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MBN USA

October 30, 2021

Viewpoint: Major corporation, major mandate to help communities

By James H. Lowry

As I have shared in previous articles, I genuinely believe the CEOs of major corporations are sincere in wanting to assist minority business enterprises or MBEs grow. I have been in board rooms where the same CEOs admonished their top executives for not achieving their own stretch internal minority and women spend goals. However, after the meetings are over, programs are designed and monies are allocated, there is limited progress on both local and national levels. Over the years — in my many reports and books — I have provided in-depth analyses on why this limited progress has occurred. But recently, after being immersed in many of these programs and reflecting on the events of 2020, I have concluded the biggest reasons are:

1. Most corporations perceive MBE development with a philanthropic mindset.

2. Top corporate management is conflicted with respect to what targeted groups to assist — small, large or potential large businesses.

In the remainder of this article, I will address each one of these problem areas and make recommendations on how corporations can achieve ambitious goals for both small and potentially large MBEs.

Most corporations perceive MBE development with a philanthropic mindset

When the first major MBE programs were designed in the 60s, they were created in times of urban riots, corporate distrust, economic decline and high unemployment rates, particularly in Black and Brown communities. In response to these conditions, many programs were designed quickly within government agencies and corporations.

Over a 60-year period, many of these programs have been redefined, grown and, in many cases, discarded. There have been good intentions, but the programs were not designed, supported and driven with the similar corporate focus of profit-driven projects. Thus, they had limited success and have not had a major impact on the social injustice they originally identified e.g., limited economic development, reduction of crime, lack of jobs, poor health conditions, weak education programs and high unemployment.

Upon reflection, I strongly feel if top executives within corporate America had attacked the opportunity of advancing MBE development the same way they did when they were faced with problems in maintaining market share, global competition and driving government policy, the results would have been different after 60 years. The basic rules of the game should have been:

1. Establish your overall minority business goals to achieve parity by the year 2000.

2. Define the five to seven critical steps to achieve the goals.

3. Allocate the required capital and resources to achieve the goals.

4. Assign your top executives to design the plan.

5. Monitor success by utilizing business metrics.

6. Reward the deserving executives for positive results or demote or fire them for negative results.

Let’s assume if this simple formula had been followed by the Fortune 100 starting in 1961, we might not have achieved parity, but we would have achieved greater success and our urban areas would have been stronger.

Top corporate management is conflicted with respect to what targeted groups to assist.

I accept that most of these minority businesses in the United States are small and play a significant role in the U.S. economy. And we all witnessed the same small businesses owned by Black and Brown people have been suffering disproportionately during this COVID-19 pandemic. These companies should be helped — quickly and dramatically. Even with substantial and immediate help, are these companies collectively stabilizing low-income communities, increasing employment dramatically, creating and finding founders capable of competing globally? We all know the answer to this question. The other question we must ask is should they receive support directly from big corporations? This responsibility should abdicate to government agencies and nonprofits. These two organizations are better able to:

1. Establish local markets.

2. Train MBEs.

3. Identify community development financial institutions or CDFIs.

4. Advocate for small business.

5. Design and execute training programs.

The biggest contributions corporations can make are funding nonprofits, ensuring quality service and keeping government mandates honest. Major corporations should focus on growing the biggest and most qualified MBEs. This growth will:

1. Position MBEs in global growth markets.

2. Facilitate joint ventures with minority and nonminority businesses.

3. Create spin-off divisions.

4. Urge large banks, foundations and individuals to invest in existing and potential MBEs.

5. Produce critical data and research.

6. Establish collective major societal goals.

7. Help train the next generation of Black and Brown CEOs.

Major corporation, major mandate

Major change in low-income urban and rural communities will only occur when many midsize and large businesses are owned by minorities. These companies will be able to provide jobs and viable subcontractor opportunities, elevate themselves within the U.S. economic system and create hope for our youth. Major corporations with a long-range view on economic development and business perspectives can be the catalyst for effecting this change.