(Photos: By Salimah Ali)
By Ralph G. Moore and Harriet R. Michel
The genesis of this essay
Rohena Miller is a guru of innovative supplier diversity solutions and head cultivator at Planet Mogul, an interactive technology platform designed to cultivate the next generation of diverse entrepreneurs and business leaders. She recently reached out to Harriet R. Michel, legendary president of National Minority Supplier Development Council Inc. from 1988 to 2010, and Ralph G. Moore, president of Ralph G. Moore & Associates Inc. and author of the RGMA Five Levels of Supplier Diversity, to encourage them to write an essay in response to the reckoning on race taking place in corporate America. Miller felt strongly that these two legendary thought leaders' collective insights would be invaluable to corporate decision-makers as they contemplate their strategies for navigating this watershed moment. This article is the result of their collaboration.
America's ultimate aha moment on race
The video of George Floyd's murder struck America like an eight-minute and 46-second earthquake that penetrated the very core of the country’s values of equality and fairness. The reaction has been an overwhelming feeling of helplessness, followed by one of these reactions:
- Most white viewers: "How could something like this happen in America?"
- Most Black viewers: "Not again!!! ... Welcome to MY America!"
What has followed is the most significant and impactful "aha moment" ever. By the end of that video, white Americans realized that Black Americans live in a different world from theirs. The aftershocks to that tragic moment are continuing to reverberate around the world. Social media platforms exploded in protest, followed by passionate multicultural and multigenerational marches and demonstrations. Following these events, elected officials and celebrities issued hundreds of statements expressing their commitment to racial equity.
This movement has a different vibe
In our collective decades of marching, picketing, debating and negotiating to advance racial equity and economic opportunities for Black people and other minority groups, the range of reactions is measurably different from all other movements we have studied or joined. The passion, tenacity and diversity of the protesters that have come together is cause for excitement.
As the first woman president and CEO of the New York Urban League before joining the National Minority Supplier Development Council Inc., Harriet R. Michel has seen "the struggle" in real-time. And, we agree that this movement has a sense of purpose and cohesiveness that neither of us had ever experienced. America is collectively saying "Black Lives Matter!" and corporate America's voice is an essential addition to this moment of transformation.
Corporate America's historical role in racial equity and economic justice
During the first 100 years of "freedom" for Black citizens — 1865-1965 —, corporate America was conspicuously absent in fighting for equal rights. In fact, American corporations were active partners in executing the oppressive segregation laws and racist practices during this period. "White only" signs were prominently displayed throughout America and, with a few notable exceptions, major corporations had few jobs for Blacks. Also, most banks denied loans and mortgages to Black people, which left them as easy prey for predatory lending practices designed to deplete the meager savings Black families were able to accumulate. For Black entrepreneurs, the situation was even more difficult as they were denied the right to purchase commercial property throughout the United States. American corporations had always valued shareholder equity over racial equity — until the George Floyd murder.
Black Capitalism Initiative highlighted need for corporate America's participation in the pursuit of economic justice
In response to America's racial tension and economic disparity in the late 1960s, President Richard Nixon's Executive Orders 11458 in 1969 and 11625 in 1971 — also referred to as the Black Capitalism Initiative — launched several programs and policy initiatives designed to invigorate economic opportunities for Black and brown businesses. Although some of the programs failed to achieve the desired outcomes, experts agree that many of the policies and programs created by the Black Capitalism Initiative produced a game-changing impact in Black and brown communities in terms of access to federal government resources. These are the same resources that fueled post-World War II economic growth for the nonminority business sector but were not made available to minority businesses until 25 years later. The directives from these executive orders comprised the Black Capitalism Initiative and produced many successful programs and outcomes, including the following:
- Provided minority businesses access to the U.S. Small Business Administration's resources, including the guaranteed loan program.
- Created the Office of Minority Business Enterprise, which is now the U.S. Department of Commerce Minority Business Development Agency.
- Established the American Association of Minority Enterprise Small Business Investment Companies, the first government-funded investment companies dedicated to minority businesses. This initiative was the foundation that evolved into the National Association of Investment Companies.
- Provided the initial funding for the National Minority Supplier Development Council.
In addition to the programs designed to advance minority businesses, the Black Capitalism Initiative was the first occurrence in American history where the federal government engaged corporate America as active partners in implementing programs designed to address racial equity and economic justice.
Considering that America was still debating the merits of the Civil Rights Act of 1964 and the Voting Rights Act of 1965, many corporations made bold decisions to support minority business development for the first time. Dozens of corporations invested in MESBICs, and several banks quietly removed the "whites only" signs from their commercial lending departments. They provided millions of dollars of SBA-guaranteed loans to thousands of Black and brown businesses.
Black community awaits corporate America's response
Just as a select group of CEOs provided timely leadership in expanding opportunities for Black suppliers in response to the unrest of the 1960s, the need is even greater today. The importance of corporate America's response to this moment is critical as the quality and authenticity will serve as a barometer on the state of race relations for the foreseeable future. The question discussed in every boardroom in America, regardless of size, is
"What should we do?"
This is a CEO moment
CEOs lead. CEOs make bold plans, empower leaders, mobilize teams, allocate resources, define success, assign accountability and transform visions into realities. Thus, the most impactful responses will be CEO-led initiatives that embed racial equity and economic justice into existing corporate strategy, structure and culture. This is why now is a CEO moment.
How redefining supplier diversity impacts racial equity and economic justice
Among the array of options available to corporate leaders as a response at this critical moment, we view redefining corporate America's approach to supplier diversity as the response that will have the most significant impact on racial equity and economic justice by impacting the following stakeholders:
- Black-owned suppliers, service providers and business partners.
- Black citizens.
Stakeholders - The Benefits Derived by Redefining Supplier Diversity
- Increases access to corporate business opportunities.
Service providers and business
- Provides resources to invest in talent, build capacity and enhance competitiveness.
Partners to corporations
- Enables Black-owned businesses to contribute to a healthier business climate, which accelerates community transformation.
Corporations of all sizes
- Enhances operational excellence through increased access to high-performing Black/minority businesses.
- Creates a more competitive marketplace that increases profitability.
- Strengthens the business climate, which spurs growth for all businesses.
- Expands jobs in the community from growing Black businesses.
- Black CEOs become role models and civic leaders.
- Increases Black household income.
- Expands the pool of Black business partners that support community institutions with time and money.
- Creates more jobs throughout the communities.
- Spurs community transformation.
Corporations must lead this transformationAs indicated above, the formal partnership between corporate America and Black businesses began when the Black Capitalism Initiative provided the initial funding for NMSDC. Led by the late Robert Stuart, CEO of National Can Corp., dozens of forward-thinking CEOs from various industries established NMSDC as a corporate-led organization. As a footnote, Stuart was not only the founding chairman of NMSDC, but he was also chairman of Chicago Community Ventures Inc. or CCVI, which was one of the newly created MESBICs. Ralph Moore, vice president of CCVI from 1974 to 1977, worked with Stuart on these endeavors.
As corporate America's interest in developing minority suppliers grew, the NMSDC board voted to establish a dues structure that would fund the organization and eliminate the need to accept federal funding and the associated red tape. This action was a watershed moment as many of the same corporations that were partners in denying racial justice to Black entrepreneurs during the first 100 years after the end of enslavement were now funding an organization dedicated to expanding opportunities for Black entrepreneurs.
A critical reason that corporate America continues to play a pivotal role in advancing Black and brown businesses is the outstanding contributions of Harriet Michel during her 22-year tenure as NMSDC’s president. Under her leadership, NMSDC implemented a series of best practices in professional development for corporate members and capacity-building for minority suppliers, transforming the organization into the global leader in supplier diversity. Her visionary leadership also created the foundation for the Global Supplier Diversity Alliance which — in addition to NMSDC — has member organizations in Australia, Canada, China, South Africa and the United Kingdom.
One of the most impactful best practices that Michel spearheaded during her tenure was influencing C-suite executives on the importance of their active engagement when establishing supplier diversity programs. Her work in this area resulted in many NMSDC member corporations establishing advanced and world-class supplier diversity programs as benchmarked by the RGMA Five Levels of Supplier Diversity Maturity Model.
Michel's legacy has set the stage for C-suite executives to once again step up and redefine their corporations' supplier diversity strategies to include the pursuit of racial equity and economic justice.
Redefining supplier diversity: What only the CEO can do
"What Only the CEO Can Do" is A.G. Lafley's article published in the May 2009 issue of the Harvard Business Review. The Procter & Gamble Co.'s retired CEO outlined the four major areas where corporate CEOs should focus their unique influence when determining a corporation's priorities and purpose.
RGMA has utilized Lafley's article in its practice for the past decade. Now, the four tasks that Lafley referenced in his article provide the perfect framework for outlining how CEOs can redefine their supplier diversity strategies.
Seizing the moment: The intersection of value and values
This moment of reckoning has provided corporate leaders the opportunity to reassess how their supplier diversity strategies impact racial equity and economic justice. RGMA has utilized the four tasks to suggest how leadership teams and boards design strategy sessions that recognize the value derived from Black suppliers and business partners, while aligning the supplier diversity strategy with corporate values, including racial equity and economic justice.
The four tasks in the article "What Only the CEO Can Do" by A.G. Lafley are:
1. Defining and interpreting the meaningful outside.
2. Answering, time and again, the two-part question: What business are we in and what business are we not in?
3. Balancing sufficient yield in the present with necessary investment in the future.
4. Shaping the values and standards of the organization.
The following is how RGMA is incorporating these four critical tasks into corporate leadership strategy sessions to redefine their approaches to supplier diversity.
1. Defining and interpreting the meaningful outside
In redefining supplier diversity, leadership discussions should include engaging Black and other diverse suppliers throughout the corporate ecosystem. CEOs must empower their supplier diversity teams to embed supplier diversity beyond the supplier chain and embrace the entire value chain. The supplier diversity strategy must include Black-owned professional services firms, beyond employment law firms; Black infrastructure services firms, beyond construction trades; and Black-owned employee benefits firms, beyond subcontractors to primary insurance firms.
Key prime suppliers participating in corporate second-tier programs will also play a critical role in advancing racial equity and economic justice. Other critical issues that must be on the agenda include:
- How do we engage the network of advocacy organizations in our expanded strategy?
- What will it take to be the industry leader in supplier diversity?
2. Answering, time and again, the two-part question: What business are we in and what business are we not in?
We have added a companion question to "What business are we in?" CEOs must also determine, "What role will our business play in society?" C-suite conversations for this task include the following topics:
- What is the supplier diversity value proposition for each of our businesses/brands?
- Where do we rank when benchmarked against the 2021 iteration of the RGMA Five Levels of Supplier Diversity Maturity Model?
- What internal and external resources are required to position supplier diversity to have a measurable impact on community transformation?
3. Balancing sufficient yield in the present with necessary investment in the future
To sustain increased Black business participation in industry ecosystems, CEOs must incorporate Black suppliers, service providers and business partners in all current and future growth and customer-service strategies. C-suite and board-level discussions should include the following topics:
- What adjustments are required to our three-year business plan to achieve meaningful gains in Black supplier engagement and sustainable contributions to community transformation?
- How do we engage our employee resource groups on this journey? What role should they play?
- What investments are necessary to build scalable Black suppliers, service providers and business partners?
- What is the return on investment of our enhanced supplier diversity strategy?
4. Shaping the values and standards of the organization
As leadership teams embrace redefining supplier diversity, the end goal is the seamless alignment of the supplier diversity strategy with corporate strategy, structure and culture.
Step one is the terminology used to describe the function. When Major League Baseball retained RGMA to participate in transforming their engagement with diverse businesses, the initiative was titled the Major League Baseball's Diverse Business Partners Program, which captures the partnership culture at MLB. Another example is a recent RGMA engagement that resulted in a change in the title from the supplier diversity program to the Business-to-Business Diversity Program or B2B Diversity Program. B2B Diversity captures the fact that all transactions with external business partners are included in the program's scope.
The remaining steps in ensuring that Black and other diverse suppliers are embedded in the corporation's DNA revolve around managing the intersection of value and values. The value is measured by B2B Diversity's contribution to operational excellence and shareholder value. The values are measured by the alignment with corporate values, including racial equity and economic justice.
America's reckoning on race requires transformational leaders to take bold, decisive steps that elevate the importance of racial equity, economic justice and community transformation within their organizations.
Such action will increase the number of meaningful engagements with Black suppliers, service providers and business partners. To achieve these outcomes, CEOs must incentivize decision owners to include supplier diversity leaders when contemplating the following actions:
When sourcing the best performing business partners in the marketplace, ensure that that the thousands of exceptional Black-owned businesses currently servicing corporate America are included in the process.
Incorporate Black suppliers, service providers and business partners in the beginning stages of implementing advanced sourcing strategies designed to enhance overall business performance. This action will allow the opportunity to document Black suppliers' contributions to critical metrics such as improved margins and risk mitigation.
When enhancing operational excellence by replacing underperforming incumbent suppliers, ensure that decision owners include Black-owned enterprises as possible replacements or Black-owned private equity firms as acquirers of the troubled suppliers.
Access to the American dream
The American dream is the ideal by which equality of opportunity is available to any American, allowing the highest aspirations and goals to be achieved. As standard-bearers of the American dream, corporate CEOs have the opportunity — and some may say the obligation — to ensure that all Black Americans have access to the same American dream that enabled them to become CEOs. All that is required is for CEOs to keep doing what great CEOs do best!
- Create phenomenal companies.
- Hire/train outstanding employees.
- Engage and support extraordinary business partners.
- Mobilize diverse teams to deliver innovative solutions through value-added products and services to your customers and consumers.
The only pivot required is to expand corporate business practices to include Black suppliers, Black contractors, Black business partners and Black advisers throughout the value chain.
The resulting collaborations will enhance operational excellence, reward shareholders, grow Black household income and forever redefine the quality of corporate engagement with Black America.
There is no need to change the rules of the game. Just let Black businesses participate in a meaningful way, and everyone wins!
Harriet R. Michel was president of the National Minority Supplier Development Council Inc. from 1988 to 2010. Under her leadership, NMSDC transformed supplier diversity from the "right thing to do" to a strategic imperative. Her legacy includes creating the NMSDC Corporate Plus® Program, which accelerates scalable minority suppliers and establishes the NMSDC Growth Initiative, enabling emerging MBEs to secure equity capital, while maintaining their minority certification. Michel also collaborated with the legendary Dorothy Brothers from Bank of America Corp. to establish the National NMSDC Program Managers' Seminar, which is the most attended supplier diversity training event in the world.
Ralph G. Moore is president of Ralph G. Moore & Associates Inc. or RGMA in Chicago, Illinois, a leading consulting firm in supplier/B2B diversity program strategy, management and training. Founded in 1979, RGMA was the primary training consultant for the National Minority Supplier Development Council for 24 years, which has enabled it to become the leading trainer of supplier diversity professionals worldwide. Thirteen members of the Billion Dollar Roundtable Inc. have retained RGMA's services. Moore also serves on the board of directors of Sentinel Technologies Inc., a midsize nonminority technology firm with over 500 employees. He is a special adviser to APC Holdings LLC, a private investment firm dedicated to leveraging mergers and acquisitions to create scalable minority suppliers and business partners that deliver value to corporations while transforming minority communities.