne Saini and me, Hannah Bates. Ian Fox is our editor, music by Coma Media. Special thanks to Maureen Hoch, Erica Truxler, Ramsey Khabbaz, Nicole Smith, Anne Bartholomew, and you, our listener. See you next week.
