In response to the civil rights riots of the 1960s, President Richard Nixon initiated the first minority business enterprise program and focused on black business growth. The initiative quickly expanded and included Hispanics and Asian-Americans. Finally, in the 1980s, politicians embraced women as a protected group, and business owners fell under four major categories.
Over time these four groups formed their own separate advocacy organizations. For minorities, the National Minority Supplier Development Council represented the three ethnic minority groups under one umbrella for the private sector.
In 2012, the U.S. produced approximately $16.6 trillion in economic output. Black-owned businesses generate $136 billion; Hispanic-owned businesses generate $351 billion; Asian-owned businesses generate $506 billion; and female-owned businesses generate $3 trillion.
Although all groups have made significant progress, some groups are disproportionately small, and none have reached parity. There are many reasons why this gap occurred; however, the predominant one is these groups continually fight each other over a small allocation within budgets.
In most Fortune 500 companies, procurement teams allocate between 3 and 10 percent to minorities. In large corporations, 5 to 10 percent can be a sizable amount, and well over $1 billion, but again, for all four groups none has reached parity.
As of the last audit by supplier diversity group the Billion Dollar Roundtable, there are 18 companies that procure more than $1 billion of goods and services from minority companies. If all Fortune 500 companies allocated $10 billion on average to minority and female-owned business, more than $5 trillion would flow into our communities. This represents one of my hopes, and I believe we could easily achieve it if female- and minority-owned businesses changed their mindsets.
Instead of focusing and fighting over a small piece of the pie, minorities and women should work together as strategic partners with the common goal of business growth. The increased economic capacity would allow for enormous economic output. Minority- and female-owned businesses should:
• Accept that all four groups face similar problems related to lack of market penetration, capital and managerial and technical talent.
• Accept that white women will always have unique relationships with major decision-makers compared to the three minority groups because of family connections.
• Accept, like corporations, the importance of diversifying, unifying and leveraging powerful networks.
• Accept the advantage achieved from collectively leveraging geographic, lingual and personal skills as competitive advantages.
• Accept the business growth achieved from merging or developing strategic partnerships.
• Accept the organic growth obtained if minority and female business owners purchased goods and services from one another.
• Accept that if minority and female business owners lobbied collectively, their concerns could be heard more clearly in city councils, state legislatures and the federal government.
I am sure some of my readers will say this collaboration will never happen. However, I believe it is possible, and when it happens millennials will assume leadership roles unifying these groups.
Fortunately for the U.S. economy and us, millennials do not bring the psychological baggage of a halo mentality. They are better able to accept people for who they are and the skills they possess. Thus, they have a greater opportunity to achieve bottom-line results.
For the rest of us, there are a few models of mutually beneficial behavior. One that stands out for me is the collaborative efforts of the Executive Leadership Council, a black organization led by Ron Parker; the Hispanic Association on Corporate Responsibility, led by Carlos Orta; and Catalyst, a women’s organization led by Ilene Lang.
These organizations annually prepare a joint report on the status of blacks, Hispanics and women within Fortune 500 boards. They work together to keep a record of corporate actions and to improve the situation for their collective memberships. If more organizations operated the same way, working together for the greater good, I am confident we could reach parity.