Melvin J. Gravely, Ph.D
A rapidly shifting racial demographic is the first key component. Consider the fact that a person over the age of 70 has a 20 percent chance of being a person of color. Yet a child under the age of 10 has a 75 percent chance. Our country is browning and this change is creating opportunity. The growth rate of minorities in this country is impacting every segment of our political and economic system. People of color are buying more homes, paying more taxes, attending more schools and electing more politicians than in any time in our history. There is a strong, purely economic case to black entrepreneurship. Studies suggest that black owned businesses hire black people at a higher rate than does any other race and as much as 85 percent more often. Although the reasons for the high rates of black unemployment are complex, it is still clear that more black businesses, means more black jobs. It also means better schools, more stable neighborhoods, and more black philanthropy.
Major corporations understand that black people are also buying more Procter and Gamble Pampers, Ford Explorers and Verizon cellular telephone services. Major corporations have moved beyond the simple (but obvious) idea of doing business with those who do business with you. Leading major corporations see that doing business with the fastest growing demographic in our country provides the wealth to that growing customer base to buy more from them. There is no doubt that major corporations are interested in supplier diversity to support their corporate image. But the leading corporations understand that doing business with minorities supports the growth of their business.
The second key component driving the Supplier Diversity Industry is the level of talent, education, interest and experience among blacks and other minorities. The civil rights movement created access to cherished corporate jobs and institutions of higher education. The focus for the majority of black people in this country was to raise their children to get a good education and to get a good job. For the next 40 years there was a gold rush to get into corporate America and therefore not into your own business. Well the gold rush is over and those same talented, well educated and experienced people are bringing there considerable abilities to entrepreneurial interest. The outcome is businesses are more ready to compete, and with higher growth potential than ever before.
The stage is set but progress is still slow. Although the National Minority Supplier Development Council (NMSDC), the largest and most established Supplier Diversity industry group boasts 39 local affiliates and over 3500 corporate members, corporate spending with minorities remains a disappointing 3 percent. Although spending with diverse suppliers is growing, it fails to keep pace with the rate of growth in the number of minority businesses. The question is what will it take to accelerate the growth of minority businesses in this country?
Research conducted by the Institute for Entrepreneurial Thinking, a for-profit think tank focused on making entrepreneurship more accessible, sought to answer that question. They evaluated the best programs around the country. The researchers interviewed corporate executives and minority business owners and performed case studies on minority business owners who had experienced exceptional success. The findings are published in the book, When Black and White Make Green: The Next Evolution in Business and Race. What they found were the core elements needed to take advantage of the opportunity in the Supplier Diversity Industry. All were important but four stood out as the most critical factors.
The first factor is the reality that skeptics abound. Some people (of all races) are still SOS (stuck on stupid) when it comes to issues of race. The emotional baggage that comes with issues of race for this segment of people shuts down their sense of logic and opportunity. You will find just as many people of color, as you will whites that can not figure out how to deal in a world that has finally discovered that green is something on which we can all agree. The good news is these people are stuck within a profit driven system that is designed to pursue opportunity. If you are going to see and pursue the opportunities in the Supplier Diversity Industry you must be ready to deal with (and probably work around) the skeptics. Be ready to go with the ones that get it and catch the others the next time around.
Second, success in the next evolution of race and business demands we all learn to speak the universal language of value. The exchange of value is at the very root of entrepreneurship. Businesses are started on the basis of providing a particular value for which another is willing to pay a price that in turn allows the business to make a profit. Somewhere in our 40 years of struggle we began speaking a different language. Access legislation, protest and special programs helped position us for the success we can have today but they also often confused the core business issue. The language of you must, you should, you have to or even you ought to do business with me will not work going forward. There is no corporate trade off of value to achieve the goals of supplier diversity. Corporations now expect both and we should too. There is only one sustainable language in business and that is the language of value. What is the value I can create for my customer? Can I help them make more money, save more money, or maybe get to a market they can not get to alone? Business is about value and we must all be speaking the same language.
Third, black and minority owned businesses must strengthen their strategic view. The most common measures of our success in business are how many employees we have, how much revenue we generate, and how fast we are growing. Although these are important measures, they fail to capture the factors that will lead to long-term success in supplier diversity. Strategic measures to consider are things like how your business is positioned in your industry. How much more able to compete is your business now than it was a year ago? How strong is your management team and how well are they developing? What new levels of technical expertise and capacity have you developed? Without a strengthened strategic view you may get contracts but you will fall to achieve sustained success. Without a strong strategic view your business will always be marginal and easily replaceable as a supplier. You may get a contract or two because you are a minority business but you will not have sustainable success until you strengthen your strategic view.
The fourth and final element of success in the Supplier Diversity Industry is establishing actionable relationships. Actionable relationships are those relationships with whom you have influence and trust; Those relationship on which you can depend; The relationships you have with people who are both willing and able to create access for you; Those who could and would go to bat for you; The types of relationship with people who have power and influence and were willing to use both in your behalf. The evidence is clear that these actionable relationships are what matter most. In every case study of the black and minority entrepreneurs that had major successes, each of them pointed to a person who “hooked them up.”
These relationships are not easy to create. Relationships at this level cannot be legislated, or created through programs. This is the hard work of the Supplier Diversity Industry. This is the element of the industry with the most challenge but yet the most lasting opportunity. This is the tough stuff. The non-business, attitude changing, comfort zone escaping, stereotype breaking work that has years of momentum that must be broken. Actionable relationships are developed the old fashioned way. They happen over time. They are galvanized through working together and fulfilling on first small and then larger commitments to each other. These special relationships are solidified by mutual respect and value driven support. The cornerstone of actionable relationships is trust and to have trust you must be trust-worthy. Bottom-line, there are no major successes in business without actionable relationships.
The Supplier Diversity Industry is small but growing rapidly. After nearly 40 years of efforts, all of the elements of growth are in place. To succeed in this evolving industry will demand a renewed focus on the key elements of how business really works. The missed expectations of the past have created fertile ground for skeptics. You can not let their voice hold up your progress. The common language of value has, inherent in it, the opportunity to improve how you do business. A strengthened strategic view will position you for sustained growth and profitability. But it is important to know that the next evolution of race and business in this country will work much like business always has. Relationships that are actionable are critical. Maybe for the first time ever, it is not about black. It is not about white. It is about green. Are you ready for that?
Key Facts of Supplier Diversity Industry
- Leading Industry Association: National Minority Supplier Development Council
- Over 3500 corporate members
- 39 local affiliates
- 1500+ minority business members - Minority owned businesses account for over 4.5 million U.S. jobs
- 22 percent of employees in minority owned firms come from low income neighborhoods
- 3 percent of corporate spending is with minority owned businesses
- This article is a reprint from Black MBA Magazine.
- ©Melvin J. Gravely, II 2006
- Dr. Gravely is the author of When Black and White Make Green: The Next Evolution in Business & Race and an expert in creating successful plans for the development of minority businesses.
- For more information on how to achieve this success, please visit www.BlackWhiteGreen.com or e-mail Dr. Gravely at This email address is being protected from spambots. You need JavaScript enabled to view it..