by Leon C. Prieto and Simone T.A. Phipps
Summary.
In the early 20th century, the US saw what’s been called a golden age of Black business and of Black business thinkers, one that has been elided in traditional business history taught in classrooms and leadership trainings. In this highly segregated era, leaders like Charles Clinton Spaulding and Maggie Lena Walker created and ran successful regional, national, and international corporations that employed and served the Black community in unique ways. The authors, two business historians, describe these leaders and show the ways in which the theme of social support runs throughout their work. The authors argue that leaders in today’s world have a lot to learn from this “cooperative advantage” as they seek a more sustainable, stakeholder-based form of capitalism.
Think back over the pantheon of 20th-century corporate leaders and thinkers you learned about in business school and you’ll likely conjure up figures like Frederick Winslow Taylor, Peter Drucker, Jack Welch, or Clayton Christensen. It’s hardly a surprise that these canonical giants are largely male and white. What’s less well known is that the same century in the U.S. saw a golden age of Black business and Black business thinkers. Deeply rooted systemic prejudices meant that these individuals and their thinking were omitted from most textbooks, leadership workshops, and from public consciousness. It’s past time to incorporate their work into what we know of business history, not only because it is the ethical thing to do but because in our research as management historians, we’ve found that a more racially inclusive history of management is filled with profound advice about the role of business in society that is relevant for leaders today.
The Golden Age of Black Business
University of Texas business historian Dr. Juliet E.K. Walker was the first to name the period from 1900 to 1930 in the United States the golden age of Black Business. She observed that many companies owned by Black entrepreneurs (which primarily served Black customers) thrived in a country starkly divided along racial lines. These companies included not only small local shops but also organizations with regional, national, and international reach such as insurance companies, financial institutions, manufacturing companies, and beauty enterprises. For example, Annie Turnbo-Malone built a beauty, hair care, and cosmetic empire under the “Poro” brand, establishing branches in major cities in the US, and achieving a business presence in Canada, the Philippines, the Caribbean, South America, and Africa. By recruiting and training sales agents she created almost 75,000 jobs mostly held by Black women and women of color.
As we studied the owners and executives of these companies, we noticed a pattern in their management philosophies and actions: a love of community that loomed large and permeated their business. As we describe in our recent book, many Black business pioneers built their businesses in ways that supported and strengthened the people around them: employees, customers, and local communities. These efforts were beneficial to the companies’ success: Care is often reciprocated, and many successful Black businesses were robustly sustained by the African American community which was happy to patronize organizations that cared for its members’ well-being.
That these efforts were needed at all was a reflection on the failure of the US government as well as white-led corporations in the wake of slavery and reconstruction. Rampant racial discrimination led to unemployment and underemployment. Blacks were less likely to be hired (except for marginalized jobs) and more likely to be fired, often to make room for white applicants. Enterprising African Americans filled the void by engaging in their own social sustainability efforts to ensure community wellbeing.
In contemporary times, we have witnessed corporations’ promises to do better. However, some companies, even those that have made significant steps toward diversity and inclusion even those that have created much needed jobs for the unemployed within communities, are still failing the stakeholder capitalism test. This has been made especially clear during the pandemic as complaints surface about economic and health disparities due to workers’ race, as well as unsafe working conditions and low salaries for certain workers.
Let’s take a closer look at two early twentieth-century Black business leaders to better understand their alternative approach.
Charles Clinton Spaulding
Charles Clinton Spaulding is known as the father of African-American management and has been recognized as one of the great American business leaders of the 20th century. Under his management in 1900–1952, the North Carolina Mutual Life Insurance Company on Durham’s Black Wall Street grew into the largest Black-owned business in the country. The firm supported many local Black-owned businesses and other worthy causes, and its eventual subsidiaries were also Black-operated. They were largely responsible for promoting economic development via employment opportunities for both men and women, as well as promoting talent development via training, leading to progress in economic and social standing, and ultimately supporting the growth of a Black middle class.
Spaulding exhibited a management style that deliberately benefitted all stakeholders and which earned him the nickname “Mr. Cooperation.” It began with all of his employees: For example, in 1921, Spaulding began an initiative at his company known as the Forum as a way to increase company spirit and self-improvement of all employees. He encouraged younger employees to test their oratorical skills, and there were sessions for employees to air their grievances. Additionally, Spaulding insisted that employees from the lower ranks serve as the leaders of the Forum to aid in their growth.
His passion extended to helping his wider community as well. Spaulding was one of the pioneers of what we now term corporate social responsibility. In an article he wrote in 1937, Spaulding laid out what he called the Four Cardinal Points of Entrepreneurship, one of which was “social service in business.” He explained how he and his partners were not only interested in making a profit, but also determined to ensure that their businesses remained socially responsible to the communities within which they operated. He followed these convictions in his own entrepreneurialism as he helped build an extended family of financial institutions that improved the living and working conditions of African Americans and strengthened race relations by creating safe work environments where Blacks and whites collaborated. When W.E.B Du Bois visited Durham’s Black Wall Street and the North Carolina Mutual Life Insurance Company in 1912, he praised the firm for its emphasis on cooperation over capitalism.
For his contributions, and the critical role he played in the history of management, Spaulding was inducted in 2020 to the Thinkers50 Hall of Fame.
Maggie Lena Walker
Spaulding was far from the only Black entrepreneur whose business success was deeply tied to community mission. Take Maggie Lena Walker, who was born poor, female, and Black in 1864; by her death in 1934 she had become an African American visionary, teacher, entrepreneur, business and civic leader, philanthropist, and activist for the rights of African Americans, women, and especially Black women. Among other accomplishments, Walker was the first African American woman to start a bank; she also founded a newspaper and a department store.
As a feminist, Walker challenged the notion that a woman’s place was in the home. She was confident that the sphere of women’s occupations was widening, and that there were professions traditionally seen as men’s work that could be pursued by women, including women of color (until that time Black women were often limited to occupations such as washerwomen). Walker gave stirring speeches to encourage her female followers to catch up to the white women who she perceived as making great strides within occupations that were male dominated.
Like Spaulding, Walker acted on these beliefs, creating economic opportunities for Black women. The businesses she created employed women and allowed them to step out of their comfort zones, learn business skills, and prove their competence; the companies also provided affordable, high-quality goods and services to their communities. Under her leadership, her organizations positively impacted the economic and social landscape of the Black community by creating jobs, facilitating home ownership, and shedding light on atrocities facing the community so they could be addressed. In return, individuals who came into contact with her (employees, customers and community members) demonstrated their commitment to her ventures and gave their support. The result was business success and positive change for many stakeholders in the community. So great was Walker’s success that she even received a fan letter from a Black man who said, “You made me almost want to be a woman.”
A More Compassionate Form of Capitalism
We see Spaulding’s and Walker’s approach — echoed in many of the successful Black enterprises of that era — as critical to the success of today’s corporations. It has become increasingly clear that companies have a significant role to play in creating sustainable cities and communities and in building an equitable economy and society. Capitalism in its unbridled form is contributing to the brokenness of our shared humanity, and this moment in time calls for firms to engender a more compassionate form of the capitalistic economic system, one that encourages all companies to focus on community well-being as much as they do profit. The Black businesses of Spaulding’s and Walker’s era engendered a spirit of care, meaningful dialogue, and consensus building for the benefit of employees, customers, and the community. We call this approach cooperative advantage and see its roots in African traditions of cooperation such as Ubuntu, which means “I am, because we are.”
We believe that the cooperative advantage approach is an important model for today’s leaders as they seek ways to build social sustainability into their business models. And in a world in which only 8% of managers and 3.8% of CEOs are Black and in which Black women face particular exclusion and prejudice due to their gender, skin color, and hairstyles, we believe the business world has missed out long enough by not learning about these inclusive community-oriented approaches pioneered by Black management thinkers and practitioners.