In 2020, JPMorgan Chase & Co. announced a $30 billion “Commitment to Advance Racial Equity.” This included investments in housing, small businesses, and financial literacy across the U.S., as well as in diversity, equity, and inclusion initiatives within the bank.
Harvard Business School professor emeritus Joe Bower and case protagonist Alice Rodriguez, head of community impact, managing director at JPMorgan Chase, discuss the implementation of that commitment and how it aligns with the bank’s longer-term growth strategy in the case, JPMorgan Chase’s Path Forward.
BRIAN KENNY: According to the FDIC, approximately 63 million Americans are unbanked or underbanked. Black and Hispanic households are five times as likely as white households to be unbanked. And those who choose to participate are often marginalized by a system that was built to serve the white and the wealthy. But one bank has made a $30 billion commitment to level the playing field. Today on Cold Call, we’ll discuss the case entitled, JPMorgan Chase’s Path Forward, with author Joe Bower and case protagonist Alice Rodriguez. I’m your host, Brian Kenny, and you’re listening to Cold Call on the HBR Presents network.
BRIAN KENNY: Professor Joe Bower is an expert on corporate strategy, organization, and leadership. He’s written some 200 cases over 50 plus years at HBS [Harvard Business School] and a dozen books, including, Capitalism at Risk: Rethinking the Role of Business. ALICE RODRIGUEZ is the head of community impact and a managing director at JPMorgan Chase, where she’s been for 30 plus years and had a remarkable career. And we’re going to hear more about that, and she’s the protagonist in today’s case. So, thank you both so much for joining me on Cold Call.
JOE BOWER: Our pleasure.
ALICE RODRIGUEZ: Thank you.
BRIAN KENNY: It’s great to have you both here. And I think obviously people know JPMorgan Chase. So they’re familiar with the brand, it’s one of the largest banks in the world. But I think they’re going to be really interested in hearing about this commitment that the bank has made, particularly in light of what’s been happening over the past year in this country. So, Alice, I really I’m so happy that you’re here to talk about it. It’s always great to have the protagonist in the room. Joe, I’m going to start with you and ask you to let us know when you step into the classroom to kick off this case, what would your cold call be?
JOE BOWER: Well, I’ll say a few words about banking and the case, but then ask them, “Before we get into the $30 billion commitment, what is the strategy of JPMorgan Chase?” It’s a bank. So what’s its strategy? Lots of MBAs have never thought about what a bank does in order to compete. As a place where you get money or invest money, but they don’t think of it as having a strategy. It’s very important to the whole case discussion and what we’re going to do today to understand it’s fundamentally the bank thinking through how to alter its strategy and in the process deal with a very important set of problems.
BRIAN KENNY: I mentioned in the beginning that you’ve written a huge amount of cases. So you obviously know the makings of a good case when you see one. Why did this one jump out at you? Why is it important to the things that you think about as a scholar?
JOE BOWER: One of the largest banks in the world is addressing a fundamental need in our country and several others. And it’s doing that at scale. So it’s a perfect case.
BRIAN KENNY: Tell us a little bit about JPMorgan Chase. People know the name, as I said, but how influential are they within the banking industry? What’s that landscape look like?
JOE BOWER: Well, they’re really, particularly in this country, but in globally it’s one of the largest banks. And particularly so many of the other large banks in the world are either state-owned or state-tutored. By that I mean, like if you’re a large French bank, you’re not really independent of the government, nor if you’re in Japan and you’re a very large bank are you independent. This is a large independent bank with a history going back into the 18th century, a lot of its current scale comes from the mergers in the latter part of the 20th century. It’s an extremely important and I would say very well run bank.
BRIAN KENNY: Alice, anything you want to add to that?
ALICE RODRIGUEZ: I love the part Joe just said. If you were to take a wall and starts to fill in all the banks that make up JPMorgan Chase, I think people would be shocked of how many that is, geographically where they were located. And me, myself, I started 34 years ago with an independent bank in Texas, called Texas Commerce Bank, which six months after I started got gobbled up by Chemical Bank. And then it started, Joe, from there in my career. So yes, totally get it.
BRIAN KENNY: So you’ve been there for a long time. What have you been doing for the last 30 years at JPMorgan?
ALICE RODRIGUEZ: It’s crazy, Brian. I can’t even believe. Sometimes when those words come out of my mouth, it’s shocking. But I’ve been very blessed in my career. I have had the real opportunity to work in several different lines of business. I started my career in commercial loan ops. I’ve worked in the consumer bank in a leadership position, managing branches, several branches, districts, regions. I spent several years in the business bank, moved out to California after we acquired Washington Mutual and spent some time there, really starting up their business bank. Moved back to Texas and spent time in the Chase Wealth business. Then I went into a staff role, which to be honest, I was a little nervous about because I had spent my entire career in the field, faced off against either consumers or entrepreneurs or I led teams that did. And so the idea of thinking about other products and services that perhaps the bank was missing, that’s just a whole different skillset, but I really enjoyed it. I spent several years with Thasunda Duckett, who was the CEO of the consumer bank at the time, developing a financial health agenda. And I was getting ready to retire to be honest. But that’s when I got the tap on the shoulder that said, “Hey, we’re about to make a $30 billion announcement and we’re just wondering if you’d like to be a part of that?”
BRIAN KENNY: You’ve been put in charge of this enormous commitment for the bank. And I guess if you’re thinking about something that you want to do with the second half of your career, this is a pretty good opportunity for you?
ALICE RODRIGUEZ: It definitely is. And I think what’s very unique about this commitment. It’s focused on advancing racial equity. we are really addressing our approach to the wealth divide in this country. And I’m sure I’m preaching to the choir here, but it’s a pretty big divide. You look at 2019 FDIC data, the median net worth for a white household is $188,000 for a Latino household is $36,000. And for black households it’s $24,000. So a very big chasm there. And the idea here is to peel back the onion and say, “So what are the key drivers of wealth creation in this country? And how can we do a better job of providing the necessary capital out in the marketplace, incremental to what we already do for Black and Latinx consumers and entrepreneurs?” And so my team was designed to really do two things. The first is, develop the governance around the commitments to ensure that they stay true to what they’re supposed to deliver, which includes very regular reporting, business reviews every quarter with each one of the lines of business they’re responsible for the different parts of the commitments, bringing forth new ideas or innovation or really bringing the team together to collaborate stronger. So that governance piece is extremely important and that reporting and transparency goes all the way to our chairman and CEO and our board of directors. And then the second is to really take that massive commitment, which is, as Joe said, we’re trying to do this at scale, but how do we deliver it locally? How do we really be very intentional about local plans in very specific cities that we do business in, so that we can really amplify the impact that we’re trying to have in the community?
BRIAN KENNY: Yeah, and we’re going to talk a little bit about some of the work that JPMorgan Chase has done in different communities a little bit further on in the discussion, but before we go there, Joe, the case does a great job of touching on, we’ve heard the term systemic racism a lot over the past year, and the case delves into that. Let me just ask you sort of directly, is there systemic racism in the banking industry? And if so, how did that happen to evolve to where it is today?
JOE BOWER: Well, since you ask directly the answer would be yes. And how did it evolve? It evolved the way our country evolved. And for a long time in the history of the nation, Black people were rarely free. There were free Blacks, but they had a complicated existence. And in parts of the country if you acquired resources and tried to behave independently as a Black person, that was a good way to get killed. So now you ask about banking. Well, one of the reasons there was a problem in the distribution of housing in Detroit was that we had red lining imposed by the Federal Housing Administration, and you couldn’t lend. So throughout the economy and banking and as much, as any other sector, yes, there was racism.
BRIAN KENNY: Yeah. And Alice, you’ve been at this three decades at this point. Have you seen these symptoms in your experience?
ALICE RODRIGUEZ: I mean, I think it’s like Joe said, it’s part of history, so you have to really acknowledge that piece. And I think that over my tenure at the bank, as more laws came into place as more focus came into it I think we’ve all trieed to be very intentional on how we could do a better job reaching out to all people in our community. But I would say that, like all banks we can do better, we can do better. And I think that the way we’re approaching our $30 billion commitment is really putting a lot of accountability on our lines of business to look at this with a real racial equity lens. And I can honestly tell you that in my tenure we’ve never done that. As Joe mentioned in the beginning, you always have strategies on how you want to do growth, and we are a bank and we are stewards of the shareholder money, but this feels really different. And I can tell you, it’s a little uncomfortable. Because I’m talking to CEOs who are very successful in their businesses and challenging them on how to do it a different way.
JOE BOWER: It gets down to very specific things. As you’re trying to improve the employment of Black people in the bank, you discover there are laws against hiring felons. Well, we all know about the mass incarceration laws in the ’80s and ’90s. One thing Jamie Dimon did was he got the law changed so that they could hire felons. I mean, you run into one thing after another, and it’s really that sort of thing. But now go down to every city and there are different kinds of obstacles, and they need to be overcome. I guess what we’re used to doing is saying, “Well, it’s too much of a problem. We can make money someplace else.” Now we’re learning how to make money while overcoming a problem.
ALICE RODRIGUEZ: I think that’s right, Joe. And that’s why in my view it’s not just this $30 billion commitment. It’s great that we put a number to it and we tied it to a time frame. But ultimately it’s what you’re saying, which is bringing all the different parties to the table and challenging, like from a public policy perspective, like what has to be changed in order to make the real progress? As I keep telling everybody, it’s a five-year commitment, but let’s be honest, if you really want to address the wealth divide in this country, it’s probably going to take decades.
BRIAN KENNY: So this isn’t the first time that JPMorgan Chase has really gotten to the ground level with things. Joe and I did a podcast a couple of years ago about Joe’s case on JPMorgan Chase’s work in Detroit with Peter Scher. A lot of that was revisited in this case today. Joe, I’m wondering if you can talk a little bit about some of the work that JPMorgan Chase did in Detroit and some of the things that they might have learned that helped them to shape their approach to what they’re doing with the $30 billion commitment?
JOE BOWER: Peter said, “we’re not making much of an impact. And to do that, we’re going to focus on the four areas where we know what we’re doing.” And they call that the four pillars of their work. And that was basically jobs and skills, small business expansion, financial health, and neighborhood revitalization. And they studied the problem for a year, that’s important. All kinds of agencies and NGOs, community development, investment funds had been studying and working together with foundations. And there was a 200-page plan and a new mayor and JPMorgan moved in with money, $100 million, later $150 million, and people, which turned out to be perhaps more important than the money. And it was called the Detroit Service Corps. And I was stunned, because I would think that no banker in a large organization is going to want to waste their time working on stuff like this. But across the whole global bank people competed to work in Detroit in teams for three weeks. That was pretty dramatic. And I think we can all think of it as that was the pilot experiment. And the bank began to learn that they could in fact do very useful things. And there’s more, in 2016 it was advancing Black leaders. 2018 they then began advancing cities—Chicago, Anacostia in Washington D.C., and Paris. So they began to test drive this idea that as bankers doing banking, working with other organizations and local government—this is all local—we can make a difference and have an impact.
BRIAN KENNY: Yeah. Alice, tell me what are some of the things that you’ve been able to glean from that work and how does it affect what you’re doing with the work you’re doing today?
ALICE RODRIGUEZ: It’s like Joe said, it’s been like building blocks—building on each one of the initiatives and taking the best practices from each one of them. So I would say a really important best practice that I’ve taken from all of that work has been how critical it is to first start with listening to the community. Because, as bankers, we tend to think we have all the answers, right? We have access to lots of data. We look at the data, we make all these hypotheses based on the data. But man, there’s nothing better than eyeball to eyeball with consumer advocates, with entrepreneurs on the ground, getting the feedback directly about what we should be improving on. And I’ll tell you, I spent the day before yesterday with my team on a little bit of a field trip in south Dallas, going to areas that have no grocery stores near them, have no banks near them, have some real challenges. And just having lunch with a few people in the community and listening to the feedback, again with a real ear to a solution. I have found that at least in the examples where I’ve been involved with, they just want to collaborate. They want to be a part of the solution. They want to be candid about what they think you’re not doing enough of, but at the same time they want to be part of how do we resolve this issue together. And many times they recognize that maybe, as a bank, we can’t do it all, but we have at least the brand to bring the right people to the table, whether it’s the local city council people or the mayor or other policy groups that need to be involved.
BRIAN KENNY: Yeah. And you know, Joe mentioned it earlier too, the bank isn’t doing this for altruistic reasons solely, it’s not just because it’s the right thing to do. They’re doing it because it’s good for business in the long run to be able to improve these communities at the ground level.
ALICE RODRIGUEZ: 100 percent. I mean, you don’t have to be a rocket scientist to look at what’s the makeup of our country today, and what’s it going to look like ten years from now, 20 years from now, 30 years from now? There’s a lot of majority-minority cities here where that population and the net household growth is coming from these communities. So if we don’t do a good job today, trust me, it’s going to be hard to capture that business in the future.
BRIAN KENNY: Right. Joe, the case goes into the change that the Business Roundtable made last year. And there was a lot of news about this. A lot of headlines made about the fact that the Business Roundtable changed the scope of their mission essentially to say, “it’s not just about shareholder supremacy, it’s about all stakeholders.” And they, obviously were giving a nod to equity by doing that. My question I guess is what’s the significance of that and how credible is it? Like how seriously should people be taking that?
JOE BOWER: It acknowledged that something that, I think, for many businesses was always true. They saw their job as serving customers and doing it in a sustainable way—sustainable means you make money so you can keep reinvesting. They understood that. And they did it and created wealth, created jobs. Jamie says this all the time, “when we spent money, either as government or as foundations, it’s created in business.” There’s a wonderful phrase: “You can’t have a good business if the business is not based in a sound community.” Why is the strategy of JPMorgan important to this case? Because, as a bank, it’s going to grow and prosper. That means it must be serving new customers. That means it has to be serving new needs. And that means it has to be paying attention to parts of the market that were unserved. And if it can get there early and establish their brand and learn how to do it. I mean, all of this is fundamental to building a healthy business.
BRIAN KENNY: The case establishes that JP Morgan Chase has been focused on these issues for a while and now has really stepped up. I’ve heard Jamie Dimon talk about this. He’s pretty passionate about the topic of advancement. Tell us what the mood was like as things were really heating up around Black Lives Matter in the wake of the murder of George Floyd. How did that play out at JPMorgan Chase?
ALICE RODRIGUEZ: I think it was, to be honest, a very somber time. It was kind of a mix of emotions, right? You had colleagues that were obviously very angry. Some that were very sad. Some that just really couldn’t believe the horrific event of George Floyd and just everything that was happening. But what I did really think was very effective is, it’s one thing to have all of those feelings, and it’s another to be able to share them with your colleagues. In order to continue working together and, more importantly, understanding the why. So the bank did a really nice job of facilitating a lot of different opportunities where people got together and we just talked about it. I just think that for JPMorgan Chase to allow people to have a voice, really have a voice, during a very difficult time, was really important as an employer.
BRIAN KENNY: Yeah. Can you describe what the $30 billion commitment is and how it breaks down?
ALICE RODRIGUEZ: It is focused on incremental lending. Specifically around home ownership, as well as minority business owners. In addition to that, we have a very specific focus on supplier diversity and ensuring that we’ve got an opportunity for our minority suppliers to do business with us. The way it breaks up is $14 billion is tied to affordable housing. Eight billion of that is for purchases, four billion of that is for refi. And then we’ve got the number allocated to the supply side. So, one side of the business, the wholesale bank, is responsible for the supply side, ensuring that we’re providing affordable rental units to our communities. And then obviously on the demand side home lending is responsible. So just between those two, one has a $14 billion commitment, one has a $12 billion commitment. There’s $26 billion of that 30 billion is all in lending for home ownership. And then there’s $2 billion tied to minority business owners. And then a really important investment that we’re making is around that financial health pillar. And this is where we are making an investment in a whole new position, called a community manager, community centers. And all of this is in service to supporting how we build trust in our communities. And more importantly, how we get the unbanked and the underbanked into the banking system.
JOE BOWER: Within the banks and management and employee population, a major effort to increase Black employment. So the Black presence throughout.
ALICE RODRIGUEZ: That’s exactly right, Joe. We have a fourth pillar, that’s all on workforce diversity, which is what Joe was talking about. So it’s a very holistic approach to how we want to think about racial equity in our country.
BRIAN KENNY: So Joe, how do you, this is a mammoth undertaking for any organization, I don’t care how big they are. How do you operationalize and scale something like this?
JOE BOWER: Well, one of the things that I’ve gotten used to working with or studying—JPMorgan Chase is that it’s a very business-like organization. It’s very planful, and there’s a lot of accountability and a lot of measurement. And if you listen carefully to what Alice was saying, it’s just all broken down. $30 billion—that number arrived by adding up, it wasn’t pulled out of the air. It was, “Okay, we’re going to do this. What does it involve?” And it’s city by city, line of business by line of business. The review system is adjusted. This is a bank where you have very detailed reviews, very regularly, and they go right up to the top.
BRIAN KENNY: Yeah. I was going to ask, so Alice, how involved is Jamie in this?
ALICE RODRIGUEZ: Very involved. I update along with my boss, update the operating committee and Jamie every 60 days. Within those 60 days he’s always asking about a specific area. So we end up saying an update there. We report to the board pretty much every 60 days as well. So there’s very rigorous reporting around, as Joe mentioned, every element of the number, and it’s not just the volume or the dollar amount, it’s also the unit numbers. We have unit numbers committed to all of this. Ultimately, every week we’re meeting with some line of business to really do a deep dive. If someone looks like they’re forecasting to come in lower than what they thought they were in Year One, lots of conversation on why, and is there a different approach they should take? Is there other additional local marketing they should be doing? It’s like any other approach to the businesses we manage. We’re using the same rigor with this particular commitment.
BRIAN KENNY: This has been a fantastic conversation. It’s so great to hear about the details of what you’re trying to accomplish. I’ve got a couple more questions before I let you go. Alice, I’ll start with you. How are you measuring success? What does success look like down the road, as you continue to pursue this?
ALICE RODRIGUEZ: For me it’s more about really changing the way that we look at the business. Because we’re a bank, we lend money, but we obviously manage a lot of risk. And so we want to be prudent, but at the same time it’s hard to imagine that the way we evaluated risk in the past is really the right way we should be thinking about it in the future. A lot has changed. To me real success, when I finally do retire, would be that we actually got the lines of business to think more innovatively on how to solve our problem, leaning in a little bit more to make it happen.
BRIAN KENNY: Joe, you literally wrote the book on rethinking the role of business in society. So let me ask you this question. Do you think this effort heralds the beginning of a new sort of social compact between business and society?
JOE BOWER: The answer is yes. What business is about is using your skills—analytic and managerial—to create wealth that gets shared and builds a great community. What I hope all the listeners understand is that this isn’t magic. What’s happening is just what Alice said, is you’re taking the set of skills that you’ve developed in your business and becoming more imaginative and innovative, and seeing how you can use them to build business, to create wealth using those skills.
BRIAN KENNY: Thank you both so much for joining me today. Alice, we wish you great success in your endeavor. If this is the second half of your career, it’s a great one. And one where you can really have an opportunity to leave a lasting legacy.
ALICE RODRIGUEZ: Thank you, Brian. I appreciate that.
BRIAN KENNY: Joe, always a pleasure to have you on. We’ll get you back here again.
JOE BOWER: Thank you. And thank you, Alice. It’s just, you’ve got the most amazing job. It’s fantastic.
ALICE RODRIGUEZ: I said this to someone yesterday, Joe, I’ve never worked so hard in my life, and I’ve had some pretty tough jobs, but it’s definitely one of the most rewarding.
BRIAN KENNY: That’s great. Thank you both.
BRIAN KENNY: We are excited to be celebrating the 100-year anniversary of the case method at Harvard Business School. It’s a year-long celebration, kicking off this month alongside our new academic year. If you want more on the history of the case method, visit our website: www.hbs.edu/casemethod100. Cold Call is a great way to get a taste of the case method, after all each episode features a business case and its faculty author. You might also like our other podcasts: After Hours, Climate Rising, Skydeck, and Managing the Future of Work. Find them on Apple Podcasts or wherever you listen. Thanks again for joining us. I’m your host, Brian Kenny, and you’ve been listening to Cold Call, an official podcast of Harvard Business School, brought to you by the HBR Presents network.